February 23, 2004 | Advertising Age | 24 REPORTP&G ADDING IT ALL UP A look at Procter & Gamble’s brands in the U.S. and around the world. Value positioning FIT TO BE Compared to the overall population, the average buyer of Procter & Gamble Co. flagship Tide has a higher annual income and is slightly older and more educated. Average household incomes for detergents: becomes a priority for most of its TAPPING history, premi- NEW um-brand giant MARKETS Procter & Gam- BY JACK ble Co. treated NEFF the poor much like well-off per- sons treat panhandlers—avoiding direct eye contact but handing over some spare change in the spirit of philanthropy. But something happened in 2001 when Chairman-CEO A.G. Lafley Source: BIGresearch started making his top global man- agers spend time with consumers in homes or stores once a quarter. Take BILLION-DOLLAR BRANDS Rob Steele, for instance. P&G’s presi- dent-North America was standing in P&G sells nearly 300 products in 160-plus countries in five sectors. Half of the checkout line one day with his re- its sales come from 13 products with $1 billion-plus in sales: search subject, and she asked him to come up with the participation fee BABY & BEAUTY FABRIC & SNACKS & FAMILY CARE CARE HOME CARE HEALTH CARE BEVERAGES right then and there so she could pay her grocery bill. Due to experiences like this, top P&G executives began realizing how many poor people there really are in the world, what a big potential market they made up, and how seldom they Folgers could afford or wanted to buy high- Iams Pringles price P&G products. Pantene Tide At the same time, private labels and such rivals as Unilever’s Suave Source: Procter & Gamble Co. and Alberto-Culver Co.’s VO5 were PAMPERS: To take the focus off price the Premium line was renamed Baby Stages of Development. snatching money from P&G’s wal- let more figuratively as their value CLEANING UP brands took share from P&G’s stable years later sold the house that built in 2003. But it did end several years of premium ones. —its century-old Cincinnati of double-digit sales growth for P&G claims to sell more than 30% of global fabric-care products. Dollar Close encounters with the cash- Ivorydale plant—to a Canadian con- Suave and helped ensure Unilever share of U.S. laundry detergent: strapped have helped change the way tract manufacturer. lost share in hair care despite its $100 Procter & Gamble 58.4% Tide, Gain, Ariel P&G thinks about brands and market- Following cost cuts derived in million launch of Dove shampoo and Unilever 15.9% All/Surf, Wisk ing as it launches more value brands, part from the outsourcing, P&G to- conditioner. Church & Dwight 9.7% Arm & Hammer value versions of premium brands and day markets Ivory as a “midtier” Dial Corp.1 8.1% Purex other marketing initiatives geared to- value brand, priced 10% to 15% DIFFERENT VENUES ward lower-income consumers both lower-per-ounce than such rivals as Diana Shaheen, a hair-care market- 1. Henkel’s acquisition of Dial is pending Sources: Credit Suisse First Boston analysis of ACNielsen data for 52 weeks ended Sept. 6, 2003, in the U.S. and overseas. Dial Corp.’s Dial or Unilever’s Dove. ing director whose portfolio spans excluding Wal-Mart and club stores; Procter & Gamble Co. “It’s important just that they’ve ac- Unlike most P&G brands, Ivory has Physique products priced north of $7 knowledged as they try to become a no agency of record, but gets media to Daily Defense, said having such a global company that 80% of the world support on a project basis from range “gives me more exposure to PAPER PROFITS can’t afford their stuff,” said an execu- Benchmark Group, Cincinnati. consumers in different venues. In tive for one P&G competitor. “It’s just As P&G integrated its 2001 Clairol shampoo, loyalty is not high, so P&G vies with Kimberly-Clark for dollar share lead in the $4.8 billion (re- part of the gale force of competition acquisition, it has similarly taken learning their needs, having a lot of tail) U.S. market for toilet paper, tissues and paper towels. with Unilever and Colgate, which are offerings and accelerating growth already value companies. At the same “In shampoo, loyalty are really important.” time, advertising prices are going Since the value strategy is global, through the roof. At some point, their is not high ... having a P&G is sharing learning about ap- business model has to evolve.” lot of offerings and pealing to low-income consumers among developing markets, lower- CLOSING THE GAP accelerating growth income European markets such as Just in North America, P&G could are really important” Poland and developed markets. add $3 billion in sales overnight if it Mr. Lafley, in an interview with could close the gap with rivals many of the lesser acquired brands, Ad Age, said he has been one of the among low-income, African-Amer- such as Daily Renewal 5x, and chief drivers behind value brands, ican, Hispanic and French-Canadian Infusium, down several price points. along with Kerry Clark, president- consumers, Mr. Lafley said at a De- Most dramatically, Daily Defense, a global market development, who cember investor conference. failing premium brand Clairol had oversees the units that handle local Symbolically, P&G’s most dra- yanked in the U.S. as the deal was clos- marketing and media buying efforts matic shift toward value may be with ing, came back last year priced at 99¢ throughout the world. Ivory, its oldest surviving brand. or lower, positioned as what P&Gers Executives experienced in mar- Dubbed “The House that Ivory called “a Suave killer.” keting to low-income consumers Built” in a 1987 Advertising Age The strategy hasn’t immediately overseas are taking their knowledge Dollar market share in U.S. based on ACNielsen data for 52 weeks ended Sept. 6, 2003, excluding Wal-Mart and club stores commemorative issue on P&G’s helped P&G’s sales or share in U.S. to the U.S. and vice versa. Alex Source: Credit Suisse First Boston 150th anniversary, the company 15 hair care, both of which were down See VALUE SHIFT on Page 30