P&G India’s Sharat Verma on the Premiumization of the FMCG sector
We speak to P&G India’s Sharat Verma talks about how using P&G’s voice for a larger change is not only the right thing to do, but also an apt business decision. He also sheds light on the premiumization seen in the FMCG space & gives a peek into the brand’s media mix.
Procter and Gamble (P&G), the company behind brands including Gillette, Ariel, Pampers, Whisper, and Pantene, is an advertising mammoth that produces thousands of new ads in a year. As per TAM AdEx, P&G was among the top 10 advertisers on television in 2022.
Social Samosa speaks to Sharat Verma, Chief Marketing Officer, P&G India; Vice President and Business Head for Fabric Care, P&G India to understand the advertising patterns that the giant follows, importance of cause advertising, and its growing focus on premiumization.
He shared with us a few important pillars of its marketing strategy, which are as follows:
P&G’s Ariel and Vicks have tried to keep cause-advertising at its center. While Ariel shares the message of gender equality in the division of household through its ‘Share the Load’ campaign, Vicks, the brand from their Personal Health Care portfolio, talks about ‘Touch of Care’ taking up topics such as transgender rights, adoption, and children with disabilities.
Whisper has also attempted to raise awareness around period taboos and drive menstrual education with initiatives like Touch The Pickle, KeepGirlsInSchool, and more.
Varma said that no matter the year, it is important for advertising to stand out in an environment of reducing consumer attention span (less than 5 seconds) and heavy clutter where a consumer can be exposed to upwards of 5000 ad triggers in a day.
So, to break through the clutter, P&G connects with consumers through their beliefs.
“At P&G, we’ve made a choice to step up and use our voice in advertising as a force for good and a force for growth. We produce thousands of new ads every year. We believe that the best way to break through the clutter is by connecting with consumers on shared values and beliefs and have conversations on the world stage that bust myths, break biases & shatter stereotypes while building our brands,” said Verma.
Due to this marketing approach of connecting with shared values and beliefs, Verma said that consumers have rewarded the FMCG group with loyalty and preference.
“Vicks, Ariel, and Whisper are some of our most loved brands, and consumers have rewarded these brands not only for the superior value they offer, but also for being a Force For Good and consistently driving social and cultural change,” said Verma.
Various reports suggest that the youth find it easier to connect with sustainable and green brands.
According to a Havas Report, more than 60% of consumers in India care about the social impact of products, and the effect of the product on society and would like their favorite brands to play a much larger role in society.
Therefore, leveraging P&G’s voice for larger social change, said Verma, is not just the right thing to do, but also the right business choice.
“Consumers today have a strong point of view and expect their brands to take a stand. While we provide the consumers with the best products that money can buy, it is also important for us to use our voice to help bring about change that consumers want to see. 9/10 consumers feel better about a brand that supports a social cause. 64% consumers choose, switch, or avoid brands based on their stand on societal issues. Expressing brand values isn’t optional anymore,” he added.
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Price-centric Product Innovation
India is a price-centric market, especially after the increasing inflationary pressures; a report by Kantar said that Indian consumers have started opting for lower-priced packs or unbranded products of food, grocery and daily necessities as rising prices are squeezing their monthly household budgets.
What has helped P&G navigate inflationary pressures is its ‘quality products’ and price point. Across its portfolio that includes products of everyday use, P&G has tried positioning itself as an affordable brand that offers value.
“At P&G, our strategy has taught us that for a portfolio like ours of everyday use products, performance drives brand choice. Indian consumers have always been value-conscious, and our tried and tested way of delivering consumers is by delighting them with propositions that improve their lives. Therefore, the base expectations from products don’t change – they want the best clean, the best hygiene, the best smoothness, the best comfort that fits their budget,” said Verma.
In a diverse country like India, where consumer expectations change as you go deeper into the country, consumer shopping behavior is even more diverse and ranges from quick commerce to local Kirana stores.
With pandemic giving a push to digital adoption in rural India, marketers are now working on their regional strategy, which mostly includes focusing on pricing, languages, media mix, and shopping behaviour.
“The pandemic accelerated the digital adoption for Indian consumers at large, but an unparalleled shift is noticed in the rural consumers. The journey of media consumption evolution for rural markets has missed a few steps, and today we are seeing the market catch up to the evolving trend – mobile internet consumption! Today, 50% of active internet users are from Rural India. This opens a never-before opportunity of reaching these consumers with our propositions and communication,” said Verma.
India is expected to have 900 Million internet users, and 350 Million online shoppers by 2025, and Verma said that the way to be ahead of this disruption is to view it constructively and take it as an opportunity vs a challenge.
On the other hand, the affluent cohort of consumers expects products that offer ease of living. In the fabric care category, P&G has been focusing on premiumization to meet these needs. It has come up with liquid detergent, washing pods, and post-wash care such as conditioners as washing machines are becoming more and more automated.
Sharing what is driving the growth of premium products, Verma said, “Premiumization or up tiering is driven by mobility, rising household incomes, increased access, and awareness with digital penetration, and increasing participation of women in the workforce. In India, only 20% of women are working in the formal sector. This number has been growing between 6-8% year-on-year. We know that as people step out to work, household incomes rise and the time at hand reduces. This combination creates the conditions for up-tiering.”
For example, more expensive clothes in the wash basket combined with less time for laundry creates the preference for premium and more efficient detergents.
Due to this trend, P&G has seen strong growth in premium powders, liquids, and PODs.
“If we look at growth in numbers, liquid detergents priced at 3x the market average price have grown nearly 50% year-on-year. Even premium machine powders (Matics), which are priced at 2x the average price, have been growing twice as fast as the average market growth. This consistent premiumization is being driven by consumers at the top of pyramid, who are early adopters and more resilient to inflation. This is also supplemented with increasing washing machine penetration, and we know that household with washing machines and working women consume 2x and spend 3- 4x vs category average,” said Verma.
Marketing Mix for 2023
One of the biggest advertisers in the world, P&G will continue to be where the consumer is. It leverages every touchpoint in the way best suited for addressing both – consumer needs and brand needs. The brand stays away from the one-size-fits-all route.
“As always, it starts with understanding consumer behaviour. In a diverse market like India, every platform or medium has a role to play and a place in our mix. Therefore, our media mix is dynamic. It is influenced by the brand and category challenge, cultural context, our brand message, and where we want to intercept the path to purchase. With the different roles that every platform can play for the vast and varied portfolio at P&G, there is no one-size-fits-all approach,” said Verma.
From Whisper to Ariel, P&G spends a lot on television advertising to drive awareness. The brand continues to be one of the top 10 spenders on TV.
Sharing more about P&G’s media mix, Verma said, “From a time when almost all of our advertising budgets on Pampers were going on TV ads where less than 20% of the audience had babies in the diaper-able age, we now have data-driven algorithms and applications that allow us to target expecting and new parents with the right propositions and right content. TV continues to be the primary medium for awareness on many of our categories.”
For skincare, it has often turned to print media to win consumers’ trust. It has also upped its focus on digital.
“Print helps us with unparalleled on-the-ground buzz for exciting promotions. In categories like skincare where consumers rely on trusted sources to provide them with genuine information and reviews, Olay works with an established always-on activity system of Key Opinion Leader partnerships. As digital penetration in the country further accelerates… we will continue to evaluate our mix and adapt it to help build brands and engage consumers,” said Verma.
While Varma avoided giving future-looking statements, he told Social Samosa that its focus would continue to be on consumers. It would chase mediums where consumers are and continue to listen to their beliefs.