Leveraging Global Scale and Scope

The most differentiating aspect of P&G’s approach to innovation is the scale and scope of our business and brand portfolio, science and technology platforms, and geographic reach.

The diversity of our business portfolio creates highly valuable scale benefits. Our Health & Beauty businesses take advantage of purchasing pools created by Household businesses such as laundry, diapers and paper products. This enables them to purchase packing materials and basic commodities at lower prices than their direct competitors. Similarly, Household Care enjoys economies of scale created by the large advertising budgets supporting our Health & Beauty Care businesses. We use these scale advantages to invest in innovation.

The diversity of P&G’s brand portfolio gives us the opportunity to innovate in more aspects of consumers’ lives than nearly any other company. P&G brands are in every room of the house, at virtually every hour of the day. As a result, we get to see more of consumers’ needs than other companies. This helps us spot more problems P&G innovation can help solve and more aspirations P&G brands can help achieve.

Our science and technology portfolio is another huge scale advantage. Bleach technology from Laundry has been used in Health & Beauty Care products such as Crest White Strips and Nice ’n Easy Perfect 10 Hair Colorant. Non-woven top sheet technology started in Diapers, traveled to Feminine Care then moved to Swiffer and Olay Daily Facials. Proprietary perfume technology has been used to enhance the performance of Bounce, Febreze, Fine Fragrances, Camay and most recently Secret and Gillette Clinical Strength deodorant. We’re now combining Gillette’s expertise in mechanical engineering with our expertise in chemical engineering.

Companies that compete primarily in Beauty can’t benefit from such technology transfer because they don’t have a Laundry business. Home Care competitors can’t move a substrate technology from diapers or feminine hygiene if they’re not in those businesses. There is no other company in our industry whose portfolio of businesses and brands, sciences and technologies is as broad, as deep or as diverse as P&G’s. This is a very significant source of competitive advantage. We use our diverse mix of sciences and technologies to make innovation connections that other companies cannot make on their own.

Another area in which we can leverage P&G scale is our geographic reach. In developed markets like the U.S., where P&G brands can be found in virtually every household, we leverage household penetration as a scale advantage. In developing markets, we’re using our portfolio of leading brands to attract and build a network of best-in-class, often exclusive distributors in countries such as China, India and Russia. Today our distributor network in China reaches about 800 million people. In India, our distributor network covers 4.5 million stores, an increase of two million stores in just five years. In Russia, we now have access to 80% of the population.

P&G’s global scale allows us to quickly flow innovation across developing countries. We create innovation to meet consumer needs in a particular region and then quickly flow that technology across multiple countries faster than the competition. For example, consumers who wash clothing by hand need improved rinsing with less water. This is a common need in many developing countries. We launched Downy Single Rinse in Mexico, and have since expanded it into 12 countries, including China, the Philippines and Peru. We did the same with Naturella, an innovative feminine protection product created specifically for low-income consumers in Latin America; we’re now expanding Naturella throughout Eastern Europe. We’ve created highly cost-effective laundry detergent formulations that we’ve expanded rapidly across developing markets. We’ve created a “better and cheaper” dentifrice formulation for Crest that was first introduced in China and has now been expanded into Eastern European markets — and has also been introduced as an important cost innovation in several developed markets.

We’re able to do all this because we’ve built the systems and go-to-market scale that allow us to move an entire innovation — concept, brand, product formulation, package, marketing, and in-store presence — to multiple markets almost simultaneously. With this geographic reach and capability, in developed and developing markets alike, we can expand innovation around the world and into millions of homes very quickly.

Back to top