Proctor and Gamble 2008 Annual Report Download - page 11

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P&G’sglobalscaleallowsustoquicklyowinnovationacross
developingcountries.Wecreateinnovationtomeetconsumer
needsinaparticularregionandthenquicklyowthattechnology
acrossmultiplecountriesfasterthan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specically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rst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.

We’vebuiltP&G’sbusinessmodelaroundinnovationbecause
it’stheprimarydriverofsuperiorconsumervalueandprotable
organicsalesgrowthintheconsumerproductsindustry.The
companiesthatleadinnovationaregrowthcatalystsandgenerally
captureasubstantialportionofthegrowththeystimulate.
Idon’tknowofacompanythathassustainedgrowthand
industryleadershipoverthelongtermthathasnotalsobeen
theinnovationleader.
Innovationisespeciallyimportantintougheconomicperiods.
Consumerswillcontinuetobuypremium-pricedproductsas
longasthey’recondentthey’regettingvaluefortheirmoney.
Thisiswhyinnovationissoimportant.Priceisanelementof
value,buttherealdriverofvalueperceptionisrelativepricing,
notabsolutepricing,combinedwithproductperformanceand
brandequity.Innovationdrivesvalue.Itdifferentiatesour
brandsintheheartsandmindsofconsumers.Itenablescategory
leadership.Itstimulatesgrowthandpreventscommoditization
ofthecategoriesinwhichwecompete.Itdrivespremium
pricingandhighergrossandoperatingmargins.
ThisrealityplaystoP&Gstrengthsasaninnovator.Weinnovate
morebroadlythananyothercompanyinourindustry.Weinvest
moreininnovationandmarketingsupport.Webringaricher
mixofinnovationtomarketwithgreaterdisciplineandstrong
leadership.We’vedesignedaninnovationcapabilitythatis
unmatchedintheconsumerproductsindustry.
Mostimportantofall,P&Gersaroundtheworldseeinnovation
astheirjob.Theylookforopportunitiestoinnovateinevery
partofthebusiness.Consumerresearchersaredeveloping
innovativenewwaystolearnfromconsumers.Marketersare
ndingnewwaysandnewplacestoengageconsumers.
TechniciansoperatinglinesinP&Gplantsarecreatinginnovative
ideasformakingproductsbetter,fasterandcheaper.Innovation
hasalwaysbeenattheheartofP&G’sbusinessmodel,but
todayit’snottheprovinceofonlyoneortwofunctionswithin
theCompany.Innovationisthefocusofourentireorganization.
P&G’sinnovationcapabilityisstrongerandmorerobusttoday
thanatanytimeintheCompany’shistory—andthisiswhyI’m
condentinnovationwillcontinuetobetheprimarydriverof
sustainablesalesandearnings-per-sharegrowthatoraheadof
P&G’slong-termtargets.
P&Gisdesignedtoinnovate,andtogrow.

ChairmanoftheBoard
andChiefExecutiveOfcer
August12,2008
TheProcter&GambleCompany 9