Targeting the low-income consumer

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In a radical shift to its business model, Procter & Gamble is targeting ultra-low-cost products as developing markets are expected to fuel future growth:

“There are roughly 6bn people in the world. For most of this company’s history, its strategy was pointed at the billion at the top of the economic pyramid. Where did that leave P&G? It meant we were appealing only to the top percentage of people in those developed markets who had the money. When [chief executive] AG [Lafley] came in [in 2000] and said, ‘We’re going to serve the world’s consumers’, that led us to say, ‘We don’t have the product strategy, the cost structure, to be effective in serving lower income consumers’.”

Jeremy Grant details the changes this has had on P&G’s market research techniques, manufacturing processes and supply-chain management. Project next-in-line: a sub-10 cent disposable diaper to clothe billions of Chinese babies.

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