Report on Management Economics: Procter & Gamble Baby Wipes Analysis

This report provides a comprehensive analysis of the management economics principles applied to Procter & Gamble's (P&G) baby wipes product. It begins with an overview of the company and its business, focusing on the baby wipes product range and its success in the market. The report then delves into the concepts of demand and market equilibrium, examining various factors influencing demand, such as the price of substitutes, complimentary goods, consumer income, taste, preferences and expectations, and demographics. The study further analyzes the competitive landscape, identifying key competitors and their pricing strategies. It explores the price elasticity of demand, offering recommendations for pricing policies that could give P&G a competitive edge. The report draws on various management economics concepts to provide a clear understanding of the market dynamics affecting P&G's baby wipes and offers strategic insights for maximizing market performance. This report is a case study on the application of management economics principles and provides a deep understanding of the factors affecting a product's market presence.

MANAGEMENT
ECONOMICS
Table of Contents

INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................3
Company Overview...........................................................................................................................3
1. Business and product.................................................................................................................3
2. Demand and market equilibrium................................................................................................4
3. Price elasticity of demand..........................................................................................................8
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................10

INTRODUCTION
Management economics is all about utilising the concepts specify in economics to
analysis about the market and business situation in order to take competitive advantages. This
report is based on the case study on The Procter and Gamble Company. Henceforth, report
will emphasis on the company’s specific product and its analysis. Impacts of different
elements associated with management economics over the product presence in market will be
analysis in detail. Furthermore, report will precisely analyse about the aspects related to price
elasticity of demand and its associated dimensions. The entire research would also suggest
what pricing policy company should implement in order to take competitive advantages in
the market.
MAIN BODY
Company Overview
The Procter and Gamble Company formerly known as P&G were established in the
year 1837 by the founders William Procter and James Gamble. Procter and Gamble Company
is a US based organisation and also the headquarter of company is located in Cincinnati,
Ohio, United States. Company deals in different consumer goods like cleaning agents,
personal care products, beauty care products, personal health care products and diagnostic
products. The organisation is one of the leading brands in consumer goods sector and
currently servig a global business base except Cuba and North Korea (Belas and et.al., 2018).
Company is mainly associated with the consumer goods sector. Company’s business
environment is volatile which allow company to offer numerous products. Volatility in
business environment also serves aggressive level of market competition. Leadership in
Procter and Gamble Company give huge emphasis on innovation which has resulted into
multiple products associated with the product portfolio of company.
1. Business and product
The Procter and Gamble Company deal in consumer goods. Company offer various
consumer goods but in recent time the organisation has entertained an effective presence in
market based on its Baby Wipes product range. The product has received a huge market
demand in recent time. This product s a recent success of the Procter and Gamble group of
company. This product has launched by company under Pampers Umbrella (Bradley and
Klein, 2016). This product has entertained an effective demand due to its features like natural

product, free of fragrance, lotion and chlorine and only the natural fibbers interact with the
baby. This product is chosen as it is easy to use and a recent success of the P&G Group.
Company offers a wide range of collection of all Baby Wipes product range. This product has
been chosen for this report as the product generates effective demand in market all across the
globe. Due to the presence of company in this product range different concepts of
management economic would effectively analysed in the case study of this product range of
the Procter and Gamble Company. This report is based on the concepts specifies in
management economics and this product of the company would allow the proper analysis of
all concepts of management economic in the recent context of business environment. The
P&G group has also given a huge emphasis over this product range in all its marketing
campaigns all across the globe.
2. Demand and market equilibrium
Demand is defined as how much the company has been able to sale its product in
market are the fundamental that denote about the product demand in market. Market
equilibrium in economic terms denote about the situation where the economic forces like
demand and supply are controlled and well balanced. In the absence of external influence the
value of economic variable will also not change in the equilibrium. In the study of
management economic different factors that attract the demand and price of the products
offer by company (Dierksmeier, 2016). Even the rice and demand also goes in same
direction. If the demand gets a hike the prices also increases and if the demand get reduced
than the price would also decrease by company to improve the sales. Various factors put an
impact over the demand of products in market would be projected in the following points.
Price of substitute
Substitute products are such products that can be used instead of the products offer by
company. All such products that can replace the use of Baby Wipes would be call as
substitute products for this product segment of the Procter and Gamble Company. Company
is facing aggressive level of competition from Johnson and Johnson, Aqua Wipes, Kinder by
Natural, Mum and You, KIT and KIN, Huggies, Dove, Kimberly Clark Corp, Unicharm Corp
and SCA Company and many other competitors (Helin and et.al., 2017). The P&G group has
recently received an effective success in its baby wipe product range due to affordable prices
of its baby wipe product range. Company has aimed to serve its products at the prices more
affordable in context to other competitors in the market.

