The growth of consumer goods companies like P&G is a function of product innovation, which requires the management to take risks and experiment with new products.
P&G has discontinued providing quarterly guidance under Lafley’s leadership, which indicates that the company is moving away from rigid targets and towards more freedom in the decision-making process. Stopping quarterly guidance will allow the management to take greater risks, as there will be little or no pressure to meet the guidance targets released to investors, as was the case before. With the room created by discontinuing guidance, the company can also increase its marketing expenditures to compete better against rivals. However, this is just a step towards the long-term restructuring required in P&G.
Increases in marketing investments have impacted consumer goods companies positively in the past, as is evident from the following case studies of PepsiCo (PEP), Coca-Cola (KO) and P&G. read more about Coca-Cola.
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