Reckitt Benckiser (RB) has only one small request prior to its top UK marketers embarking on their first-ever interview: could we please not use the headline “Reckitt Benckiser Cleans Up”?
A cursory investigation reveals that the press has used this particular headline ad infinitum since the company’s first quarter 2008 results, just over two weeks ago. To be fair to the headline writers, it is easy to see why. The household goods giant reported such forecast-beating results (net revenues of £1.51 billion, up 20% on the same quarter last year) it raised its full-year targets.
While others are wringing their hands, RB – maker of Vanish, Finish, Cillit Bang, Dettol, Clearasil, Nurofen, Lemsip and Airwick among others – is performing above expectations. Chief executive Bart Becht has pointed out that while consumers do not tend to buy more cleaning products during a financial upturn, neither do they buy less in a slowdown. But Becht has also put RB’s success down to a hike in marketing spend that is paying off “ in spades”.
Stain remover Vanish dominates the laundry aids market and Finish, the dishwasher detergent, commands 60% of that £200m market and has consistently rebuffed efforts by Procter & Gamble (P&G), Unilever and Henkel to enter the fray. Other brands such as Calgon, Dettol and Airwick have also been in demand.
RB’s UK marketing director across the household and personal care division, Phil Thomas, says that the company made an increase in media investment of 29% in quarter one. That, meaning global media spend is a whopping 12.9% of net revenue, is a “clear indication of RB’s commitment to its brands”, Thomas claims. In a climate where many are cutting their media spend, he adds: “We’re not doing less, we’re doing more.”
The RB formula sounds simple enough: well-researched markets, good product innovation, strong marketing, all creating brand loyalty and driving up margins. But when Thomas reveals that, at any given time, 40% of revenue comes from products launched in the previous three years, one begins to get an idea of the velocity at which it all takes place.
Thomas has been marketing chief of household and personal care for just under a year. Prior to RB, he was with Procter & Gamble (P&G) for 15 years working primarily on its laundry brands.
He explains how the company manages to churn out product innovations faster and often more cheaply than its competitors: “For a start, we are a flatter organisation than most companies. There are simply fewer people to talk to and fewer people to argue with. We don’t have endless meetings, because there’s no one to have them with.”
The structure of the company is such that there are only two people between Thomas and the chief executive; in the form of his immediate boss, the regional vice-president, who reports to the head of Europe, who in turn reports directly to Becht.
“If need be, I can lift the phone and get a decision from Bart Becht on any given subject within 24 hours,” says Thomas. In a comparable organisation, Thomas might find five or six levels between himself and the chief executive.
And it is not just the senior management that is empowered. Thomas says one of the key differences between RB and other similar companies is that brand and marketing managers get to participate in innovation programmes as well as being truly responsible for the top and bottom line of their brands.
Thomas maintains this is highly unusual and explains in companies of this size, middle managers normally work on one side or the other and marketers often do not get involved in innovation until they have been at a company “for years”.
Camillo Pane, UK general manager of healthcare, is an RB veteran and currently overseeing the division’s operation while the recently promoted Hanna Novak finds her feet in her new role as its marketing director. Pane explains that “energetic” strategy and innovation forums take place and says: “We don’t leave unless a decision has been made and everyone knows what has to be done to launch a specific campaign or innovation at a particular time.”
RB’s advertising agency Euro RSCG has to keep in step with this rhythm too. Sam Southey, who runs the RB business at the agency, adds: “Pace is behind everything that RB does, in terms of innovation and in terms of decision making. You always exit a meeting with a decision and that creates speed. You’re through and out the other side at the speed of light – and then onto the next one.”
Southey says that, because RB is one of the UK’s top five advertisers, according to Nielsen Media Research, there is a huge volume of communications going through the agency and its group companies. The process has involved a core team being established, in a way that reflects RB’s own structure. Specialist services are drafted in from Euro RSCG’s group companies as and when required, so that a “comprehensive, cohesive approach” can be applied.
The agency’s work for RB may not win may creative awards but Southey explains that the strategy behind the executions is based around being clear about what consumers want, then informing them with fresh news in compelling ways. “Like most of these things, the beauty is in the simplicity,” she says.
The formula is applied across its healthcare brands too. The company already counted Lemsip and Gaviscon among its over-the-counter medicines portfolio but with its £1.93bn takeover of Boots’ healthcare operation in February 2006, it obtained brands including Nurofen, Strepsils and Optrex.
Already, innovations to Strepsils and Nurofen, with the high-visibility launch of Nurofen Express in July 2007, has seen significant growth in the brands acquired from Boots. Pane says that, for Nurofen, it was simply a matter of giving the brand the “RB treatment”.
He explains that Nurofen had seen little or no innovation in almost a decade. Consumer research revealed the unsurprising insight that people want an analgesic to work fast. A new fast-acting product was developed and launched with great success, winning over-the-counter medicine industry awards.
Pane says that, despite the limitations that over-the-counter medicines have in terms of meeting regulations, clinical data and trials, the plan is to “accelerate the innovation process timeline” for RB’s healthcare brands.
Thomas himself displays a sense of duty by saying that the company’s competitive edge must not be compromised by long-winded processes, slowing the path to market. He concludes: “Reckitt Benckiser is a vast machine of innovation and it’s beholden to the marketers to maintain the same velocity.”