Tag Archives: P&G

How P&G Plans to Profit in Today’s Economy

12 Feb

Proctor & Gamble is the leading consumer products company in the world. Nonetheless, there are two particular issues with which it must deal: (1) Many of its most popular brands are mature, especially in industrialized countries, with the resultant slowdown in sales growth. (2) Since the onset of the recent Great Recession, even more consumers have become price conscious and turned to less expensive manufacturer and private (store) brands.

As a result, P&G has embarked on a two-pronged product strategy. It has introduced “budget” versions of some brands and it has raised its profit margins on its premium product versions.

According to Serena Na, writing for the Wall Street Journal, this is the approach P&G is undertaking with its Tide detergent:

“To compensate for the introduction of a lower-end version of its big-selling Tide detergent, P&G is raising prices on some fancier Tide varieties by as much as 25%. The goal is to preserve margins while heading off competition from lower-cost rivals. The detergent, in its signature reddish-orange containers, brings in around $2.8 billion in annual sales and holds a commanding 38% share of the North American laundry soap business, according to Nielsen data. But Tide has come under pressure in recent years as more shoppers have reached for bargain brands such as Arm & Hammer, made by Church & Dwight. In response, P&G recently began rolling out a lower-priced liquid, called Tide Simply Clean & Fresh, that is around 35% cheaper than regular Tide detergent, which currently retails for about $12 for a 100-ounce bottle.”

What do YOU think of this approach?

Click the Wall Street Journal chart image to learn more.

 


 

 

P&G Turns to a Former CEO to Right the Ship

4 Jun

The board of directors at Procter & Gamble (P&G), dissatisfied with the performance of the world’s largest consumer products firm, recently decided to replace its CEO. In doing so, the firm brought back former CEO A.G. Lafley. Is this a good move or a desperate one?

This is the view of Rosabeth Moss Kanter (the Ernest L. Arbuckle Professorship at Harvard Business School), as reported by the HBR Blog Network: “P&G’s board has been under a great deal of pressure from an activist investor who has made his views on the pace of the restructuring clear and vocal. Regardless of the merits, that begins to wear everyone down. If the current CEO is under attack, that becomes a distraction for the company and makes it harder to execute or gain credibility with certain stakeholders. Even if the performance improvement plan is on a good path, that noise becomes a distraction (and psychologically, it leads to dreams of escape or wishes for a bold dramatic move). Appointing a new CEO buys everyone time, and thus quiets the noise for a while. But note how P&G did it. Asking A.G. Lafley to return is a sign of how much the company values continuity and company knowledge.”

Click Lafley’s HBR blog photo to read more from Rosabeth Moss Kanter.
 

 

What’s Next for Proctor & Gamble?

28 Feb

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.
 

 

Is the P&G Innovation Well Running Dry?

14 Sep

For many decades, Procter & Gamble has been the leading consumer products company in the world. (Today, it battles Unilever for global supremacy.) Among P&G’s best-known brands are Bounty, Charmin, Cover Girl, Crest, Duracell, Febreze, Gillette, Head & Shoulders, Mr. Clean, Old Spice, Oral B, Pantene, Pepto-Bismal, Swiffer, Tide, and Vicks. The company originated the product manager system.

But, despite its market-leading position in many categories, product innovation is more challenging now. As Lauren Coleman-Lochner and Carol Hymowitz report for Businessweek:  “There’s been a dearth of pioneering brands emerging from the world’s largest consumer-products company. Spending on research and development in fiscal 2012 ended June 30 was $2.03 billion, or 2.4 percent of sales, the same as the prior year and down from 3 percent of sales in 2006. P&G’s most recent homegrown blockbusters — Swiffer cleaning devices, Crest Whitestrips, and Febreze odor fresheners — were all launched at least a decade ago. Says Peter Golder, a professor at the Tuck School of Business at Dartmouth College: ‘P&G is built on creating new categories, and innovation is in its DNA, but they need to rediscover it.’”

Read more by clicking the chart from Businessweek.

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