P&G – Managing a Multi-Brand Portfolio in Personal Care

Executive Summary

Procter & Gamble (P&G), founded in 1837, operates one of the world's most extensive consumer goods portfolios, with particular dominance in personal care. As of fiscal year 2024, P&G's Beauty segment, which encompasses much of its personal care portfolio, generated $15.6 billion in net sales, representing approximately 18% of total company revenue (P&G Annual Report 2024). The company manages over 10 major beauty and personal care brands globally, including Olay, Pantene, Head & Shoulders, Old Spice, Gillette, and SK-II, each targeting distinct consumer segments and price points.

This case study examines P&G's strategic approach to managing this multi-brand portfolio, focusing on brand architecture decisions, market positioning strategies, innovation frameworks, and portfolio rationalization efforts undertaken between 2014 and 2024. The analysis draws exclusively on verified public information from P&G's official disclosures, executive statements, and credible media reports.

Company Background and Portfolio Evolution

P&G operates across five reportable segments: Fabric & Home Care, Baby, Feminine & Family Care, Beauty, Health Care, and Grooming. The Beauty segment includes skin and personal care products, hair care, and prestige beauty offerings. According to P&G's 2024 Annual Report, the company's brands reach approximately 5 billion consumers worldwide across more than 180 countries.

The company's multi-brand strategy in personal care evolved significantly under CEO A.G. Lafley's leadership during his two tenures (2000-2009 and 2013-2015). In August 2014, P&G announced a major portfolio restructuring plan to divest or discontinue between 90 and 100 brands, focusing resources on approximately 65-70 "leadership brands" that generated about 90% of company sales and more than 95% of profits (P&G Press Release, August 2014). According to Lafley's statements to investors at the time, "We are making the bold decision to change the shape of our company and focus our resources on the businesses where P&G's capabilities create the greatest value for our shareholders" (P&G Investor Presentation, August 2014).

This strategic shift resulted in divestitures including the sale of 43 beauty brands to Coty Inc. in 2016 for approximately $12.5 billion, including Cover Girl, Max Factor, and Clairol (P&G Press Release, July 2016). The company retained premium brands like SK-II and Olay while exiting lower-margin businesses.

Brand Portfolio Architecture in Personal Care

P&G's personal care portfolio demonstrates a clear hierarchical brand architecture designed to minimize cannibalization while maximizing market coverage across price tiers and consumer segments.

Hair Care Portfolio

In hair care, P&G maintains distinct brands targeting different consumer needs and price points. Head & Shoulders, the world's number one shampoo brand by sales according to P&G's 2023 Annual Report, focuses on dandruff treatment and scalp health. Pantene positions around hair strength and damage repair, emphasizing its Pro-Vitamin formula. Herbal Essences targets consumers seeking botanical ingredients and sensorial experiences. According to Jon Moeller, P&G's CEO, in a 2023 earnings call, "Our hair care portfolio allows us to serve consumers across multiple price points and benefit territories without having our brands compete directly against each other" (P&G Q3 FY2023 Earnings Call Transcript).

Each brand maintains separate product development teams, marketing campaigns, and retail strategies. For example, Pantene's "Strong is Beautiful" campaign, launched in multiple markets, focused on hair strength testing and scientific credibility, while Herbal Essences emphasized sustainability and natural ingredients with its "bio: renew" line (P&G Brand Websites, 2023).

Skin Care Portfolio

P&G's skin care strategy centers on Olay as its mass-premium anchor brand. Following years of declining sales, P&G repositioned Olay starting in 2018 with increased investment in digital marketing and product innovation. According to Alex Keith, then Vice President of North America Skin and Personal Care at P&G, the company "made a deliberate decision to elevate Olay through science-backed communication and premium positioning while maintaining accessible price points" (Interview with AdAge, March 2019).

The repositioning included the "Fearless to Face Anything" campaign and the launch of Olay Regenerist Retinol 24 in 2019, which became one of the brand's most successful product launches. P&G reported in its 2020 Annual Report that Olay had returned to growth in fiscal year 2020 after several years of decline.

SK-II operates at the prestige tier, priced significantly above Olay, and targets Asian markets particularly. The brand, acquired by P&G in the 1990s, maintains separate distribution channels, predominantly in department stores and specialty retailers, minimizing direct competition with mass-market brands. According to P&G's 2024 Annual Report, SK-II continued to grow despite challenging market conditions in China, driven by product innovation and digital engagement strategies.

