On knowing the consumer
Mr. Crain: The human values that you hold so dear at Procter & Gamble seem to extend naturally to the way you think about marketing: Having respect for the customer and trying to find out what the customer really wants rather than what you want to sell the customer. Do you see any analogy there?
Mr. Smale: Our business is based on understanding the consumer and providing the kind of products that the consumer wants. We place enormous emphasis on our product development area and our marketing area, and on our people knowing the consumer. If they're responsible for laundry products, they need to know how people get dirty clothes clean. They do it in a whole variety of ways using a whole variety of standards. Our people have to know that like the palm of their hand. Perhaps one manifestation of that is the 800 line. We have something like 110 operators at those phones 10 hours a day answering questions. Some people call to complain about this or that -- and we want that , too -- but the vast majority of the calls are for information. They want to know nutritional information about food products, or they want to know how to bake a cake at an altitude of 5,000 feet. They may call and say, I'm giving my neighbor a Lilt home permanent and I'm stuck on this part of the directions. What do I do?' I get a cassette about once a month, and I play it in the car, and listen to people who call. All of this is reported monthly and broken out by brands. It's a statistical report that is circulated. And at the ground level, where we're dealing with individual products, our people go through focus-group interviews. They sit and listen to people by the hour.
On mass marketing
Mr. Danzig: Does it get any more difficult for you to reach consumers on TV these days given the programming problems and pricing problems?
Mr. Smale: It's more difficult, in fact, because the networks don't reach as many people as they did, regardless of how much it costs to do it. On the other hand, I've got to say that network television is still by far the most efficient way to reach 60% or 70% of the homes. There has been a clear segmentation of media, and that 's responsive, again, to changes in society -- the number of specialty kinds of magazines, as an example. And I assume that that kind of trend will continue on into the future.
Mr. Crain: Is it now becoming harder for a mass marketer like Procter & Gamble to reach the consumer in an effective way?
Mr. Smale: It's becoming different. If you define harder on the basis that you can't reach as many people through network television as you could 10 or 20 years ago, then, yes, it's harder. But you can still reach those people, and we do. I suspect if you go back into the last century, it was much more difficult for the company to reach consumers, because that predated mass media. But the company operated with that kind of a challenge, and it will operate in the future with the kind of challenge represented by the diversity of people P&G wants to reach. We'll have to make adjustments to one degree or another, but it doesn't stand in our way of being able to grow in the future.
Mr. Crain: We've read a lot lately -- and I know you're very interested in this topic -- about U.S. business losing its basic competitiveness. Do you think that regaining these basic human values that you talked about are part of the formula for U.S. business to reestablish its competitive position in the world?
Mr. Smale: No question. I think it's got to be the foundation of it. But we have to be careful we don't paint with too broad a brush. This company and our competitors in the consumer goods field have been competitive because we've been operating arount the world. So I don't think there has been any reduction in the degree of competitiveness of U.S. consumer goods companies broadly. But certainly there are broad areas of U.S. industry that have not been competitive, and there are, perhaps, a number of reasons for that , having to do with the value of currencies, and changes in costs of energy, and so forth. At the root of it, I think, is what you're suggesting: Our ability to compete is based on people. It's based on their education. How well are we educating young people vs. other countries with whom we compete? It's based on the relationships within the organization between people, between hourly employees and management. There have been major steps toward improving these human relationships in American industry, and American industry is getting more competitive.