With 175 years of history behind it, Procter & Gamble knows how to change with the times. PRWeek charts the successes and challenges ahead for the CPG giant and its high-profile brands.
Charmin, Pampers, Tide – household names we have known since childhood. Behind these billion dollar brands and many others is Procter & Gamble, a global CPG powerhouse on the cutting edge of marketing that got its start 175 years ago when William Procter and James Gamble invested $7,192.94 to start a company that made candles and soap.
With its portfolio of 79 brands, 24 of which are worth at least $1 billion, P&G recently went through a major communications restructure, putting more focus on its PR and social media efforts than ever before.
“Public relations and digital and social media are less expensive than traditional advertising, have a higher return on investment, and get people to engage with the brand on a more personal level,” says Marc Pritchard, P&G's global marketing and brand building officer, who is leading the revamped communications practice. Under the new external relations platform, brand PR, corporate communications, and consumer relations are the focus, with government relations consolidating with legal and regulatory, and technical merging with the R&D function.
In addition to the internal changes taking place at the company, P&G announced plans in February to cut 5,700 non-manufacturing positions by the end of the 2013
fiscal year, thus streamlining its marketing spend, and reducing $10 billion in costs.
The company ended first quarter 2012 with revenue down 16% compared to the previous year, and shares have been fluctuating in recent months in the US.
Pritchard says the financial issues are mainly due to “share softness in the US,” and the $10 billion savings are an “important source in ensuring we can drive and invest in building our business and our brands in key markets, as well as offset cost increases, which sometimes come up.”
“It's important to note that in our developing markets, such as Asia, Central and Eastern Europe, the Middle East, and Africa, as well as Latin America, shares are growing and have been for the last three years,” he adds.
In May, P&G announced it was moving the headquarters for its skincare business to Singapore, an area where the company expects to see “significant growth in the future,” explains Pritchard. The company's babycare business also moved to Singapore, partly because P&G went from 20% of sales coming from developing markets in 2000 to 37% in 2012, with some business areas reaching 50%.
Erin Lash, senior equity analyst at investment research firm Morningstar, says P&G has entered some of the emerging markets a little late compared to competitors and may have entered “too many, too quickly.”
“Some of [P&G's] problems are the result of overextending themselves as they have worked to build their product portfolio, as well as their geographic footprint,” explains Lash.
She adds that P&G's $10 billion cost-cutting initiative is necessary for the company to remain a top player in such a competitive industry. “The potential savings from these efforts will ultimately need to be reinvested in the business to keep market shares healthy,” says Lash.
Paul Fox, director of corporate communications at P&G, says the company is doing well with haircare and oralcare in Brazil and is the number one consumer-products business in China. He adds that India and Russia are also key developing markets for P&G.
To increase growth, the CPG giant is focusing on improving products and shifting attention to some lesser-known brands in its portfolio. Pritchard says Gillette's Fusion and ProGlide razors are both very popular, so the company is going to focus efforts on raising awareness and creating brand affinity for Gillette's Mach3 disposable line, which is a little less expensive than the other razors.
P&G operates in about 1,000 market/category combinations – 40 of which represent 50% of overall sales and 70% of profits. Top markets include the US, Mexico, Brazil, China, the UK, Germany, and Russia, and big categories are babycare, laundry, haircare, skincare, feminine care, and oralcare, adds Pritchard. “What we're going to do is focus more on winning where it matters most,” he says.
Innovation, which is at the core of the company, is also key when it comes to driving sales and engaging consumers, says Fox. “If you think back through the decades and what this company has brought out, whether it's the first synthetic laundry detergent, the first toothpaste with fluoride, or the first disposable diaper in the mass market, there have been big breakthroughs,” he explains.
|P&G's 'Thank You Mom' campaign featured top Olympians such as US swimmer Ryan Lochte.|
“What we said we need to do is focus on some of those breakthroughs and have fewer innovations, but make them bigger.”
Lash agrees with P&G's take on product innovation, saying that it's “what drives category growth.”
“It has to be product innovation that really resonates with consumers, especially given the economic environment that we're operating in,” she advises. “Consumers are not willing to pay for new products if they don't perceive there to be added value.”
In February, P&G launched a new product for its Tide brand called Pods, which is aimed at easing the task of doing laundry and making the chore “less messy.”
The new Pods are comprised of detergent, stain removers, and brighteners in one small pack, and while laundry is a “fairly mature category,” Pritchard says the new line has helped the brand grow its market share in the US over the last six months.
On an even larger scale, Fox says P&G has been pushing innovation in conjunction with the 2012 London Olympics, which included a corporate campaign and involvement from 34 brands, such as Head & Shoulders, Pampers, and Gillette.
