In a conference with financial analysts June 15, P&G President-CEO A.G. Lafley said the company will discontinue its Olay cosmetics and Fit produce-rinse brands while scaling back global expansion of Dryel home dry-cleaning kits, Secret antiperspirant, Bounty paper towels and Charmin bath tissue.
Issuing the most complete report yet on his year-long strategic review, Mr. Lafley said P&G will focus on four key businesses-baby care, laundry, feminine care and hair care-plus what he termed "faster-growing, higher-margin, more asset-efficient businesses with global leadership potential." The latter group includes such brands as Olay skin care, the Actonel prescription osteoporosis drug and Crest oral-care products.
Among brands noticeably absent from Mr. Lafley's priorities were Bounty and Charmin, which, while among P&G's 10 largest global brands, are tissue-towel businesses with lower margins and higher capital costs. Mr. Lafley said P&G has no plans to divest or scale back tissue-towel brands in North America, but indicated that expansion to Asia will be ended while P&G strengthens those brands in the U.S. and Western Europe.
Overall, P&G's marketing spending was down 4% in the first nine months of the 2001 fiscal year, which ends June 30, and will be down "low single digits" for the year, Mr. Lafley said, though he said advertising spending as a percent of sales will stay above 9%. P&G's measured spending in 2000 was $1.5 billion, according to Taylor Nelson Sofres' CMR.
Also appearing via tape during the presentation was newly appointed Global Marketing Officer Jim Stengel, 46, who succeeds the retiring Bob Wehling, 62. Mr. Stengel outlined a four-part "evolving approach to marketing" for P&G that includes:
* Targeting "prime prospect consumers," such as through the recent launch of Crest Whitestrips, whose Internet distribution helped P&G identify core consumer segments prior to this spring's national retail launch.
* What he called "going where consumers are," citing a program for P&G's Tide brand "where we are advertising in surprising places with surprising messages and going where laundry problems start ... where someone spills a coffee cup, takes a fall, where a child is playing on a football, soccer or baseball field, Tide is advertising there." Tide has tested added weight behind the program in some markets, including the Cleveland area, with building-size downtown billboards featuring humorous plays on the perils of dashboard dining. Volume and market share are up significantly in such markets, he said, "and we're going to expand it even more."
* Expanding category consumption, such as through ads for Pampers baby wipes that encourage parents to use a wipe with every diaper change.
* Retailer co-marketing, including a program called "The Buzz Report" in which P&G uses data from market research with 50,000 shoppers to create customized reports and marketing programs for retailers.
"Brand marketing [is] the essence of our company," Mr. Stengel said.
His message represents little departure from that of his predecessor Mr. Wehling, who is retiring in August after 41 years at the company. Mr. Wehling has overseen sweeping changes in recent years that include a sales-based agency compensation system, streamlined internal decision-making on ads, more varied and less TV-centric marketing, and, most recently, a groundbreaking $300 million multimedia deal with Viacom.
Colleagues, former colleagues and agency executives familiar with Mr. Stengel describe him as a "nice guy" in the mold of Mr. Wehling who also brings recent line-management experience to the job.
Currently VP-global strategic planning, marketing and new-business development for global baby care, Mr. Stengel started his career in 1983 in P&G's now fast-disappearing food business, rising from brand assistant to advertising manager on such brands as Jif, Crisco and Duncan Hines-all since sold or are now for sale. He also worked in beauty care on the Cover Girl business, and in Europe, where he spent four years from 1995 to 1999 in general management.
"He's been involved in the coupling of the traditional types of advertising and marketing that we've done and adapting them to the new technologies of the Internet and database marketing, so he has a fundamental understanding of [both]," said John Burbank, brand manager for interactive marketing on Pampers.
"He's a delight from an agency's point of view because he cares about three things-the consumer, the work and the people," said Kevin Roberts, CEO of Publicis Groupe's Saatchi & Saatchi.
"My creatives love him because his directions are very clear, whether you agree or not, and then he'll listen to your response," said Barbara Boyle, international creative director on Pampers for Saatchi, which handles the brand outside the U.S. "He once looked me in the eye and told me: `Barbara, I'm pure P&G.' But I think he's pure, modern-day P&G. ... He's bright, he's strategically kind of classic, but he's not afraid to kind of turn things around if that's what the consumer wants."
Contributing: Mercedes M. Cardona