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Reckitt Benckiser Group SWOT & PESTLE Analysis

Last Updated : 29 Jul, 2017

OVERVIEW

Name of the Company: Reckitt Benckiser Group

Business Sector: FMCG

Operating Geography: United Kingdom, Global

About the Company: Reckitt Benckiser Group plc is a manufacturer and marketer of health, hygiene and home products. It was formed in 1999 by the merger of the UK-based Reckitt & Colman plc and the Netherlands-based Benckiser NV. Headquartered in Slough, England, the company is selling its products in 180 countries and has about 35000 employees. Rakesh Kapoor is the current CEO.

Revenue: £9.891 billion FY ending December 2016

SWOT & PESTLE Analysis

The SWOT analysis for Reckitt Benckiser Group is presented below:
Strengths
Weaknesses
1. Brand driven growth
2. Global presence
3. High performing R&D
4. Sector diversification
5. Awards and recognition
1. Strong competition
2. Low penetration in rural markets
3. Lack of growth in meaningful categories
Opportunities
Threats
1. Acquisition of MEAD Johnson
2. High potential of India and China
3. Entering new product segments through existing brands
4. Expanding portfolios across categories and geographies
1. Controversies
2. Slowdown in emerging markets
3. Shift in lifestyle choices
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Strengths

1. Brand driven growth - There is nothing to argue about over Reckitt Benckiser’s record on growth; the firm has been growing revenue, cash flow and earnings. The strength of Reckitt’s business in its ‘power’ brands, names such as Dettol, Harpic, Durex, Strepsils, Gaviscon, Vanish and Calgon. Such consumer favourites not only generate brand loyalty from customers but also have strong repeat-purchase credentials. The company's strategy is to have a highly focused portfolio concentrating on its 19 most profitable brands, which are responsible for close to 70% of net revenues.

2. Global presence – Reckitt Benckiser has operations in 60 countries and its products are sold in 200 countries across six continents. They have 37,000 employees or ‘entrepreneurs’ as they like to call it, across the globe, all inspired by a vision of a world where people are healthier and live better.

3. High performing R&D - RB’s global, well-connected R&D team features a diverse mix of different functions and specialisms. Primarily the R&D of Reckitt Benckiser focuses on five key functions – category R&D, regulatory affairs, evidence-consumer safety and oversight, 3D and packaging and innovation and sustainability. The teams are located across 35 different countries around the world with major facilities in Germany, Italy, India, China, Thailand and the USA.

4. Sector diversification - Reckitt’s consumer products span several market sectors, a situation which provides attractive diversification. Last year, 43% of core net revenue came from hygiene products, 29% from Health, 6% from Home and the rest from other markets.

5. Awards and recognition – RB group has constantly been in media, gaining recognition for its efforts in terms of innovation, marketing and sustainability. In Dow Jones sustainability world index 2015, RB scored 83 out of 100. In addition, for seventh consecutive year RB has been identified as a leader in carbon disclosure project. In innovation, Dettol and Lysol's No-Touch hand wash system took gold in product design at the Design Business Association's Design Effectiveness Awards. In marketing, Durex Fundawear grabbed silver award at the Cannes Lions International Festival of Creativity, while RB received Company of the Year in the British OTC industry.

Weaknesses

1. Strong competition: Despite being present in the market ¬¬for a long, RB products face stiff competition from domestic as well as international players such as HUL, P&G, Johnson and Johnson etc. who not only have bigger books but also have more varieties to offer. Such competition also causes tough retention of consumers and sluggish market expansion.

2. Low penetration of rural markets: Rural markets have always been the greener pastures for any marketer in the view of high growth and untapped potential. The rural consumers are known to have low income, low brand awareness and inadequate information. Despite increased focus on emerging markets, 64% of RB’s home care business is generated from developed mature markets. RB need to come up with new strategies to develop the yet untapped rural markets, especially of emerging economies.

3. Lack of growth in meaningful categories: Premium-focused RB must explore growth potential in categories such as air care and dish washing it is showing the less dynamic performance than their competitors are. Especially as some of the 16 Power markets are mature ones that present the right income conditions for consumers who are more likely to purchase higher-value products that offer a degree of convenience through innovations such as automation. Allergy care is a particularly glaring hole in RB’s global portfolio, but other areas, including VDS and dermatological could benefit from greater investment.

Opportunities

1. Acquisition of MEAD Johnson – RB group announced officially in the month of February 2017, to acquire Mead Johnson in a deal of worth $16.6 billion. This acquisition of the global paediatric leader has opened an entirely new segment of customers for the group and looks very promising in terms of growth.

2. High potential of India and China – RB group has been strangely absent from China which is world’s second largest consumer health market. In India too, their presence has been restricted to a single digit % of market share. Having started late in these geographies can cause difficulties in the growth but there is no deny in the vast potential these two countries offer to the conglomerate. Enablers like “Swachha Bharat Abhiyan” has certainly shaken the people out of their apathy for hygiene and RB group, if planned properly, can actually benefit themselves from this philosophy.

3. Entering new product categories through existing brands - RB group is planning a foray into multiple segments including deodorants by expanding portfolio of its existing brands such as Harpic , Dettol and Dermicool . The company will also soon launch two new mosquito repellent products under its Mortein brand

4. Expanding portfolios across categories and geographies - Despite its status a major global consumer health producer, RB’s consumer health division still has some glaring holes. The company generates only meagre sales in the Asia Pacific region, which accounted for over 30% of global retail value sales in 2014. Though it has taken steps in the last five years to increase its exposure to large, fast growing markets like China and India, it will need to step up investment in both organic and inorganic growth to fully benefit from the region’s expected growth

Threats

1. Controversies - The company earned a bad name for itself in South Korea when it found itself surrounded by the controversy regarding the deadly lung injuries caused by the usage of humidifier sterilizers marketed by the firm. Although the incident occurred in the 2011, the official apology was offered in 2016 which did further damage.

2. Slowdown in emerging markets – Acquisitions have been a key strategy practiced by RB group in the emerging markets to improve their perfomance. While many legacy RB brands, including Nurofen, Disprin and Delsym have managed to hold or grow their global market shares, a number of its relatively large acquired brands have faltered since joining the RB fold. Also, the neglible presence of RB group in India, China needs to be addressed.

3. Shift in lifestyle choices – Emergence of Patanjali Ayurvedic Limited in the last 5 years as one of the strongest and fastest growing brands has changed the entire paradigm of Indian FMCG sector. The rise of PAL is being so well entrenched in consumer psyche that large Indian and Foreign Research houses are considering this pretty much a disruption Factor in the overall sector.

To get the complete detailed SWOT report on Reckitt Benckiser Group please mail us at: support@swotandpestle.com. or contact us here.

Reckitt Benckiser Group SWOT analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.

References

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The PESTLE analysis for Reckitt Benckiser Group is presented below:
Political
Economical
1. Immense opportunities steaming from globalization1. Unstable demand from the developing countries.
Social
Technological
1. Partnership with ‘Save the Children’1. High Innovation and sustainable development
Legal
Environmental
1. Patent rights for the new products1. Reduction in carbon footprint
Get Your Free Copy of the SWOT & PESTLE
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Our insightful and holistic reports have helped corporate,academia and researchers to take their research forward. Like us on Facebook to stay updated with the latest published SWOT & PESTLE Report.

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To get the complete detailed SWOT report on Reckitt Benckiser Group please mail us at: support@swotandpestle.com. or contact us here.

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