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P&G says growing
African-American, Hispanic consumer markets are 'on our radar' By
Mediapost.com (November 20, 2009) 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 (pictured) 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
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
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."