Reckitt plans transformation

09 February 2012

LONDON: Reckitt Benckiser, the household goods group, is undertaking a wide-ranging corporate transformation scheme in a bid to target new growth markets.

According to Rakesh Kapoor, Reckitt's chief executive officer, one key shift in strategy will be merging its European and North American business units.

"We find increasingly higher levels of similarity between Europe and North America in terms of consumer behaviour and consumer needs," he told the Financial Times.

The company will also primarily emphasise the health, hygiene and homecare sectors – its "core" categories – which are anticipated to yield 72% of revenues by 2016, compared with 67% at present.

Fast-growth economies are expected to deliver 50% of sales on this date, up from 42% today, and are now being split into two divisions as a means of pursuing a nuanced approach.

These geographies are Latin America, Asia, Australia and New Zealand on the one hand, and Russia, the CIS, the Middle East, Africa and Turkey on the other.

"We should be investing more in these markets as this is where there is the opportunity for growth. We are shaping our business for tomorrow," said Kapoor.

Turning to marketing, Reckitt plans to direct an additional £100m into brand building through cost-cutting efforts implemented elsewhere.

By 2013, the firm hopes to have a new "Brand Equity Index" in place, measuring the payback from its activity across TV, print, digital, social media, medical professional and consumer education programmes.

It reported that this system is set to replace the current "pure media investment" model when it comes to examining the return on its spending in this area.

"RB's relentless focus on building brands will continue. We will be increasing our investments in high rates of innovation and brand equity building," said Kapoor.

A disproportionate amount of expenditure is being allocated the company's 19 "power brands" and 16 "power markets", which are intended to serve as the central drivers of future growth.

Data sourced from Financial Times, Reckitt Benckiser, Reuters; additional content by Warc staff