Reckitt Benckiser keeps its shine

From Management Today, 1 March 2010:

"Last year was a horrible one for packaged-goods firms. Procter & Gamble reported profits for the second quarter down 18%, while for Unilever it was a 17% fall.

There was, however, an interesting exception. Reckitt Benckiser reported a 14% increase in profits for the second quarter compared with the previous year, and for several years has been growing substantially faster than either P&G or Unilever.

What is Reckitt's secret? It may have something to do with pursuing a strategy the direct opposite of that of most of its competitors.

Reckitt increased spending on marketing by 25% over the past year, while most rivals were cutting back as fast as they could. While the FMCG herd rushed to introduce cheaper 'value' ranges of basic products, Reckitt held its nerve and continued to invest in the premium market - the latest version of its Finish dishwasher detergent, Quantum, is a very high-end product costing twice as much as bargain rivals.

Says Reckitt's CEO, Bart Becht: 'We've proved that, in a downturn, consumers don't walk away from better products.' More than a few of his rivals must now wish they had shared his confidence."

Read the full article at Management Today