The competitors of the P&G group offer product in different prices range that can be
denoted as Aqua Wipes is offering at £10 for four packs, Dove is offering at the price of
£1.50 per baby wipe product, Kinder by Natural is offering the entire pack of Baby Wipe
product range at the price of £ 24 over Amazon, Mum and You is offering at the price of £
19.99 over Amazon and £ 26.49 over eBay, KIT and KIN is offering at £ 2.75 for each bay
wipe product, Huggies are offering at the price of £18.99 for 18 packs and so as other
competitors are offering at different prices (Hemmati, 2017). All the above competitors are
the key competitors for the Procter and Gamble Company. The price of the product is
depends upon various aspects like demand, production cost, profit margins and many other
elements. All these competition are the substitute for the Procter and Gamble Company. Most
of the time the prices of the substitute remain same but in case of occasion all brands look for
offering seasonal sale of the Baby Wipe product range to enhance the sales potential of the
company.
Prices offer by the substitutes put a huge impact over the product demand of the
Procter and Gamble Company. P & G group is one of the leading brand parts of the consumer
goods sector. Due to its effective brand value company always becomes part of the buying
decision customer make for its products. Due to effective demand in market company charges
a bit competitive prices for its products that can be challenged by other competitors in
market. The prices range offer by the company is also similar with the other competitor’s
invove in the sale of baby wipe product. So it can be specify that apart from aggressive
competition the demand of the P&G Company has always been high due to effective brand
value and competitive price structure. Company also give value to price affordability in its
price structure that also supports company in entertaining market competitiveness.
Price of compliments
Complimentary goods are such goods that are used along with the product offer by
company. All such products that are used along with the baby wipe product is call as
complimentary good and products for the P&G baby wipe product range. Product like baby
oil, lotion, cream and many other products are used as a complimentary for the baby wipe
product. In recent time due to aggressive competition in the consumer good products due to
involvement of various national and international brands in United Kingdom the prices have
been decreased. Whenever the competition gets increase the prices would get down this is te
concept of management economic. The prices of all the complimentary products for the baby

wipe product get reduced in recent time due to intimidated type of market competition
(Hurley and Frisvold, 2016). As a result of the price affordability the demand of the baby
wipe have also increased in market. Inflation could somehow manage to get an increment in
prices at some extent but part from the inflation the prices are well controlled. Controlled
prices of different complimentary products associated with the baby wipe could also increase
the product demand in United Kingdom. The economic growth in United Kingdom has also
supported the significant increase in the per capita income of people based in United
Kingdom. The increased income of people have also supported to buying capacity of the
people based in United Kingdom. This has further increased the demand of different products
which also include baby wipe.
Consumer income
Income always carries a strong relationship with the product demand in market. As
per the principles stated by management economics if the income of the people get increases
than the demand of the product in market would also increase and in case the income get
decreases than it would also reduce the product demand in market. The direct impact of the
income of people create on the buying capacity or purchasing power of the potential
customers of the company in target market (Shinkevich and et.al., 2016). Over the period of
time the United Kingdom have entertained major boost in the economic growth rate which
has further increases the per capita income of people based in United Kingdom. Due to
increasing trend in the per capita income of people based in United Kingdom the demand of
all kinds of products has increased. Baby wipe product offer by P&G group have also
received an increasing trend in product demand.
Consumer taste and preferences
Over the period of time the life standards in United Kingdom have upgraded due to
increasing per capita income in UK. This increasing income of people based in United
Kingdom has supported the high standard of living of people based in United Kingdom.
Customer taste in United Kingdom has always been modern and new. All the social factors
have supported the Procter and Gamble to sale its baby wipe product. Company has also
framed a affordable pricing strategy to sale this product. Marketing of company has also
created a positive impact over the product sale (IJzerman and et.al., 2018). The modern
customer taste has allowed company to gain an effective success in this product category.
This has supported company in enhancing the profitability and growth potential of company

