When Mr. Stengel made his first rounds of the company's far flung ranks of 3,500 marketing executives last year, he says a message he heard repeatedly was: "I don't know what matters anymore." He's come to Assistant Brand Manager College-a weeklong "boot camp" for P&G's marketing foot soldiers-to tell them what does.
And what new recruits are learning at the world's biggest media buyer could be a little disturbing for ad agencies and media companies.
Marketing spending, Mr. Stengel tells them, is sometimes looked upon by Wall Street "as a sign of our business health." He demurs. "I think a sign of business health is how are you spending your money effectively."
Relatively little class time in the week deals with conventional media advertising. Instead, various P&G executives lay out what Mr. Stengel calls "the marketing framework," including targeting, brand equity, marketing plans and value propositions. The ABMs spend as much or more time on such subjects as direct marketing, design, retailing and public relations as on advertising development and media. They listen while Mr. Stengel lauds "companies that spend practically nothing on marketing and are building great brands," citing Starbucks and California's In-N-Out Burger.
He hasn't forgotten about advertising or agencies, but he's not taking it easy on them either. "If we're not making advertising that's more persuasive than our competitors, we're just not doing our basic work," he says.
This particular class of three dozen is more diverse than the typical group of mainly recent college grads and MBAs. About half are transfers from other P&G functions, some moving because of restructuring. One is a 15-year veteran manager at P&G's New Orleans Folgers plant. Fewer than half are white men. Several have never been to P&G's Cincinnati headquarters before, including some in a group of six from Canada and four from P&G's Hispanic marketing unit in Puerto Rico.
The curriculum includes everything from a section on competitive intelligence to a shopping trip to a Kroger and a home visit with a suburban Cincinnati family. The class did Procteresque 13-15 hour days Monday through Thursday, though that includes dinners and nightclubbing.
P&G is so serious about training that it's tearing up the vaunted and legendarily stuffy wood-paneled 11th floor offices of its senior managers, rededicating two thirds of the space as the John Pepper Training Center, named after the recently retired chairman. Chairman-CEO A.G. Lafley and Mr. Stengel will stay on the 11th floor in new open offices along with a few other senior executives, making it easier for them to drop in on training sessions.
"There's a psychological element of going up to 11 ... and I think it will be very powerful, just as a symbol," says Joe Hensler, associate director overseeing Marketing University. "The executives have found it important enough that they're giving up their own space."
Symbolism looms large at ABM College. Mr. Stengel likens P&G marketing to Camelot. "Camelot was a strong community, but they were relentlessly competitive outside," he tells P&G's would-be knights, sitting at round tables. "We want you to be collaborators, to get to know each other, to have fun, to be a strong community. But when we get outside and we're up against our competitors, we want to be ruthlessly competitive. "
win some, lose some
To be sure, P&G still loses some jousts. Earnings and the stock price are up, but organic sales growth remains on the to-do list after two flat-to-down years. Yet P&G is also scoring victories against once-implacable foes. Colgate-Palmolive Co. suddenly finds itself playing catch-up in U.S. oral care. As P&G got broadly aggressive on price and promotion in the past year for the first time in a decade, competitors learned what "ruthlessly competitive" could mean.
Mr. Stengel exhorts the ABMs to beat competitors in consumer understanding. He doesn't want them to just use their heads, but also to feel it in their guts. One ABM asks how that's possible when they're destined to shuttle among brands and categories every few years. "We're going to make a change in that," Mr. Stengel says. "We're not in jobs long enough."
To drive home how seriously P&G takes Mr. Lafley's "consumer is boss" slogan, most of the first day of ABM College is devoted to preparing for visits with consumers in their homes and at stores.
Carol Berning, a research fellow for P&G's fabric and home-care business, says that the insights from seeing and talking with consumers in their homes are almost always more valuable than watching them in rented rooms from behind one-way mirrors.
One group of three ABMs conducts an hour-long, informal in-home focus group with a 60-something mother, her two daughters and a daughter-in-law in a suburb 15 minutes away. The family has few reservations discussing their home cleaning habits-or sometimes lack thereof-or opening up the cupboard. Amazingly, every woman in the family has adopted mom's strategy of buying club-store jugs of S.C. Johnson & Son's Windex and pouring it into squirt bottles purchased from a local hardware store. One daughter jokes that they're like the Windex-loving character in the film "My Big Fat Greek Wedding" who uses the product even to control acne. Product placement rears its head again.
These consumers are mostly brand loyal, but little of their loyalty and few new-product purchases stem from media advertising. The younger women try products based on tips from mom, who often follows advice of friends and neighbors. "I don't think you can trust everything on TV," says one of the daughters.
Later, riding to a nearby Kroger supermarket for more research, Daryl Ellis, ABM for Eukanuba pet food, notes how seemingly all the family's brand choices hinged on word of mouth. "If P&G could find a way to tap into that it would be awesome," says Dawn Capper, an ABM for Downy.
At Kroger, Ms. Capper finds more divergence from traditional P&G marketing. She's clearly not used to approaching strangers in supermarkets to quiz them about contents of their shopping carts. She's apprehensive at first. But soon she's talking to an elderly woman about why she likes Charmin yet didn't buy either package she'd just been looking over. Ms. Capper then stops a shopper buying Clorox Co.'s SOS pads and private-label bleach and finds the woman gets most home-care products free through a multi-level marketing scheme she was recruited into by her boss.
Back at the training room, as ABMs are debriefed, some appear to have had their first real conversations with low-income consumers. They're surprised, either by the resentment they heard or how some buy P&G products as status symbols or small luxuries. Ms. Berning relates the surprise of Rob Steele, P&G's president-North America, when a consumer he was shopping with last year needed her research fee from P&G upfront to pay the cashier.
On Wednesday, there's another lesson in how to get a brand message across without paid media. Bryan McCleary, oral care external-relations manager, gets active participation, and some laughs, with an exercise titled "Make Me Care," where pairs of male and female ABMs pitch product stories to a media panel and guess if the journalists will care. Two of three care about launches of a four-bladed razor and curry-flavored Pringles. Everyone likes the angle of using Dawn to clean up after a grisly grease-tanker spill on a busy highway. The male team wins, high fiving and chanting. They're ruthless.
For their final project Thursday night and Friday, six teams of ABMs tackle the hypothetical turnaround of a failing Mexican import beer in the United Kingdom. Each pitches its plan to a real P&G general manager. Each plan is different, and most include no TV.
The team pitching to hair-care general manager Ravi Chaturvedi wants to build a niche brand big competitors will ignore. "The future of the company is in good hands," Mr. Chaturvedi tells them. "Not everyone thinks about being small ... but profitable and growing."
But he pauses at their plan to use TV. "I can just about guarantee you can't afford that," he says. "You're thinking small and profitable. TV is a waste of time for you because it's a mass medium."