When someone decides to compete with Procter & Gamble
*This post was originally posted on my personal blog thedigitalrookie.com on 13/10/2015.
If you want to advertise diapers, conditioners, tooth pastes, soap, then you’ll find yourself up against P&G. It owns more than 40% of the market share in each of these products, and also has a powerful position in shampoo, cake mixes, and house products. It spends about $700,000,000 each year in advertising, more than any other company, and its turnover is $12,000,000,000 each year.
First of all, P&G is disciplined. Their philosophy is using a methodical plan and minimising risk. They distribute huge amounts of samples to households. In 1977, its President had said, “The largest part of our initial investment is given to introductory sampling. Only when our customers have a complete experience of our product, do we start advertising for sales.”
They never go for smaller product categories, unless they expect them to grow, and they always take care to dominate the category they choose. By creating a huge amount of sales, they manage to have lower operational costs than their competitors, and this gives them higher profit margins, or allows them to sell in lower prices.
They perform extensive market research in order to find the consumers’ specific needs. Their former President Ed Harness mentions that, “We continuously try to understand what hides behind every corner. We study the customer and try to discover new trends in taste, needs and habits.”
Through blind in-home tests, they make sure that their product’s superiority is clearly shown. Harness mentions characteristically that, “The key for successful marketing is your product having the best quality. If the consumer doesn’t finally receive a real benefit from your product, then no advertisement or sales move that can save it.” When they launch a new brand, they advertise it to a very high degree, supporting it by spending huge amounts of money. $29,000,000 for Crest, $24,000,000 for High Point, $19,000,000 for Pampers, $17,000,000 for Tide, and so on.
Their test-marketing is incredibly detailed and continuous. For Folger’s international expansion, they did 6 years of test before presenting it to the East. As their President mentions, “Patience is one of this Company’s highest virtues.” They prefer being right than being first. Only 3 products in P&G’s history have been internationally launched without first going through test-marketing for at least 6 months. 2 out of 3 failed.
They do extensive market research to discover the most successful strategy, and they never change it if it proves successful. Their strategy for Tide, Zest and Ivory Bar hasn’t changed for 30 years.
They always promise an important benefit for the consumer. They believe that their advertisement’s first duty is to successfully communicate about the product, not to be entertaining or original, and they evaluate this communication in 3 stages: before the copy is written, after the ad is created, and in test markets. All of their ads contain a “moment of confirmation.” They show a woman squeezing Charmin and testing its softness.
In 60% of their ads, they use demonstrations to show how absorbent Bounty is, etc. Their ads speak directly to the consumer, using a tone and a set of circumstances that are familiar to them. If the product is for bathroom use, then it’s advertised in a bathroom, not a lab. While their ads are incredibly competitive, they don’t spend their money to name the competing brands. They mention them as “other leading products.”
When P&G continuously uses a certain character to promote a brand, then they will be an unknown actor, and never a celebrity. This way they come even closer to the audience that’s connected to the products brand identity.
Only 30% of their budget goes to advertising during the evening. Instead of using 30" spots, they prefer 45" spots, since they’ve ascertained that those extra 15" serve to even better carry the ad’s message through.
Source: Ogilvy on advertising
