Proctor and Gamble 2012 Annual Report Download - page 7
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We’re making good progress in all these areas.
Driving Productivity
and Cost Savings
PRODUCTIVITY IS THE GREAT ENABLER that
allows us to invest in leadership levels of consumer
understanding and innovation, ensure our
brands are priced competitively, overcome macro
headwinds and deliver bottom-line growth…
simultaneously.
Earlier this year, we announced our objective of
delivering $billion* in cost savings by the end
of fi scal year . This program includes $billion
of savings in cost of goods sold, $billion from
marketing effi ciencies, and $billion from non-
manufacturing overhead.
* Based on projected revenue and costs growing at
a % annual rate through.
To accelerate progress down this path and address our shortfalls,
we have implemented three meaningful changes: strengthening
our core business, renewing our focus on discontinuous innovation,
and implementing a $ billion productivity program.
Focusing on Our Core
The fi rst change is our // focus
—
focusing resources on
the largest and most profi table businesses, many of which are
in developed markets; on our largest innovations; and on the
most important developing markets.
Our largest businesses generate more than % of sales and
nearly % of operating profi t. They are disproportionately in the
U.S. and China, which are P&G’s fi rst and second largest, most
profi table markets, respectively.
Our most important innovations are
nearly times larger on average than the
rest of the initiatives. This is the core of
our innovation pipeline.
Our most important developing markets are critical to P&G’s
future growth. Between and , the world’s population
will grow by million people, and % of this population
growth will be in developing markets. During that same period,
the world’s middle class will increase by . billion people, %
in developing markets. Population growth and household income
growth are the primary drivers of our business growth, so these
trends are highly encouraging for P&G’s future. We are maintain-
ing strong momentum in developing markets, targeting the
developing markets with the highest potential for growth.
We will innovate and execute with excellence across all our busi-
nesses, but this sharp focus on core businesses, our biggest
innovations and developing markets will have the greatest impact
on getting P&G back on track to leadership levels of growth and
shareholder value.
Winning with Innovation
The second change we’ve made is a deliberate refocus
on discontinuous innovation
—
innovation that obsoletes current
products and creates new categories and new brands. Examples
are products such as Tide PODS, Swiffer, and Crest Whitestrips.
We will maintain our commitment to ongoing innovation
in our base business (i.e., the innovations that enable P&G’s brands
to maintain superior performance and value between more
$
will help P&G fi nance top-line
growth, ensure our consumer value
propositions are superior, overcome
macro headwinds and deliver better
bottom-line growth.
$B
$B
$B
billion
The Procter & Gamble Company 5