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Effective Brandbuilding - A Case Study on P&G
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CASE STUDY on P&G - Branding ...

CASE STUDY on P&G - Branding
The Ten Commandments of Effective Brand Building –
As Inspired by the Proctor & Gamble Experience
THE WINNING STRATEGIES THAT BUILT A BRAND POWERHOUSE
Proctor & Gamble is one of the world’s largest and most influential companies – the maker of numerous billion-dollar brands that have helped shape the way millions of people live today. Brands like Tide, Crest, Ivory, and Pampers have become household names in modern consumer culture – and legends in the annals of brand-building history.
This article is inspired by the fascinating tale of P&G’s 165 year journey : how it grew from a two-man soap and candle maker in 1837 into a $40 billion global brand powerhouse, employing over 100,000 people in 80 countries (as of 2003-2004). This story reveals the principles and practices of brand building Proctor & Gamble style : how the company learned – through trial, error, and breakthrough successes – to consistently anticipate and satisfy consumer needs.
From the birth and evolution of brand giants like Ivory, Tide, and Crest to lessons learnt from product disasters like Olestra, and from intense global competition to the diaper wars, the story reveals insightful lessons about product innovation, global expansion, leadership transformation, business reinvention, and brand building.
From a powerful belief in doing the right thing to an unparalleled passion for winning to a laser like focus on consumer needs, the authors have narrated the powerful arsenal of branding principles Proctor & Gamble has built over the years. A compelling and candid account of hard-won, sustained success, this story is also a strategic guide – taken straight from the playbook of the brand master – to delivering superior consumer value.

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Effective Brandbuilding - A Case Study on P&G Document Transcript

  • 1. EFFECTIVE BRAND BUILDING : The Ten Commandments of Effective Brand Building – As Inspired by the Proctor & Gamble Experience THE WINNING STRATEGIES THAT BUILT A BRAND POWERHOUSE Proctor & Gamble is one of the world’s largest and most influential companies – the maker of numerous billion-dollar brands that have helped shape the way millions of people live today. Brands like Tide, Crest, Ivory, and Pampers have become household names in modern consumer culture – and legends in the annals of brand-building history. This article is inspired by the fascinating tale of P&G’s 165 year journey : how it grew from a two-man soap and candle maker in 1837 into a $40 billion global brand powerhouse, employing over 100,000 people in 80 countries (as of 2003-2004). This story reveals the principles and practices of brand building Proctor & Gamble style : how the company learned – through trial, error, and breakthrough successes – to consistently anticipate and satisfy consumer needs. From the birth and evolution of brand giants like Ivory, Tide, and Crest to lessons learnt from product disasters like Olestra, and from intense global competition to the diaper wars, the story reveals insightful lessons about product innovation, global expansion, leadership transformation, business reinvention, and brand building. From a powerful belief in doing the right thing to an unparalleled passion for winning to a laser like focus on consumer needs, the authors have narrated the powerful arsenal of branding principles Proctor & Gamble has built over the years. A compelling and candid account of hard-won, sustained success, this story is also a strategic guide – taken straight from the playbook of the brand master – to delivering superior consumer value. INTRODUCTION Throughout its history, Proctor & Gamble has sought consciously to learn from its experiences, as well as from deep study of consumers, competitors, and markets. Before this, an account of company’s experience by identifying historical management cases used to be studied as part of the curriculum in Proctor & Gamble college, the internal forum for management training and development. Beyond these formal enquiries into P&G’s past, the company is a collection of stories and lore, about the key innovation in this brand, the terrible mistake made in that one, the contributions of this individual, the impact and response to that unforeseen event. Some of these stories are posted on P&G’s intranet, where they serve as illustrations and reminders of how the company works and makes progress. Proctor and Gamble recounts and propagates these stories and, from time to time, enquires systematically into its past because it recognises that its experience is a unique source of learning and advantage. The trick in examining experience is to distil from it the important and enduring conclusions and to distinguish these from the insignificant and ephemeral. P&G’s Business and long term formula for success is building consumer brands : developing and offering products with features and associations that consumers value over their alternatives. Ideally, the features will enhance performance and make P&G’s products superior to those of the competition. Similarly, the associations should create in the consumer feeling of safety, reliability and trust. A strong brand promises a positive experience and creates an enduring relationship. 1
