Procter & Gamble, the world’s largest consumer products company, has been facing some tough sledding for quite a while now (see our September post). Many critics — and some disgruntled stockholders — remain unimpressed with the firm’s declining level of innovation, once the strongest competitive advantage of P&G.
Let’s look at a recent example. As John Bussey reports for the Wall Street Journal: “Consider Procter & Gamble’s new over-the-counter sleep aid ZzzQuil, introduced with fanfare in June. In recent investor and analyst conference calls — which have been hot with criticism of P&G’s slow sales and management — the company has touted the elixir as an example of its innovative spirit. CEO Bob McDonald put the product in worthy company when he said P&G valued creating new brands and categories — ‘items like Tide PODS, Swiffer, Crest White Strips, or ZzzQuil.’ But ZzzQuil is hardly a breakthrough, or even a small discovery. P&G’s NyQuil cold and flu medicine contains three active ingredients, one of which is an antihistamine that makes you drowsy. Consumers have misused NyQuil for years as a sleep aid even when they didn’t have a cold. So P&G took a familiar antihistamine, diphenhydramine, left out the other ingredients for a cold, and gave it its own package and name: ZzzQuil. No unification theory of the universe, this. What’s more, P&G was late: Competitors, such as Johnson & Johnson’s JNJ 0.00% Tylenol PM Simply Sleep, got to market long ago with similar products. Benadryl is diphenhydramine. ‘It’s a sign of what passes for innovation at P&G,” says an unhappy portfolio manager. “It’s not enough. It’s incremental, derivative.'”
Click the photo for a WSJ video on ZzzQuil.
Photo source: Procter & Gamble
2 Replies to “P&G: No Longer the King of Innovation”
As we all know, company competition in the world is more fierce than before, so in order to attract more consumers, companies have to create products persistant.