Article

James Swift

23 January 2024

Procter & Gamble: ‘Now is not the time to pull back on marketing’ 

Procter & Gamble's CEO, Jon Moeller, stressed the importance of using innovation and marketing to drive market share in the company's Q2 2023/24 earnings call

(Procter & Gamble’s world headquarters in Cincinnati, US) 

Procter & Gamble’s (P&G) CEO, Jon Moeller, said that ‘now is not the time to be pulling back on investments and marketing’ in a quarterly earnings call with investors today (23 January).

Responding to a question from an analyst about whether the FMCG company was putting too much money back into the company, Moeller said:

‘If you look at the amount of innovation that’s coming to market currently and in the future, if you look at the opportunity to fully penetrate households with that innovation in ways that delights [consumers] and improves their lives, now is not the time to be pulling back on investments and marketing, or commercialisation efforts of that innovation…and that’s where the majority of the incremental spend has and will come from.’

Moeller added that P&G was looking ‘very carefully at the effectiveness of that [marketing] spend’, and that data sets and tools had shown that it ‘can increase the effectiveness of that advertising, increase the return rates of that advertising p…] while increasing reach.’

P&G’s CFO, Andre Schulten, also chipped in to talk about marketing, saying he had recently spoken to the team about getting ‘very granular’ about assessing return on investment and going down to the brand and channel level, so that it doesn’t have good investments covering for bad ones.

Moeller also said that P&G will continue to strive to ‘create business’ not ‘take business’, meaning that it would focus on growing market share. The strong communication of innovation in a targeted way is what drives that growth, added Schulten, although neither he nor Moeller commented on whether the deprecation of third-party tracking cookies by Google, and other privacy-related measures, would hinder that pursuit in the future.

Overall, the company’s Q2 2023/24 results were a mixed bag. P&G recorded almost flat volumes sales but prices rose 4% on average across the board, pushing its net sales for the quarter up 3.2%.

Demand for P&G products was strong in North America and Western Europe, but it was weaker in China and the Middle East, where it had to contend with economic and socio-political instability.

​​​​​​​One of P&G’s brands in particular was having a choppy time of things. Sales of luxury cosmetics brand SK II were down 34% in China, in part due to sluggish consumer confidence, but also because of a panic in China over the safety of Japanese water-based products, after the latter country began releasing waste water from the destroyed Fukushima nuclear power plant into the ocean.

But Shulten said ‘negative top of mind awareness’ around SK II in China was now declining. And Moeller shared that he had recently been in the home of a heavy SK II buyer in Beijing, and he asked her whether the issue had affected her purchasing.

‘She kind of laughed, and it wasn’t the normal nervous laugh, and she followed it up with, “If Japanese consumers aren’t afraid of this why should I be? I’m much more afraid of the pimple I’ll get if I don’t use this than I am about the [wastewater].”’

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