Proctor and Gamble 2004 Annual Report Download - page 8

rising฀costs฀to฀erode฀the฀consumer฀value฀of฀P&G฀brands,฀
particularly฀as฀brand฀choices฀and฀consumer฀expectations฀฀
for฀value฀continue฀to฀grow.฀
Media฀fragmentation฀is฀yet฀another฀challenge.฀Today,฀฀
the฀average฀U.S.฀household฀has฀access฀to฀90฀television฀
channels,฀up฀from฀27฀channels฀a฀decade฀ago.฀Prime-time฀
audience฀share฀for฀the฀big฀three฀U.S.฀networks฀has฀฀
dropped฀23฀percentage฀points฀over฀the฀same฀period.฀฀
The฀reality฀is฀that฀there฀is฀less฀“mass”฀in฀mass฀media฀today.฀
We฀have฀to฀develop฀capabilities฀to฀communicate฀with฀
consumers฀when,฀where฀and฀how฀they฀choose.฀We฀must฀฀
be฀as฀innovative฀in฀marketing฀as฀we฀are฀in฀product฀design฀
and฀development.
Global฀economic฀and฀political฀disruptions฀are฀also฀a฀
continuing฀risk.฀Our฀diversified฀portfolio฀and฀geographic฀
breadth฀provide฀significant฀shock฀absorption,฀but฀we฀฀
today,฀and฀improving฀its฀innovation฀success฀rate.฀We฀฀
are฀also฀thinking฀more฀broadly฀about฀what฀innovation฀฀
is,฀where฀it฀comes฀from,฀who฀is฀responsible฀for฀it฀and฀฀
how฀it฀can฀be฀commercialized.฀We’re฀connecting฀฀
externally฀with฀a฀global฀network฀of฀innovation฀partners฀
and฀strengthening฀internal฀capabilities฀in฀design฀and฀
marketing฀innovation.
•฀฀In฀a฀marketplace฀that฀is฀simultaneously฀global฀and฀local,฀
P&G’s฀go-to-market฀strengths฀and฀scale฀advantages฀฀
are฀increasingly฀important.฀We฀have฀the฀ability฀to฀reap฀฀
the฀benefits฀of฀a฀$50฀billion฀global฀company฀while฀
understanding฀and฀responding฀to฀needs฀in฀individual฀฀
local฀markets.
P&G฀has฀a฀history฀of฀leading฀change.฀Our฀willingness฀to฀฀
deal฀realistically฀with฀change฀and฀our฀proven฀ability฀to฀turn฀
change฀–฀and฀the฀challenges฀it฀presents฀–฀to฀advantage฀are฀
important฀sources฀of฀my฀confidence฀in฀P&G’s฀future.
Systemic฀and฀Structural฀Changes฀Are฀Improving฀
Performance
I฀am฀also฀confident฀P&G฀can฀sustain฀growth฀because฀
several฀systemic฀and฀structural฀changes฀implemented฀฀
over฀the฀past฀few฀years฀are฀improving฀the฀consistency฀฀
and฀reliability฀of฀P&G฀performance.฀Four฀changes฀in฀
particular฀are฀enabling฀more฀consistent฀growth฀and฀are฀
creating฀competitive฀advantage:฀a฀more฀balanced฀฀
business฀portfolio,฀greater฀ability฀to฀serve฀lower-income฀
consumers,฀a฀unique฀organization฀structure,฀and฀strong฀
cash฀and฀cost฀control.
A฀Balanced฀Portfolio฀Creates฀Flexibility
We฀have฀moved฀toward฀a฀more฀balanced฀mix฀of฀฀
household฀businesses฀and฀health฀and฀beauty฀businesses.฀
Longer฀term,฀this฀more฀balanced฀portfolio฀will฀help฀us฀
sustain฀strong฀revenue฀growth,฀absorb฀inevitable฀short-
term฀“bumps฀in฀the฀road,”฀and฀deliver฀more฀balanced,฀
consistent,฀predictable฀profit฀growth.
must฀always฀closely฀monitor฀these฀situations฀so฀we฀can฀
respond฀fast฀when฀crises฀occur฀–฀as฀we฀did฀in฀Latin฀America฀
in฀2003.฀
These฀are฀significant฀challenges.฀We฀believe,฀however,฀that฀
P&G’s฀strengths฀in฀branding,฀innovation,฀go-to-market฀
capability฀and฀scale฀will฀help฀ensure฀that฀these฀challenges฀do฀
not฀prevent฀us฀from฀delivering฀reliable,฀consistent฀growth.฀
•฀฀In฀a฀world฀of฀abundant฀consumer฀choice฀and฀retail฀
consolidation,฀branding฀becomes฀more฀important฀฀
than฀ever.฀P&G’s฀proven฀ability฀to฀understand฀consumers฀
and฀build฀billion-dollar฀brands฀that฀consumers฀love฀฀
and฀retailers฀find฀indispensable฀can฀be฀an฀increasing฀฀
source฀of฀advantage.
•฀฀In฀an฀environment฀of฀rising฀consumer฀expectations,฀
relentless฀competition฀and฀rapid฀technological฀change,฀
innovation฀becomes฀more฀important฀than฀ever.฀P&G฀฀
is฀setting฀the฀pace฀of฀innovation฀in฀its฀major฀businesses฀
P&G’s
Growth฀
Strategy
Grow฀leading฀brands฀in฀฀
big฀countries฀with฀winning฀
customers.฀Accelerate฀
growth฀in฀Western฀Europe.
Build฀existing฀
core฀businesses฀
into฀strong฀
global฀leaders.
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