Hi! Managers: Time to innovate and grow portfolio
It is almost a year since I gave a lecture at the Singapore Management University to Master of Business Administration students, but I still think it's something that reflects the situation today, when innovation plays a great role in helping you grow your business in the long run.Our role as a brand builder is to create excitement in the market with new products, and entice the competitors to play along so that together, we can grow the market. And we, at Procter & Gamble, are inspired by our leaders' directions on how we grow in Asia by expanding horizontally and digging deep vertically.
P&G creates more brands than any other consumer-goods company. While the company's large stable of brands - from Bounty to Braun, Oral B to Old Spice, Tide to Tampax - are relatively well known in the US, not all of them are as widely known in Asia. For instance, while about 30 categories of P&G products are sold in the US, only an average of 19 of those categories can be found on the shelves of Asia's shopping malls and supermarkets. But that will likely change, given the company's strategic direction from our leadership to grow horizontally and vertically to reach more consumers in this region.
In 2010, our chief executive officer Robert McDonald announced an ambitious goal to acquire 1 billion additional customers by 2015, and ultimately, to "convert every person on this planet into a consumer". To achieve this, the company plans on innovating so as to "touch more lives" around the world, and in particular, those in the tiger and dragon economies.
Innovation, for P&G, is not limited to the creation of a new product. Rather, it refers to "a new way of thinking or execution [that] creates value for the company and delights consumers". This includes broadening the customer base through a wider vertical portfolio of medium- to high-end products; reaching out to more customers geographically and deepening that relationship; and fulfilling a wider range of needs through brand expansion.
Citing the example of the long-established Oil of Ulan skincare fluid for women, the company first had to work around consumer understandings before it was able to grow the market. Back then, people associated the pink liquid with the older generation, as they saw it as something that their mothers used. We had to show that it was not a product for older ladies, but for ladies who do not want to look old, by strengthening its leading proposition in anti-ageing and introducing the renowned Olay Total Effects in the late 1990s. Olay then proceeded to "play the portfolio", growing the brand both vertically and horizontally. Products were added to address different customer concerns such as ageing, skin dullness, blemish-prone skin, and whitening. Several ranges were also introduced to capture various prices.
Another way to expand is to grow the market for everyone, as opposed to merely increasing your slice of the pie by taking from your competitor. However, this involves "inviting" your competitors to play along. In the past few years, almost 90 per cent of Thai consumers have used a diluted liquid fabric softener: three full caps per laundry load. When P&G introduced a liquid fabric softener concentrate - half a cap per laundry load - competitors began to do the same. Over a few years, Thailand's market for P&G's Downy concentrate grew to earn market share of more than 10 per cent. This approach of playing in the market helps everyone benefit when the pie grows bigger.
At P&G, there are secret recipes for nifty marketing strategies or brand management. It's a fundamental question on how you understand your consumers and competitors. That's the reason we believe in the way we "touch and improve more lives" and adopt a "purpose-driven" and "values-led" approach to branding. Simply put, the numbers will go up as long as you understand your consumers and innovate accordingly.
One last note to bear in mind is not falling victim to "marketing mantras" that over-emphasise market share. There are many ways to grow, and marketers should not limit themselves to just textbook strategies. It's all about what you do and how you learn from this.
Medhee Jarumaneeroj is Influencer Marketing & External Relations Leader - Asia Male Grooming at Procter & Gamble Asia.