In just over two years, Proctor and Gamble has divested more than 100 of its brands. The company has chosen to keep its top-selling brands – those that have annual sales of more than $100 million, according to an Adweek article. The brands that P&G has chosen to keep also belong primarily in the “daily-use” category, such as Tide, Febreze, Pampers and Crest. Those that were sold, many of which are well known, such as CoverGirl and Duracell, were mainly in the fashion, fragrance, and flavor categories.
This massive divestiture will allow the company to revamp its marketing campaigns and shift their focus from quantity to quality. The company is now able to focus on fewer marketing campaigns and producing higher quality ones for the brands they’ve kept. P&G’s Chief Brand Officer, Marc Pritchard, says the company is looking for a 10%-20% increase in marketing reach for its brands, as it shifts its marketing focus primarily to “reach and continuity”, according to a recent Advertising Age article.
P&G plans to improve marketing reach by using “higher-reach digital platforms” and “shifting to more broadly appealing television shows”, according to Mr. Pritchard. Continuity will be achieved by spreading media spending more evenly year-round, so as to continuously keep its brands at “top-of-mind awareness”, says Mr. Pritchard. For instance, whereas marketing efforts for Vicks brand products previously took place predominantly in the winter months, the new marketing strategy will keep Vicks marketing efforts active year-round, as “40% of colds actually happen outside of winter,” according to Mr. Pritchard.
In addition to reducing the size of its brand portfolio, P&G plans to cut its marketing costs – which is the company’s third largest expenditure – by reducing the number of agencies it works with significantly. The company is looking to improve its marketing efficiency by using “digital technology for production, pooling production and also using open sourcing in creativity,” said Mr. Pritchard, according to the Advertising Age article. With this open source creative strategy, P&G’s partner agencies will have to learn to collaborate in the creation of marketing ideas. Mr. Pritchard has stressed the importance of working with quality partners to put out “good creative work,” and focusing less on the “measurement of advertising,” which is not conducive to improved creativity and leads companies into the “crap-trap”, according to another Advertising Age article.
P&G will move forward with these new marketing strategies for its remaining top-selling brands. Despite already being the top-performing brands, it’s clear the company continues to see opportunities for these technology and performance driven “daily-use” brands to develop and grow through the implementation of its new and (hopefully) improved creative marketing strategies.
From a marketing management perspective, here are some questions to consider:
- What are some benefits and drawbacks of the brand divestitures for P&G?
- Research other large companies that have undergone similar divestitures. Did their marketing strategies change as a result?
- Do you think P&G should reduce the number of agencies is works with? Why or why not?