The chief executive of Procter & Gamble (P&G) A.G. Lafley has made the goal clear: merge, eliminate, or sell more than half of the corporation’s existing brands and maintain only the top performing 70–80 brand names in its portfolio. But even with this clear goal, the way to get there is far from certain.
According to Lafley, P&G’s top 23 brands are immediately safe, because they earn at least $1 billion in sales. Any brand surpassing that mark would remain part of the P&G family. Thus Duracell appears likely to continue as a P&G brand, because recent merchandising efforts, such as signing an exclusive distribution agreement with Sam’s Club, pushed its most recent annual sales up to $2.3 billion.
Yet just the year before, many analysts were suggesting that P&G divest itself of the underperforming Duracell brand. This quick shift exemplifies the challenges of brand and product line choices: An underperforming actor today might become a star performer a year later. But if it is to meet its stated objective to cut up to 100 brands, which represent estimated total sales of around $8 billion, P&G will have to make some risky choices.
One prominent potential loss is Ivory, the long-standing and familiar brand that essentially led to the creation of P&G. But legacy may not be a sufficient reason to keep it. Ivory sales recently fell to less than $80 million, following trends of approximately 4 percent annual losses.
Other options on the cutting board appear a little more obvious. For example, P&G recently experimented with several lines of men’s grooming products, such as Zirh and The Art of Shaving. Each brand earns relatively minimal sales, mainly in luxury and niche markets. Even as male consumers increasingly adopt personal care products, they appear attracted more by big name, familiar brands, of which P&G already has plenty.
Jack Neff, “As P&G Looks to Cut More than Half Its Brands, Which Should Go?” Advertising Age, August 4, 2014, http://adage.com