Shoppers could return to old ways, says P&G ceo

21 December 2009

CINCINNATI: Consumer behaviour has been transformed by the recession, but this shift may not be a permanent one, according to Bob McDonald, ceo of Procter & Gamble.

The FMCG giant has recently launched a new US ad campaign for Charmin toilet paper, with the tagline "soften your bottom line".

Spots suggest that while the product may be more expensive than some alternatives, it lasts four times longer than "leading value brands."

This approach forms part of the firm's heightened emphasis on "performance-based value messaging", and was adopted as large numbers of people are looking to trade down to cheaper goods.

McDonald said the Cincinnati-based corporation has considerable experience in responding to periods of financial uncertainty, and the new priorities which they engender among its customers.

"During our 172 years of operation, more than a quarter of them we've operated in a recession. So we've been there before," he said. "During every recession we've seen a change of behaviour."

Despite this, P&G's chief executive also predicted that the end of the downturn could yield a return to more favourable trading conditions, rather than a continuation of current trends.

"Is there going to be a new 'reset'? I don't know. I don't think it's going to be to the extent that people think it is," he argued.

"We've been there before ... We see behaviour change during the recession; we see it come back with resilience at the end of the recession."

Innovation will play a key role in P&G's future plans, with the aim of meeting the widely varying needs of shoppers, as shown by the introduction of both premium and value variants of Tide detergent.

"We don't think there is any reason any consumer should have to use a private label. We should be able to innovate at multiple price points to delight all consumers," said McDonald.

It is estimated that, in its 17 biggest national markets, around half of the categories in which P&G operates house "value tier" offerings at present, and this total is set to rise to 75% by 2011.

"There is renewed commitment that this is very strategic, and we need to get it done more quickly than ever before," McDonald said.

The organisation is also "committed to redouble efforts to serve Hispanics and African-American minority consumers" in its home country, he continued.

"Some time between 2035 and 2045 the minority will become the majority in the US, and looking at the US as a homogenous country is a big mistake."

More broadly, certain members of its target audience in various different nations are exhibiting similar preferences, meaning that, in many instances, "country boundaries are irrelevant."

One example of this development is among the ethnic Chinese communities living in Indonesia, Malaysia, Singapore and the Philippines.

"Why can't we market our products to these civilizations? Well, now, with global retailers and with digital technology, we can do that," McDonald said.

Similarly, the web is another forum which is of considerable interest to Procter, and it is seeking to drive up the sales it generates via this medium.

"We've got to learn about that shopping experience the way we understand the shopping experience in bricks-and-mortar stores," McDonald stated.

Data sourced from Financial Times; additional content by Warc staff