Can P&G Be So Clueless About What Customers Want? In the marketing circles I run in, P&G has long been respected as a company that nurtures the best and brightest marketers. P&G is known for being rigorous in market research to understand the needs, motivations and behaviors of the consumer and to use its findings to build brands, drive consumer engagement and beat the competition. It claims to be the first company “to conduct deliberate, data-based market research with consumers,” in 1924. As for P&G recently, I was aware that the company hasn’t been doing all that well and as a result, has been fighting with investor Nelson Peltz of Trian Partners who wants a seat on its board which P&G is determined to keep from him. The proxy fight has evolved into a battle of dueling reports, with P&G just issuing a 40+ page report in response to Peltz 90+ page report released in September. But then, as with any company’s weak performance and underperforming stock, the blame can be attributed to many issues beyond marketing. That’s why I was shocked to read this weekend’s Wall Street Journal with an article headlined, “Thrifty Consumer Habits Puzzle P&G.” In it P&G’s CFO Jon Moeller was quoted as saying in a conference call, “We’ve been unable to put our finger on why this has been,” as he reported that organic sales grew only 1% in 1Q2018 quarter, with most of that attributed to emerging markets outside the U.S. Moeller explained consumers are buying at the same levels, but spending less on household staples, to which he said, “I’ve heard theories but nothing to explain the broad slowdown.” And in another article in the same issue, Stephen Wilmot is quoted, "P&G risks giving the impression that it is losing touch with the U.S. consumer culture.” To which, I say a resounding yes! How can the world-class marketers at P&G not have clued Moeller in on the shifts in the consumer market? Or maybe more pointedly, how can Moeller not have heard? I spoke to a friend embedded in the P&G corporate culture who told me that Peltz’s report pretty well nailed it. Perhaps Moeller’s cluelessness is due to the atrophied matrix organizational structure that Peltz condemns as being “a web of ‘straight line/dotted line’ reporting relationships that obfuscates ‘ownership’ of decisions and reduces organizational agility.” What is painfully obvious to me is that Peltz diagnosed accurately P&G’s marketing challenges. He writes: Consumer preference is fragmenting, with preference for small & local Consumers used to trust big brands; many millennials now distrust big brands and seek out purpose led brands Digital ecosystem has leveled playing field, diminishing “moat” of owning shelf space at mass retailers Hyper-growth of natural, organic & wellness Millennials are the future of every consumer-facing company. Given their age, with the leading edge 37 years old this year, and lifestage, starting to establish their own homes, they are disrupting business as usual for a company like P&G which provides products largely aimed at consumers making decisions about brands that fill family household needs. As millennials have grown up, they have disrupted every industry they’ve touched, including toys, music and fashion. Now they are advancing into the categories on which P&G and so many other CPG companies depend. The painful disruption to the CPG market is coming on fast. For P&G it’s time to forget the old ways of doing business, aimed at the lifestyles and mindsets of the baby boomers, and adapt to the next generation millennials on which the future depends. Let’s look at what this means for P&G in particular, and by extension CPG companies in general.