Marketing costs, which P&G didn't break out, rose more
slowly than sales, a trend Mr. Moeller said on a conference call
with reporters would continue the rest of the year.
"We expect advertising spending to be up year-on-year but to
grow a little bit less than sales growth as we get more efficient
and more effective," Mr. Moeller said, citing efficiencies on
"non-media, non-advertising" expenses and other items that deliver
higher return on investment. Mr. Moeller said he's "even more
comfortable than I have been historically on the effectiveness of
that spend."
P&G did not shift money on price and promotion in the U.S.,
Mr. Moeller indicated, in a retort to comments by Unilever CEO Paul
Polman in a quarterly sales update yesterday. Unilever reported
organic sales growth a 3.2% gain, its weakest in years, which he
blamed in large part on more aggressive pricing by an unnamed
competitor in the U.S. Mr. Polman said "promotional intensity is
now extremely high in categories like hair and deodorants," though
he said Unilever is still growing share in U.S. personal care
"albeit at a reduced rate," and waiting to see how it would respond
to one competitor "determined to rebuild their shares in the U.S.
at an enormous cost." It's widely believed he was referring to
P&G.
Mr. Moeller said on the media call that P&G's percentage of
volume that moved on promotion was down 7 percentage points last
quarter from the prior year, "so we see a different reality."
Globally, he said, P&G's pricing was flat for the quarter.
"We would much rather invest a dollar in innovation or equity,
which are proprietary and have sustainable advantage, than we would
in promotion or price discounting, of which there's nothing
proprietary and where the results typically are not sustainable,"
Mr. Moeller said.
Nielsen data from Sanford C.
Bernstein show P&G's prices in deodorant actually rose 3% to
6.6% during 12 weeks reported last quarter. On a call with
analysts, Mr. Moeller attributed share growth in the category in
part to Secret's advertising claiming superiority in fighting
"stress sweat."
P&G's shampoo prices did decline 0.7% to 4.2% during the
quarter, however, according to the Nielsen data, and prices overall
fell 0.6% to 1.4% in P&G's beauty business. For the company as
a whole, prices ranged from down 0.5% to up 1.1% during the
quarter.
Overall, P&G's U.S. sales rose 2% last quarter, Mr. Moeller
said, which allayed concerns that the gap between 7% shipment
growth and roughly 2% growth in measured retail sales would be paid
for by a slowdown in reported P&G sales this quarter.
P&G's beauty sales globally were up only 1%, while the
company's better overall results were carried by fabric, home care,
baby care, feminine care and tissue towel businesses, which rose
6%. Mr. Moeller said sales growth in the health care division was
wiped out by product recalls in the pet food business, but said
production is coming back online.
In developing markets, where Unilever's top line took a hit from
slowing growth, P&G also noted the slowdown, but still
performed better; its developing-market sales were up 8% vs.
Unilever's reported 5.9% growth.
"We feel innovation has just as strong a place in developing
markets as it has in developed markets," Mr. Moeller said, "and I
think consumers are responding to that."
