Reckitt Benckiser (RB) might be a leading FTSE 100 company with net sales of £7.75bn in 2009, but it’s a relatively small player when compared to its two main rivals.
When your business operates in the same household cleaners, personal care and over-the-counter remedy sectors as Procter & Gamble and Unilever, both of which dwarf you in size, it helps to understand what your competitive advantage is. The 23,000 people that work across 60 countries for RB do have one powerful weapon in their armoury and they make the most of it.
UK general manager Camillo Pane says speed is the factor that allows RB to compete with its older and larger competitors. The Italian talks about his company’s speed of thought, speed of decision making and the speed at which RB is able to rattle off category-defining NPD and get it to market. New products, in particular those that Pane refers to as “game changers” (see below), account for about 35% of the company’s net revenues.
“Speed is RB’s crucial differentiator,” says the man who has held a variety of marketing roles at RB around the globe during more than 15 years with the company. “Game changers” help the company stay ahead of the curve, he explains. “We rely on speed to create and define new sectors which grow entire categories. We use our first mover advantage to take share and while our competitors are figuring out how to catch up we’re moving on to new markets.”
Sexual health and footcare are two new markets that RB will be looking to take full advantage of following the £2.5bn acquisition of SSL, makers of the Durex and Scholl brands, which completed two weeks ago.
Though many commentators have criticised RB for paying over the odds for SSL, Pane – whose job it will be to integrate the new acquisitions – insists that his team has the skills to make sure the deal is a profitable one. He says: “We believe we can make this deal cost effective.
“New brands bring new ideas, new concepts and new ways to talk to our consumers so we’re very excited about SSL – let’s face it I don’t think people will have less sex in the future,” he jokes.
Scholl and Durex are the number one brands in the world for footcare and sexual health respectively, and will bring the number of RB “power brands” – as RB calls them – to 19.
It’s these power brands that have seen the company safely through the global downturn. Through the leadership of chief executive Bart Becht, a former P&G marketer, and regional leadership from the likes of Pane, RB was the fastest growing and most profitable of the world’s FMCG companies during the downturn.
Due largely to RB’s 17 other global power brands, which include bathroom and kitchen staples Calgon, Finish and Cillit Bang and remedies such as Strepsils, Nurofen and Lemsip, the company sustained double-digit profit growth throughout the recession.
Pane has a deep respect for his competitors but describes “a unique culture” that runs throughout RB, which he believes is responsible for doubling the company’s revenues since 2000.
He says: “There are many similarities between us and the rest, such as our consumer insight and research. But once we find the right idea or project that we believe will make a difference to consumers, the entire organisation gets behind it with an intensity, a drive, a passion and an energy that is rare and unseen elsewhere.”
Pane’s passion is clearly on show during the interview at RB’s Slough headquarters. Several times he jumps to his feet to grab one of the company’s products from a shelf behind him in order to “sell” it like a consummate salesman.
He enthuses: “Every day we look for a better solution, a new idea, a better campaign or a piece of NPD, something to improve the lives of our consumers. To do that we have to be focused. No meeting, whether planned or impromptu, ends without us making a decision.”
Pane and RB chief executive Becht, who has been lauded by the City for his inspirational leadership and single-minded focus on growth, have worked together for 15 years. Pane says that under Becht everyone at RB shares the same objectives, financial or otherwise. The company prides itself on a flat structure, which encourages responsibility for ideas and project ownership to come from every quarter.
Even graduates are given the freedom and responsibility to develop ideas. Pane tells of one new recruit taking the initiative when he was assigned to the team responsible for Brasso, a metal polish brand that had not seen any NPD for more than a century. “Five months after he joined us from university, he came into one of our management meetings and asked whether he could develop a cleaning product under the Brasso brand for gadgets: iPhones, MP3 players, TV and computer screens and so on,” he says. “I told him to present a fully developed and tested product at the next management meeting a month later.”
The graduate developed a formula that tested well on every gadget he could find and also got endorsement from the manufacturers. RB approved the project immediately and the graduate started presenting to customers. “That was in March of this year,” says Pane. “Brasso Gadget Care is now listed by Amazon, HMV, Comet, PC World, Tesco, Asda, Sainsbury’s and Morrisons. And who do you think went to all the meetings with buyers to get this product listed? Who do you think created the innovative viral marketing campaign to support it? That same first-year grad has been the driver of everything.”
