Magazine article Marketing

Will P&G's Bravery Pay Off?

Magazine article Marketing

Will P&G's Bravery Pay Off?

Article excerpt

Procter & Gamble took a risk with its everyday low pricing policy and the impact is already being felt, writes Claire Murphy

Nine months ago, Marketing revealed that Procter & Gamble was introducing its everyday low pricing policy in the UK.

Spending on promotions and vouchers would be cut and savings passed on as price reductions to shoppers.

It was a brave strategy which had already worked in the US and brands such as Fairy Liquid, Flash and Pampers in the UK have since had their prices cut.

The strategy is also being introduced in the German market.

The impact of these moves is still being felt. Last week it was reported that a team of marketers is being sent into Germany to help counter resistance from the country's large retailers.

This year's annual ACNielsen figures for the Top 100 Grocery Brands have shown sales for some key P&G brands have fallen.

Fairy Liquid has fallen by almost 7% to 64.6 [pounds sterling] m compared with last year, with Pampers down 2% to 163.1 m [pounds sterling] .

On the face of it, it would seem that P&G might have some problems. But the company's tone is confident. Dick Johnson, P&G's UK director of corporate affairs, maintains that rival multi-pack (buy one, get one free) promotions are partly to blame for the drop in sales. "P&G measures its business on a long-term basis," says Johnson. "Look at our long-term track record and you won't find a better one."

There is little doubt that P&G expected some teething troubles as part of its policy of reducing investment in promotions. But it is playing the waiting game, sticking to EDLP as one plank of its Efficient Consumer Response (ECR) policy.

P&G has used ECR to put under the microscope every aspect of how it does business, from new product development through to the number of stock-keeping units in stores, the size of boxes and the way stock is ordered and supplied to retailers.

It has led the way in recent months in calling for greater standardisation of soap-powder boxes and co-operation, even with its arch-enemy Unilever, to simplify the soap-powder market.

That policy has meant reviewing not just how it does business with its customers but its relationship with retailers. Not only did P&G previously offer a myriad of promotions to consumers but it also laid on special offers to the retailers. …

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