Procter & Gamble to keep focus on innovation -CEO

* CEO defends heavy product development spending

* Shares underperforming S&P 500 in 2010

By Jon Lentz

NEW YORK, Oct 12 (BestGrowthStock) – Procter & Gamble Co (PG.N: )
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 (Read more your timing to make a profit.) below
analysts’ estimates as higher spending on marketing more than
offset sales growth. [ID:nN03138108] 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. [ID:nN02224806]

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 (.SPX: ) and a nearly 12 percent jump in smaller rival
Clorox (CLX.N: ).
(Reporting by Jon Lentz; Editing by Michele Gershberg, Phil
Berlowitz)

Procter & Gamble to keep focus on innovation -CEO