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P&G Outlines $10 Billion Cost-Cutting, New Products, Leaner Marketing

Posted by Dale Buss on November 19, 2012 03:54 PM

Procter & Gamble invented modern marketing, some would argue, in its 175 years. And now the company is hoping to reinvent it by leveraging digital assets, boosting marketing productivity and more narrowly focusing on the company's key brands in their most important markets.

As the company continues to come up off the mat from its criticized performance earlier this year, CEO Bob McDonald hasn't let his foot off the gas — or let up on his determination to continue to overhaul P&G so that it doesn't get caught flat-footed again.

During an analysts' presentation last week, McDonald said that P&G plans to cut more than twice as many non-manufacturing jobs as it already had planned, a further sign that McDonald continues to heed analyst and investor criticism over the company's bloated cost structure.

That means cuts of another 2 percent to 4 percent a year from fiscal year 2014 through fiscal 2016, reducing P&G's head count by as much as an additional 5,900 people. Specifically, Marketing Week reported that P&G plans to trim its marketing-services supplier roster and cut non-essential promotional activity as part of its effort to save more than $1 billion in marketing costs — which, in turn, is a key part of McDonald's plan to trim P&G's overall cost structure by $10 billion.

P&G already has cut its number of marketing-services suppliers globally to 13,000 down from 20,000 five years ago, CMO Marc Pritchard commented, adding that this is still "too many."

All of this is part of a plan "to make productivity an ingrained part of the culture, similar to innovation," McDonald told analysts during P&G's Nov. 15 presentation. "Always present, alway important."

But meanwhile, McDonald plans to continue to introduce new products as carriers of some of that innovation and an important way to continue to build top-line growth. Recent and upcoming product launches were highlighted for analysts, as Zacks.com noted: 

"Some recent successful product launches include Tide Pods, Downy Unstoppables diapers, ZzzQuil sleeping aid product, Pro Health for Life oral care line and some new prestige fragrances among others. Some upcoming product launches include Cascade Platinum dishwasher in U.S, a new line of Olay skin care products, Vidal Sassoon Professional Series hair care products, Fusion Mach3 sensitive and disposable skin products. All of these are scheduled to be launched in January."

The big question, looking ahead: how P&G's more "productive" marketing approach succeeds with the company's new product pipeline.

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