  • 2. The company thus strives to make the purchase of a Proctor & Gamble brand the best choice and the use of it a source of complete satisfaction. As A G Lafley (the then Chairman, President & CEO) has put it, the company wins at the two moments of truth : (1) when a consumer chooses to buy a Proctor & Gamble product instead of an alternative, (2) and, when the consumer puts that Proctor & Gamble product to use. Brand building in this sense is much more than a marketing activity. It involves developing products with performance features that consumers value, and involves constantly upgrading them. It includes manufacturing them and distributing these products at costs permitting prices consumers are willing to pay and guarantying margins acceptable to the company and its wholesalers and retailers. And of course, brand building does include the marketing and advertising that communicates the brands’ promise. All these have to be coordinated and done well. Brand building, in short, engages the entire organisation in the ongoing quest to deliver superior value to consumers. TRIED AND TESTED PRINCIPLES During the course of its long life, Proctor & Gamble has identified principles of brand building. Taking these principles from its most vivid experiences the company has then attempted to use them in introducing new brands, preserving old ones, entering new markets, and competing in old ones. Many of the principles originated in the company’s earliest days, and a few surfaced in more recent times. Some principles are made explicit in the company’s official publications, some are communicated informally on the job. Whenever and however they emerged, the principles act as the guidelines to the company’s operation. Here are the ten principles that emerged from review and discussion inside Proctor & Gamble as it reflected on its first 170 years : THE TEN COMMANDMENTS OF EFFECTIVE BRAND BUILDING The following is a descriptive account of effective brand building, as learned from the Proctor & Gamble experience. These are the set of guidelines a company or an organisation need to adhere to, for a strong and effective brand building exercise : 1. Do The Right Thing : The company has to insist on unadulterated ingredients, quality products and high ethical standards in business conduct. The promoters and the stake holders of the company must establish a reputation for rectitude, integrity, and fairness that would be the hallmarks of the company’s business. The company has to articulate formal statements of purpose, values, and principles that are foundational to all its activities and operations. Virtually all companies, of course, proclaim ethical behaviour and integrity as primary values. For a company to do the right thing every day, however, it must not only espouse the principles but also enact it. The company may have to take harsh decisions regarding, disciplining transgressors, walking away from deals involving questionable payments, and terminating products and brands that could tarnish the company’s reputation. Another manifestation of the principle is the company’s commitment to the communities in which it operates and to public service generally. This commitment originated not in idealism but in pragmatism, to win and retain consumers, attract and inspire employees, improve the communities where the company operates, and bolster the company’s image – 2
  • 3. its brand, if you will. Wherever possible, the company must contribute to the community welfare programme. Most of these contributions – such as leadership in civic associations, support for local charities, and volunteer initiatives in education and health care – may be so routine as to be scarcely noticeable. Other contributions, however, such as company’s role in helping the victims of natural disasters and the company’s humanitarian relief efforts for a good cause will go a long way. 2. Cultivate a Passion for Winning : The imperative to succeed, to best the competition, to win, is a long-standing principle in the brand building exercise. The company has to be intensely competitive, an attitude that must be possessed by the promoters. And the company has to emerge as the leader of the pack among scores of other companies. Today, it has become fashionable for corporate leaders to proclaim that their companies would become number one or number two in their business or they would exit. Companies must strive for the number one position, and number two is not acceptable. The company must institutionalise its competitiveness through the brand management system. Not only would the company strive to outdo rival makers of household products, but it would also strive to outdo itself, with brand managers of competitors trying to maximise volume and market share. Competitiveness must remain the salient characteristic of brand managers and most other employees. The best people a company keeps must be bright, articulate, committed, determined, hardworking, and creative – all of that. Most of all, though, they must want to win. Winning is not exclusively defined as developing the next blockbuster category or brand, although that remains a constant