Since launching the global partnership in January through “almost all public relations activity,” P&G had garnered more than 65 billion impressions by mid-August, Pritchard says. He adds that the goal for the company is to deliver $500 million in extra sales from the Olympic Games, since P&G earned more than $100 million with just a US sponsorship in the 2010 Vancouver Winter Games. To raise awareness about its Olympics work, P&G went to various countries and worked with the National Olympic Committees in each to hold kickoff events with the P&G president or GM in that market, along with the president of the committee.
On April 18, 100 days before the start of the Games, the company globally launched its “Thank you, Mom” campaign online with a video. By the time the Games were over, all videos generated more than 72.5 million views.
P&G engaged consumers on an emotional level with the initiative by creating 40 online video vignettes or “momumentals,” that focus on the perspective of being a mother of an Olympic athlete and the highs and lows associated with it.
“Behind all of our brands is a company called P&G,” says Pritchard, “and behind every Olympic athlete is a mom, and moms of athletes are there every step of the way, and P&G is in the business of helping moms every day.”
Risk taking through digital campaigns
Procter & Gamble is looking to become better in tune and engaged with consumers' conversations on social media.
“We have just started the journey, and it's time for us to really start to engage with the consumer,” says Krister Karjalainen, P&G's head of digital. “We're a big company and now that we have the right capabilities in place, it's about the openness to take risks.”
One of the risks is launching digital campaigns strictly through social media.
“It has become a crucial and integral part of our brand-building activities,” says Alex Tosolini, vice president of global e-business at P&G. “It's not a set of activities.”
P&G is rolling out campaigns targeting issues important to core customers. An effective campaign launched earlier this year was Secret's “Mean Stinks,” an anti-bullying campaign targeted toward teens and young girls.
The campaign launched on Facebook in February and featured Glee star Amber Riley (pictured).
The page allowed users to send apologies to those they have bullied, view videos, and comment on what other participants posted. As of August, the “Mean Stinks” page had 409,367 followers and remains active.
Following the campaign, Secret's market share was up 5% from the previous year and digital engagement on its Facebook page grew nearly 25 times, according to Tosolini.
Secret's success on Facebook is in line with some of P&G's other brands. Most of the firm's major brands have a social media presence and marketing component. On Facebook, Tide has 3.17 million followers, Old Spice 2.1 million, Secret 1.5 million, and Pampers has 1.2 million followers.
According to Tosolini, Facebook engagement across all P&G brands grew from 30 million at the start of the year to 80 million in the weeks leading up to the London Olympic Games.
Tosolini did not disclose specific details of initiatives in the near future, but did say P&G is working on partnerships with retailers and tech companies such as Google, Yahoo, and Microsoft in the areas of search and content.
Pampers' special bond with moms
Pampers became Procter & Gamble's first $10 billion brand in June 2012, serving 25 million babies in more than 100 countries. P&G's biggest brand was born in 1956, when company researcher Vic Mills charged his research and development colleagues with making an alternative to the cloth diaper that would be disposable, affordable, and high quality.
Mills found the inspiration for his project while changing his newborn grandson's diaper, and it is that same personal spirit that later drove the brand's success. Pampers has won millions of loyal customers by creating an emotional connection between the brand and consumers.
“Our goal has been to move the brand from a mark of trust to a mark of love,” says Bryan McCleary, associate director of communications at P&G. “We want to connect with consumers beyond the 30-second commercial.”
A prime example of the brand's personal approach is its Miracles campaign, launched in 2011 to commemorate its 50th anniversary. The initiative included random acts of kindness by Pampers and its employees, such as distributing 30,000 care packages to infant intensive-care units in the US. Pampers encouraged fans to share stories of miracle babies on its Facebook page, and gave its bloggers money to conduct “miracle missions” supporting babies in their communities.
|Jennifer Hudson recorded a song that was made available on Pampers' Facebook page.|
As the Miracles and Jennifer Hudson campaigns show, social media is one of the biggest ways Pampers connects with consumers. And Pampers has a significant presence in online forums for mothers, such as Baby Center where the company hosts a “Connect with Pampers” group. Bloggers have also helped build brand awareness, and Pampers was the first P&G brand to bring mommy bloggers to the company headquarters in Cincinnati.
Pampers now employs five full-time community managers to interact with customers on social media, monitor online forums, and attend events. They “were hired to be where moms are,” McCleary explains. The company also
established a 20-member Pampers Baby Board three years ago, a diverse group that includes Hispanics, African-Americans, fathers, and gay parents. The board shares its opinions on upcoming efforts, attends events, and participates in campaigns, such as when some members made videos for the Miracles campaign.
“It's a group that's become very important to us,” McCleary says. Pampers' mantra is to “win where the babies are,” he adds, and international expansion has played a large role in the company's growth. Increasingly the brand has focused on countries with booming birthrates, such as China, India, and Vietnam. Product delivery ranges from individually packaged diapers in small kiosks in markets such as India and Southeast Asia to bulk online purchases in North America, Europe, and Japan.
