Creating a brand management system was only the start of a legacy devoted to nurturing of brands by leaders who understood consumers

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Setting a budget for Procter & Gamble Co.'s first interactive ad campaign wasn't easy. Fortunately, the project had a big-name advocate -- Harley Procter, son of one of the founders.

Mr. Procter convinced P&G's board in 1882 to give him $11,000 for magazine and outdoor ads touting Ivory soap as "99 44/100% Pure" and inviting readers to share their experiences with the product.

That $11,000 in the 19th century would loom large in the 20th. It proved to P&G executives the power of advertising, as hundreds of responses poured into the company's Cincinnati headquarters. They would become fodder for future ads and a book that would become one of P&G's first point-of-purchase retail ads.

FIVE THAT DID IT BEST

The marketing commitment those ads engendered made P&G an easy choice as the No. 1 Marketer of the Century. As part of the yearlong effort to celebrate the Advertising Century, Advertising Age editors selected five marketers that set the tone for the last 100 years of marketing. Those five companies are briefly highlighted on the following pages.

The way brands were developed, managed and marketed in the 20th century all owe a debt in some major way to P&G. Mr. Whipple, Mrs. Olson and Rosie the waitress -- however maligned they might be by creative types -- became the patron icons of marketing in this century.

Beyond the tonnage of its ad budget, P&G has played a pivotal role in developing four generations of media carrying its ads -- from radio to broadcast TV to cable to the Internet. P&G's brand management system has been adopted in much of the marketing world; its desire to learn about consumers helped spawn a market research industry and invented such categories as laundry detergent and disposable diapers.

The true explosion of P&G marketing didn't occur until nearly 50 years later, in 1931. A promotion director named Neil McElroy authored a three-page memo that defied P&G's established one-page-only memo convention. Marketing functions then handled by the sales force, he argued, should be assumed by a brand management team, with one manager for each brand.

GENESIS OF BRAND MANAGEMENT

Richard Deupree, P&G president and a relentless innovator, adopted the brand management concept. And Mr. McElroy would become P&G's president in 1948 after helping the company get involved in radio advertising as an ad manager in the 1930s.

Starting with his successor, Howard Morgens, every subsequent P&G chief executive would be a brand manager at some point in his career.

"The brand management system not only powered everything we've done in the balance of the century but has in one shape or another gone across the country [and the world] into all kinds of businesses," says Robert L. Wehling, global marketing officer for P&G. "It helped shape advertising by putting one person directly responsible for the success of the business and to build share."

SOAP OPERA'S TOTAL POWER

It would be hard for youngsters today to understand the value of the soap opera, which P&G launched in 1933 on radio to support its Oxydol brand -- "Oxydol's Own Ma Perkins." P&G moved the format to TV in the 1940s, developing such long-running programs as "Search for Tomorrow" and "As the World Turns." Indeed, the soaps proved to be the primary launching pad for some of P&G's biggest products.

"Throughout the whole middle part of this century, the soap opera was a tremendous vehicle with tremendous reach," Mr. Wehling says. "It was the principal vehicle used to launch Tide, Crest and a whole host of other brands."

As the soaps slipped in the 1970s, P&G went hunting for new media bargains. Cable and syndication TV seemed promising, and P&G was an early backer of each.

"I think . . .we played a meaningful role in helping launch advertised cable television and syndication at critical points in time," Mr. Wehling said. "Ted Turner would tell you we made one of the first, if not the first, major investments by a national advertiser in CNN when it was launched."

P&G also has helped launch the Internet as a marketing vehicle -- this time relying more on its bully pulpit as the world's biggest advertiser rather than massive infusions of ad dollars. Former Chairman-CEO Edwin L. Artzt helped push ad agencies into interactive work with a 1994 speech at the American Association of Advertising Agencies' annual conference.

RESEARCH MAVEN

Another mark P&G has left on marketing has been research, pioneering pre-launch test marketing of products and ad campaigns, along with often exhaustive post-launch analysis of advertising effectiveness.

