Bob McDonald, who is into his third year as head of Cincinnati-based Procter & Gamble Co., executes on his global vision — developed and developing countries — and he applies vertical and horizontal vision in expanding category growth worldwide through product innovation, pricing value tiers and the ability to read consumers' needs.
That is how he is leading the growth at P&G, which reported sales of nearly $79 billion in 2010, up 3% from the previous year.
During earnings calls this year, much of the presentations dealt with expansion in markets outside the United States — Pampers Economy in Indonesia, Head & Shoulders in Brazil, Fusion ProGlide in Japan and Western Europe, Total Effects in South Korea, and the list goes on.
Marketing about 38 product categories in the U.S., McDonald's goal is to get all those categories into countries around the world. About half of those categories are reportedly in P&G's top 50 worldwide markets.
Last year P&G acquired Ambi Pur, an air care brand from Sara Lee with a strong presence in Europe and Asia, to expand into new countries. The acquisition gave P&G entry into 67 new countries.
About 60% of company sales are now generated outside the U.S., making the company susceptible to unexpected political upheavals and natural disasters as well as fluctuations in foreign currency, changes in foreign government policies on free trade and tax structure, and lower foreign margins.
McDonald is confident that P&G is agile enough to weather any headwinds in the global marketplace.
“We may be delayed from the kind profitability that we want to deliver quarter to quarter. We may be delayed by either the lack of market growth in developed markets, the commodity cost increases or some of the natural disasters that have occurred, but I think we're on track and we're going to continue to pursue the track that we are following,” he told investors during April's third-quarter earnings call.
In North America, which is P&G's largest market, McDonald is well aware of challenging market conditions.
“While economic growth rates in the U.S. have been showing some life, they are generally flat and significantly below the growth rates that economies in Asia are witnessing. … While unemployment rates remain high, housing prices continue to fall and gas prices remain volatile, you are not going to see the improvements in consumer confidence that North America needs to spur economic growth,” he said in a written statement to SN.
But he remains confident that delivering on product innovation like the next Swiffer or Crest Whitestrips will create new categories and revenue.
“You can expect us to continue to deliver products like Gillette Fusion ProGlide, Olay Pro-X, Crest Pro-Health and soon Tide Pods.”
P&G is expected to launch the highly concentrated 3-in-1 laundry detergent packaged in an ultra-convenient form in early 2012, making sure it can meet anticipated demand.
In helping U.S. retailers grow their market share, McDonald said a joint challenge is “always to be relevant to the consumer and that in itself presents us with numerous opportunities for innovation in terms of not just new products but also the way the store is shopped.
“We want to stand side by side with our retailer partners, anchored by our True Scorecards and Joint Business Planning processes, to provide insight and innovation that will delight their shoppers and our consumers.”
In that regard, P&G has partnered with Wal-Mart Stores in co-producing Family Movie Night made-for-TV movies, and has leveraged this to sell P&G brands. McDonald has made it known that while its partnership with Wal-Mart is strong, he would like to see better execution in U.S. stores. “The place where we're focusing to help Wal-Mart grow more is in U.S. stores. The issue in U.S. stores is not — for our business, is not largely SKU or price or even brand portfolio-driven as much as it is sheer execution,” he told investors during the company's second-quarter earnings call.
Another important partnership is with the Obama administration. President Obama has called on P&G to lend its 3-D computer modeling technology to other suppliers at no cost as part of Obama's $500 million Manufacturing Partnership program to help stimulate manufacturing in the U.S.
“It's a great example of the power of partnership. Our relationship with Los Alamos National Laboratory [where the technology was developed] goes back more than two decades and we hope that sharing this know-how will help accelerate small and midsize businesses in the U.S.”
McDonald added that more than half of the new products P&G brings to the market each year contain at least one element brought by an external partner. Under its Connect & Develop program, McDonald said he wants to hear from anyone who has an idea that may help the company touch and improve more lives or may result in better business processes.