NEWS6 August 2009

New P&G chief talks up value of research in innovation

Financials North America

US— Procter & Gamble’s $350m annual outlay on consumer research seems secure under new chief executive Bob McDonald, who yesterday talked up its role in helping the consumer goods firm innovate and grow revenues.

On a conference call with analysts to discuss the company’s fiscal year-end results, McDonald said P&G would continue to leverage its “core strengths” in consumer understanding, innovation and brand building in pursuit of its growth strategies.

The task, McDonald said, is threefold. P&G will continue to grow its core brands and categories while building business with under-served and unserved consumers, as well as growing, developing, and acquiring faster-growth, higher-margin businesses.

Consumer research has an integral part to play in achieving these goals, according to McDonald. “P&G is the industry leader in consumer research and understanding,” he said. “We conduct over 15,000 research studies per year. We spend over $350m a year on consumer research. This results in insight-driven knowledge that tells us where to innovate.”

McDonald said that “virtually all” the organic sales growth P&G has achieved in the past nine years has come from innovation, which was a key focus of previous CEO – now chairman – AG Lafley.

Net sales for fiscal 2009 were down 3% to $79bn – driven, P&G said, by unfavourable foreign exchange impacts of 4%. Organic sales were up 2%.

“In fiscal 2010, we will accelerate investments in innovation, portfolio expansion and consumer value to grow our core business and to serve more consumers in both developed and developing markets,” said McDonald.



15 years ago

I am surprised at the consumer research amount of $350m for a size of organisation of $79bn. This does seem low and as P&G pride themselves on their work on gleaning fresh consumer insights of unmet and under-served needs and seemingly totally reliant on "virtually all" organic sales growth coming from innovation this surely is a worry. The CPG industry does need to find new avenues of growth that are not so incremental as this figure might be suggesting

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15 years ago

I understand the previous comment, however the $350M refers only to consumer research. Further P&G research investment is made into B2B, product, media, industrial and other non-consumer related channels.

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