Men's Grooming Portfolio

P&G's men's grooming portfolio includes Gillette for shaving and Old Spice for deodorants and body care. The Gillette brand faced significant challenges beginning in the mid-2010s from direct-to-consumer competitors like Dollar Shave Club and Harry's. In response, P&G lowered prices on certain Gillette products in 2017 and increased digital marketing investments. According to P&G's 2018 Annual Report, the company "adjusted pricing architecture across the grooming portfolio to improve value perception while maintaining premium positioning for innovative products like Gillette Fusion5 ProGlide."

Old Spice maintained its position through continuous reinvention of marketing strategies targeting younger consumers. The brand's digital-first campaigns, including the famous "The Man Your Man Could Smell Like" series, helped Old Spice become the number one men's antiperspirant/deodorant brand in the United States by value share, according to Nielsen data cited in P&G's 2019 Annual Report.

Strategic Principles for Portfolio Management

Brand Differentiation and Positioning

P&G employs what it terms "brand imprinting" – creating distinct identities that consumers can recognize and differentiate. Marc Pritchard, P&G's Chief Brand Officer, stated in a 2022 interview with Marketing Week, "Each of our brands must stand for something unique and ownable. We don't allow brands to drift into each other's territories because that destroys value for everyone."

This differentiation extends to product formulation, packaging design, pricing strategies, and communication approaches. For example, in facial cleansers, Olay focuses on anti-aging benefits with scientific credibility, while other P&G personal care products under different brands address different primary benefits.

Innovation Resource Allocation

P&G concentrates innovation resources on "irresistibly superior" products that deliver noticeable performance advantages. According to the company's 2024 Annual Report, P&G invested approximately $2 billion in research and development across all categories. Jon Moeller explained in a 2023 investor presentation, "We focus our innovation spending on the brands and categories where we have the strongest competitive advantages and the greatest potential for value creation."

This selective approach means that not all brands receive equal innovation investment. Leadership brands like Olay, Pantene, and Gillette receive disproportionate R&D resources. P&G's 2023 Sustainability Report indicated that the company conducts over 20,000 research studies annually with more than 5 million consumers to guide product development priorities.

Portfolio Pruning and Focus

The 2014-2016 portfolio rationalization represented P&G's most significant restructuring in decades. The company's rationale, as articulated by Lafley, centered on three criteria for retained brands: leadership position in large, growing categories; distinctive brand equity; and ability to leverage P&G's core capabilities in product innovation, brand building, and go-to-market execution (P&G 2014 Investor Day Presentation).

Brands that failed to meet these criteria were divested or discontinued. The beauty brand divestiture to Coty, completed in October 2016, included 43 brands generating approximately $6.5 billion in annual sales (P&G Press Release, October 2016). According to David Taylor, who succeeded Lafley as CEO, "The portfolio changes allowed us to increase focus and resources on fewer, stronger brands where we could win" (P&G Annual Shareholders Meeting, October 2016).

Following this restructuring, P&G reported improved profit margins and sales growth rates. The company's gross margin increased from 49.2% in fiscal 2015 to 50.8% in fiscal 2017, while organic sales growth, which had been flat or declining, returned to positive territory (P&G Annual Reports 2015-2017).

Market Challenges and Competitive Dynamics

Disruption from Digital-Native Brands

P&G's personal care portfolio faced significant disruption in the 2010s from direct-to-consumer startups offering simplified product lines at competitive prices. In shaving, Dollar Shave Club's subscription model attracted consumers dissatisfied with Gillette's premium pricing. Unilever's acquisition of Dollar Shave Club for $1 billion in 2016 validated the threat (Unilever Press Release, July 2016).

In skin care, brands like The Ordinary disrupted traditional prestige beauty by offering single-ingredient products at low prices with transparent formulations. These competitors gained traction particularly among younger consumers through digital channels and social media.

P&G responded with multiple initiatives. The company lowered prices on some Gillette cartridges and launched Gillette Shave Club, a subscription service, though it gained limited traction compared to competitors. According to Gary Coombe, then President of Global Grooming at P&G, in a 2018 interview with CNBC, "We recognized we needed to adjust our value equation and meet consumers where they were shopping, including online."

Changing Consumer Preferences

Consumer preferences shifted toward products perceived as more natural, sustainable, and transparent in ingredients. This trend particularly affected traditional personal care brands. P&G acknowledged these shifts in its annual reports and sustainability disclosures.

In response, the company reformulated products to remove certain ingredients and increased sustainability commitments. P&G's 2030 Ambition, announced in 2019, included goals to enable and inspire responsible consumption through product innovation and communication (P&G 2020 Citizenship Report). Herbal Essences achieved recognition from the Royal Botanic Gardens, Kew, for its bio: renew range, and several brands increased use of recycled materials in packaging (P&G 2021 Citizenship Report).

