Why Procter & Gamble Is Declining and Will Never Recover

Personalized demand is sweeping the market. Companies that see this change must strive to cater to it, making their products actively meet customers' individual requirements to retain these opportunities. Building a shorter-cycle, more flexible production and supply chain system to adapt to market changes is also essential. Be flexible, or be left behind!

Procter & Gamble, a super-centenarian company with a history of 179 years, has encountered major troubles in both global and Chinese markets in recent years, with performance continuously declining. Despite various self-rescue measures, P&G's performance has not improved. In China, P&G's market share has been falling. P&G's global CEO David Taylor admitted at the 2016 Consumer Analyst Group of New York conference: "In China, our second-largest market, no core category is growing its user base, and most are even declining."

Plausible but Incorrect Diagnoses

P&G was once a myth in the Chinese market. The simultaneous TV advertising of its three shampoo brands—Head & Shoulders, Rejoice, and Pantene—competing with each other, stunned Chinese companies at the time. "They can do that?" P&G's precise positioning strategy, high-quality advertising films, and massive ad spending provided a lesson to Chinese counterparts just beginning to learn market economics. Everything about P&G showcased the excellent management of a world-class enterprise, from shelf displays to brand naming and ad creativity, all becoming classic cases for Chinese peers to study.

P&G is also a legendary company in the United States. GE CEO Jeff Immelt, Microsoft CEO Steve Ballmer, and eBay CEO Meg Whitman are all top talents cultivated by P&G.

P&G grew with the global consumer economy and the expansion of the middle class in the 20th century. Why has P&G's golden brand begun to fade in the 21st century? Academia and business circles have proposed various plausible but incorrect diagnoses:

Diagnosis 1: Focusing on the mass market, losing the high-end segment. As the economy develops and consumer incomes rise, consumption upgrades, and P&G's mass-market focus no longer attracts them. For example, more first-tier city consumers are upgrading from Head & Shoulders to L'Occitane, Kiehl's, or Tsubaki.
Diagnosis 2: Brand blurring. P&G has launched high-end products but placed them under its mass brands, such as Rejoice Perich, Pantene Pro-V乳液修护润发精华素, and Olay ProX. This is a blunder, a taboo in brand management, as consumers cannot distinguish them. How could P&G make such a low-level mistake?
Diagnosis 3: Multi-brand failure. This is an old topic. From the beginning, some questioned P&G's multi-brand model, arguing that running hundreds of brands simultaneously would cause management to lose focus.
Diagnosis 4: Big company disease. P&G is a mature, established public company with complete processes and reporting systems, leading to slow decision-making and long chains, unable to pull off surprise moves like small companies. For example, the herbal brand "东方季道" took two years from R&D to market, which was considered fast for P&G.
Diagnosis 5: Functional advertising no longer attracts young people. Slogans like "Dandruff gone, hair more beautiful," "80,000 micro-pores for instant absorption," "One toothpaste fights 7 oral problems"—this monotonous, force-feeding functional appeal lacks buzz and doesn't suit modern, trendy young people.
Diagnosis 6: Slow digital marketing. Modern consumers have shifted from TV to mobile and social media, but P&G's marketing remains traditional, with TV as the primary ad medium, and its internet marketing still follows traditional TV ad models, like pre-roll video ads, lacking interaction and innovation.
Diagnosis 7: Talent drain. P&G's former chairman Richard Deupree once said, "If you leave us our money, our buildings, and our brands, but take away our people, our company will fail." This contrasts with Coca-Cola's story that "if the factory burns down, as long as the brand remains, it can rise again overnight." P&G is now facing a talent exodus, from its US headquarters to Guangzhou P&G, with talents leaving in droves.
Diagnosis 8: Market saturation and economic downturn. This view holds that P&G has been cultivating global markets for over a century, with high market penetration, making further growth difficult. Additionally, the global economic slowdown in recent years makes it hard for P&G to remain unaffected.

My Rebuttals

However, I believe none of the above diagnoses hit the core issue, and they are untenable.

For instance, the claim that P&G missed China's consumption upgrade. But the brands that have taken away P&G's market share, like Liby and Blue Moon, are clearly positioned lower than P&G.
For those who think P&G's brand is blurred, look at P&G's competitors like L'Occitane and Kiehl's; they also place many products under one brand. In other words, these brands that are taking P&G's market share are far inferior to P&G in management, brand, and strategy. Of course, for P&G, it was indeed a low-level mistake.
Multi-brand failure? This is a cliché. The problem is that consumers are "rejecting" P&G precisely because they feel P&G has too few brands—not enough, not new enough, not trendy enough. So they try new brands beyond the old trio of Head & Shoulders, Rejoice, and Pantene, seeking new stimulation.
Big company disease? If you think P&G's size is a disadvantage, you are completely wrong. Personal care, baby care, and feminine hygiene products are industries that require time to build trust, and big companies have credibility. Do Chinese consumers dislike Pampers because the company behind it is too big? Can those ephemeral small FMCG companies in the Chinese market reassure first-tier consumers? Do consumers need toothpaste and shampoo that change formulas, packaging, and names every year, quarter, or even week (like Xiaomi's weekly system updates)? Of course not.
Functional advertising too old-fashioned? I want to reiterate that P&G's advertising is still the highest standard in the industry. If you think P&G's ads are outdated, look at competitors' ads. They are even more outdated. Most are imitating P&G, some poorly.
Poor digital marketing? This is a trendy topic, but it's also a false proposition. Every company doing digital marketing can present a series of so-called success cases, claiming how many clicks their internet ads got, how many interactions with consumers, how many reposts, likes, and shares. But I want to say that so far, no powerful brand in the world has been built on such superficial digital marketing. Building a brand takes time and accumulation.
Talent drain? This is a result, not a cause. Talents left P&G because they smelled the decline, not the other way around.
Market saturation and economic downturn? This is true; the overall daily consumer market has seen sluggish growth. The problem is that the market share that P&G had penetrated and saturated is being taken by other brands.

