[an error occurred while processing this directive] P&G 2009 AR – Brand Building, Tangible Assets, Innovation
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Touching Lives

P&G’s well-known, trusted brands touch the lives of consumers in more than 180 countries.

P&G Brands — Designed to Be Leaders

“P&G’s billion-dollar brands are platforms for innovation. They are global leaders. Consumers want them in their homes. Retailers want them in their stores. They enable us to bring innovation to consumers around the world effectively, efficiently and profitably. They make consumers’ lives a little better, every day.”
– A.G. Lafley

A Company of Leading Brands

For nearly 172 years, P&G has been providing trusted brands that make every day a little better for the world’s consumers. P&G has the largest lineup of leading brands in its industry, with 23 brands with over $1 billion in annual sales, and another 20 brands generating about $500 million or more in annual sales. These 43 brands have delivered a 9-year compound average sales growth rate of approximately 10% — double the growth rate of the balance of P&G’s brand portfolio.

Highly Valued Assets

P&G’s market capitalization of roughly $150 billion far exceeds the $46 billion book value of the Company’s tangible assets, such as cash, machinery, buildings, etc. The difference is the value P&G shareholders place on the Company’s brands, the earnings and cash these brands generate today, and the confidence that these leading brands will continue to grow in the future.

P&G’s top 43 brands account for 85% of sales and more than 90% of profit.
85% sales
90% profit
85% sales 90% sales

Capabilities Designed to Grow Brands for Decades

We have built these valuable assets with the industry-leading levels of investment and capabilities necessary to build brands that live and grow for decades.

Consumer Understanding

Over the last decade, we have invested more than $2 billion in consumer research to better understand, anticipate and respond to consumer needs and wants. Deep consumer understanding is a key enabler for product innovation, packaging development and marketing communication that create sustainable competitive advantages for P&G brands and create superior value for consumers.

Innovation

Each year, we invest more than $2 billion in innovation. We complement this in-house capability with our Connect and Develop program, which creates external partnerships that enhance and accelerate innovation. This is important because innovation improves consumer value and leads to profitable market share growth for our brands.

Each year IRI, a leading market research firm, publishes its New Product Pacesetter Report. This U.S.-based study ranks the most successful new consumer packaged goods (CPG) products, as measured by sales, over the past year. In 2008, P&G had five of the top 10 new non-food product launches in the U.S. and 10 of the top 25. Over the past 14 years, P&G has had 114 top-25 IRI non-food Pacesetters — more than our six largest competitors combined.

Brand Building

We invest more than $7 billion in advertising annually, consistently making P&G one of the world’s largest advertisers. While the scale of our marketing investment is significant, the messages we convey to consumers are truly most important. These messages build confidence that our brands will deliver on their promises and build leading brand equities that last for generations.

Brand Building (continued)

We regularly assess the strength and attractiveness of our brands with consumers by using proprietary testing tools.

  • Weighted Purchase Intent (WPI) tests the combination of product, concept and price in a competitive context.
  • EquityScan identifies key equity and value attributes most important to consumers and measures differences between brands.
  • Package testing measures the stopping, holding and closing power of a package, along with the ability to convey a brand’s equity and product message to the shopper.

By constantly adding value with innovation, testing the strength of our brands with consumers and delivering on marketing promises, our brands build consumer trust and loyalty that keep them growing for decades.

Growing from a Strong Core

Having a strong core of leading brands allows P&G to efficiently and effectively extend our portfolio both vertically — to serve more consumers at more price points — and horizontally into adjacent categories to touch more parts of more consumers’ lives. Here are a few examples:

Tide Stain Release

Tide is the clear leader in the U.S. laundry detergent market with approximately 38% value share. Ariel is the leading detergent in Western Europe with about 16% value share. We are expanding both of these brands horizontally into the laundry additives segment with the introduction of Tide Stain Release and Ariel Professional. These new items are launching early in Fiscal 2010.

Tide Stain Release

Pampers Simply Dry

We recently introduced a new line of diapers in Germany called Pampers Simply Dry, priced about 15% below Pampers Baby Dry. Importantly, the introduction of Simply Dry in the value tier enabled us to raise the price of the Pampers Baby Stages premium product while building overall value share of the diaper market. Simply Dry has already achieved 4% market share, and Pampers’ overall share of the diaper market is over 63%, six points above prior-year levels. Based on the success in Germany, Pampers is expanding Simply Dry to new markets, including France, the United Kingdom, Austria and Switzerland.

Pampers Simply Dry

Oral-B Toothpaste

We are building on Crest Pro-Health’s leading product technology and Oral-B’s strong brand equity and toothbrush market share leadership in Brazil to touch more parts of more consumers’ lives. In March 2009, we launched Oral-B toothpaste into the pharmacy channel in Brazil, leveraging credentialing support of oral health professionals. The early results in Brazil have been encouraging, with Oral-B toothpaste establishing a solid market share position in the pharmacy channel.

Oral-b Toothpaste
Our Billion-Dollar Brands and Half-Billion-Dollar Brands

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Our Billion-Dollar and Half-Billion-Dollar Brands:: Discover
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