Download - Rising Tide
rising tideLessons from 165 yrs of Brand Building at P&G
Brief HistoryGetting Started
Ivory Soap Story of Tide: Detergent WarsLearning to Compete in Japan
Success in Shampoos (80s)Diaper Wars
Success in MexicoThe Russian Experience
Restructuring P&GMillion Dollar Brands
Brief History
William Procter, an English storekeeper & candle maker and James Gamble, a Irish soap maker settled in Cincinnati, set up their business and married sisters Olivia and Elizabeth Ann Norris
Father-in-law Alexander Norris (also a candle maker) suggested that they join hands to survive the banking crisis of 1837
P&G was born with the commodity business of soaps and candles
Cincinnati – the largest meat packing center in the US was a hub for Soap and Candle makers who depending on the byproducts
Humble Beginnings
The development of Rail Roads helped P&G transport their commodities to markets beyond Cincinnati
Manufacturing Unit was set up in Central Avenue, Downtown CCN
Through most of the 19th century, P&G continued to sell unbranded soaps and candles
The first movement from commodities to consumer goods came with the launch of Ivory (1870s) and now the company has evolved into
a Global Giant with over 33 million dollar brands
Brief HistoryGetting Started
Ivory Soap Story of Tide: Detergent WarsLearning to Compete in Japan
Success in Shampoos (80s)Diaper Wars
Success in MexicoThe Russian Experience
Restructuring P&GMillion Dollar Brands
Getting Started: Rising Tide
This book chronicles the evolution of P&G from local candle maker to global multinational
Second purpose of the book is to explain the company’s success in its core business of building consumer brands
Research for the book done through a series of interviews conducted with a host of senior and middle managers
Some shortcomings
Despite having documented data, the authors have relied on interviews with P&G managers
….managers employed with P&G, while being interviewed
Therefore success is attributed to hard work and resourcefulness of enterprising employees
And failures are put down to reasons beyond management control or shown as “lessons” which enabled the company to become stronger
Why read this book?
Story of how P&G succeeded in building strong brands
18791946
19901955
1961
Why read this book?
Succeeded against the worthy competitors
Why read this book?
And built an organization, admired by many
Brief HistoryGetting Started
Ivory Soap Story of Tide: Detergent WarsLearning to Compete in Japan
Success in Shampoos (80s)Diaper Wars
Success in MexicoThe Russian Experience
Restructuring P&GMillion Dollar Brands
History of Ivory Soap
• In 1879, a soap maker at P&G forgot to turn off the soap mixer, during lunch.
• More than the usual amount of air was shipped into the batch of “The White Soap”
• To cover up his mistake, the soap maker packaged & shipped the air-filled soap to customers around the country.
• Soon customers were asking for more "soap that floats." When company officials found out what happened, they turned it into one of the company’s most successful products - Ivory Soap.
Excellent Laundry Soap, of great purity and more than average cleansing power
“It Floats” / Purity 99 44/100 %
“Suitable for all kinds of washing needs: face and hands, clothing and delicate articles….”
Earliest Advertising in all Leading Magazines of US
“If your grocer does not keep the Ivory Soap and declines to get it for you, the manufacturer (P&G, Cincinnati) will furnish it direct”
Crisis in Production
In 1884, a fire broke out in the downtown factory consuming a sizable portion of the soap operations
This disaster gave P&G an opportunity to overhaul their soap production setup.
The opportunities in the market were immense and the competition high. “IvoryDale” Unit built in the outskirts of Cincinnati helped Ivory move into
the next level of readiness in terms of product availability
Ivory defined and taught P&G to get over initial setbacks and prepare for bigger businesses
Brief HistoryGetting Started
Ivory Soap Story of Tide: Detergent WarsLearning to Compete in Japan
Success in Shampoos (80s)Diaper Wars
Success in MexicoThe Russian Experience
Restructuring P&GMillion Dollar Brands
Detergent Wars: The early days• In the 1920s, Americans used soap flakes to clean their laundry. The
flakes performed poorly in hard water, leaving a ring in the washing machine, dulling colors, and turning whites gray.
• P&G began an ambitious mission to change the way Americans washed their clothes. Researchers discovered two-part molecules which they called synthetic surfactants.
• Each part of the "miracle molecules" executed a specific function--one pulled grease and dirt from the clothes, while the other suspended dirt until it could be rinsed away.
• In 1933, this discovery was introduced in a detergent called "Dreft," but it could only handle lightly soiled jobs. The next goal was to create a detergent that could clean heavily soiled clothes. That detergent was Tide®.