The Real Crux

I believe that in the face of the current crisis, P&G's experienced and battle-hardened professional managers can certainly come up with many good strategies. However, my view is that P&G's decline is inevitable, and P&G will never regain its former glory. These efforts, like Tanchun taking over the Grand View Garden or Li Hongzhang and Zhang Zhidong launching the Westernization Movement, may bring a brief "revival," but in the long run, they cannot change P&G's fate of inevitable decline.

Because P&G is a product of the industrial era's "mass production + mass retail + mass distribution + mass brand + mass logistics", like the Ford Model T, producing a good, affordable product and reaching national consumers through national advertising and distribution. Consumers didn't need other choices.

However, now we are transitioning from the industrial era to the information age, and further to the data age, where small and beautiful brands can reach their audiences through online channels. For example, in the past, consumers had an inner urge to be "different." But in the pre-internet era, a young mother in a remote county in China could only see new brands on TV or in supermarkets. Even if she didn't want to use P&G shampoo, she couldn't know about a niche shampoo bar brand like Lush in the UK.

But with the internet, everything is different.

A young mother in a remote county joins an online mom community. Someone mentions a niche product from the UK or New Zealand that's good. She searches Taobao, and hey, there are daigou (personal shoppers). She orders. Two or three days later, the product arrives.

P&G, Walmart—these industrial-era giants—will inevitably decline, and no matter what, they cannot regain their former glory. No matter how many meetings P&G holds, how many talents it hires, how many new products it develops, or how much cost it incurs, it cannot succeed again. This has nothing to do with P&G's management level or the efforts of its employees.

P&G is declining not because it is low-end or high-end, not because it has too few or too many brands, not because its products are too old or too novel. In fact, in the future, high-end products, rustic knockoffs, ancient niche products, and bizarre products that iterate daily will all have their own markets. All this is because of the internet. In the industrial era, market competition inevitably led to excellent companies like P&G and Walmart defeating competitors through best practices and dominating their territories. This outcome was optimal for society, consumers, and even the natural environment. Now, P&G's market share is declining not because people no longer like P&G, but because in the industrial era, there was no choice but P&G; now they have infinite choices.

※ ※ ※

P&G's inevitable decline is an elegy for the end of the industrial era. But P&G need not mourn alone, because looking further ahead, the small and beautiful brands that are now happily eating away at P&G's market will also decline, as consumer demand will further fragment, personalize, and customize. When we reach the fully C2B era, the current concept of "brand" may no longer exist.

Some might say, "So you're saying P&G is hopeless?"

Of course, there is hope. I analyze that P&G has many ways out:

Enter markets like Africa where the internet and e-commerce are not yet widespread; they still need quality products from the industrial era. China's township markets and India also have significant untapped potential.
Leverage its strong resources to transform into a holding and capital operation company, specializing in acquiring promising small and beautiful brands, then packaging them for listing and exiting with profits.
Transform into a platform company, incubating daily consumer brands.
Transform into a B2B company, moving from the front stage to the backstage, using its technical expertise to provide raw materials, R&D, and OEM services for various daily consumer brands. This is how many European, American, and Japanese companies operate now, and they are thriving.

Finally, let me clarify: "P&G will inevitably decline" refers to the industrial-era big-brand model, not the company named P&G. Small companies with inferior management can gradually erode P&G, while P&G's efforts to improve itself are futile. This outcome seems tragic but is historically inevitable.

This is the times. This is fate.

This platform will soon organize distributor friends interested in transforming to B2B platform e-commerce to visit and learn from B2B platforms.

The B2B platforms for this visit include:

Yantai Yishang Logistics model, strong in logistics;
Beijing Beiquan model, strong in integrating terminal retail;
Piduoduo model, strong in integrating distributors.

For details, click the link below

If you are willing to join us, add the editor's WeChat. When adding, reply with the keyword: 考察 (inspection)

- END-

China's best FMCG distributor learning platform Dedicated to providing professional, practical, and applicable tutorials for companies and distributors Committed to helping Chinese FMCG distributors grow rapidly

The most professional and practical knowledge base in the FMCG industry

Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base

[Long press QR code to follow]