Mr. Wehling recalls working on the rollout of Head & Shoulders shampoo in the 1960s, using seven test markets that evaluated two ad campaigns, along with various media weights, couponing and sampling programs.

"We learned so much that it helped immensely in making [the brand] a huge instant national success," he says.

P&G since has been criticized for obsessive test marketing. Its Fit produce rinse has been in test for five years in the U.S., awaiting a possible national launch next year. Pampers holds the record with seven years in test market.

Test marketing "isn't necessarily the right medicine for everything you need today," Mr. Wehling acknowledges, but it does factor in P&G's legendary tenacity.

Pringles potato chips were launched in 1968 and largely foundered for more than two decades, during which most companies would have pulled the plug. Then, P&G repositioned them for youth, fired off spritely advertising and sales started climbing -- with Pringles ultimately becoming a key global brand.

"I think people had such conviction about" Pringles, says Mr. Wehling. "They knew it wasn't the vision that was wrong, it was our execution."

Tenacity in agency relationships also has been a hallmark of P&G. Reputed for its legions of hard-nosed, analytical managers, its once-strict conflict policy and its strong aversion to press leaks, P&G has never been the easiest client. But it also has largely stuck with agencies through good times and bad -- refraining from frequent reviews or using them as scapegoats for its problems.

UNDERSTANDS AD AGENCY RELATIONSHIPS

"I think we were among those who pioneered the importance of long-term, sustaining advertising agency relationships," Mr. Wehling says. "We've felt there was value in riding with an agency through bad periods. . .The deep knowledge of the business that came from the long-term partnership has proven to be invaluable time after time. But I don't think that was a broadly shared idea."

Indeed, not every P&G initiative has been embraced by the world at large.

P&G launched "every day low pricing" and experimented with ending coupons in the 1990s to shift spending into equity building. But trade promotion and couponing remain rampant, and even P&G relies heavily on both in a pinch.

Though P&G built itself largely as a marketing organization, its focus shifted toward acquisitions, finance, logistics and globalization of existing brands, starting in the mid-1980s.

The brand management structure remained in place, but P&G moved to category management, appointing VP-general managers who directed strategies of many brands and interceded in the often-contentious system that had P&G brand managers competing against one another.

Financial and logistical efficiency became key selling points for P&G with ever-more-powerful retailers. The philosophy took on added weight for brand managers; varieties and brands were pared. Building sales was no longer enough.

NEED TO PUSH SALES & PROFITS

A former executive recalls a meeting of brand managers with Mr. Artzt in the early 1990s in which one asked: "Are we supposed to be increasing sales or profits?" Mr. Artzt reportedly replied: "Any fool can do one of those. You need to do both."

The bottom line more often prevailed. P&G's shares slipped in the 1990s across many categories, and it lost U.S. leadership in diapers and toothpaste. Yet earnings and the all-important stock price grew with nary a stumble.

As P&G enters the next century, however, sales growth -- and the marketing to drive it -- are getting new emphasis. After years of failing to meet sales goals, P&G has pulled out the stops on new brand and product launches. CEO Durk Jager promised in July that 20 new brands will roll into test or broad distribution by 2001.

The company rolled its Swiffer electrostatic dust mop globally this year over the objections of the finance department, and the brand appears on its way to becoming one of the decade's best-selling new package-goods brands in its first year.

Marketing has always been important to P&G, with Mr. Wehling pointing to Pantene, a tiny business acquired in the 1985 Richardson-Vicks deal as an afterthought. It has become the world's leading haircare brand and P&G's most heavily advertised.

NEW CAREER PATH

P&G also created a new career path for its marketing directors, named fittingly enough after the man who started it all. These "Harley Procter marketers" will make a career commitment to marketing -- abandoning ambitions toward the myriad concerns of general management -- in return for special training opportunities.

"I joined P&G out of business school because it was the best marketing job in 1984," says Elizabeth Ronn, one of the first Harley Procter marketers. "I look at [the Harley Procter program] as a way for P&G to regain our hard marketing edge and kind of rebuild our image as the best marketer in the world."

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