Detergent Wars: The Tide Revolution• Created in 1943, Tide detergent was the combination of synthetic
surfactants and "builders." The builders helped the synthetic surfactants penetrate the clothes more deeply to attack greasy, difficult stains.
• Introduced to test markets in October 1946 as the world’s first heavy-duty detergent, consumer response to Tide was immediate and intense.
• Tide detergent outsold every other brand within weeks. It became so popular that store owners were forced to limit the quantity purchased per customer.
• Tide detergent was improved 22 times during its first 21 years on the market, and P&G still strives for perfection. Each year, researchers duplicate the mineral content of water from all parts of the United States and wash 50,000 loads of laundry to test Tide detergent’s consistency and performance
Brief HistoryGetting Started
Ivory Soap Story of Tide: Detergent WarsLearning to Compete in Japan
Success in Shampoos (80s)Diaper Wars
Success in MexicoThe Russian Experience
Restructuring P&GMillion Dollar Brands
Learning to compete in Japan
• “If you cant compete with them in Japan, you cant compete with them anywhere”
• P&G entered Japanese market by acquiring Nippon Sunhome Ltd in 1973 – and in three years their laundry powder “Cheer” become a best seller
• Understanding Japanese Culture: Mistakes in Advertising
• Understanding Local Customs and Culture – instead of adapting American way of working helped P&G gain a foothold in the Japan market.
“The Great Flying Leap”
5 Key Points for Growth in Japan
Understand Japanese Consumers
Tailor Products To Japan
Market With Sensitivity To Culture
Sell The Company’s Image
Penetrate The Japanese Distribution System
Innovation in Japan
• On Kao / Lion: By attacking them on their home turf P&G weakened its rivals, delayed their international expansion and P&G gained deep insight into the local marketplace
• Febreze odor removing fabric spray is P&G’s crowning glory in innovative
marketing
Brief HistoryGetting Started
Ivory Soap Story of Tide: Detergent WarsLearning to Compete in Japan
Success in Shampoos (80s)Diaper Wars
Success in MexicoThe Russian Experience
Restructuring P&GMillion Dollar Brands
Success in Shampoos (80s)
Market ScenarioPantene: Acquired by Richardson Vicks Inc in 1985
Other Brands - Head & Shoulders : had a 25% MS in the early 60sPrell: Had a 22% MS in the 70s
By the 80s – Hair styles had changed/ aggressive new competition / P&G responding sluggishly
Most products in hair care were “very similar, without much differentiation”
Manufacturing of shampoos inexpensive – low entry barriers compared to the other categories of P&G
Evolution of P&G ShampoosPert – BC18 – Pert Plus – Pantene Pro V
Pert, launched in 1979 to turn the tide. Campaign line “Coast for your hair” The brand was positioned on refreshment and a green hi-scent
formulation.
With competitors adding and communicating the component of conditioner more aggressively; Pert quickly changed its brand promise
to “Wash & Go”
Since conditioner was seen as a very important aspect; Pert failed to evoke a strong response amongst consumers
Though P&G had a proven track record with technological breakthroughs (synthetic cleaning – Drene 1930s & dandruff control – Head &
Shoulders 1960s), it seemed to have lost its technological edginess
Technology Breakthrough
Testing (Beauty Care Product 18) BC18 : HPT , Focus Response
Success of Pert Plus – First Shampoo + Conditioner
Entry into Taiwan Market – Pantene Pro V
Pantene Pro V : “Don’t‘ hate me because I’m beautiful” / Selling on the aura of beauty instead of functional performance
Going Global
Brief HistoryGetting Started
Ivory Soap Story of Tide: Detergent WarsLearning to Compete in Japan
Success in Shampoos (80s)Diaper Wars
Success in MexicoThe Russian Experience
Restructuring P&GMillion Dollar Brands
Diaper Wars
Primary Competitor - Huggies (Kimberly Clark)
Introduction of Luvs – a premium diaper brand
Learning from detergent category on multiple brand in a single category (Tide = premium , Cheer = safe on colors, Gain = fresh scent , Oxydol = bleach)
P&G worked on a strategy that Pampers stands for VFM and Luvs – a more premium offering
Brief HistoryGetting Started
Ivory Soap Story of Tide: Detergent WarsLearning to Compete in Japan
Success in Shampoos (80s)Diaper Wars
Success in MexicoThe Russian Experience
Restructuring P&GMillion Dollar Brands
Success in Mexico
Strong competition from Colgate – Entrenched Player
Advertising Council Issues – Get the Language Right
Turning Point – Rapido Detergent / Perfect for local water conditions Followed by the success of Ariel
