Walmart, P&G, Unilever Learn from Their Mistakes

Yielding to Lure of 'Sexy' Undeveloped Markets Can Be Bad for Business

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BATAVIA, Ohio (AdAge.com) -- Paul Polman is the only senior executive to have worked at each of the three biggest consumer-product marketers on Earth in the past five years -- Procter & Gamble Co., Nestlé and Unilever. As such, he's seen a variety of takes on how to run global marketing, and his unique perspective is this: No single solution will work universally, even within the same company.

Most global marketers have adopted some form of matrix organization in which brand positioning and product development are directed primarily by global category units, while other marketing efforts, including shopper marketing, multibrand promotion and sometimes local development of global ad campaigns, are handled within local countries. What varies most is where profit-and-loss responsibility -- and hence budgeting power -- resides.

"The model you apply is really a function of the business you're in," said Mr. Polman. "You have to be careful."

The risk of having profit-and-loss and budgeting with global managers is that they'll overlook "more difficult" markets in the developed world, such as Germany, in favor of the faster-growth potential in developing markets such as China, "because it's sexy. It's dynamic. And certainly when [global managers] have the profit responsibility, they might get a quicker reward for that." Of course, that "wouldn't necessarily be in the interest of the business."

For Unilever, he said, "it's not [about] winning in developing markets. For us it's winning in categories, so there's a winning attitude wherever you are."

P&G's model has worked well in household and personal care, he said, and a highly global model works for many beverage brands such as Coca-Cola or Lipton. Food and pet food, however, are often best handled by region or country, he said, because tastes or lifestyles differ considerably. Even within ice cream, however, a premium brand like Ben & Jerry's or Haagen-Dazs lends itself to global strategy and marketing better than more midtier brands such as Unilever's Magnum or Breyer's, he said.

Don't force it
Some things about marketing absolutely need to be global, and Mr. Polman points to the work of Unilever CMO Simon Clift in sharing best practices around the world as one key. But he sees a difference between sharing knowledge and trying to force a single global direction on every market.

"At the end of the day, you have to win in the local market," he said. "It doesn't serve anything to have a standard product globally and not win anywhere. We've all made that mistake. I made that mistake when I was running global laundry at P&G. I made that mistake in some businesses at Nestle. And I'm sure I will make it again here and learn from it."

But globalization broadly marches on. Walmart Stores, which long has divided its U.S. from its international division and tended to run marketing in individual countries fairly independently, recently established a global marketing organization within its international unit that looks to cross-fertilize ideas between the U.S. and the 14 other countries.

Walmart recent relocated some marketing functions from its Bentonville, Ark., headquarters to the U.K., where Rick Bendel, who had been chief marketing officer of Asda, has taken on duties overseeing marketing for Walmart around the world, Doug McMillon, CEO of Wal-Mart international, said in a press conference June 5.

"He's out there working with [Walmart U.S. CMO] Stephen Quinn to understand the marketing approaches and philosophies we have and translate those around the world for other countries," Mr. McMillon said, "with Asda working as the conduit from a marketing perspective now for our international division."

"A lot of the lessons about merchandising, about private label and about food and food quality we hope to transport from the U.K. to markets all around the world," said Walmart Stores CEO Michael Duke.

Opportunities for growth
P&G's global marketing organization has been fairly centralized since it was introduced in 1999, and it's arguably becoming more so. But while the focus of incoming CEO Robert McDonald and Global Brand-Building Officer Marc Pritchard clearly is on developing markets, expected by analysts to account for more than 80% of P&G's growth in the next 15 years, Mr. Pritchard said developed markets such as the U.S. won't be starved for attention.

Mr. Pritchard noted that brands such as Swiffer still haven't been tried by more than half of U.S. households and that most other P&G brands have similar opportunities for growth through exposure to new consumers.

P&G's brand-franchise leaders, usually VP level or above, have global responsibilities for brand positioning and marketing, and even many brand-manager positions in Cincinnati or the company's West European headquarters are now global in scope.

"We are shifting toward thinking about how we can operate in a way where we have ideas that travel globally, but we still have to execute at the local level," Mr. Pritchard said. Brand-franchise leaders are working globally on such issues as brand equity, consumer understanding, campaign ideas and product development, he said. "But we need to make sure we have resources in each of the regions to ensure that they're designing things that are good to use [and] bring it to life effectively."

Both Mr. Pritchard and Mr. Polman believe marketers are best taught their craft at the local level before moving on to global roles. And Mr. Polman sees value in moving people between global brand-development organizations and local or regional brand-building organizations.

A similar approach has worked for Reckitt Benckiser, where employees regularly switch between global and local roles. Rob de Groot, exec VP-North America, and James Watson, marketing director for auto dishwashing, have led the U.S. effort to consolidate the Electrasol and Jet Dry brands this year under the European Finish brand name. Both came last summer from the global household unit that had developed the global "Diamond standard" campaign behind Finish and product initiatives to coincide with that shift.

How to handle media
Reckitt pulled off a similar switch earlier in the decade from Wizard to Airwick, not only without a hitch, but while also building market share consistently each year since it took place. Mr. Watson is confident the same thing can work for Finish. "There are efficiencies to be gained, obviously, on a global scale," Mr. Watson said. "It's much easier to share learning and best practices across multiple markets. You also can get advertising and production efficiencies that you couldn't get if you had multiple brands."

Other questions arise, however, about how to handle media, which is part of the local organizations in most marketing-matrix schemes, but which is also an important consideration in developing global campaign ideas.

To resolve that issue, Unilever brought Babs Rangaiah from the U.S. to London as global communications planning director in late 2007. "It was essentially to infuse media sensibilities into the creative-development process on a global level, since many of our global campaigns are created here," Mr. Rangaiah said.

The internet and social media also present a global-local quandary marketers have yet to quite fully solve. While other media tend to be local, the internet has little regard for borders. Check the traffic data for just about any U.S.-based website on Alexa.com and at least a quarter to a third of its traffic comes from overseas. Still, most digital campaigns, even for local brands, are intended for one country.

As Reckitt has launched its $20 million shift from TV to online video earlier this year in the U.S., one of the stipulations it put into its buys called for strict auditing to ensure it only paid for video served to U.S. residents.

And regardless of how global digital media may be, what works best tends to be tailored to local populations, Mr. Rangaiah said. "Even in the digital space, I think there's a lot of localization and customization that needs to be made," he said. "Obviously broadband penetration is greater in developed markets. But if you look at mobile penetration, it's really growing in developing markets."

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