Image source: Procter & Gamble.

Procter & Gamble's (PG 0.08%) latest business trends haven't given investors much to cheer about. Organic sales growth slowed for the second straight year in fiscal year 2016, and the consumer goods giant lost market share in four of its five main product categories while holding steady in just one -- its fabric care and home care division.

Part of P&G's poor growth can be blamed on a weak selling environment and economic struggles in some of its geographies. Yet the company is also trailing competitors in a head-to-head match up in these important ways.

Volume gains

The biggest standout when comparing P&G to rivals is its volume figures. Consumer giants typically aim for organic growth that's led by volume gains, or at least includes a healthy mix of volume and pricing upticks that together produce higher sales.

Unilever (UL -0.11%) is a great example as it has managed 2.2% improved volume over the past six months that powered organic growth of nearly 5%. In contrast, P&G's volume shrunk by 1% in the 12 months ended this past June, and so the company had to rely exclusively on higher prices to deliver its modest 1% overall organic growth uptick.

The good news for shareholders is that a rebound could be in the cards. Volume figures rose last quarter across all of P&G's product divisions, at an average of 2%. That result was still well below Kimberly-Clark's (KMB 1.22%) 4% volume jump, but it does close the gap somewhat.

Innovation

Innovation is critical to P&G's business since it needs to constantly update existing brands (new and improved) while launching the occasional game-changing product (e.g., Febreze, Swiffer) to stay ahead of rivals. "Winning with consumers around the world and against our best competitors requires innovation," executives explain in the 10-K. "Innovation has always been, and continues to be, P&G's lifeblood."

The company has struggled in this area recently. Sure, products like Pampers Swaddlers diapers, Gillette Fusion razors, and Tide Pods detergent are doing well. But P&G hasn't introduced a new hit brand worth over $1 billion in annual sales in more than a decade.

Image source: P&G.

By contrast, Johnson & Johnson (JNJ 0.05%) is on an innovative roll lately. The healthcare titan got one-quarter of its sales last year from products that it introduced in just the past five years, which is a testament to an innovation strategy that's backed by $9 billion of annual spending on research and development -- up 10% since 2013.

Compare that to Procter & Gamble's R&D commitment that has held steady at $2 billion in each of the last three years.

Value focus

By its own admission, P&G hasn't done an especially good job at catering to the value niche of many of its competitive markets. In razors, for example, the company is enjoying strong growth with premium Gillette Fusion products, but at the same time has lost share from price-based competitors like Unilever's Dollar Shave Club. "We need to do more work on the lower end of the portfolio," Chief Financial Officer Jon Moeller told investors in a conference call.

That weakness has also left P&G vulnerable to store brands that are offered directly from retailers. Wal-Mart recently credited its private label products for helping produce strong growth in its laundry and home care aisles. The same negative dynamic could quickly shift online, where e-commerce giant Amazon.com is eyeing a few of P&G's strongest categories, diapers, and laundry detergent, with its own private label brands.

P&G's brand shedding initiative should boost sales growth and profitability. BT: Before Tax. Image source: P&G.

P&G executives are taking steps to close the gap against competitors on all these metrics. The company's portfolio reboot initiative, for one, is likely to boost overall volume growth. And major cost cuts should help it compete better on pricing. In fact, progress on these goals recently gave management the confidence to project the first annual uptick in organic sales growth in years. Yet the 2% gain it is forecasting for fiscal year 2017 would still put P&G behind most of its global rivals.