Saturday, May 22, 2010

Purpose-Inspired Growth Strategy: “Where to Play” Choices

Our single, unifying growth strategy is tightly linked to our Purpose: “We will grow by touching and improving the lives of more consumers in more parts of the world…more completely.” Specifically, we will:
  • Grow our leading global brands and core categories—with an unrelenting focus on innovation
  • Build business with underserved and unserved consumers
  • Continue to grow and develop faster-growing, structurally attractive businesses with global leadership potential.
We will create abundant growth opportunities in each of these areas.

1) Growing Our Core

Our billion-dollar brands and aspiring billion-dollar brands represent 85% of P&G’s sales and more than 90% of profit.

We will continue to focus sharply on our core businesses and brands because this is the primary way we touch and improve lives—and there is plenty of room to keep growing our core brands and categories.
  • Global Household Care is a $200 billion market—and P&G’s global share is about 20%.
  • Consumer Health Care is a $240 billion market; P&G is a market leader with just a 5% share.
  • Beauty & Grooming is a $300 billion market and P&G is leading, but with only a 13% share.
We will focus on growing market share profitably across all these businesses. As economies recover, we will be positioned to extend our leading market share positions.

2) Winning with Underserved and Unserved Consumers

The second growth strategy is new—build our business with underserved and unserved consumers. We’ll do this in three ways.

We are increasing our presence in developing markets.
The opportunities here are boundless. Eighty-six percent of the world’s population is in developing markets and we have strong share positions in the most important of these markets. In Blades and Razors, we’re #1 in the Central & Eastern Europe, Middle East and Africa region, Latin America, Greater China and developing Asia. In Shampoo and Diapers, we’re #1 or #2. And in Laundry, Feminine Care and Oral Care, we are ranked #1, #2 or #3 in market share.

We will continue to increase the percentage of total company sales from these markets by building consumers’ awareness of the performance, quality and value of our brands and making our products more accessible and affordable for consumers.

We are extending our distribution systems to reach more consumers through underserved retail channels.
We’re pursuing opportunities in four priority areas:

  • Drug, Pharmacy and Perfumery: This is a significant opportunity across many parts of our business, and a strategic focus for Beauty & Grooming.
  • High Frequency Stores: Already, high frequency stores would be our single largest customer if they were a single retailer. They are growing at rates equal to the modern retail trade and are the main source of our products for the majority of developing-market consumers.
  • Export Operations: This is another underdeveloped channel with meaningful potential. It’s the primary way P&G reaches consumers in newly emerging markets where P&G does not yet have on-the-ground operations. This channel sets the stage for more aggressive portfolio expansion as new economies develop.
  • E-commerce: Our “Consumer is boss” focus means we must be available to consumers when and where they seek to research or purchase P&G products. Increasingly, that’s online. We do less than a billion dollars in online sales today, and we believe we can increase that substantially over the next few years. We see e-commerce as part of a broader effort to establish online connections with consumers that build our brands and our business with retail partners.
We are expanding brand and product portfolios.
A third action we are taking to serve more consumers is to create broader and deeper product portfolios.

To do this, we will expand our categories vertically into the premium end of our markets as we have done successfully with Tide Total Care, Clairol Perfect 10, Gillette Fusion, Venus Embrace, Olay Pro-X, Dawn Hand Renewal, Secret Clinical Strength and Cascade Action Pacs. By bringing better-performing, specially targeted products to market, we will increase consumer value and drive category sales for retailers.

We will simultaneously expand our portfolio into the value-priced segment. The successful launches of Mach3 disposable razors in the U.S., Pampers Simply Dry diapers in Germany and Naturella feminine care pads into the Arabian Peninsula are three recent examples. We will also expand our core brands horizontally into adjacent product segments. Febreze Candles, Bounce Dryer Bar and Tide Stain Release are recent examples of how we have done this.

As we stretch our portfolio vertically and horizontally, we will touch more consumers’ lives and offer more opportunities to improve each consumer’s life.

3) Develop Faster-Growing, Structurally Attractive Businesses with Global Leadership Potential

Our third growth strategy for the decade ahead is to continue to grow and develop faster-growing, structurally attractive businesses. We’re concentrating on opportunity areas in the beauty and health market segments and several household care categories. With this strategy, we will continue to shift P&G’s business portfolio toward these advantaged categories.
P&G Growth Strategy: Touching and improving more consumers' lives in more parts of the world more completely. Where to play: 1. Grow leading, global brands and core categories. 2. Build business with underserved and unserved consumers. 3. Continue to grow and develop faster-growing, structurally attractive businesses with global leadership potential. How to win: 1. Drive Core P&G Strengths in consumer understanding, brand building, innovation and go to market. 2. Simplify, Scale and Execute for competitive advantage. 3. Lead change to win with consumers and customers.
Source: P&G 2009 Annual Report