Warc Blog

P&G focuses on value creation

6 September 2013
BOSTON: Value creation is to be the primary measure of success at Procter & Gamble, the FMCG giant, its chief executive has said.

Speaking at the Barclays Back to School Conference in Boston, AG Lafley outlined four areas in which he was making changes. As well as value creation, he cited investment in innovation and go-to-market capabilities, the acceleration of productivity savings and the improvement of operating discipline. 

"When we introduce new products with superior product benefits and communicate those benefits, we create a value accretive proposition for a group of consumers," he declared, offering Crest 3D White as an example.

This toothpaste, he said, offered over 20% premium to regular Crest and had grown market share in the US for 40 consecutive months since launch.

Another example was Tide PODS, a laundry detergent at a similar premium to basic liquid Tide. He said this product had now generated $600m in sales and gained 6% of the total laundry category in the US and over 70% of the single-dose pack segment.

"These results were delivered with essentially no merchandising support in a category that moves 40% to 50% of daily sales and promotion with trials," he declared, adding that the product had been tried by a wide range of consumers and seen high conversion and repurchase rates.

"When we understand consumers and their needs and provide them with relevant performance benefits, we can generate profitable growth at the high-mid and even the lower end of the pricing ladder," said Lafley.

Not all analysts were convinced, however, that P&G was on the right track, as, in the words of the Wall Street Journal, it tested "how far the concept of luxury can be pushed into the world of the mundane".

Similarly, Burt Flickinger III, a retail consultant and managing director of Strategic Resource Group, told the paper: "People may associate premium with beauty products and high performance, but if it's just about doing the dishes, there are a lot of products with good cleaning efficacy at a competitive range of prices."

Data sourced from Seeking Alpha, Wall Street Journal; additional content by Warc staff

 
Envelope
EMAIL UPDATES

Sign up to Warc News – free daily bulletins on brand and market strategy, digital media and innovation



Trial


 

News content feedPrint