Procter & Gamble Bet Big on Luxury Toilet Paper, Paper Towels

The retailer is following the three-tiered business model to increase profit

   

Procter & Gamble (PG) is looking to increase revenue off of toilet paper sales by adding a new, high-end product as it continues to expand its three-tiered business model.

Business Week reports that P&G is already selling cheap and mid-tier toilet papers but it is planning on adding an upscale brand to its repertoire. The company’s decision comes after expanding its paper towel and detergent offerings into two and three tiers of the products respectively.

P&G’s strategy follows a basic business model called price segmentation which releases products based on how much different customers are willing to pay. The data shows that when this model is done well, customers are willing to pay more money for products whenever a new, more expensive product comes out.

And it appears as if the three-tier system is working out for P&G as the retailer’s profit increased 7.6% over the last quarter.


Article printed from InvestorPlace Media, http://investorplace.com/2013/10/procter-gamble-bet-big-luxury-toilet-paper-paper-towels/.

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