Getting profitable and staying profitable is what it’s all about for companies. Being the market leader, while not an easy task, is certainly one way to help make that happen. P&G has the largest lineup of leading brands in its industry, with 22 brands with over $1 billion in annual sales and another 19 brands generating about $500 million or more in annual sales. In 2000, there were 10 brands over a Billion; today, they have 22. During this period, the company’s revenue has doubled from $40 Billion to $80 Billion.
As you may have read in our last article about Core Values, Procter & Gamble is very clear on their objective to have superior products, not just in performance, but in consumer preference. They have sharpened their focus on how to deliver this. This sharpened focus has meant selling off or discontinuing a number of very successful brands, but brands that did not fit with an opportunity for global market leadership.
The company used to market a stable of brands and achieve market leadership through the combined sales. For example, when I joined P&G in the early seventies, in laundry detergents, the company marketed Tide, Cheer, Bold, Gain, Duz, Dreft, Era, Liquid Tide, Ivory Snow and the first detergent, Oxydol. There were probably several others as well that just don’t come to mind. Combined, this provided market leadership.
However, it resulted in increased costs. The brands competed against one another for sales force time, retailer promotions, shelf space, advertising, media time slots, in-store offers and most importantly, Procter & Gamble management attention. As a Brand Manager, my task was to get a larger share of company effort so that I could increase my brand’s impact with consumers. It was not uncommon for a great idea to be expended on one of the smaller brands and thus dilute its impact. The company realized that it would be far better served to focus its efforts on the lead brands and make them clear market leaders. The billion dollar brands are the result.
Today, Procter & Gamble has a very clear path for its mega brands to achieve market dominance. All of the very best people, ideas, support and processes are given to one brand and not spread across multiple brands. In fact, there has been an increasing tendency to “borrow” from one mega brand in one category to assist another in a separate category.
There are many benefits to being the market leader and we will highlight some in a separate article.
But what is the value of the Procter & Gamble experience for your business if you do not have a stable of billion dollar brands or are not the market leader?
Here are 5 tips I learned from my time at Procter building the smaller brands or opening up new categories and industries for the company.
1. Be choiceful in selecting the market / industry / geography in which you will compete. Make certain that you have an opportunity to be able to gain a leadership position in the arena that you select, perhaps not immediately, but within a reasonable time frame.
2. Focus your resources to build a solid base in one area and become successful before you move to additional areas.
3. Hire and use “A” class people. Your best investment will be in your people. Skimp in other areas if needed since the great people will be able to over compensate.
4. Take good care of your customers. You would be surprised at how many companies we see that overlook their current customers in the drive to get new ones.
5. Take advantage of consulting and contracting help to both capitalize on their expertise and keep your costs down overall. This may sound self-serving, since we are consultants, but there is no substitute for experience.
Market leadership brings with it many benefits that help companies get profitable and stay profitable. Look for our next article that highlights some of those benefits.
Maver Management Group