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Wednesday, September 14, 2011

P&G segments its markets into ‘ones’, ‘twos’ and ‘threes’ – much better to be a ‘one’

Yesterday’s WARC newsletter contained the summary of an article from the WSJ about Procter & Gamble and how it is responding to the impact of the recession on US consumers by creating strategies to reach "high-end and lower-end" shoppers.

Since the beginning of the year I have been writing about the mammoth challenge for marketers to respond to the ultra-fragmentation of the market. This trend applies to all ages but particularly older consumers. I have referred to the two groups as the ‘haves’ and ‘have nothings’.

Apparently Citigroup, the financial services provider, has called this phenomenon the "hourglass" society. The narrowing of the middle class in parallel to the expanding affluent and poorer groups.

P&G’s head honcho for North America said: "It's required us to think differently about our product portfolio and how to please the high-end and lower-end markets  - that's frankly where a lot of the growth is happening."

One fact from the article that surprised me was that the Gini Coefficient for the US is similar to that for the Philippines and Mexico.  The Gini Coefficient is the standard way of measuring social inequality.

It seems that P&G divides shoppers into "ones", who are relatively affluent, "twos", the lower-income group attracting greater attention, and "threes", the poorest customers, and not an explicit target. Unfortunately, the article did not provide any quantification of these three groups.

This is a disturbing comment from P&G

"This has been the most humbling aspect of our jobs, seeing the numbers of Middle America shrinking because people have been getting hurt so badly economically that they've been falling into lower income."

Not a happy story in America. Not a happy story in Europe, but one marketers had better get used to dealing with. Dick Stroud

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