Tag Archives: Procter & Gamble

A New Focus for P&G

19 Aug

Procter & Gamble, the long-time world leader in consumer products and the leading global advertiser, is ready to embark on another new strategy. It has tried many tactics in recent years to try to stimulate company growth and profits.

P&G’s latest approach may seem counter-intuitive — to grow by shrinking its brand portfolio. However, this idea does seem on target and reflects the essence of the Pareto 80/20 Principle that relatively few products account for a disproportionate amount of sales and profits.

As reported by Rachel Abrams for the New York Times:

“After years of expansion into areas like pet food and beauty products, Procter & Gamble announced that it would cut as many as 100 brands from its arsenal to focus on others, like Tide, that made the company a powerhouse over the decades. The move is part of a strategy to improve the company’s financial performance by doubling down on about 80 brands that generate 95 percent of the profits and 90 percent of sales, according to A. G. Lafley, the firm’s chief executive. The company, and the industry at large, have faced pressure as consumers continue to spend less than they did before the financial crisis.”

[According to Lafley,] “‘This new streamlined P&G should continue to grow faster and more sustainably, and reliably create more value. Importantly, this will be a much simpler, much less complex company of leading brands that’s easier to manage and operate.'”

Click the image to read more of Abrams’ story.

 

Photo by Mario Anzuoni/Reuters

 

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.
 

 

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

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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