P & G Korea - Detergent Division Essay
The main issue of the P&G Korea case is centered around the question of market share. P&G and Unilever are the two major market shareholders in the Korean detergent industry holding 80-85% of the total market share. The remaining 15-20% of the market is held by low-priced local Korean brands. There are no new markets either company can tap for further market share since most Korean households already use laundry detergent, making the market saturated. Other than peripheral chemical changes claimed to be “improvements”, there are no major innovations to be explored for product development or diversification. Per Ansoff’s strategic opportunities matrix, P&G and Unilever are both focused on Market Penetration, …show more content…
The two companies’ best chance of breaking the destructive cycle of classical Game Theory behavior is to form a cooperative relationship. Neither company has competitive advantage over the other; therefore, there is little to lose on either side. By Unilever and P&G coming to an agreement to maintain or even reduce marketing expenditures in the future, both can concentrate on strategies that aim to keep individual brand equity strong to increase use and satisfaction among current customers rather than continue fighting for market share. As Figure 6 shows, the most desirable outcome is for both to keep or even slightly increase market share while also maintaining higher net profits by not increasing fixed costs in marketing.