Jager hangs out P&G’s past to dry

Who might have guessed that only four years after plumbing the depths of the world’s worst marketing disaster, Persil would once again steal market leadership from its arch-rival Ariel? And, still more piquantly, that it would be a direct result of Lever Bros’ superiority over P&G in bringing product innovation to the market?

But there it is. While Lever apparently carries all before it with Persil Tablets, its competition, Ariel Discs, is still languishing in a Cleethorpes test market. The Discs affair says it all about contemporary P&G culture: religious in its adherence to the ideal of product differentiation, rigorous in research and, increasingly, wrong-footed in implementation.

It’s a measure of the enormous task facing P&G’s new chief executive officer Durk Jager, ushered in after a bloodless coup last week.

Superficially, Jager’s triumph can be portrayed as a reversion to the abrasive management style of Ed Artzt (aka the Prince of Darkness) after the more emollient reign of John Pepper. Jager was very much Artzt’s protegé, but lost out to Pepper in the last power struggle three years ago, when Artzt retired.

More to the point, Pepper’s stewardship has not been a success. Last year, P&G sales were almost stagnant and although they are now picking up, there is no hope of the company reaching the five-year target it set in 1995. Jager has been set the awesome task of doubling sales by 2006. He plans to do so by introducing a seven-division global category management system and ruthlessly pruning top-heavy management at the same time. That should certainly please the shareholders and speed decision-making. But it will be nowhere near enough.

To succeed, Jager must re-engineer P&G’s formidable corporate culture. Over the years, P&G has always fought hard to launch new products with a tangible point of difference. But in mature First World markets, product superiority is becoming ever more tricky to achieve and sustain. Somehow, Jager has to find ways of stimulating innovation and escorting the new product to market a lot more rapidly – an infinitely more difficult task than introducing the new management system.

However, if P&G has problems, consider for a moment those of Heinz. It, too, is losing ground to rivals through lack of innovation, has recently installed a new chief executive and embarked on a global category management restructure. One major obstacle to achieving its goal is a lack of truly global brands – aside from Heinz Tomato Ketchup. In its seafood category alone, Heinz carries six different brand names across the world. Before anything else, it will need to invest massively on rebranding its products.

The message for both these companies seems identical. They should spend a little less time on satisfying short-term shareholder interest and a little more money on long-term marketing strategy if they want to stay ahead of the game.

Cover Story, page 16; News analysis, page 23

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