Lessons from Procter & Gamble –Focus on Market Leadership

 

Getting profitable and staying profitable is how we help our clients, the critical element for all companies.  Being a 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 21 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 21.  During this period, the company’s revenue has doubled from $40 Billion to $80 Billion. 

 

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.

 

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?  How can you capitalize on the learnings from P&G’s experience?

 

Here are 5 tips learned from 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.  We have used our P&G learning and knowledge to build substantial profitability for many companies

 

Market leadership brings with it many benefits that help companies get profitable and stay profitable.   We can help you.  Contact us anytime.

 Thanks.

 

John Maver
Founder & Managing Director of Moon & Stars Consulting
President Maver Management Group
(925) 648-7561
Maver Management

What’s the issue? Business planning or just doing?

The recession continues and more and more businesses are failing - failing and being forced out of business, failing enough to have significant losses despite large layoffs and a desperate focus on cost cutting or failing through having little idea of how to turn the business around and keep a meaningful cash flow.

What’s the issue? Is it too much planning or too much action?

Are they failing because they have spent so much time creating the mission, vision, objective, goals and measurements for their strategic business plan that the opportunities have passed them by? Or are they locked in to outdated plans, programs and spending? Or is it more a case of having leadership that is unable to cope with the realities of today’s dynamic marketplace?

On the other hand, is it because they do not have a basic business plan that they are following and are just winging it? In this case, everyone is going full speed, but not in the same direction, no matter what you may think and certainly not toward a specific goal.

Or worse still, is it because they are faced with analysis paralysis and actually doing nothing? This cause a company to seize up and the organization grinds to a halt.

Actually, the failing may be the result of some or all of these elements. Business plans are a MUST for every company. However, they need to be actionable. And they need to be acted upon, adjusted and acted upon again. They shouldn’t be binder thick. In fact, we recommend that they be kept to one or two pages. Otherwise, they are not read, used properly or followed.

What are you doing in your company? If your company is struggling, is it due to over-planning for the business with concentration on the theoretical plan and not taking the appropriate action? Or is it all action and no known overall plan. Clearly, it can’t be an either/or if you are going to survive in today’s economy. It is a reasoned combination of both planning and action.

Do you have a written business plan? Is it simple and understandable to all? Has it been communicated to others?

Are they taking action on it? Are you adapting the plan based on the ever new market feedback? Do your customers know what you are trying to do and the benefit in it for them? Are they supporting your direction?

What are the results and what needs to be changed?

So many companies are focused on cost cutting that they are not generating revenue that is desperately required for cash flow and support and also undermining all future efforts. Now, and when the economy turns, it is going to be the company with the successful plans put into action and market honed that will prosper.

Managing in today’s turbulent times isn’t easy so don’t think you can do this on your own. Get some help from experts who have been there before and can help lead you through the problems.

This can be a time for you and your company to actually prosper but you have to do it smartly.

Thanks.

John

John Maver
President
Maver Management Group
(925) 648-7561
Maver Management

Lessons from P&G - False reasons for not doing strategic planning

Procter & Gamble spends a considerable amount of time and effort in gathering the appropriate data and developing the right strategic plans that can be followed to maximize effectiveness in the market.  As a result, they have a significant number of billion dollar brands from their world-wide effort.  Yet, as we have studied many other companies across a broad range of industries, we find that many companies are reluctant to undertake the simple strategic planning process and thus are not achieving the results that they should.

Here are the 7 most common reasons given for not doing strategic planning.  You can see why these could be considered to be false reasons and just stand in the way of the company’s success.  The lessons from Procter & Gamble show how these may be false.

1 The CEO believes they already have a plan in their mind.

 Too often the CEO believes that there is already a strategic plan because they have a rough plan in their mind.  The difficulty is that this plan is generally not data based and worse still is not communicated well or understood by the rest of the organization.  As a result, the organization does the best that they are able but seldom in line with the CEO’s vision or plan.  Valuable resources in people and finances are not focused and wasted.  If you want the plan to work, write it down and share it broadly.  This only makes sense!

2  A belief that funds for planning are not available. 

This is a great misunderstanding and is based on a short term view.  The investment of funds to do a strategic plan properly is generally minimal. The ROI is generally considerable.  Once the expenditure is made, the benefits start quickly and the business and profitability grow.  This is an investment that will pay big dividends in so many ways.

3 Focusing on too many other projects.

One of the reasons that there are too many other projects is that there is no well-known and followed plan.  A strategic plan is not only what the company will do but what it will not do.  Focused effort leads to fewer false starts with less wasted effort and rework.  Productivity increases.  The employees are happier and have less stress, thereby reducing turnover.

4 A Belief that the market will change

Many companies put off strategic planning because they expect the market will change.  Of course, the market will change!  But the purpose of the plan is to manage that change and not be managed by it.  The right plan can help companies to take advantage of market changes and gain a competitive advantage over competitors who have done no planning.  Develop the plan and review it, altering it to capitalize on market changes.

5 Not sure how to proceed

Executives at companies are smart.  They clearly have the intelligence to do strategic planning.  However, in many cases they just don’t have the training in strategic planning and should be active participants instead of facilitators.  Having a simple process like the one that we use at Moon & Stars allows the executives to lead the planning without disrupting the daily business.

6 Team doesn’t want to do it

Teams generally do not get involved in strategic planning.  They are just provided with new ways of doing business and of course there is always a resistance to change.  They need to be “pulled” into executing the plans.  At Procter & Gamble, all are involved and so they believe that they have a vested interest in the plans and an understanding of the benefits.

7 Takes too much time/ Waste of time

Actually, the strategic planning process can be built upon current data and knowledge and accomplished within normal work effort.  Almost immediately, it will become clear as to the activities that can be eliminated due to negative or low returns.  This frees up the time to do the planning and the activities which will have a long term positive effect.

Conclusion

Strategic planning is generally misunderstood and as a result these and other false reasons are held that prevent companies from getting the benefit of the planning.  We at Moon & Stars have had the opportunity to learn, not only how to do strategic planning, but to assist clients to develop plans that are specifically tailored to their situation.  The time and investment are minimal and the results are significant.  Procter & Gamble makes this process a common activity in which everyone participates.

What is holding you back from getting the business results that you might achieve?

 Thanks,

John

John Maver
Founder and Managing Director of Moon & Stars Consulting
President Maver Management Group
(925) 648-7561
Maver Management