P&G targets flexibility by simplifying operations

The goal is to move away from the current huge, multi-layered business organisation by simplifying all working processes. The move will allow P&G to cope better in an increasingly intense competitive environment amid the downturn.

Medhee Jarumaneeroj, senior marketing and corporate-communications manager at Procter & Gamble Trading (Thailand), said P&G had realised its organisation was not flexible enough when it came to launching new product initiatives and competing.

"We take between one-and-a-half and two years to launch any new product," said Medhee.

He said in Thailand, eight new products had been launched over the past five months and about 20 in total in the past year. About 75 per cent of P&G's business in the Kingdom is in haircare and skincare products.

"P&G has positioned itself as a premium consumer-product brand. We don't want to compete on price as much as on launching product innovations that cater to consumer demand," said Medhee.

He said today's consumers were eager to buy products with great value for money both in quality and features that meet their needs.

"Our strategy is to launch innovations based on understanding our consumers. We study consumer insights more often, as their behaviour has been changing along with outside factors like the macroeconomy," said Medhee.

He said surveys were now conducted up to eight months before a product launch, in order to ensure the company was introducing an item that would receive a good response from customers.

Without understanding consumer insights, it is quite difficult for us to communicate with our customers effectively, he said.

"We've changed from focus-group study to home visits and in-shop surveys to get more in-depth results. We have more one-on-one interviews with consumers," said Medhee.

He said P&G had achieved growth of 6-8 per cent in its fiscal year ending June 30.

For the first quarter of 2009, the company saw its sales of skincare products grow by 5-7 per cent, which is in line with the overall market. Sales of haircare products, however, were relatively flat.

Medhee said P&G (Thailand) had reshuffled its product portfolio, in order to create a greater balance between modern trade and traditional trade - or "open trade", as the company calls the segment - channels.

He said the company had also launched new packages that were appropriate to such open-trade channels, such as the 90-millilitre package size of shampoo and skincare products, which are available at the more affordable price of Bt20.

"We've seen the contribution of modern trade stores in our sales decline gradually from 70 per cent earlier to about 60 per cent today. The remaining 40 per cent of sales is shared by small retail outlets," Medhee said.