Regional Market Dynamics

P&G's personal care brands face different competitive dynamics across regions. In China, a critical growth market, the company confronted strong local competitors and shifting consumer preferences toward domestic brands. According to P&G's 2023 Annual Report, Greater China sales faced challenges but the company maintained focus on premium innovation and digital engagement.

SK-II, predominantly sold in Asia, faced particular pressure during COVID-19-related travel restrictions that reduced duty-free sales. P&G reported in its 2021 Annual Report that SK-II sales declined significantly due to reduced travel retail. The brand subsequently increased investment in e-commerce and domestic channels. By fiscal 2024, P&G reported that SK-II had returned to growth, driven by innovation including the new Pitera Essence line (P&G Q4 FY2024 Earnings Call).

In India, P&G adapted its portfolio strategy with localized products and pricing. The company's 2022 Annual Report noted growth in developing markets driven by "tailored product forms and price points that meet local consumer needs."

Digital Transformation and E-Commerce Strategy

P&G significantly increased investment in digital capabilities and e-commerce across its personal care portfolio. According to Jon Moeller in a 2023 earnings call, e-commerce represented approximately 16% of P&G's total sales globally, up from about 5% in fiscal 2016 (P&G Q4 FY2023 Earnings Call).

The company reorganized its commercial operations to strengthen e-commerce capabilities. Marc Pritchard stated in a 2021 AdAge interview that P&G had "fundamentally changed how we develop products, design packaging, create content, and engage consumers to optimize for digital and e-commerce environments."

For personal care specifically, this meant developing products designed for online discovery and purchase, creating digital-first content, and building direct-to-consumer relationships. Olay launched its Skin Advisor tool, an AI-powered digital consultation platform that recommends personalized product regimens. According to P&G's statements, millions of consumers have used the tool globally (P&G Innovation Website, 2023).

P&G also established dedicated teams for major e-commerce retailers. In a 2022 interview with Retail Dive, a P&G executive stated, "We have account teams specifically focused on Amazon, Walmart.com, and other major e-retailers, just as we do for brick-and-mortar retailers."

Organizational Structure and Decision-Making

P&G operates through a matrix organization structure with category, regional, and functional responsibilities. According to the company's 2024 Proxy Statement, the Beauty sector represents one of several sector-level organizations, each led by a Group President who reports to the CEO.

Within sectors, individual brands are managed by brand teams responsible for strategy, innovation, and marketing. However, certain functions remain centralized to leverage scale, including research and development, purchasing, and supply chain operations. Jon Moeller explained in a 2023 Harvard Business Review interview, "We organize to get the best of both worlds—brand-focused accountability combined with enterprise-wide capability leverage."

Portfolio decisions, particularly around resource allocation and major innovation investments, involve senior leadership review. The company's annual strategic planning process evaluates each brand's performance, competitive position, and growth potential. According to P&G's 2023 Annual Report, leadership uses a framework assessing category attractiveness, competitive advantage, and financial returns to guide investment decisions.

No verified public information is available on specific internal processes, team structures, or decision-making protocols beyond these general descriptions provided in public statements.

Financial Performance and Outcomes

Following the portfolio rationalization, P&G's Beauty segment demonstrated improved performance metrics. Beauty segment sales were $15.6 billion in fiscal 2024, compared to $13.3 billion in fiscal 2017 (the first full year after the Coty divestiture), representing an increase of approximately 17% over seven years (P&G Annual Reports 2017, 2024).

The company's overall gross profit margin improved from 49.4% in fiscal 2016 to 52.6% in fiscal 2024, with operating margin increasing from 19.5% to 24.4% over the same period (P&G Annual Reports 2016, 2024). While these company-wide figures include all segments, P&G attributed much of the improvement to portfolio focus and productivity initiatives.

Organic sales growth, which excludes impacts from acquisitions, divestitures, and foreign exchange, accelerated following the portfolio changes. P&G reported organic sales growth of 5% in fiscal 2024, compared to essentially flat growth in fiscal 2015 (P&G Annual Reports 2015, 2024).

Individual brand performance data is rarely disclosed publicly, making detailed assessment challenging. However, P&G periodically reports that specific brands have achieved or maintained category leadership positions. The 2024 Annual Report stated that P&G held either the number one or number two market share position in most categories where it competes.

Sustainability and Social Responsibility Integration

P&G integrated environmental and social considerations into portfolio management and brand strategies. The company's "Ambition 2030" goals, announced in 2019, included commitments around climate, waste, water, and nature (P&G 2020 Citizenship Report).

