K-C starts with a clean sheet

In its 134-year history, Kimberly-Clark (K-C) seems to have managed quite adequately without a global marketer, with brands such as Kleenex and Andrex ranking first or second in their respective markets in more than 80 countries.

But when Tom Falk became chief executive in 2003 after a 25-year career with the company, he proved he was far from a passive company insider by launching a radical five-year plan to transform K-C from the inside out. One of Falk’s commitments was to improve the company’s marketing capabilities.

To this end, he brought in K-C’s first chief marketing officer, Tony Palmer, in September 2006. Palmer, a rare external appointment for K-C, is a former UK managing director of Kellogg. Before that he had held marketing and general management roles at Coca-Cola USA.

But for a company that dominates many of its local markets (in the UK, for example, Andrex and Kleenex are both market leaders by huge margins), what can global marketing add? “The challenge is to get 55,000 people pointing in the same direction,” says Palmer, a genial Australian, in an exclusive interview with Marketing Week.

In Palmer’s view, the task of global marketing is to identify examples of great local marketing and establish a core competency in the company in order to transfer those ideas to other markets.

“There’s no such thing as a global consumer, people buy locally,” he adds. “The idea is that you win first locally, compete locally but you can yield the benefits of scale, which gives you more leverage with suppliers. Sometimes you can centralise advertising production, sometimes not.”

Director of equity research at US-based Wachovia Capital Markets Jason Gere says: “Prior to the changes Falk implemented, to say that K-C had some good ideas that it couldn’t leverage would be an understatement. It’s now a much more nimble organisation. Between innovation, marketing and execution with retailers, there’s now an integrated team effort. The results are starting to be seen in an elevation in sales.”

The task for Palmer is to establish a structure where everybody at K-C speaks the same marketing language; a kind of internal vernacular. He is looking to put in place standard processes and approaches, so that ideas can be readily transferred. There is a team providing what Palmer calls a “travelling university” that visits K-C bases around the world.

Palmer says global marketing also offers an opportunity to develop K-C’s employees in a way that enriches both the company and the individual. “In the same way you can transfer ideas, you can transfer people,” he adds. “Develop their skills and provide consistency around the world and that lifts the quality of that marketing.”

Palmer’s belief in and enthusiasm for creating this new regime is palpable. The father of five-year-old twins, he expresses a desire to create a working environment at K-C where employees have the scope to “achieve their dreams”.

This runs the risk of sounding like worthy though improbable corporate blurb but Bruce Haines, former chief executive of Leo Burnett, who worked closely with Palmer during his time at Kellogg, says: “He’s very committed to doing the right thing, just an incredibly good chap.” Haines goes on to say that Palmer was instrumental in getting the food industry together to give a cohesive response to Ofcom’s ruling on “junk food” advertising.

Haines continues: “He’s full of enthusiasm, an energetic driver of ideas but with a really laid-back style. For an advertising agency to work with he was all good things.”

Although Palmer is making fundamental changes to K-C’s marketing structure, the company’s main agencies, JWT, OMD and MindShare, are not in any danger. Palmer says: ”We’re not changing our roster but we are changing the way we work with our agencies. We have an opportunity to change how our marketing works and we see this as an enormous advantage in the way we’re going forward.”

Palmer observes that marketers for packaged goods companies have grown up as manufacturing systems for 30-second television ads. “The process has been: understand your brand promise, go out and shoot an ad, then take the ad and apply it to below-the-line and point-of-sale. We’re changing that structure,” he says.

He explains that K-C’s new process is to establish the brand promise and then, with agencies and internal teams, understand what the barriers are to people partaking in that brand promise. Once the barriers have been understood, the next step is to look at not just media but all consumer touchpoints and determine where the desired response can be driven.

“Only once all this has been established is it possible to go to execution and it’s only then that you can start allocating funds,” says Palmer. “What we’re doing is changing the sequence in which we go to market.

“In hindsight,” he says, “it was a strategic mistake to separate media from creative; the medium is the message now. To a large extent people are now obsessing about digital, which is only one of many emerging ways to touch consumers. I don’t think the separation of traditional and non-traditional media is at all helpful.”

K-C has put in place what Palmer describes as a “very structured process” to get its agencies and internal teams together, bringing a “diversity of thinking” to the task in hand.

This approach may seem somewhat rigid but it brings with it an ability to get things done quickly. K-C has some formidable competitors in Procter & Gamble, Georgia Pacific and SCA, which recently bought P&G’s paper products portfolio. But Palmer feels K-C’s advantage lies in this new system, which is created from scratch for today’s marketing industry rather than struggling to adapt to cumbersome inherited practices.

On learning that P&G’s UK and Ireland marketing director Roisin Donnelly had said – reflecting on 2007 – she wished she had been able to implement marketing innovations more quickly and to take risks with media and new product development faster, Palmer grins.

“That’s music to my ears,” he says. “You can’t outspend P&G but you can market better than them, you can be more nimble and outsmart them.”

“Legacy” brands such as Kleenex and Andrex are constantly under attack from competitors. For Palmer, the key is for K-C to be a leader in innovation and concentrate on growing the categories rather than “living off the equity of its brands”, a prospect he terms as “sacrilege”.

Though establishing this new marketing system in a major multinational company has been a complex and intricately thought-out process, when asked to define the fundamental objectives of marketing, Palmer responds with remarkable simplicity: “Sell more stuff, for more money, to more people, more often.”