Business school cases often consist of how companies adapt their strategies for different times. By that benchmark last one year has provided a life's worth of learning for managers. I have read and observed numerous instances of companies changing strategies to adapt to the consumer's spending habits and changing priorities - the new normal.
Lately, P&G, known for is investment in R&D and known to introduce a new product only when it was 30% better than an existing one, made a significant deviation in response to its falling sales. It introduced 'Tide Basic', a lower cost version of its Tide line of detergent. The product, at least initially, was offered for sale only at value chains. To distinguish it from the regular Tide products, the company has used yellow for packaging.
With rise in the savings rate of American households, while you can debate whether the move to cheaper store brands is due to the recession or has it been happening for a while, there is no doubt over the result. Consumers are moving to cheaper brands. P&G has taken he learning from this to evolve its strategy.
In the word's of the new CEO McDonald it is, "purpose-inspired growth" strategy of touching and improving more consumers' lives in more parts of the world…more completely." According to this HBR interpretation the company now plans to touch more lives with its emerging economy focus and bring on more affordable products. To me that implies that there is another organization that has realized the its growth drivers now lie in emerging markets and it needs to adapt its style ( and its product portfolio for the consumers). Even is the developed markets consumers are becoming extremely sensitive about how they spend and companies have to adapt their product portfolios.
Books Update - Five people you meet in Heaven (Mitch Albom). I am motivated to read the more popular, Tuesdays with Morrie
Predictably Irrational (Dan Ariely)