For personal care brands specifically, initiatives included:

• Reducing plastic use and increasing recycled content in packaging. P&G reported in its 2023 Citizenship Report that it had delivered approximately 315 million pounds of recycled resin in packaging globally in fiscal 2023.

• Reformulating products to reduce environmental impact. Head & Shoulders launched bottles made with beach plastic in partnership with TerraCycle, collecting plastic from beaches and waterways (P&G Press Release, January 2017).

• Water conservation in product design. P&G reported developing low-rinse formulations for hair care products to reduce water usage during consumer use (P&G 2022 Citizenship Report).

These initiatives served dual purposes of reducing environmental impact and responding to consumer preferences. Marc Pritchard stated in a 2022 interview, "Sustainability is both the right thing to do and increasingly important to our consumers, particularly younger generations."

Brand Building and Marketing Approach

P&G maintained significant investment in brand building across its personal care portfolio despite industry trends toward performance marketing and lower-funnel advertising. According to the company's 2024 Annual Report, P&G spent approximately $7.7 billion on advertising globally, representing about 9% of net sales.

The company shifted its media mix significantly toward digital channels. Marc Pritchard, in testimony before the U.S. House Committee on Energy and Commerce in 2019, stated that P&G had moved approximately $2 billion of its media spending to digital platforms over the preceding several years.

P&G also took leadership positions on media quality and advertising standards. Pritchard delivered a widely-covered speech at the Interactive Advertising Bureau's Annual Leadership Meeting in January 2017, calling for transparency and standardization in digital advertising. He stated, "We have a very simple principle: we don't want to waste time and money on a crappy media supply chain" (IAB Annual Leadership Meeting, January 2017, as reported by AdAge).

For individual brands, P&G increasingly emphasized purpose-driven marketing. Olay's campaigns addressed ageism and featured diverse models. Gillette's "The Best Men Can Be" campaign in 2019, addressing toxic masculinity, generated significant discussion though also controversy. P&G defended the campaign, with a spokesperson telling CNBC, "We have a responsibility as a leading brand for men to reflect on the best men they can be" (CNBC, January 2019).

Current Strategic Priorities and Future Direction

As of 2024, P&G articulated several strategic priorities for its personal care and beauty portfolio in public communications:

Premiumization: Driving growth through premium innovation and product upgrades. Jon Moeller stated in a 2024 earnings call, "We continue to see consumers respond positively to premium offerings that deliver superior performance" (P&G Q4 FY2024 Earnings Call).

Productivity and Cost Management: Ongoing productivity programs to fund brand investments and manage inflation. P&G reported $3.5 billion in gross productivity savings in fiscal 2024 through its multi-year program (P&G 2024 Annual Report).

Market Development: Growing in underpenetrated markets and occasions. The company highlighted opportunities in men's skin care, premium hair care in developing markets, and other white space areas.

Digital and E-Commerce: Continuing to build capabilities and grow sales through digital channels. E-commerce growth remained a top priority with investments in analytics, content, and direct-to-consumer platforms.

Sustainability: Meeting announced environmental commitments while maintaining product performance. P&G reported progress toward its 2030 goals though acknowledged challenges in certain areas like scope 3 emissions (P&G 2024 Citizenship Report).

No verified public information is available regarding specific long-term brand strategies, planned innovations, or portfolio changes beyond these general directional statements.

Limitations of Available Information

Several aspects of P&G's multi-brand portfolio management remain opaque due to limited public disclosure:

• Brand-level financial performance: P&G rarely discloses revenue, profit, or market share data for individual brands, making precise performance assessment impossible.

• Resource allocation methodology: While P&G describes prioritizing "leadership brands," specific criteria, processes, and investment levels for different brands are not publicly detailed.

• Internal organizational processes: Team structures, decision-making protocols, innovation processes, and inter-brand coordination mechanisms are not comprehensively documented in public sources.

• Regional strategies: Brand-level strategies for specific countries or regions are rarely disclosed beyond general statements.

• Customer metrics: Data on customer acquisition costs, lifetime value, retention rates, or similar metrics are not publicly reported.

• Competitive intelligence: P&G's internal assessments of competitive threats, market share trends, or strategic responses are not typically disclosed.

• Failed initiatives: The company rarely discusses discontinued products, unsuccessful strategies, or internal challenges in detail.

These information limitations constrain comprehensive analysis of P&G's portfolio management effectiveness and specific practices.

