P&G: still trying to replicate the American consumer

Photo credit: Meanest Indian

This snippet from The Hindu caught my eye,

Mr Robert McDonald, Chief Operating Officer, P&G, [...], said that

 Indian consumers spend only about a dollar a year on P&G brands while in the US, its most developed market, consumers spend $100 a year on its products across the 21 categories.

“So we would like to replicate that everywhere,” he said. China’s consumers spend about $3, Mexico about $20 and Russia is about $9 a year, he said.

P&G, which owns brands across categories such as Pampers diapers, Ariel and Tide detergents, Gillette shaving systems and Pantene and Head & Shoulders shampoos, is yet to enter several categories in India such as body wash, premium fragrances, household cleaners and cosmetics in which it is present worldwide. “We have to get into those 13 other categories and we have plans in place to do those,” said Mr McDonald.

I dunno about that. It seems to me that in today's world, one where we have Thomas Friedman begging for a reboot, is recreating the spending habits of the American consumer the right strategy to take in emerging markets?

And on a snide note, a couple of points that I simply have to make though its very late and I'm really not in an analytical mood right now.

1. Purchasing power parity please people - is spending a $100 in America on Bounty and Dove quite the same as a dollar (US, based on which day's exchange rate, prithee?) in India?

2. There are existing solutions in many of these categories, so to apply just Porter's five forces alone means that the threat of substitutes is uber high. Like what, you may ask?

Paper towels for one, ain't gonna happen. Forget India, even the officially "developed" nation of Singapore thinks twice about using paper towels in the kitchen. Interestingly enough, a great majority of P&G products are built on the premise of "throwaway and replace". That's why we spend so much on household cleaning products in the US. Yes, it is convenient and yes its affordable and no, there aren't many substitutes like an army of maids and other domestic help.

In a country like India, where human labour is extremely affordable, by the most middle class of households as well as further down the income chain, can demand be created for "convenience" ? Can the mindset that chooses to "repair and reuse" be changed to accomodate this premise of disposable everything? Has Kellogg's succeeded in teaching Indians to pour cold milk into their cereal yet in the morning?

Come now, its Christmas, I shall stop this snarky tide and hope for the best. Or, since I leave for India this weekend, I'll let you know what I think after I've had a look see in the markets and talked to a few housewives. Heh. Pinching paisa is a matter of pride.

Comments

[ruSh.Me]

Well, Even in "High-Income Group" as in my parents home, the bai still uses cloth poocchha, my mom dusts the drawing room by waste cloth....Paper towel might for the couple with very-high-income... Not for a family of 4.....Yes, the figure is achievable, but needs time and lots n lots of patience!!

[Niti Bhan]

the figure may be achievable but I question whether that is the metric of success P&G should aim, all things being equal (sustainability, the environment, consumption, throwaway, disposable etc) ? Or are they willing to change their own mindset and approach, particularly the positioning of "convenience"? India's market has great potential but its not for the same products or the same types of products. It may well be that the premise of "reuse and maintain" rather than "cheap" or "sachet" may convey far greater "value for money" - say a really super "magic cloth" that picks up dust like swiffer does but is reusable and rinsable? what if P&G threw the might of their innovation and creativity to come up with products in the same categories (household or personal care) but addressing the very different value systems and mindset of those who have been outside of mainstream consumer culture?