When we think about big global businesses Procter and Gamble is right up there. It has recently changed the way in which it develops strategy. It is starting from the inside out. We preach in marketing to be externally focused, so is this a contradiction?
If we look at the P&G ideal it is driving values in the business, which focus on care of the customer. The starting point is to build the culture of the business. Everything that the business does is aimed at making the lives of the consumer better. If this is achieved the profits will follow. Many of the items are relatively small ticket e.g. razor blades. The secret is scale. Do the maths. P&G have 7 billion consumers who spend $14 pa (HBR 09). If this is increased by just a few dollars per consumer per year the increase in profits is huge. Spending an extra dollar per year, per consumer is a juicy prospect
So, how will P& G achieve this? They spend more on innovation by some distance, than its competitors. They conduct more than just lip service market research. They really get under the skin of the consumer and understand how they live. 10 years ago the P&G business in Brasil was dying. The product were top of the range yet in relatively too expensive by a long way.
‘In a recent article by Moss Kanter When the first basico products were launched (women’s hygiene, diapers, and “greener” laundry detergent), demand immediately outpaced supply. They quickly captured market share through small neighbourhood shops, substituting colorful store displays for costly TV advertising. Premium products were lifted too. The business in Brazil became a profitable global growth model, and not just for emerging countries. Tide Basic was recently introduced in the U.S ‘( HBR 09)
This gives great benefits to the consumer but also to the business. It showed how the team could re-engineer the way in which the products were developed. Each tiny element was examined to find a way to decrease costs. That helped to gain synergy across the business and create a sense of belonging for all of the staff. They gained a great deal of satisfaction from challenging accepted business processes.
This process has seen similar improvements in India. The majority of shaving is done in barbershops. Not home or in the car as in other countries or on the train on the way to work. Again the P&G products were too expensive for the lower incomes. So the manufacturing processes had to be taken apart and new products developed. One of the benefits was bringing the business together to think outside of the usual business silos.
Create a vision
Challenge the accepted way of doing business
Get inside the skin of the consumer. They shave, yes but how do they live? Look in depth not just think about developing another better product and doing the same just a bit better.
Uncover new markets. E.g Asda sells a great deal of Indian food. Customers demanded more and one of those demands was for clothing. This week in the UK Asda, which is owned by Walmart will launch the first high street range of Indian clothing.
Be brave and challenge, before someone else seizes the opportunity