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P&G ups adspend, targets market entry

News, 04 August 2016

CINCINNATI: Procter & Gamble plans on increasing its adspend in the coming year and on focusing more of its attention on market entry.

"We're expecting increases in advertising spend this year versus last," said Jon R. Moeller, chief financial officer at the FMCG giant, during a quarterly earnings call. "Think about it in the probably mid-single-digit range."

He also revealed that during the course of the 2016 fiscal year, the company's efforts to reduce non-media marketing costs had delivered an additional $250m of agency-related savings, which had been reinvested in advertising and sampling of consumer preferred products.

"We want to increase sampling of consumer preferred products in trial generation," said Moeller. "We want to be more relevant in store and online."

David S. Taylor, chairman, president & chief executive officer, added that the company was making "a very clear choice in investing in brand building" and he highlighted a "bias toward point-of-market entry" and attracting new consumers.

He attributed the company's lower market shares with entry-point consumers in many categories to reduced spending in this area in recent years.

"The best, most effective way is to bring consumers into your category is when they first have the need for the category," he pointed out. "So we have prioritised point of market entry and point of market change."

As part of that approach, P&G will be investing more in go-to-market capability, including sales coverage, "to make sure that we can reach and win in fast-moving channels, be that e-commerce, baby stores, cosmetic stores, or wherever the consumer and shopper want to shop".

There was also emphasis on getting back to basics and "making consumers aware of the product and communicating the benefits".

"We've adjusted our communication both to TV, digital, and any way that's appropriate to reach target consumers," said Taylor. "And I believe that's going to make a big difference."

Data sourced from Seeking Alpha; additional content by Warc staff