P&G'S JAGER VOWS NEW, FASTER WAYS TO SELL ITS PRODUCTS: TRADITIONAL TESTS AND PRODUCT ADS TO BE USED LESS; 'COMMUNICATION CHANNELS' MORE

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Procter & Gamble Co. will launch 20 new brands during the next 18 months, while relying less on conventional advertising and test marketing and more on targeted messages to minority and low-income groups in the U.S., President-CEO Durk Jager told financial analysts last week.

The moves come as P&G cuts 15,000 jobs in the next five years as part of its Organization 2005 restructuring, with cuts focusing disproportionately on Europe and in manufacturing and non-marketing administration.

Acquisitions and new brand successes could lower that number, he said, adding that P&G also expects to hire 4,000 people during the period.

The 20 new brands will be in addition to the four products currently expanding to global distribution -- Febreze, Dryel, Swiffer and disinfectant wipes to be marketed under existing cleaning brands, including Mr. Clean.

VIBRANT TO BE TESTED IN THE U.K.

One of those is Vibrant, a product used in the laundry rinse cycle that locks in colors to keep clothes looking new, which will be tested in the U.K. starting this summer. P&G last used the Vibrant name in the early 1980s on a U.S. test-market bleach product.

Mr. Jager said that, besides higher-priced, higher-margin product improvements, P&G's focus in new products would be on brands with the potential to generate $500 million or more in global sales.

Not all new brands will be test marketed, Mr. Jager said, noting that P&G aims to cut new-product development cycles for non-pharmaceutical products in half, partly by doing away with unnecessary testing.

Riskier products that require new plant construction still will go to test, he said, but others could roll nationally or even globally without test markets.

COMMUNITIES OF INTEREST

Mr. Jager also painted a future in which P&G may rely less on advertising and more on "channels of communication."

"Our media messages up to five years ago were all one-dimensional, one-directional," he said. "Five years from now that will no longer happen. You will communicate through communities of interest -- communities you either control or create or communities that are already there."

Mr. Jager didn't elaborate, but the concept of communities of interest is primarily linked to online activity. P&G already has made some attempts to establish them, such as the T Room chat room at the Tampax Web site (www.tampax.com), designed for women to discuss feminine hygiene issues.

"Some brands have become foundational without any advertising," Mr. Jager added. "Starbucks doesn't spend a dime on advertising. It's all word of mouth. So there are different communication patterns evolving that already have tremendous influence on our company."

He mentioned interactive retail displays as one P&G medium of the future, citing a cosmetics counseling program in Japan where "we have a picture of you that digitizes and shows you how you will look five years from now -- unless you use our brands."

Though P&G's new global business units have been highlighted in its restructuring, Mr. Jager said the regionally focused market development organizations ultimately may be seen as the key change.

INCREASING SALES

In North America, increasing P&G's sales in Hispanic and African-American communities, where its market share currently is 7 points lower than its overall average, will be a top priority, said VP Rob Steele, the No. 2 executive in P&G's North American market development organization, in a video presentation.

Eliminating that 7-point gap would add $750 million to P&G's sales, Mr. Steele said, adding that the newly minted Ethnic Marketing Group within the market development organization is expected to add $100 million in sales next year alone.

LOWER-INCOME TARGETS

A separate team targets lower-income consumers and works with retailers such as Dollar General, where it placed a non-concentrated version of Dawn dishwash detergent that has made the chain the No. 2 retail outlet behind Wal-Mart Stores for that brand.

"We feel we can leverage the Dawn [lessons] across many product categories and significantly grow our sales among lower-income consumers," Mr. Steele said.

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