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P&G cuts won't hit quarterly adspend

News, 22 February 2016

BOCA RATON, FL: FMCG giant Procter & Gamble will slash another $10bn in cost cuts over the next five years, but it plans to hire more outside experts as it shakes up its traditional promote-from-within culture, the company's new CEO has announced.

In his first public appearance since taking over in November last year, David Taylor told analysts that P&G's latest wave of cost-cutting will concentrate on distribution, marketing and other areas.

Taylor was speaking at the Consumer Analyst Group of New York's annual conference in Florida and said P&G will focus on four of its biggest categories of fabric care, baby care, hair care and grooming, Advertising Age reported.

The company will also concentrate on the US and China, which is P&G's second-largest market where it is declining in most of its categories.

Describing P&G's performance in China as "unacceptable", Taylor said e-commerce will need to become a major focus, alongside shifting the product mix to higher-end goods that appeal to middle-class consumers.

When asked whether P&G would continue with its plans to increase its advertising spend by several hundred million dollars until the end of June, he confirmed the company will not cut adspend in its final fiscal quarter.

"The consumer buys our categories 12 months of the year. They don't take a holiday in April, May and June," he said.

While that will reassure the advertising industry, P&G's plans to restructure its structural operations by hiring more outside talent will also be of interest.

By moving away from its promote-from-within culture, P&G will consider hiring outside for brand managers and brand directors – there are now 65 brands in 10 product categories – or possibly even general managers.

"P&G is fortunate to consistently source and develop strong talent," Taylor said. "But there are times when the best talent is not inside the organisation."

Data sourced from Advertising Age; additional content by Warc staff