P&G Plans For Future: Multicultural Outreach, Evolve Marketing, Products

Jon Moeller

Procter & Gamble became the second leading marketer to emphasize that fashioning its business to adapt to a changing society will be critical going forward.

"Very much on our radar screen is what will happen between now and 2050 in terms of the demographics of the U.S. population, where minorities move to a majority," CFO Jon Moeller said. "We need to ensure we have products and messages and connections with Hispanic consumers, with African-American consumers."

Coca-Cola said Wednesday that reaching "multicultural" Americans will be a "core focus" between now and 2020.

P&G's Moeller said the company is also mindful of the aging U.S. population and needs to evolve its go-to-market strategy and product portfolio accordingly, although he declined to cite further details.

Speaking at a Morgan Stanley event, Moeller also reiterated the company's commitment to increase marketing outlays in the current fiscal year, saying that "media impressions" will be up 10% -- largely because it has a run of new products and extensions to plug. Categories there include laundry, baby and feminine care.



Moeller said the company will pursue successful marketing as chief in growing sales versus cutting prices -- which it has done recently -- or special promotions. He favors "performance-based value messaging across our entire brand portfolio" and support of "our strong innovation programs."

TNS Media Research figures show P&G cut ad spending by 20% in the U.S. in the January to June period this year (to $1.2 billion). Verizon passed it as the country's largest advertiser during that period.

Moeller said P&G is not actively seeking acquisitions for growth, and its unwillingness to engage in hostile bidding hinders it. An acquisition target, he said, must fit five criteria: strength in consumer understanding, branding, innovation, go-to-market approach and scale. P&G recently divested its Folgers and pharmaceutical businesses because they failed to live up to those core capabilities the company touts.

On Folgers, he said: "It took us a long time, but we finally came to the realization that a coffee bean is a coffee bean is a coffee bean. Our expertise and formulated chemistry was not going to allow us to differentially innovate in that business."

Also, retail channels were shifting toward Starbucks and away from the mass retailers, where P&G has a powerful position.

As for the pharma business, which included the heavily promoted Actonel, Moeller said the restrictions on direct-to-consumer, prescription-drug advertising did not allow its marketing prowess to shine. "With all of the disclaimers that are required [in that category], it's very difficult to build meaningful connections with consumers," he said. On the current landscape of consumer spending, Moeller said pocket books continue to have a tight lid in the U.S.

"We see relative restraint in spending in some of the more developed parts of the world -- primarily driven by unemployment. Either the unemployed or underemployed -- that figure continues to increase both in the U.S. and in Europe."

He did add that there has been some uptick with "markets ... growing modestly, but nowhere near the level they have historically."

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