Unilever and P&G’s Battle over Emerging Markets

Unilever is experiencing significant growth figures while Procter & Gamble (P&G) is loosing market share. Five years ago, it was the other way around. However, the slow recovery of the American economy and the deterioration of the European economy have caused more damage to P&G as a huge portion of its revenues come from these developed marketplaces. Brands under P&G are more likely to be pricier than those belonging to Unilever. Thus consumers, particularly those who are compelled to count every penny they spend, tend to sacrifice P&G brands over the more affordable Unilever.

Plans of P&G’s chief executive Bob McDonald to make their prices more economical and cut expenses by about $10 billion if carried out successfully can considerably restore their company’s wealth in these established markets even at the cost of consumer-goods corporations such as Unilever.

However, the biggest question the baffles the minds of many remains to be in what ways P&G can achieve improved performance in emerging economies which their company as well as Unilever depends on for continuing development.

Hopes of Recovery

Both multinationals started off this decade with incredibly ambitious goals. P&G intended to increase their consumer population by 25%, that is to say a billion new patrons by the year 2015. Unilever on the other hand planned to increase their returns twofold by the year 2020 while at the same time cutting up the adverse environmental impacts they produce.

Both as well admitted to the importance of their growth in emergent markets to accomplish these said goals. They pledged to capitalize greatly in the promotion and distribution of their recognized products in emerging countries and in the creation of new ones particularly tailored to the poorer consumers’ pockets and tastes.

By the year 2020, Unilever hopes that emerging markets will account for about 70% of their total sales – two-thirds of which will be generated by the growth of these markets in terms of size while the remaining one-third will come from the increase in the company’s share of these growing markets.

In contrast to Unilever, the exact share P&G aims to achieve in the years to come is unclear at the moment. Although last year, the company expressed its detailed plans by entering as much as 950 markets.

Distributed Innovation

Although both corporations have established various innovation centers throughout the world, P&G’s focus on Cincinnati caused it to be less efficient than Unilever in terms of “distributed innovation”.

For instance, consumers from Turkey, Britain and the rest of continental Europe who detested the current packaged soup have willingly embraced the Knorr Stock Pot primarily developed for consumers in China.

Nevertheless, these days are still considered to be early ones for both P&G and Unilever in the emerging markets that unlike those in developed countries are yet to experience the highest level of growth.

At the moment, Unilever may seem to be performing better but the key components of its growth are yet to be proven unlike that of P&G’s updated scheme.

P&G has as well started to show its willingness and determination to capitalize greatly in emergent markets it will encounter along the way. This should be taken as hope for the company. If they can resolve their issues on cost and make more money available for innovation and promotion particularly in the emerging countries, P&G will be able to rediscover its innate expertise.

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