Key Lessons

1. Portfolio Clarity and Focus Create Value: P&G's decision to divest approximately 100 brands and focus on 65-70 leadership brands demonstrated that portfolio breadth does not necessarily drive value. The company's improved financial performance following rationalization suggests that concentration of resources on stronger brands with clearer competitive advantages can outperform broader portfolios. This challenges conventional assumptions that larger product portfolios automatically provide diversification benefits and market coverage advantages.

2. Brand Architecture Requires Active Management to Prevent Cannibalization: P&G's approach of assigning distinct positioning territories to each brand—different benefits, consumer segments, and price tiers—minimizes internal competition. The hair care portfolio exemplifies this principle with Head & Shoulders owning dandruff treatment, Pantene claiming strength and repair, and Herbal Essences emphasizing natural ingredients and sensorial experience. However, this requires ongoing discipline and clear communication throughout the organization to prevent brands from drifting into each other's territories as they seek growth.

3. Premium Positioning Requires Continuous Innovation and Communication: Olay's repositioning from 2018 onward, emphasizing scientific credentials and premium performance while maintaining mass accessibility, demonstrates that brand premiumization requires sustained investment in both product innovation and brand communication. P&G's experience suggests that premium positioning cannot be achieved through marketing alone but requires substantive product superiority that justifies higher prices and elevates brand perception.

4. Digital Disruption Demands Fundamental Business Model Adaptation: The challenge from direct-to-consumer brands like Dollar Shave Club revealed that incremental digital marketing efforts are insufficient when business models are disrupted. P&G's response—including price adjustments, e-commerce capability building, and organizational restructuring—indicates that established companies must be willing to fundamentally alter pricing strategies, distribution approaches, and product development processes to compete in digital-first environments.

5. Large Portfolios Require Differential Investment Strategies: P&G's concentration of innovation resources on leadership brands reflects a clear prioritization philosophy: not all brands warrant equal investment. This approach assumes that focused investment in fewer, stronger brands delivers superior returns compared to spreading resources evenly. However, it requires difficult decisions about which brands receive limited resources and acceptance that some portfolio brands may decline or require divestiture if they cannot achieve leadership positions.

6. Sustainability Integration Is Increasingly Non-Optional: P&G's extensive sustainability commitments across its personal care portfolio, from recycled packaging to ingredient reformulation, reflect recognition that environmental considerations have shifted from optional corporate responsibility to essential brand requirements. Consumer expectations, particularly among younger demographics, and regulatory pressures make sustainability integration a competitive necessity rather than a differentiation opportunity.

Discussion Questions for Classroom Analysis

1. Portfolio Architecture and Brand Cannibalization: Given P&G's multi-brand strategy in personal care, how should the company determine when to launch a new brand versus extending an existing brand into adjacent categories? When Head & Shoulders considers launching a conditioner or Olay considers entering body care, what framework should guide decisions about competing with sister brands? Consider the trade-offs between market coverage, resource efficiency, and brand clarity.

2. Innovation Resource Allocation: P&G explicitly concentrates innovation investment on "leadership brands" while maintaining smaller brands with lower investment. Evaluate this approach against alternatives such as equal per-brand investment, investment proportional to current sales, or disproportionate investment in smaller brands with higher growth potential. What criteria should determine which brands receive priority for innovation resources? How should the company balance short-term profit maximization with long-term portfolio vitality?

3. Response to Digital Disruption: Analyze P&G's response to the Dollar Shave Club threat and similar direct-to-consumer competitors. Was the company's strategy of price adjustments, launching its own subscription service, and strengthening e-commerce capabilities sufficient? What alternative approaches might have been more effective? Should P&G have acquired Dollar Shave Club or similar startups? Consider the cultural, organizational, and strategic challenges of established CPG companies competing with digital-native brands.

4. Premium versus Mass Market Positioning: P&G maintains both premium brands (SK-II) and mass-market brands (Head & Shoulders) in personal care. Evaluate the strategic logic of competing across price tiers versus focusing exclusively on premium or mass segments. How does serving multiple tiers affect the company's capabilities, cost structure, and competitive positioning? Consider the implications of increasing consumer polarization toward premium and value segments with hollowing of the middle market.

5. Portfolio Rationalization Decision Framework: Assess P&G's decision to divest approximately 100 brands and the criteria used (category leadership, distinctive brand equity, capability leverage). Was this approach optimal, or should the company have retained more brands for diversification? What frameworks should guide portfolio rationalization decisions? Consider how to evaluate brands that are currently weak but operate in attractive categories versus strong brands in declining categories. How should management balance activist investor pressure for focus with potential benefits of diversification?