Since 2006, Pampers has partnered with UNICEF to help provide vaccines for maternal and neonatal tetanus. Pampers also allows its employees to take a three-month sabbatical to work with UNICEF. “To many of us, this is the program we're most proud of,” McCleary says.
|Olympic beach volleyball player Kerri Walsh and her family partnered with Pampers for their special USA diaper range.|
Recognizing that more and more babies born in the US are Hispanic – 25% to be exact – the company is launching a program this fall called the Latino Baby Boom. The yearlong campaign will celebrate the integral role the fastest-growing minority group plays in the US.
Pampers found that Hispanic moms want to assimilate in American society without losing their ethnic heritage, so it built the campaign around that idea of cultural duality, McCleary explains. The company has enlisted Mexican singer and actress Thalía as campaign spokesperson to travel the country on a media tour. The Pampers Latino Facebook page will include giveaways for mothers and a ticker counting Hispanic babies born in the US. P&G also plans to donate money to a national Latino organization for every new birth.
Pampers has an internal communications team of three in the US, led by McCleary, with counterparts in Western Europe, Latin America, and Asia. McCleary characterizes Pampers' communications strategy as “a combination of shouting, humming, and singing.”
The team executes long-term campaigns, such as the Latino Baby Boom, while still trying to remain current and relevant with short-term efforts, such as the partnership with Jennifer Hudson, he explains.
McCleary adds, “Sometimes we shout for brief bursts that create a lot of excitement and advocacy. Sometimes we hum along for the whole year.”
The Latino Baby Boom campaign and social media will be two primary focuses of the brand in the coming year. McCleary hopes to double Pampers' Facebook fans in half the time it took to build its current following, along with reaching Hispanic moms “in new and relevant ways.” Content creation will be another area of growth for the brand, Alvarez adds.
Creating an emotional bond between the brand and consumers will continue to be the foundation for all of Pampers' efforts, McCleary and Alvarez both say.
SK-II origins run deep
|Cellumination was launched with a campaign that focused on its natural benefits.|
While scientists were searching for an ingredient for a new skincare line called Secret Key, they noticed the brewery's elderly workers, who were in constant contact with the yeast fermentation process, had soft, smooth hands. After years of researching 350 different strains of yeast, they discovered one that was rich with nutrients benefiting the skin. Named pitera, it became the key ingredient in SK-II when it launched in December 1980.
“The discovery of the brand became the story of the brand,” says Dr. Colin D'Silva, associate director of external relations at SK-II.
SK-II joined the ranks of P&G's billion-dollar brands in March and because pitera has continued to be at the center of the brand's messaging, that “powerful” origin story has contributed to the brand's success, says Michelle Tham, Asia MD at DeVries, which has a 28-year partnership with P&G.
“There's so much magic in that, it makes our storytelling job so much easier,” Tham adds. “That gives us a good jumping-off point.”
While SK-II stays true to its roots – including keeping the same packaging for the past 32 years – its communications evolve through scientific testing and innovation. The company has continued to research different aspects of pitera, as well as other technologies it hopes to roll out in products within three to five years, D'Silva says.
One campaign that focused on scientific innovation was the launch of SK-II's Cellumination line in 2010, which was created to boost the skin's glow. The company highlighted the line's ingredients and natural benefits during events across markets, including a global press event in Beijing, with interactive segments to introduce the press and other influencers to the product. “Bringing user experience and science to life” is essential to SK-II's communications strategy, says Tham.
The bulk of SK-II's business is in Asia, with Japan its biggest market, but products are also sold in Western countries such as the US, UK, and Spain. The trend of more Western women adopting the Eastern concept of a multistep skincare ritual has helped SK-II's business in the West, D'Silva explains.
|Actress Cate Blanchett is the global brand ambassador for the SK-II line.|
And a greater emphasis among women about the importance of starting skincare earlier in life has attracter more young consumers to the brand, D'Silva says. SK-II reaches many of these consumers through digital and social media in the US and other markets where the platform is popular.
On the SK-II Singapore page, for example, the brand shares personal stories of consumers who have used the products. “Especially for younger users, this is a great way to engage them,” he adds. The brand also reaches out to magazines, newspapers, and broadcast media, he says.
Authenticity is key to messaging, D'Silva and Tham say. This approach is most evident in the company's recruitment of brand ambassadors, all of whom must already be users of SK-II products.
Actress Cate Blanchett is SK-II's global ambassador and the company also employs actors and models across Asia such as Singapore model Sheila Sim. South Korean actor and director Yoo Ji-tae and Taiwanese-Canadian actor and model Godfrey Gao are brand ambassadors for the SK-II Men line.
Going forward, the skincare company will expand its global footprint by continuing to focus messaging on scientific innovation, authentic brand ambassadors, and the products' unique ingredients, D'Silva adds.