Procter & Gamble, the consumer-packaged-goods giant, is confident that its focus on daily-use offerings, product superiority and at various pricepoints leave it in a stronger position than before the last recession.
Jon Moeller, P&G’s COO/CFO, discussed the threat of a coronavirus-related recession on a conference call with investors, and suggested the company is in a stronger strategic position than before the financial crisis of 2008/09.
“We’re assuming it’s already here and will be here for some period of time. While we are not immune, our current strategy puts us on better footing than prior downturns to weather economic headwinds,” he said. (For more, read WARC’s in-depth report: Procter & Gamble’s strategy for COVID-19 – and playbook for the recession.)
As he broke out various features of P&G’s “recessionary playbook,” the CFO/COO outlined various considerations that are informing its thinking.
P&G’s strategy is honed around meeting the daily needs of consumers – from doing laundry and washing dishes to providing diapers for babies – not battling for discretionary spend.
“Our portfolio is now focused on daily-use items, where performance drives brand choice. We have much less exposure to discretionary items than we had during the last downturn,” Moeller said.
Even as the company wants to compete at every viable pricepoint, the “overall value proposition really matters and at a time when there is heightened concern about the need for a product to work and be efficacious as I take care of my family and my home,” Moeller said.
In fact, excellence – be it in making products or in its marketing – was a priority for the CPG business long before the coronavirus hit. “We’ve increased the superiority of our offerings, simultaneously increasing their value,” said Moeller.
To that end, in the current climate, “We’re emphasising performance-based value messaging … So, the changes we’ve made there, I think, will put us in much better stead.”
Market share vs. category growth
P&G’s business is growing, but in categories where it’s already dominant — think family care, with its Charmin and Bounty brands – it still might lose market share.
“We can see a scenario where our business continues to grow at strong, double-digit rates, and we lose share. That’s because the market is growing at an even higher rate than that,” he said.
Over the next three to six months, P&G’s “results are going to be very, very good, but we will probably in that context lose some share,” Moeller predicted.
“There will be more volatility in the share numbers just because of all the market dynamics that we’re trying to manage.”
Moeller allowed it would be “silly to assume” that some consumers will not trade down as the financial pinch hits – meaning that P&G may face pricing and share pressure over time.
“There is certainly a subset of consumers for whom price becomes a significantly greater portion of their personal value equation. That will, in some cases, result in trading down to private label,” Moeller said.
“Our job becomes having an offering and alternative for them that allows them to achieve the same objective within our branded portfolio.”
Equally, he continued, “There are other consumers who move the other way – for whom performance, efficacy, dependability, [who think], ‘I can’t afford to be wrong,’ [or], ‘I can’t buy two, so I need to buy the best’ – which results in a migration to branded offerings and that’s different by category and by market.”
Sourced from WARC