Marketing Case Study-P & Gs Secrets to Success

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.

Lessons

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

How Google Innovates

When Google started life as a university project, who would have thought that it would lead to a multi million $ business. Google News, Gmail, Maps, Google Earth and Adsense are examples of the business growing by innovation. The challenge to large business is to still think like a small business and act creatively. It seems that larger business are struggling to take the risks and often buy in innovation from smaller businesses.

In technology it is doubly challenging as there are so many options and it is a rapidly moving world. If you think that the internet has only really existing for about 15 years, it shows how much life has changed and indeed will change.

So how does Google manage to innovate so successfully? It invests in innovation. Staff have 20% of their time to spend on innovation and the remaining 80% on the day job. Googles’ innovation budget was $2.79 billion in 2008. It uses a project based approach to manage resources and monitor progress.

Each project needs to find a solution to a problem. So with News, the problem was to locate news quickly. Simple format and to the point. Staff who have a track record are supported. It is risky to back a project, hire people and just go the office in Sydney and go for it. But that is pretty much how Maps was born. The same team as working on Wave. This brings together instant messaging, like Twitter with email and wikis.

So being a big business is helping with innovation as there are resources and expertise to use to build networks and generate skills in developing a raw, even wacky idea into a success.