INVESTING IN INNOVATION

P&G invests more in innovation and marketing support than any other consumer products company. This level of investment is funded primarily by ongoing productivity efforts and rigorous cost discipline.

Productivity and cost savings discipline are deeply ingrained in P&G’s culture. Every organization has specific goals for cost savings and productivity improvements, and we manage restructuring work as an ongoing business activity.

Steady investment in innovation and brand building is a top priority in both good times and challenging times alike. Decades of experience have taught us that building strong, innovation-leading brands that deliver superior consumer value is the best way to deliver consistently strong value creation for shareholders.

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Maintaining consistent investment in innovation and marketing requires a relentless focus on productivity improvements and cost savings.

MATERIALS
PRODUCTIVITY

P&G researchers are continually searching for new formulations and designs that lower cost, improve performance and increase value for consumers. For instance, new formulations of laundry detergents significantly reduced our use of packaging material, leading to cost savings, more consumer convenience and less waste for the environment.

MANUFACTURING
PRODUCTIVITY

We are building more local, multi-category manufacturing plants closer to the consumer, enabling local materials sourcing, lower distribution costs, and lower import duties. This also helps P&G build strong international relationships and deepens our understanding of local consumer needs.

DISTRIBUTION
PRODUCTIVITY

We are generating cost savings in shipping and warehousing while improving service levels to customers by optimizing the Company’s finished-product supply chain, including cutting the number of distribution centers in half.

MARKETING
PRODUCTIVITY

All of P&G’s major global brands have changed their mix of marketing tools to reach target consumers more cost effectively. In Feminine Care, for instance, Always and Tampax have reduced TV advertising budgets in favor of higher-return magazine ads and our “BeingGirl.com” website.

GO-TO-MARKET
PRODUCTIVITY

P&G is reducing go-to-market costs with streamlined organization designs in developing markets, smaller local organizations, and faster decision-making. We are implementing these designs in the Latin America, Central and Eastern Europe and ASEAN markets.

R&D
PRODUCTIVITY

P&G has reduced R&D costs as a percentage of sales, increased the value of the innovation pipeline and led the industry in innovation delivered to market by leveraging a global network of external innovation partners.

ORGANIZATIONAL
PRODUCTIVITY

P&G is driving down overhead costs as a percentage of sales by reducing senior management positions, cutting the number of managers on international assignments, moving toward a corporate shared services structure, and reducing staffing duplication among global, regional and local organizations.

Historical Productivity Improvement

P&G’s organizational productivity has increased both significantly and consistently over the years. Since 1980, it has jumped more than threefold, growing at a compound average rate of nearly 5% a year — more than twice the broad-based U.S. productivity rate. Net earnings per employee are up more than eight-fold, growing at an average of nearly 8% per year.

Innovation, Productivity & Growth

Innovation, productivity and growth is a virtuous cycle at P&G. In our industry, innovation and productivity are the key drivers of profitable organic sales growth. Innovation creates superior consumer value, differentiates brands, and prevents the commoditization of categories. Productivity fuels investment in innovation and brand-building, acting as an engine of both top- and bottom-line growth.

 
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