RIVALS STEP UP PACE OF PRODUCT LAUNCHES

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Ask A.G. Lafley to address Procter & Gamble Co.'s new-product record, and he offers this assessment.

"I think this company's been pretty doggone good at idea creation," says the president of P&G's global beauty-care unit and its North American market development organization. "Our problem has been speed. We're slower than my great-grandma."

That's what P&G -- and separately, rival Unilever -- are working to improve. With mixed success.

WINNING A CLOSE RACE

Unilever won a close race with McNeil Consumer Products Corp. by being first to receive U.S. Food & Drug Administration approval to market cholesterol-lowering Take Control margarine. Its Thermasilk heat-activated haircare products rang up sales of more than $120 million their first year.

P&G's new Febreze fabric odor-removing treatment brand, launched last June, broke new ground in the category and is on pace to reach $200 million in retail sales its first year, according to Information Resources Inc. figures. A host of rivals have since followed it.

P&G also has a legion of other innovations in test that are now rolling out, including Jif Sensations flavored peanut butter, Dryel home dry-cleaning kits and Swiffer eletrostatic dust mops.

That pace of new brand creation should continue, Mr. Lafley said, as the company works to shorten the time it takes to develop products.

The most notorious example may be Fit produce rinse, now in the fifth year of test marketing.

Mr. Lafley was part of the small team that originally developed Fit and got it to test market within a year.

That team became the model for new-product groups within each of P&G's newly formed global business units, each with its own general manager, support staff and budget

P&G also is moving to speed new products by doing "more simultaneous and less sequential" consumer testing and more testing with small, defined segments and individual consumers rather than large sample populations, Mr. Lafley said. And the company has begun testing new-product ideas over the Web in consumers' homes rather than bringing the consumers into P&G offices.

P&G's competitors, however, have been getting faster, too.

When P&G launched Always feminine pads in the mid-1980s (its last new national consumer brand before Febreze), it took competitors five to 10 years to catch up with the top-sheet technology on which the brand was based, Mr. Lafley said. But Clorox Co., S.C. Johnson & Son and others are coming out with their own versions of Febreze only a year after that product was launched.

By the time Dryel made it to test market, a small rival, Consumer Product Resources' Custom Cleaner, was already in distribution. And S.C. Johnson is simultaneously launching nationally Pledge Grab-It, aimed directly at Swiffer.

EMULATING UNILEVER

In one respect, P&G may move to improve its new-product processes by becoming more like Unilever.

Both have been burned in recent years by innovations from smaller competitors -- such as Automation's Clean Shower daily shower cleaner, GoJo Industries' Purell waterless hand sanitizers and Kao's Biore facial cleansers. While Unilever has rushed in with copycat products in most cases, P&G hasn't.

That strategy appears to be changing.

'WE MESSED UP'

"We clearly messed up [by] missing baking soda in dentifrice; missing the pump dispensing [in toothpaste]," which P&G finally launched last year with Crest Multicare Plus Extra Whitening, Mr. Lafley said. "I think in the spirit of [Organization 2005] that we're going to have to do what the strategy in laundry and cleaning was for a long time . . . which was you matched the marker. Then we'll figure out whether it's a good idea or not."

He added he doesn't want "matching the marker" to drag P&G away from its core strategy of developing its own new product concepts based on "habit-changing, life-changing" technologies.

For Unilever, improvements in new-product efforts stem from better control over spending priorities, said former executives.

For years, Unilever frittered resources competing in hopeless causes in categories where it was weak. But the launch of Thermasilk, behind an $80 million marketing campaign last year, is a sign the company has begun to focus on categories where it can win, said a former executive who now works for a competitor.

Still, industry veterans remain unimpressed.

"I think Unilever has had a lot of incremental innovation and a lot of me-too innovation, and I think the focus in the short-term is trying to get a steady stream of new products out there," said a recently departed executive. "But there really doesn't seem to be any substantial innovation."

"For a company that spends as much on R&D as they do," asked a P&G alum,

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