objective. Rather, winning often consists of many incremental gains, a significant reduction of total delivered cost here, a share point taken from the competition there. These accumulate, and the company need to encourage the attitudes and develop the supporting systems and policies to produce these small gains, time after time. 3. Sustaining Brands is a Never-Ending Challenge : Another old discovery involves the power of branding – the ability to implant in a consumer’s mind a set of positive associations around even a hum-drum, everyday product like a bar of soap. Brands can command loyalty. A product needn’t have any secret ingredients, but it must have lower costs, or other features that make it more favourable with the consumers. Also what it must have are qualities that are rolled into an image that consumers came to understand and value : quality, reliability, convenience, familiarity, home-and-hearth values. The company must carefully craft and nurture these associations over time, so that it becomes one of the first, and remain one of the best, in the market. A critical point to note : once built, brands cannot be neglected, lest they languish. Once a brand becomes successful, the company tends to take it for granted and allow it to whither and fade. Thus the brand looses its distinctive positioning, and brand erosion takes place. This must be prevented at any cost. 4. The Consumer is The Boss : The concept of building brands continuous phenomenon. The principal reason is another old lesson occasionally forgotten and painfully relearned : The consumer must be at the heart of everything the company does. That is why the company has to invest in market research and test markets which gives positive results in the vast majority of instances – 3
  • 4. consumers come to prize the company’s brands. The brands are customised to their needs and preferences, even when, initially, consumers aren’t fully aware of these. Listening to customer often pays, but sometimes it takes a long time, so the company needs a continuous programme of market research. The company must listen better (than its competitors) to consumers and offer innovative features at prices people were prepared to pay. Wedded to formulas, features, and positioning that work together, the company must be quick to recognise changing consumer tastes. 5. Individuals Do Make a Difference : Still another old lesson lies in the recognition that the company consists of individuals whose contributions sum up to the performance of the whole. No company grows fast and large on the abilities of its owners alone. The sooner the company learns this the better. The company must recognise and act on the notion that the interests of employer and its employees are inseparable, and individuals should be treated with dignity. This recognition gives rise to things like profit sharing and the employee stock ownership, as well as the policy of promotion from within. Recognition of the individuals must remain at the heart of the integrated (high-performance) work systems in the company’s production facilities today. Employees taking responsibility and being held accountable, thinking and behaving like an owner is of utmost importance. The company must encourage individual initiatives and tolerate nonconformists and mavericks within certain bounds, recognising that individuals make a difference. An individual or a small team of people can do something new or different and extraordinary, and also can take ownership and refuse to be deflected off course in its determined effort. 6. Discipline Does Count : Another important principle of brand building for the company involves in the hard thinking and work channelled into getting something right. The company may gather a mass of data and analyse and reflect on it before developing a plan of action. It then can stage trials, analyses and reflected on these, can proceed to develop better plans of action. This can thus become a continuous process. Operational discipline should be embedded in the company’s daily procedures and activities as well as in its approach to new initiatives. There are no shortcuts, no substitutes for the intensive effort necessary to sustain success. The roots of brand building lies in operational discipline. This discipline has many manifestations. For example, there should be rigorous market research and bounded test markets that precede every product launch and major marketing campaign. The company’s discipline must be also evident in the comprehensive quality control systems and procedures characteristic of strong brands. Finally, there are the strict and closely monitored finance controls the company must apply to its programmes and projects. 7. Innovate Constantly, Everywhere : Constant, meaningful product innovation is a primary tool for any company in building and sustaining brands. A company’s best brands are distinctive in ways that consumers recognise and value in both the moments of truth : (1) when they are shopping for a product, and (2) when they use it. Winning in these moments, in turn requires significant investment in R&D. The company must sell its products confidently, because it believes they are better for the consumer than competitive products and alternatives, and it has stacks of research studies to back-up its claims. A company needs to think of and value innovation more broadly than as a responsibility of its technical organisation, just as it doesn’t consider brand building the sole responsibility 4
