Diversity drive

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In a controversial experiment, Procter & Gamble Co. decided two years ago to base its new U.S. Hispanic marketing unit in sultry San Juan, Puerto Rico, 1,800 miles from the company's Cincinnati headquarters.

The mission was clear: narrow the 7-point share gap between P&G's shares in the general market and those among U.S. Hispanics and African-Americans. Another goal was building skill in targeting fast-growing ethnic consumer groups, a tough task in Cincinnati, where ethnic marketing was often tacked on to harassed junior brand managers' duties. "We've seen it all," said a P&G agency executive. "At one time, Procter had an ethnic consultant with no fiscal responsibility over budgets. That went away, and it was brand groups. Then, ethnic marketing was managed by assistant brand managers who focused on it after 5 p.m."

Today, multiculturalism is a 24/7 affair at P&G. The unit has about 64 people, two-thirds of them in San Juan, the rest in Cincinnati and field offices. The Puerto Rican office leads the way on major initiatives-it played a major strategic role in the launch of Downy Tropical Bloom fabric softener, and created an online game for Head & Shoulders now being considered for the general market. Even so, the grand experiment has not yet been a hands-down winner for P&G, the U.S. Hispanic ad leader, with a $46.2 million budget in 2000, according to Hispanic Business.

Graciela Eleta de Cacho, general manager of the unit, says results are mixed. "I think we as a company could be [making] faster progress," she said. "So underscoring the fact that we're part of a bigger piece, we're growing half the brands ahead of the general market." She wouldn't provide specific shares.

The idea to base the unit in Puerto Rico grew from a desire to get closer to consumers and multicultural marketing talent. So far among its competitive set, P&G is alone in its decision to distance multicultural marketing so far from headquarters.

"I'm the first to admit that at the beginning we were all skeptical about our ability to do this," said Ms. Eleta, who is the first Hispanic woman to reach the level of general manager at P&G. A Panamanian, she began her P&G career as an assistant brand manager for Crest toothpaste in Latin America in 1986 and now runs ethnic marketing.

The new setup demands extra effort and travel to stay linked to the global units overseeing P&G brands and other parts of the organization. In more of a stretch, Ms. Eleta's unit last year changed its name to the Multicultural Business Development Organization and also began focusing on African-American marketing.

Advantages include recruitment and first-hand observation of a key Hispanic market, she said. "We are able to not only recruit but also retain and develop a very strong Hispanic organization, which I am not as sure would be the case if we were located in Cincinnati. And in Cincinnati, there's also the feeling [among marketing executives] that you've got to work in a [global business unit] or work on an Anglo brand. Whereas here, this is 100% of the work we do."

Still, there are naysayers. Some Hispanic ad agencies-especially those not working for P&G -are still skeptical about a major marketer handling multicultural from Puerto Rico. They say it's too far, and the nuances of Mexican and Cuban cultures may carry less weight than that of Puerto Rico. And in San Juan, Puerto Ricans are the general market, a different situation from major U.S. cities.

"It's like having your Brazilian marketing operations in Mexico City," said Alex Rodriguez, president, Diversity Consulting Group, Los Angeles, a Hispanic marketing consulting and recruitment firm. "The markets are similar, but it's still a world of its own. They would have been better off leaving it in Cincinnati."

Ms. Eleta, however, says Puerto Rico has historically been a key Hispanic market for P&G and its chief global rivals-Unilever, Kimberly-Clark Corp. and Colgate-Palmolive Co. Among North American markets, Puerto Rico is neck and neck with New York, home to Unilever and Colgate, in importance among Hispanic markets, ranking behind Southern California and Texas.

"Competition is very rough here on the island, so product initiatives are sometimes introduced here even earlier [than elsewhere in the U.S.]," Ms. Eleta said. "So it gives us a sense of how our key competitors are working in the marketplace."

Isabel Valdes, president of Hispanic marketing consulting firm Santiago Valdes Solutions, Palo Alto, Calif., sees pluses and minuses in P&G's move.

"It sends the message to other corporations that Puerto Rico, which is a market of 4 million consumers, is part of the United States," she said. "I think it's about time we embraced Puerto Rico."

P&G also has access there to highly qualified Spanish-speaking professionals and marketing services and production shops in a less-costly market.

On the other hand, she said, "Neither the Puerto Rican, nor the Colombian, nor the Mexican population represents the U.S. Hispanic market. ... Many people in Puerto Rico do not see how different it is to be Latino here."

U.S. Hispanic agency executives who work with Ms. Eleta, 38, regard the Puerto Rican unit as still experimental, but cite better-quality thinking from San Juan-based brand management.

Ms. Eleta believes her unit will play a strategic role in working with brand groups on product development. For example, Downy Tropical Bloom was developed with a scent that tests well with Hispanic and African American consumers, along with packaging and advertising that emphasize a "freshness" positioning that resonates with ethnic communities, she said.

Being out of sight of Cincinnati doesn't mean out of mind. Ms. Eleta's group works with P&G sales teams to develop retail promotions, influence media planning for brand groups and conduct Hispanic market research and analysis. They see opportunities everywhere. The unit even hauled Charmin-sponsored portable toilets to a Unified Western Grocers of California concert in Southern California.

"If you go to any festival or fair, probably the most atrocious experience you can have, particularly if you're a female, is going to a restroom," Ms. Eleta said. In contrast, the clean, white Charmin trailers feature the Charmin bear on the outside and piped-in music and Pampers changing tables inside.

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