P&G’s new ‘Irresistible Superiority’ approach baffles
Procter & Gamble (P&G) has talked up its intention to hone its products – and marketing – around the idea of ‘Irresistible Superiority’. But on an earnings call yesterday (27 April) the new approach seemed to throw up more questions than answers.
P&G’s notion of ‘Irresistible Superiority’ comes down to setting a new standard of quality for its products and packaging coupled with “superior execution” of its advertising and in-store messaging. The hope is that this strategy will help it overcome difficult market conditions, such as “geopolitical disruptions” of Brexit, over the coming years.
Despite finance chief Jon Moeller's repeated clarifications, the approach was too easily interpreted as a push to become more premium, a point that was confused further when he said that “in some cases” it will mean price increases in some product categories.
What does it mean?
In practice, Moeller explained that the ‘Irresistibly Superior’ plan will mean each of P&G’s brands rely less on selling through promotions and instead will invest more in the product itself, packaging, advertising and how it is presented in-store.
“When a consumer has an irresistibly superior experience with our products, it raises their expectations for performance in the category and makes it hard to go back to what they were using before,” he explained.
Consequently, P&G will move from measuring success based on a single metric - weighted purchase intent - and instead use “a body of evidence” as it puts more emphasis on things like deprivation testing, consumer reviews, and pulls in data from considerably more sources gathered over a longer period.
For a brand to “pass” it must achieve a strong result on “quality, packaging and execution” – something Moeller dubbed a “superior value equation”. Currently, P&G brands earn a "passing grade" versus this new benchmark about 30% of the time.
More emotive advertising
The focus on improving execution will result in changes to its broader advertising strategy. Moeller said he wants all P&G brands to be producing ads “that make you think, talk, laugh, cry, smile, act, and, of course, buy".
“We're raising the bar in advertising quality with a focus on superior brand performance claims that communicate the brand's benefit superiority to create awareness and trial," he said.
While campaigns for brands like Always with 'Like A Girl' have been the exception, he wants this “culture defining” creative to become the norm. To that end, improvements to “the quality of consumer insights, agency creative talent and production” are to come and P&G will be applying the same "body-of-evidence approach" to measurement to judging the quality of its advertising.
To be assessed as “proven effective”, a campaign must drive awareness, household penetration, and share growth “for at least one full year” and be determined “by a panel of objective experts to be effective".
Meanwhile, echoing comments made by chief marketing offering Marc Pritchard earlier this year, Moeller said there will now be a ‘Superior’ approach to how it buys media.
“We're working to lead the effort on media transparency, eliminating costs in the media supply chain created by poor standards adoption, too many players grading their own homework, too many hidden touches, too many holes, where criminals can rip us off, and unsafe places for our brands to have ads,” he added.
“We're letting our spending talk, buying media from those that comply with the new standards we're setting, so that we know our ads are experienced by consumers in the most productive and efficient way.”
Yet its investment into marketing will be cut. As part of a promise to make $10bn (£7.8bn) in savings this year, ad spend will be slashed by $2bn (£1.6bn) from “eliminating media supply waste, reduced agency fees and cutting advertising costs”.
However, this new approach was interpreted as a “premiumisation strategy” by many analysts and raised fresh questions of how it was going to gain share in an increasingly commoditised market.
“I'm very concerned here that there's a misperception that a bar of irresistible superiority in products and packaging denotes higher prices or that we could get driven by a slogan and not by the consumer because that's not what we're all about here,” Moeller said.
“We want to be irresistibly superior at all relevant price segments of the market, not just in the premium price segment.”
While the chief executive repeatedly claimed that ‘Irresistibly Superior’ will not necessarily mean ‘more expensive,’ he then admitted that it “may in some cases.”
P&G will have work to do if it’s to convince retail partners - through which it still makes 95% of sales – of its plans. The likes of Tesco have been slashing big brand names from shelves as consumers increasingly turn to the cheaper, own-brand, offerings.
How it pushes this will also vary market to market. China, Moeller claimed, is turning to more premium goods and “our biggest problem in China is that we're not premium enough”. Meanwhile, in its biggest market, the US, he revealed that its fastest-growing offerings are premium ranges.
“So, this notion that the categories have become commoditised and that there's only one shopper and all she cares about is price, doesn't care about product benefit. It's just not true as we look at our business, both on a US basis and on a global basis.”
Overall, total sales for the third quarter were $15.6bn (£12.1bn), a fall of 1% compared to the previous year.