  • 5. of its marketing organisation. Innovations that reduce the total delivered cost – in purchasing, manufacturing, logistics, and overhead – are potent competitive weapons. Similarly, innovations that enhance differentiation – in packaging, advertising, and promotion, as well as in R&D – are essential to building strong, enduring brands. 8. Lead The Change : In business generally, and in FMCG industry particularly, companies don’t sustain success without anticipating and leading innovation and change. Companies tend to fare better when championing change than when observing or opposing it. An important part of a company’s success is an attitude about change expressed in common saying around the company that is determined periodically to “reinvent itself” and “change the game”. It seeks to breed in employees not only “a restless dissatisfaction with a status quo” but also “a relentless quest to be the best”. Companies must learn how to do that, through a willingness to change not only the outside world but also the inside. 9. Alliances Create Advantage : As the common adage goes, “No company can succeed in isolation”, companies must discover the benefits of partnership as early as possible and develop enduring alliances with ad agencies to promote brands and negotiated technical agreements with third parties to introduce and improve products and processes. Technical agreements, for example, hastens the development of superior products, where these agreements remain an especially important source of advantage today. The benefits of partnerships are apparent in a company’s attitude on “connect and develop” rather than always going it alone in new- product development. Companies may embrace another form of alliance, the joint venture, as its customary mode of entry into many new geographic markets. Partnerships are a mechanism for blurring the boundaries of the company, providing access to information and innovation, gaining speed, saving money, and generating better returns. 10. Partner with Customers : Companies must learn to extend the concept of alliance to its trade customers, which include distributors and retailers of all sizes and modes of operating all over the world. A company should not view them more as parties in a transaction rather than as partners in a common purpose to serve their shopper, who also is its consumer. Several factors prompt the change in company’s thinking about the total quality movement’s focus on the customer, advances in information technology that would enable real time gathering and analysis of consumer decisions and behaviour, and the rise of mass merchandisers such as retail mall chains and their own store brands. The company needs to establish a single organisation to coordinate purchasing, manufacturing, and distribution activities; recast the sales function as “customer business development” a customer relationship management activity; and participate in and often lead industry wide cooperative programmes to take costs out of the supply chain. CONCLUSION The principles of brand building just enumerated are hardly unique. Many of them, with slight variations, might be already found in various large consumer products companies. But the timing, context and ways in which they are learned and how they cumulate and interact give them particular meaning and force within the company. How well and how consistently the company executes them in actual practice will largely determine its fortunes. 5
  • 6. The principles thus helped gather and guide the “Rising Tide” that we take as a metaphor for P&G’s evolution and expansion – the waves of change originating in Cincinnati in 1837 and still swelling and surging through time and across distance today. This is the lesson which the great company Proctor & Gamble learned thro’ its history of experiments, trial and errors, and which also has become a source of inspiration for the modern day marketers in the brand building exercise. © Himansu S M / 02-Feb-2010 The Source of Inspiration : Book of History of Proctor & Gamble : RISING TIDE – Lessons from 165 Years of Brand Building at Proctor & Gamble, by Davis Dyer, Frederick Daizell, Rowena Olegario. – Harvard Business School Press (Published 2004). Chapter : “Epilogue” – Principles of Brand Building. [End] 6
  • 7. The principles thus helped gather and guide the “Rising Tide” that we take as a metaphor for P&G’s evolution and expansion – the waves of change originating in Cincinnati in 1837 and still swelling and surging through time and across distance today. This is the lesson which the great company Proctor & Gamble learned thro’ its history of experiments, trial and errors, and which also has become a source of inspiration for the modern day marketers in the brand building exercise. © Himansu S M / 02-Feb-2010 The Source of Inspiration : Book of History of Proctor & Gamble : RISING TIDE – Lessons from 165 Years of Brand Building at Proctor & Gamble, by Davis Dyer, Frederick Daizell, Rowena Olegario. – Harvard Business School Press (Published 2004). Chapter : “Epilogue” – Principles of Brand Building. [End] 6