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Executive column: P&G’s new focus for Indonesia — young families
Magesvaran Suranjan and LV Vaidyanathan (Courtesy of P&G)As Indonesia braces for a demographic dividend, American consumer goods giant Procter & Gamble (P&G) is adding young families as a segment of focus for local operations, alongside millennials and baby boomers
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Magesvaran Suranjan and LV Vaidyanathan (Courtesy of P&G)
As Indonesia braces for a demographic dividend, American consumer goods giant Procter & Gamble (P&G) is adding young families as a segment of focus for local operations, alongside millennials and baby boomers.
P&G defines young families as married millennials, with or without children, that are new entrants to the market. Millennials are generally understood as those born around 1981 to 1996 and boomers around 1946 to 1964.
The company expects the new segment to help push sales in the Asia Pacific, which grew 2.4 percent to US$6 billion last year, up from $5.86 billion in 2017, according to P&G’s latest annual report.
P&G is also undergoing restructuring that has resulted in continual worldwide layoffs since 2013. The annual report says the workforce was cut by 24 percent from 121,000 employees in 2013 to 92,000 last year.
At the same time, following a $3.8 billion acquisition of Merck’s over the counter healthcare business, P&G has expanded its own health care business unit, particularly in targeting aging populations. The other units are beauty, grooming, fabric & home care and baby, feminine & family care.
To find out more about the company’s business strategy, The Jakarta Post talked to P&G Asia Pacific president of selling and marketing operations Magesvaran Suranjan, P&G Indonesia managing director LV Vaidyanathan and P&G Indonesia marketing head Marc Aldrich Gopal.
Below is an excerpt of the interview that was held during P&G Indonesia’s 30th anniversary celebration in Jakarta and that has been edited for brevity and clarity.
How important is Indonesia to P&G operations in Asia Pacific? How big was the country’s contribution to net sales last year?
Suranjan: Indonesia is a very important aspect of the business. We have invested over $5 billion into Indonesia from 30 years ago and we will keep investing.
Vaidyanathan: I won’t go into specific details of each of the businesses. But I have to say that from an [Indonesian] consumer standpoint, all our brands are loved. We have market leading brands in the hair care category — Pantene. We have it in the fabric enhancers category — Downy. We have in men’s grooming — Gillette.
What about growth in Indonesia?
Vaidyanathan: I can say we contributed in line with the expectations set for us in terms of size of business and contribution to growth.
There are many categories [in Indonesia] that don’t have the same level of development in Southeast Asia. Take grooming as an example. Only 30 percent of [Indonesian] men use our grooming products. There are still 70 percent who can start using our products.
P&G’s annual report says the beauty business unit recorded the highest growth. Is that the same for Indonesia?
Vaidyanathan: Yes. Beauty is a large part of our business. But we also have our fabric business such as fabric conditioners that has also grown quite well.
Which are P&G’s biggest markets in Asia Pacific?
Suranjan: We are blessed to have been in Indonesia for 30 years, but some markets we’ve been in longer. We have been in Japan for longer (46 years). We’ve been in the Philippines for 82 years. Where we’ve been longer, we tend to have larger businesses.
P&G’s customer demographics are reportedly shifting toward boomers and millennials. What new marketing strategies and products have been introduced in addressing these markets?
Suranjan: I would add a third segment, which is young families. Boomers and millennials are clearly there but young families are [also] an important aspect of Asian societies, including in Indonesia. These young families are aspiring. They have new needs such as diapers and have disposable incomes like never before.
You may ask how does one brand serve somebody who’s 50 plus and somebody who’s below 50? It comes down to usage. How do you design packaging for somebody who may want an easy way to open the product versus an easy way to carry to their house. So you could find direct to consumer for families and millennials but different opening systems for the boomers.
Vaidyanathan: In Indonesia, boomers are not as delimited as millennials are. The greatest product innovation for us has been Pantene Perfect On [hair conditioner], launched in January. It comes from the insight that people, particularly millennials, look for solutions to maintain their hair during the course of the day.
How about the marketing strategy?
Suranjan: We do more research than, likely, anybody else. This is our brand’s foundation. That’s first. Second is leveraging new age digital capabilities, which have conversations with these consumers so we can learn from consumers. The third aspect is keeping our ears to the ground on broader societal trends. Where is society growing and how can we stay in front of it to stay relevant?
P&G recently released a new headscarf-friendly shampoo. Will the company continue this approach of targeting Muslims in its Muslim-majority markets?
Gopal: The reality is that Indonesia is the biggest Muslim market in the world. It’s the biggest [Muslim] population. It’s critical for brands to — in creating superior products — understand the life that they live. And the reality is that the majority of Indonesians are Muslim. So, obviously, as we design with that in mind, you might see more [products].
There was a case over halal refrigerators last year. How far might P&G pursue an approach of putting halal labels on non-ingestible items?
Suranjan: We will comply with the regulations asked of the local market and, of course, explicitly meet local standards.
Gopal: On top of complying with government standards, what’s important is deeper consumer understanding. I think discerning consumers buy a product today not just because it is halal but because it also understands their needs.
Suranjan: I would encourage us — if I were to put an editorial on this — to put [halal labels] where it really matters. Where products are ingestible. This is in order to maintain the integrity of something good. I do think that once you put [labels] onto refrigerators and things, it dilutes the intent. But again, that is an opinion.
