Procter & Gamble to keep focus on innovation

Reuters News October 12th

Procter & Gamble Co Chief Executive Bob McDonald defended the company's heavy spending on product innovation and marketing as a way to boost market share for each of its brands.
The world's largest household products maker, known for such popular brands as Pampers diapers, Tide laundry detergent and Duracell batteries, has been spending heavily on developing and promoting new products to attract value-seeking shoppers.

In August, P&G posted a fourth quarter profit below analysts' estimates as higher spending on marketing more than offset sales growth. First quarter earnings will be released
on Oct. 27. "We're not yet growing profitable share on every one of our businesses," McDonald told shareholders at the company's annual meeting in P&G's hometown of Cincinnati,
Ohio, on Tuesday. "This remains a top priority," he said. "We have robust innovation
and marketing plans in place to accelerate share growth across the entire portfolio." McDonald highlighted the company's new Gillette Fusion ProGlide shaving system, which he said is already the number one razor in the United States, and Pampers Dry Max diapers.

Earlier this year, the company faced a public relations battle over its new Pampers after parents complained that the diapers caused severe rashes. U.S. and Canadian agencies investigating the claims said last month they found no specific link between Pampers and the rash cases.

Many packaged goods makers turned to promotions to lure U.S. consumers during
the recession's nadir. But as the economy shows halting signs of recovery, they are
focusing on new products with fresh features to attract purchases.

"Innovation that truly improves people's lives is more important than ever because
many of the economies in which we operate are still recovering from recession," McDonald said.
"Our own experience shows that companies that continue to invest in innovation during economic downturns enjoy more growth in the years that follow."

The company's increased investment in new product development will likely pay off despite a recent lackluster performance, said Lauren DeSanto, a stock analyst with Morningstar Inc.

"P&G's stock has been kind of languishing for a while but I think a lot of people including myself think it's undervalued and certainly they've been doing a little bit better job
getting the top line moving and defending market share," DeSanto said.

P&G's shares closed down 0.2 percent at $62.02 on the New York Stock Exchange. The shares are up just over 2 percent this year, compared with a 4.7 percent rise in the Standard
& Poor's 500 Index and a nearly 12 percent jump in smaller rival Clorox .