P&G: No Longer the King of Innovation

14 Oct

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 Responses to “P&G: No Longer the King of Innovation”

  1. Cheri October 17, 2012 at 1:52 am #

    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.


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