P&G outlines growth drivers

09 August 2011

CINCINNATI: Procter & Gamble, the consumer goods giant, is emphasising innovation, integration and simplifying its corporate structure to drive future growth.

Speaking on a conference call, Bob McDonald, P&G's CEO, reported it spent $2bn on R&D - one of the firm's three "how to win" strategic priorities - in the last 12 months, 60% more than its nearest rival.

Among the goals behind Procter's R&D activity is increasing its average number of categories per country from 19 to 24, as well as reaching 5bn people rather than today's 4.4bn, by 2015.

"We have a stated strategy in our company to have a value tier portfolio," McDonald said. "So no matter the price point the consumer wants to spend we have something there."

The second core aspect of Procter & Gamble's model is pursuing "integration" in fields like manufacturing, such as by building factories capable of delivering a wider variety of goods on a single site.

Such an idea also involves creating innovation plans covering various sectors and nations, and P&G has already pursued this tactic for its top 11 emerging markets, doubling growth rates as a result.

This notion similarly applies to advertising, with P&G's sponsorship of the 2012 Olympic Games broadening the "Thanks, Mom" campaign first run in the 2010 Winter Olympics to the global level.

Another area of focus is "simplification", including "flattening" the P&G hierarchy, streamlining its brand portfolio and employing digital tools in disciplines from product design to logistics management.

"To enable simplification, we are making P&G the most technology-enabled company in the world," said McDonald.

"This will enable us to collaborate more effectively and efficiently inside the company and outside the company, with customers, suppliers, innovation partners and most importantly, with our consumers."

Savings generated by these moves also release funds for advertising, where P&G's expenditure rose by $700m in the last quarter, and hit $9.3bn in the last year, up $1.8bn from two years earlier.

"We're improving the creativity and effectiveness of our advertising, which supports our innovation," said McDonald, citing P&G's position as the leading brand owner in the Effies Effectiveness Index in evidence of this statement.

Data sourced from Seeking Alpha; additional content by Warc staff