Corporate makeovers are underway at Procter & Gamble and The Estée Lauder Companies as both beauty behemoths alter strategies to better meet the changing demands of a global marketplace. Here are some highlights from their respective Consumer Analyst Group of New York programs:
*P&G to spend more wisely: To become more agile and fast moving, P&G will eliminate 5,700 non-manufacturing jobs and consolidate functions of its business units and country go-to-market teams, said Robert McDonald, President and Chief Executive Officer of P&G, part of a corporate plan to trim $10 billion in costs. The beauty giant will keep R&D spending at $2 billion, but to eliminate waste, P&G will look to design products with the features consumers want, “and nothing more,” he said. An example of smart spending: Due to a new technology, P&G increased sales of Pantene in Japan by five percent, despite an overall market downturn.
*Estée Lauder outlines global, regional opportunities: Lauder brands are preparing to capture global trends as they develop, noted Fabrizio Freda, President and CEO of Estee Lauder. Emerging markets now account for 15% of the company’s sales, which is expected to expand to 20% by 2020. Russia and China present “huge opportunities” as wealth grows, said Fabrizio. Additionally, Brazil, which is well developed with mass-market brands, is fertile ground for prestige brands as consumers begin trading up. Regionally, Lauder is paying more attention to unique market characteristics, and developing and introducing products accordingly. In the Middle East, where fragrance is nearly half of the business, the company responded with the launch of Wood Mystique, a rich unisex scent, and developed Estée Lauder Revitalizing Supreme Global Anti-Aging Crème for Europe, a product with potential global appeal.
*P&G makes marketing shift: For one, it intends to shift some focus from TV to digital and mobile strategies. Meanwhile, a new Olympic promotion, touting 30 products, will not only be on TV and the Internet but will cascade into retail stores, and is expected to deliver $500 million in additional sales. Noted Bob, “It is our biggest multi-brand global promotion ever.”
*Estée Lauder’s consumer-centric push: The company is spending more money on merchandising, sampling and advertising programs. Last year’s ad budget for TV and digital was up 60%, with spots concentrated on specific products with technological innovation stories. The company reported sales of $8.8 billion in 2011, up 13% from the previous year.