P&G boss slams innovation-stifling promotions

by Joanna Bowery, Marketing 03-May-06, 08:30

LONDON - Packaged goods firms are struggling to create ground-breaking products as they spend too much on price promotions, according to Procter & Gamble vice-president and UK & Ireland managing director Gianni Ciserani.

"Lower prices are considered a good thing for consumers. However, as we put more money into promotions, we have less to put into innovation," he told delegates at the Institute of Directors' annual convention in London last week. "If sales revenues fall, research and development spend is affected," he warned.

He added that brand values are also suffering as marketing budgets are cut to cover the lower margins resulting from price cuts.

"Over the past six months, media spend [for advertising] has declined and the same is true for direct marketing, print and sampling. This leads to a decline in brand values," he said.

Ciserani suggested that firms should start to increase consumer understanding instead of focusing on promotions, which encourage brand switching.

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