Mexico seen as a entry point / Hub to Latin America
Ariel become P&G’s first Blockbuster Brand in Mexico
Based on Enzyme Formulations originally developed in Europe
Brief HistoryGetting Started
Ivory Soap Story of Tide: Detergent WarsLearning to Compete in Japan
Success in Shampoos (80s)Diaper Wars
Success in MexicoThe Russian Experience
Restructuring P&GMillion Dollar Brands
Russia Market
Tracking the breakdown of communist Russia
Division of markets & setting objectives
Test Launches based on set objectives
Values of Company communicated
Crash of the Russian Market
Agree on Realistic Volume Forecasts
Restructure Internal Process and Workloads
Re-evaluation Of Supply Chain / Economize & Simplify Operations
Severance Package To Reduce Workload
Localize Management and Production
Brief HistoryGetting Started
Ivory Soap Story of Tide: Detergent WarsLearning to Compete in Japan
Success in Shampoos (80s)Diaper Wars
Success in MexicoBusiness with WallMartThe Russian Experience
Restructuring P&GMillion Dollar Brands
Restructuring P&G
Strategic Acquisitions
Pruning Low Potential SBUs / Exit Options
Supply Chain Reconfiguration – Understanding Issues
Deal with Wall Mart
Understanding & Implementing Value Pricing
Lafleys 10 beliefs
Values of P&G
Strategic Acquisitions
By 2K – P&G has a fast growing brands in beauty & health care (including oral care) and had traditional strong brands in fabric care,
home care and paper products (including feminine protection)
Major Acquisitions of the period : Max Factor (1991), Tambrands (1997), Iams (1999), Clariol (2001) and Wella (2003)
Pruning Low Potential SBUs
P&G departed from Crisco, Spic and Span, Biz, Duncan Hines and Jif
Hard Look at Food & Beverage Business / No Power Brands apart from Folgers and Pringles
Concerns on Citrus Hill Orange Juice (planned entry into Juices) and Fisher Nuts (planned entry to complement Pringles in the salty snack
category)
Sept ‘92 – P&G liquidated Citrus Hill (along with selling off other minor Juice Brands) & in ‘95 after accumulating modest losses sold Nuts business to
John B San Filippo
Supply Chain Reconfiguration
The era of passing out costs increases to consumers was over, so what were the avenues of cost control?
If orders were primarily coming through Electronic Orders, what was the role of the modern salesman?
Customers were getting more sophisticated in their use of IT and inventory management
Purchasing decisions in customer organizations were shifting from traditional criteria such as price and allowances to a more holistic set of criteria
Value Pricing
• Look at the Market Value of the Company and subtract what the Balance Sheet says – the difference is the future earning power at NPV
• If Brands are your source of Value Creation – then you have to ask “What are we doing to create strong brands” The stronger you make the more value you add to the company”
• Strong Brand Franchises are created by creating strong consumer loyalty. “As a consumer if I came to a store and saw Tide at half the price I pad the week before, I’d be angry”
Bold Move and Subsequent Repercussion
• Between 1989 – 90, P&G shifted virtually all its offerings to value pricing – attracting strong reactions
• SUPERVALU added a Surcharge to P&G products / Certified Growers Midwest, a big distributor removed 40 P&G products off the list / Von’s a leading grocery chain in New England removed 13 products off the shelf /
• “P&G is acting like a dictator, and like all dictators, they will fail. We will do everything in our power to undermine their plan” – Stop & Shop, leading grocery chain
Deal with Wal-Mart
In 2002, it took 117 prime time ads to reach 80% of 18-49 yr
By Comparison, 50% of the US Households shopped at Wal-Mart every week / 80% shopped at WM every month
Walton & Pritchett’s Canoe trip
Deal on Knowledge Transfer, Total System Efficiency, Total Quality
Sharing of experiences in Electronic Ordering, Custom Built Displays and New Sources of Cost Control
10 things I believe – A.G. Lafley
Lead change: Change is inevitable
The consumer is boss
Innovation is our lifeblood
Power of strategy: Where to play and how to win
Power of execution: Win in the store
Power of brands
Power of knowledge and learning
Power of P&G people: Without us, no strategies, no brands, no execution
Direct, simple and transparent: What you see is what you get
Take purpose, values and principles seriously
Brief HistoryGetting Started
Ivory Soap Story of Tide: Detergent WarsLearning to Compete in Japan
Success in Shampoos (80s)Diaper Wars
Success in MexicoBusiness with WallMartThe Russian Experience
Million Dollar Brands
mail: [email protected]: rpkiLinkedIn: linkedin.com/in/pradeep26