Procter & Gamble Streamlines Things: New Brand Development Plan Could Simplify Promotions and Save Money



NEW YORK – Procter & Gamble just moved closer to streamlining management and cutting costs. Its rollout of a revised brand development fund on July 1 will require all company divisions to adhere to one set of guidelines to receive promotional monies for product merchandising.
The brand development fund is an extension of value pricing that enables retailers to receive a certain amount of promotional and merchandising funds upfront, based on past performance of P&G product sales. There will exist one set of rules for health and beauty care and grocery products, instead of two. The system should serve to lessen the burden of meeting stringent product performance requirements to earn promotional dollars, say industry sources.
The current brand development fund is broken up into two segments: the flexible marketing fund for grocery products, and the category marketing fund for health and beauty care products, say industry sources. The flexible marketing fund requires very little product sales performance to earn promotional monies, while the category marketing fund forces retailers to meet stringent performance requirements to receive trade allowances.
The move signifies P&G’s quest to simplify and standardize its work processes that have become increasingly convoluted over the past several years. ‘Why have several approaches to the brand development fund when they can have one to cover all their brands. They’re trying to simplify their operations to cut costs in inventory, transportation and manufacturing,’ said a P&G insider.
Ann Jenemann Smith, spokesperson for P&G, said the company ‘is working with customers to take excess costs out of the system. This standardized program is much easier to use, so our costs will be lower.’
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