Proctor and Gamble Essay Example | Topics and Well Written Essays - 1000 words

Proctor and Gamble - Essay Example The products of choice in this paper are Ariel and pampers. Ariel is a cleaning agent while pampers is a personal care product which is applicable mostly to babies to protect them of baby rashes as a result of wetting themselves. The products have been launched in various countries with the aim of diversifying the marketability and scope. Ariel soaps and detergents target all households including offices (WHITE, 2009)). Both high end and low end customers are targeted. The new products for Ariel and Pampers will be launched into the maturing market considering the fact they have been in existence for some time. P & G faces several threats from other companies such as Unilever and Henkel which are firms that are growing very fast. However, there are various opportunities which prevail such as the strong marketing mechanisms that the firm uses and its reputation which makes its product very firm and stable (HOLLIS, 2010).). Price sensitivity of pampers and Ariel detergents Ariel and Pa mpers products are all less sensitive to price. This is because each company has the liberty to sell its product at the price it desires given the different materials required to make the product. The other competitors such as Johnson and Johnson, Unilever have their own products which do compete with the case products hence it can price them according to their own estimation. Product Cost Estimate The product is estimated to be priced according to the size or quantity offered to the customers. It should be noted that Ariel and pampers comes in various sizes and quantities to be able to distribute to various market niches according to the demand in place. It is therefore, important to note that Pampers falls in various sizes and quality similar to Ariel which also falls in different quantities (AMERICAN UNIVERSITY IN CAIRO, 2011). Variable Costs The variable cost in the manufacturing of Ariel is the cost of raw materials which vary due to the economic conditions prevailing in the Un ited Kingdom. Other variable costs include the costs of transportation, the costs incurred on payroll of senior management, costs of floating shares on the stock exchange (HOLLIS, 2010; 33.). Fixed Costs Some of the main fixed costs include; the costs of insurance, costs of advertisement and the costs related to distribution of the products within the country. Other fixed costs include; the cost of utilities such as electricity, water and communications. These costs can be predetermined in advance before costing the products ((KAPFERER, 2008; p. 79). Cost leadership aspects of the products In an attempt to beat rivalry in the market and the increasing level of threats in the market, the company puts more emphasis utilization of the economies of scale. This is because of the high fixed costs incurred in the manufacturing sector which is required to be spread throughout the numerous units (CHERUNILAM, 2010; p. 57). By pulling down the costs incurred per unit cost of the product the ul timate product is then sold at a lower price which fosters the company’s competitiveness in the market (KAPFERER, 2008; p. 79). Market Price The market price is determined by the law of demand and the competitors’ quality of products. The market price of pampers and Ariel depends highly on the consumer preferences and tastes and according to the level of income. The products might have a higher price due to quality but the population does not have the cash to buy the products (DYER, DALZELL & OLEGARIO, 2004; p. 227). Break Even Analysis The breakeven analysis of Ariel and pampers arises when costs of production is exactly equal to the revenue acquired from the sales of the products (Drury, 2008; 2006). At this point the sales revenue equals the