in customer good sector. Preferences of customers in United Kingdom have also been keen
towards the health care and protection of their baby’s. All these aspects of United Kingdom
have supported company in receiving a healthy success in market.
Consumer expectations
Customer expectation is define as all such factors that are desired by the customers as
a part of the experience associated with the product. In United Kingdom people are very
educated which always reflected in the product choices of such customer group. People are
keener towards buying healthy and natural products. The baby wipe product offer by Procter
and Gamble Company has made out of the natural elements. The product could match the
expectations of the customer base (Mustafakulov, 2020). Due to its significance company
could discover an effective product demand in the target market. Company could deliver all
the expectations associated with the customer base such as price affordability, natural and
healthy product range and all other expectations associated with the potential customers
based in United Kingdom. It’s important for the company to attract the customer’s
expectations in order to serve the best business outcome out of the practices acquired for
business operations. Dealing with the expectation of potential customers of company also
allow company to cope up with the growth rate and further it has supported company in
achieving a healthy boost in the growth rate of company.
Demographics
Demographic is another crucial elements that support the demand element for
products offer by company. Demographic involve how many competitors are available in
market, what are the demand proportion of company and other associated aspects. All the
demographics supports the demand have supported the Procter and Gamble Company to
achieve the best possible environment for the growth of company’s business. Company has
also channelizes an attractive brand advertisement to channelize an effective growth rate in
dealing market.
The above mentioned points are such factors that influence the demand of product in
market. P&G Group consist up an effective brand value which has also supported the
company in gaining a success in its baby wipe product range. Due to high brand value
company could always be capable enough to deal with the expectations and able to attract
such customer group.

3. Price elasticity of demand
Concept of price elasticity depict the fact that if the price of the product get an
increase than the product demand would reduce and in case of reverse action reverse reaction
would be entertained. The prices of luxury items are usually higher as compare to necessity
products.
Substitute effect
Substitute effect is denoted as all such products that can replace the use of use of
baby’s wipe are called as substitute products. If the product contains plenty of substitute
products which denote that the company need to fight against the aggressive level of market
competition. To much substitute product also denote that company can’t aggressively hike its
prices. In case of Procter and Gamble Company the organisation is receiving tough
competition from plenty of competitors in market (Rasolofoson and et.al., 2017). Due to the
substitute effect the prices are in control. Company has to keep the prices affordable and
competitive so that customers can sustain by the company. Many more companies are also
serving the aggressive level of market competition to the P&G Company in its baby wipes
product segment. The product of company is luxury item as the use of the product is more
accessible in nature. Usually the luxury item costs are always high as compare to other basic
products.
Income effect
Income effect is all about if the income of customers get hype than it will increase the
demand of product in market. In case the income gets low the demand would sink. This is the
basic concept of economics. In United Kingdom the income of the people have always
receive a significant increase due to economic growth. This has also supported the P&G
Company to get an effective success for its baby wipes product (Rigamonti, Sterpi and
Grosso, 2016). In case the income of people is attractive it allows company to launch
maximum luxury category products. The product call baby wipe of P&G Company got an
effective response in the market apart from the healthy level of market competition. Company
has received a huge demand in the market. Due to high demand company also kept the
product price a bit high but in a certain limit due to aggressive level of competition from
other big brands.

CONCLUSION
This report have touched some of the concepts involve in the management of
economics. If the price of the product get an increase than it would reduce the demand of the
product in market. In case the demand of the product is high than the price of the product
would also increase. All these are the basic concepts of economics. Competition also
influences the price of the product in market. In case the company requires to entertain a huge
competition than it would reduce the price of the company. All these are the concepts involve
in economics. Demand and price flow in same direction.

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