ARTZT STEERING BARILLA INTO EDLP STRATEGY;EX-P&G CHIEF ADVISES IN ITALY AS PASTAMAKER THINKS GLOBAL

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[milan] Edwin L. Artzt is taking the bravado he brought to his tenure as chairman-CEO of Procter & Gamble Co. to Italy.

Mr. Artzt, who retired from P&G in July, is helping Italy's leading pasta marketer Barilla introduce everyday low pricing in Italy, its first step toward becoming a bigger player in the global market.

Currently, Barilla has a 22% share of the European pasta market.

In the U.S., P&G introduced EDLP in 1991 to lower costs, improve brand loyalty and eliminate the varying wholesale prices offered retailers as part of trade promotion deals. The giant marketer has started using EDLP in the U.K. in several product categories.

Under Mr. Artzt's guidance, Parma-based Barilla is slashing prices by an average of 12% on products accounting for 70% of total sales in order to compete with Italy's deep discounters.

"Our objective is to enhance the value of our products to consumers and eliminate inefficient promotional activities that only attract a minority of our consumers," Mr. Artzt explained in his first public appearance in Milan on Barilla's behalf.

He estimated that 80% of Barilla's customers in Italy disregard price promotions.

"The theme of our marketing strategy can be summed up in one phrase, `Selling superior quality products at the lowest possible price,"' Mr. Artzt said.

WPP Group noted last week signs of "a shift in client spending from ...activities such as trade and consumer promotion to above-the-line media advertising. Some major advertising spenders are experimenting with dropping coupon activity, concentrating on everyday low pricing and beefing up network television spending."

WPP, whose agencies include Ogilvy & Mather Worldwide and J. Walter Thompson Co., said clients seemed to be focusing on brand differentiation and revenue growth as cost cutting gets harder and competition more fierce.

"That fits in with what Barilla is doing, reducing pricing and increasing network spending," said Martin Sorrell, chief executive of WPP Group.

A monthlong TV and print campaign for Barilla by Young & Rubicam, Milan, will explain EDLP to consumers.

Mr. Artzt, who worked in Italy in the 1970s and was in charge of P&G's international operations before becoming its CEO in 1990, joined Barilla as part-time executive director of the family-owned company's board in September.

Mr. Artzt spends eight to 10 days a month at Barilla's Milan and Parma offices, helping the company develop an international marketing strategy. He's working on strategic planning and ways to increase Barilla's market share in the U.S., Asia and Latin America.

Barilla hopes to increase exports from 15% of sales to 50% and considers the U.S. market, with Mr. Artzt's help, a priority. In 1994, Barilla posted a net profit of $70 million on sales of $2 billion.

In Italy, fierce competition from discounters has helped trigger Barilla's move. Now, 20% of Italian families buy food at 2,300 deep-discount outlets, according to A.C. Nielsen Co. Those stores have captured 11% of Italy's pasta market and 12% of the cookie and baked goods market.

"I think Barilla's new strategy will work because of their name and experience in the industry," said a product manager at the SMA superstore chain, owned by Italian retailer Rinascente Group.

Lamberto Prati, a Barilla press officer, declined to comment on whether everyday low pricing will be extended to other markets.

The price cuts go into effect this month and Barilla expects to wind down its price promotions and giveaways over the next five months.

Outside the U.S., Mr. Artzt's former employer hasn't embraced EDLP as enthusiastically as Barilla plans to in Italy. In the U.K., P&G cut the price of Fairy Liquid dishwashing liquid by 9% in January but, though preceded by a 7% cut for Pampers disposable diapers, there are no plans for across-the-board cuts, a spokeswoman said.

A U.S. spokesman said P&G is adding everyday low pricing "in a number of countries" and that "this is an ongoing effort to get more efficient worldwide."

Pat Sloan in New York contributed to this story.

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