Procter and Gamble Treats America's Economy like the Philippines

As this article states, for generations Procter & Gamble Co.’s growth strategy was focused on developing household staples for the vast American middle class. Lately P&G executives have seen that many of its former middle-market shoppers are trading down to lower-priced goods -- this gap is contributing to making products geared towards the middle classes more and more expensive. P&G, which estimates it has at least one product in 98% of American households, was forced to change the way it develops and sells its goods. For example, for the first time in 38 years, the company launched a new dish soap in the U.S. at a bargain price. “Companies have thought that if you’re in the middle, you’re safe,” says Citigroup analyst Deborah Weinswig. “But that’s not where the consumer is any more — the consumer hourglass is more pronounced now than ever.” “We now have a Gini index similar to the Philippines and Mexico—you’d never have imagined that,” says Phyllis Jackson, P&G’s vice president of consumer market knowledge for North America. “I don’t think we’ve typically thought about America as a country with big income gaps to this extent.”