Procter & Gamble Gets A Charge Out Of Duracell

A major growth driver for Procter & Gamble (PG) has been the continual expansion of the portfolio of brand-name products, both through internal development and acquisition. Product innovation is strongly supported by management, and the company has had a strong tradition of not only introducing blockbuster new products but also creating entire new categories.

Duracell, a division of Procter & Gamble, just announced the availability of the Duracell USB Charger, a USB charging port that plugs right into the car’s DC socket, aka lighter socket. In addition, the company announced three different connectors (for mini USB, micro USB and iPhone ports) for the Duracell My Pocket Charger.

The Duracell USB Charger allows the 5-volt DC power port to charge mobile devices, such as iPods, MP3 players, and iPhones. The thumb-sized device is an improvement over the Duracell Mobile Charger launched in late 2007. The Duracell USB Charger, My Pocket Charger, and the three new connectors for the My Pocket Charger are available online and at many mass and specialty retail stores nationwide.

Procter & Gamble faces severe competition in the battery charger businesses. Major competitors include Energizer Holdings, Inc. (ENR) and Belkin International, a privately held company based in Los Angeles. Even though Duracell maintains a healthy market share, management must continually intensify product development and marketing efforts in order to maintain and/or grow market share.

Initially, new products reduce a company’s profitability. Before the product is feasible, R&D is expensed as incurred. Once the product has been developed, investments must be made in the operations to produce the new item. Production lines must be set up, new labels must be designed and produced, and the distribution system must be altered to accommodate the new product.

Lastly, investments must be made through a marketing campaign to launch the new brand with sufficient advertising and sampling to make it successful. Only after a period of time will the new product add to profitability, usually within two years.

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