As we have reported before (see, for example, 1 and 2), P&G — the pioneer of product management and the world’s leading consumer products company — is having a tough go of it now. So, where is it headed now?
Here’s the February 2013 assessment of Fortune’s Jennifer Reingold and Doris Burke:
“The past several years have been a struggle, as the company’s vaunted innovation machine clanged to a halt, recession-battered consumers abandoned P&G’s premium-priced products for cheaper alternatives, and efforts to build market share in the developing world were stymied by newly nimble rivals such as Unilever. By its low point in June 2012, P&G was losing share in two-thirds of its markets. A sense of vulnerability and insecurity crept into the ranks of longtime employees and alumni, who wondered whether the company had lost its edge. Many questioned CEO Bob McDonald’s fitness for the job.
“Now there are signs that the company is emerging from its funk with a shift driven by a $10 billion cost-cutting plan and a promise to create, in McDonald’s words, a ‘culture of productivity.’ In June 2012, he unveiled what he calls 40/20/10, which is narrowing P&G’s focus to its 40 biggest category/country combinations (such as laundry in China), its 20 largest innovations, and its 10 most lucrative developing markets. The company vows that blockbuster new products are imminent.”
Click the chart to read more of the Fortune and P&G’s efforts to move forward.
The global market is a constantly changing environment that needs to be regularly adapted to and Procter & gamble is not immune to this. Every business goes through periods of huge success and periods of struggle but it is how the business adapts to these changes and makes ready for the future that is important. I am confident that Procter & Gamble will return from this decline with a new market plan.
Procter and Gamble is a long time successful company in many different product markets, mainly in the baby and family market share. Just because this company has been dominant in these markets for so many years doesn’t mean that the economy is not subject to change and no competitors will arise. P&G will definitely get back on their feet in the years to come with their new “culture of productivity” market plan.
It’s not really shocking to hear that a company like P&G has struggled recently, even a successful company like that is not exempt from such a tough economic time. However, it also doesn’t surprise me to hear that they are beginning to emerge from their struggles, and them being hopeful for things to come. If they can make a successful turnaround it’s proof of just how strong a company P&G is.
P&G has been an enormously successful company. It just goes to show how the economy can negatively impact such a strong solid company. The fact that Unilever has lower price products that people can turn to in this recession is proof that even a branded product is not protected in bad times. Lafley, the former CEO did a lot of good things such as increasing product development thru outside partners, but having business units tied to profitability of products was what caused some of the downturn. But most notable in the article is the drop in R&D from a high of +4% down to 2.4% in 2012 is what I see is their major issue. As Robert Cooper pointed out in our reading, R&D is key to innovation. Hopefully, putting some of the $10B in cost cutting into R&D will turn P&G back around.
🙂
It seems to me like Procter and gamble is facing a strategic drift. Having to implement cuts to its budget and alter its strategy, Procter and Gamble is realizing that it is not immune to the economic melt down and that as a company its important to always stay ahead and adjust to new market situations. Innovation and lower price offerings on products is what P&G should aim for as consumers try to make ends meet.