Already well on its way to eliminating 5,700 jobs, or 10% of its
nonmanufacturing workforce, in the fiscal year ending June 30,
P&G plans to eliminate another 2% to 4%, or 1,000 to 2,000 more
such positions each of the next three years.
Chief Financial Officer Jon Moeller said in a press briefing
after the analyst meeting that around 1,000 of the positions
eliminated so far were for marketers in the company's regional
market-development organizations, including North America, whose
duties overlapped and have been consolidated with regional
operations of global business units.
Melanie Healey, Group President-North America, said her group
has eliminated around 15% of its headcount so far, well ahead of
the companywide 10% reduction. Alex Keith, VP of North American
laundry, another area where P&G has faced market-share losses
in recent years, said her group has cut 20% of nonmanufacturing
jobs, double the corporate pace, including rolling the duties of
three Tide marketing directors into one job.
It's unclear how many of the additional job cuts will come from
marketing ranks, but Mr. Moeller said the 2% to 4% annual reduction
would be a net figure after P&G continues to hire people,
particularly in developing markets.
Providing new details on how P&G plans to cut $1 billion in
marketing expenses over five years, Global Brand-Building Officer
Marc Pritchard said the company wants "fewer, bigger creative ideas
that can travel around the world," which results in lower agency
and production fees by eliminating some that "don't add value."
P&G has at times had "too many ads on air," Mr. Pritchard
said, "which has diluted the core-benefit communication of the
For example, Pampers in recent years has pared its global
"messages" to two from eight via Publcis Groupe's Saatchi &
Saatchi. A concept developed by WPP's Grey Global Group in
Australia showing people blindfolded in a room of fetid trash but
loving the Febreze-treated smell has aired in nine countries and
three regions. Tide, likewise, has gone from three campaigns in the
U.S. alone via Saatchi to one under the "My Tide" banner, Ms. Keith
"Marketing costs are our third-biggest spend pool behind people
and materials," Mr. Pritchard said.
"Our objective is to increase the number and effectiveness of
our advertising impressions while growing spending at a rate of
around two [percentage] points below sales growth."
While P&G plans to plow savings from productivity efforts
back into marketing this year, Mr. Pritchard said the plan is still
to take at least some of the marketing savings to the bottom
A bigger proportion of the cuts will come in the non-advertising
portion of P&G's annual marketing spending, including
production of promotion and in-store marketing programs, coupon
distribution and eliminating things such as giveaways of stuffed
animals with multiple purchases of brands like Febreze, which Mr.
Pritchard said "don't build brand equity."
These non-advertising costs made up more than $4 billion of
P&G's overall $13.7 billion marketing outlay last year, Mr.
P&G already has cut suppliers for consumer and trade
promotion programs from 20,000 to 13,000 in recent years and plans
to squeeze that number further, he said.
The company also, as previously discussed, plans to keep cutting
costs by shifting spending into more cost-effective digital and
social media, though Mr. Pritchard gave that less focus than he has
in some prior presentations.
The company, which has been under pressure from investors such
as Pershing Square Holdings' Bill Ackman to cut costs and turn
around market-share losses, is also looking to increase innovation
and revealed some of the plans for stepped-up activity to begin
early next year.
Those include the relaunch of Vidal Sassoon hair care,
discontinued years ago as a mass brand in the U.S., as a salon
professional brand. P&G is also restaging Olay Regenerist line
and using dermatologist recommendations to position Gillette Fusion
ProGlide and Mach 3 razors for the 70% of men who believe they have
Some recent P&G innovations are outperforming projections.
Tide Pods is on track to reach a higher-than-expected $500 million
in first-year sales in part because, despite being among P&G's
most premium-price detergent products, it's gotten an unexpectedly
high 50% of users so far from "lower-price-tier shoppers," Ms.
That product appeals to apartment dwellers without their own
washing machines, and Ms. Keith said P&G also has focused on
marketing each Pod as having the cleaning power of six cups or
single-use-dose liquid packs from its value-priced rivals. "Fewer
and bigger" is also the watch phrase for product rollouts, though
P&G since last year has doubled the number of big-bang
"discontinuous innovation" initiatives in its pipeline, aimed at
creating new categories or making current products obsolete, said
Jorge Mesquite, group president-new business creation and pet
In recent years, P&G focused such efforts on entering
service industries or creating new business models -- such as Tide
Dry Cleaners, Mr. Clean Car Washes and the MDVIP concierge
physician practice. But Mr. Mesquita said the company is now
focused more on new brands and categories for its existing retail
channels and "leveraging our current business model."
Spokesman Paul Fox said later that doesn't necessarily mean the
push into services didn't work, but said those concepts "aren't
likely to create new billion-dollar businesses." The new approach,
he said, is part of P&G "focusing on the core."
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CORRECTION: An earlier
version of the story incorrectly said non-advertising costs made up
$2.1 billion of P&G's overall $11.5 billion marketing