P&G takes a new market direction

As one of the world’s most secretive consumer goods companies, Procter & Gamble drills the message into its recruits, right from a tender age, that everyone wants to know their secrets and it is imperative that no one finds them out.

So last week’s announcement that P&G is to start selling its marketing and branding expertise to other companies appeared to turn the company’s 160-year old culture of confidentiality on its head. It seems a bit like exposing the secrets of the Magic Circle.

The new P & G business, code-named “Project EMM” (Enterprise Marketing Management), has been set up in partnership with Worldwide Magnifi, a Silicon valley company, and aims to enable companies across the world to build brands “faster, more efficiently and more effectively”.

Analysts appear sceptical of P&G’s plans to milk consultancy fees from its rivals, and say that the company’s expertise seems to have become thinly stretched in recent years, amid flat sales and executive turmoil.

Last June the then chief executive of P&G, Durk Jager, resigned in favour of former president of global beauty care Alan Lafley , who said: “P&G tends to be fairly linear, analytical, predictable. We want to be less predictable, more discontinuous, more capable of creating a business strategy that is ground-breaking” (MW June 29).

P&G, which over the past 160 years acquired the reputation of being inward-looking, has now made a “less predictable” announcement with the launch of Project EMM. But the industry is still unsure why the company is doing it. Analysts add that it made sense to divest several of its non-performing brands such as Wash n Go and Clearasil, but a venture like this is a distraction at a time when P&G is struggling with a declining share price.

Chairman and chief executive of this new venture Hunter Hastings, formerly the chief executive of Magnifi, says that the company has been set up because there is a huge economic opportunity.

Last year P&G top brands – Ariel, Sunny Delight, Pringles and Fairy Liquid – all suffered a dramatic decline in their UK market share. (MW June 15). Hastings says: “As a company we are always looking forward. And with the setting up of a Web-based company like the Project EMM, P&G will be a market leader yet again. The new venture was also an opportunity for us to reinvent the way our customers look at the business – the ‘outside in’ way”.

P&G aims to target the world’s 2,000 largest marketers through the new business and maintains that there is a $5bn (&£3.42bn) market for Web-based services over the next five years.

It is also setting up a London office for the new business later this week.

Graham Singleton, an analyst at consultancy The Value Engineers, sees EMM as an interesting proposition, but as an ex-“Proctoid”, expresses his doubts: “I doubt P&G’s ability to give advice in markets that are not core to its business. I would also have a few concerns if I was a client. As it is so overtly trading off the P&G name. I can’t see any competitors using EMM, which knocks out a lot of companies”.

Value Engineers managing director Paul Walton adds: “P&G does have the intellectual capital and vast amounts of knowledge about advertising and consumer goods, but the question remains who would want to buy that? And what is good for P&G or has been working for it may not work for other companies. Also, as a company, P&G is known for its strong cultural values and has long been a believer in its own product superiority, which might make it difficult to sell its expertise to other companies”.

Project EMM has already announced its first customers, which include Coca-Cola and Philips domestic appliance and personal care divisions. While P&G will contribute its knowledge on brand-building to these companies, it has made it clear that it will not sell specific proprietary information that could help a competitor.

Controversial Charmin loo roll will not share its marketing techniques with Kimberly-Clark’s new pre-moistened toilet rolls, to be rolled out in the UK, following its US launch this summer (MW January 25) and the branding experts on Ariel detergents will not join forces with Unilever’s Persil and share skills on how to best market its new Persil capsules (see news p5).

Rival Unilever sees the new venture as “a recognition of the importance of a company’s knowledge”.

Lever Fabergé marketing development director of home services Helena Ganczakowski says: “This is an interesting approach and we do know there is a lot of knowledge to spread around. The Unilever world for instance has a lot of expertise and skills, but as a company we haven’t done anything as overtly as P&G has”.

Four years ago Unilever set up marketing consortium Jigsaw – in partnership with Kimberly-Clark and Cadbury Schweppes – with the objective of pooling their customer databases.

But P&G is planning to do much more than selling its customer database through Project EMM – it hopes to sell its brains.

Professor Simon Knox, at Cranfield School of Management, says: “This is part of the company’s agenda to control the experience of consumption of consumers. But I can’t understand how this fits into the core functions of P&G.

“This venture certainly could be a first in the consumer market and where P&G goes, others follow. But the announcement looks to be a knee-jerk reaction to it falling short of targets in the past – something to turn the company around”.

The question remains, will P&G’s offer of its intellect to the world be enough to turn around its fortunes?

See “MW200102010091”