P&G CEO: We will prioritise innovation and brand building before promotion ‘any day’
P&G is aiming to build its brands and the categories in which they operate through meaningful innovation, CEO Jon Moeller says.
Procter & Gamble CEO Jon Moeller says the company will always prioritise investment in innovation and brand building, not promotional activity.
“We would rather invest $1 in innovation, or $1 in brand building any day of the week before we invest in promotion,” Moeller said.
He was speaking at Consumer Analyst Group of New York (CAGNY) conference yesterday (22 February), an event attended by financial analysts covering the consumer goods industry.
P&G, which owns brands including Head & Shoulders, Pampers and Ariel, has increased its promotional activity “a little bit” in recent times in order to be “competitive”, but its levels of promotion are still “meaningfully” below pre-Covid levels, Moeller said.
The company’s reason for preferring to invest in innovation and brand-building is that these deliver “proprietary advantage”, where promotion does not, he stated.
How can brands drive growth in 2024?
Promotional strategy has to be decided between FMCG companies and their retail partners; however, Moeller indicated that this is not dominating P&G’s conversations with retailers.
“By far the most prominent part of the discussion is, what can we do, working together, to increase market size?” he claimed.
Increasing the size of the markets P&G’s brands operate in is beneficial to both itself and the retailers it works with.
P&G is working to increase market size through innovation, Moeller said. Innovation can help introduce new use occasions or even recruit new consumers to a category, thus building out the market.
“Superior innovations that are driven by deep consumer insights, communicated to consumers with more efficient and effective marketing programmes, executed in-store and online in conjunction with retailer strategies grow categories and brands,” he asserted.
Make this the year you innovate
The company is innovating in its focused “daily use” categories, where brand superiority is important, he added.
Technological advances are enabling P&G’s teams to innovate more efficiently. Moeller said the use of AI is freeing up teams to focus on “big ideas”.
The company is focusing its innovation efforts on those big ideas that will deliver meaningful results and grow markets, chief financial officer Andre Schulten added.
He also indicated that the company would pair price increases with innovation where “warranted”.
