P&G ‘doubles down’ on marketing as demand soars
Procter & Gamble has experienced some of its strongest growth in a decade, a sign that it needs to “double down” on promoting its brands so that it “moves forward not backward”.
Procter & Gamble believes the Covid-19 pandemic is a time for the FMCG company to “remind” consumers of its brands and their benefits rather than cutting back on marketing spend.
Speaking on a call with analysts following its third financial quarter results, CFO Jon Moeller said that while companies in some sectors are talking about cutting media support, P&G is “doubling down”. That comes as media consumption ticks up and demand for many of its products soars.
P&G has increased marketing spend in categories including beauty, healthcare and baby. Overall, its marketing investment was up 190 basis points in the quarter.
“There is a big upside here in terms of reminding consumers of the benefits they have experienced on our brands and how they have served them and their families’ needs. That is why this is not the time to come off air,” he said.
“[In our sector], with more media consumption now than ever, this all ties back to doubling down, and moving forward not backward. This is not a time to retrench – and that is a service to our consumers, our retail partners and to broader society.”
P&G has seen demand in some categories rise by 20% as consumers stock up on cough medicine, cleaning products and cupboard staples. Even shaving has seen a boost in some markets following healthcare advice that men need to shave in order for facial masks to work at their best.
That increase in demand has led P&G, which owns brands including Gillette, Ariel and Vicks, to “concentrate” its product line-ups in the most in-demand areas in order to meet demand.
“In some categories we have had a fairly significant concentration of SKUs,” explained Moeller. “[Our retail partners] and we are very focused on staying in touch with consumers, consumption and what they demand. That will be the driver of our SKU line-ups.”
P&G also does not expect that every product it has removed from shelves amid the current situation will go back. The company sees this as a “reset opportunity” to ensure it is providing the brands and products consumers really want.
“The demand impact on our total portfolio is clearly a positive longer term. Not minimising human suffering that led to this situation, but we are seeing an increase in consumption in the majority of product categories,” Moeller added.
“We really do expect to come out of this stronger than we went into it. There is a bright future ahead and we need to be very deliberately keeping aware of opportunities and putting steps in place to seize those opportunities to fully serve consumers.”
Sales at P&G’s range of well-known brands – such as Bounty paper towels, Tampax tampons, Charmin toilet paper and Pampers diapers – rose by between 6% and 8%. Moeller, noted that consumer use of P&G products has increased with more people doing more loads of laundry and cleaning more at home.
In the US, organic sales surged by 10% while Western Europe saw a rise of 6%. However, sales of previously strong sectors beauty and grooming products have fallen as people stay indoors.
Moeller added that the company had to remain agile to adapt to Covid-19, telling investors that “we are pushing production to its limits” and “discovering daily low cost ways” to carry out production.
Speaking about the future, Moeller said P&G wasn’t “recession-proof,” but had “made major steps since the last recession, which have significantly improved our hand”.