P&G set for expansion into new product categories
Procter & Gamble is set to enter into new product categories as it places greater focus on innovative products to help turnaround declining growth rates.
Speaking at the Deutsche Bank global consumer conference in Paris this week, chief financial officer Jon Moeller revealed that the company – whose brands include Gillette, Pampers and Ariel – is implementing a strategy “for improving in this environment” and building on innovation.
While Moeller said it is “too early to name them”, P&G will be entering into a new category within the next six months to introduce a “new and far superior method” of addressing “chronic consumer issues” and to improve existing offerings.
The company currently focusses on beauty and grooming and household care.
Speaking about the issue of pricing, Moeller revealed that while innovations, such as the soon-to-be launched Oral B Smart Series 7000 toothbrush, are at the premium end, customers are willing to pay more for the products because they are “value creative”.
“Innovation, productivity and focus are critical enablers of value creation in the current environment,” he said.
“Innovation creates value for consumers and for our retail partners, it creates cumulative advantage, it combats commoditisation, and it generates higher sales and profit per unit and creates value for share owners.”
Moeller revealed that P&G will continue to drive its marketing effectiveness and productivity through “an optimised media mix” leveraging more digital, mobile search and social presence.
He said that the company expects its marketing spend to come in below prior year levels due to “productivity improvements in non-working marketing and advertising costs”.
On e-commerce, Moeller said it now represents about $2.5bn dollars of its $85bn in sales and is growing at a rate of 30-40 per cent. He added that the company is “channel agnostic” and wants to be relevant wherever its consumers decide to shop and that it is aiming to increase its e-commerce market share to match that of its physical stores.
“I don’t think we are headed for an ‘or’ world anytime soon, I think we will remain in an ‘and’ world.
“Our objective is to have shares that are equal to or ahead of current brick and mortar retailers and operate that business that is just as profitable.”
January to March organic sales at P&G grew by three per cent.