Pane stops short of revealing his expectations for the product, but adds: “I give you this example because it demonstrates how we allow good ideas to come from anywhere and let them flow. We gave the grad full freedom and all the resources he needed because the idea was strong.”
RB employees are made to feel that they will always find someone to listen to their ideas within the company, says Pane. “If it’s a good idea, we don’t wait for a consensus every time. If you do that you end up with endless meetings and no decisions.” Small meetings with someone senior are arranged where employees come “focused and prepared to fight for their own ideas. An instant decision will then be made”, he claims.
This culture runs not just through the UK arm of RB but through the global organisation too. It is sustained, says Pane, through the passion and commitment of its regional managers, all of whom, like himself, have reached their positions of responsibility by working across various categories and regions for RB. Pane might now be settled in the UK with his Irish wife and two sons, but he is aware of the experience he gained from working in a variety of markets.
Global citizenship concept
He explains: “We have a global citizenship concept. I began working for RB in Italy but have also worked for the company in the US, Brazil and London. An American is running RB in Germany, a Dutchman is running the US, a Belgian is running Brazil and an Indian is running China.”
Pane says RB recognises that working in different countries prepares managers to handle any situation and work in a global economy. “This wasn’t my first recession,” he says, describing his time as the regional marketing director for Brazil and Latin America between 2001 and 2003. “There was a recession. It wasn’t global, it was related to the political and economic situation of that country,” he adds.
“My biggest task was to maintain the focus on the brands at a time when other companies were pulling out of Brazil or decreasing their investment because it was so difficult to make money. As the marketing director, I fought really hard with global HQ to maintain our commitment. Brazil is now one of the best performing countries in the world for us and we’re in that position because we retained commitment to our brands when everybody else was getting out.”
Substantial price premiums versus the rest of the market work if they are based on true consumer insight and a differential
With technology and consumer behaviour evolving so rapidly, Pane is now managing a different kind of situation. There is a need for a company so committed to television advertising to embrace the digital world and take advantage of the new routes to market it provides. Pane says that there is a natural role for RB’s brands to fulfil through the likes of smartphone apps, social media and the internet.
“The relationship we build with consumers needs to be around the areas of advice, information, education and expertise,” he adds. “We have a little known website sponsored by Senokot that offers advice on constipation. It works very well. It’s quite low key and we don’t advertise around it, but for people who are embarrassed to talk about a problem but need advice, information and support it is very useful.”
RB also has a Nurofen app for the iPhone and Facebook pages for Lemsip and Nurofen (see Marketer to Marketer, below). Pane explains: “This is new territory for us. Facebook is a way of communicating with our consumers – a lot of brands do it but nobody does it in ‘over-the-counter’. Unless there is legislation that disallows it, why would we not do it?”
Pane says this is an example of RB thinking about OTC with an FMCG approach as opposed to a pharma approach like many of his competitors. This can help when dealing with his retail customers who are always keen to place products on promotion to attract cash-strapped consumers, he adds.
“We try to foster a collaborative relationship with the retail customers. We believe in our brands, we re-invest and we provide growth, which makes us good to do business with.” He adds that the retailers are perhaps the biggest fans of RB’s quick and successful innovation cycles. “The contributions made to category growth by our brands means they are well respected by retailers,” he claims.
This means that in categories such as household, where promotions are frequent and heavy, RB’s strategy of delivering better solutions, launched with a high premium price on the product is normally enough to protect against the wrong kind of promotional activity. He says: “Substantial price premiums versus the rest of the market work if they are based on true consumer insight and a differential.”
He points to a new Lemsip product as an example. This is the first product that can be both swallowed with a drink or dissolved in solution. “We identified two groups of people who like to self-medicate in different ways. But what happens if you’re a family with two different people that have two different needs? Do you have to buy two separate products for the same problem?”
Such insight, he believes, is about to add a notch or two of speed to the future growth of the SSL business and the company’s two newest power brands.
Marketer to marketer
Ross Farquhar, brand manager for Cadbury Wispa, Crunchie & Bitesize, asks: Achieving “brand fame” through creativity must be difficult in categories that are either low-emotion staples, such as cleaning products, or only useful at a time of pain such as over-the-counter pharmaceuticals.
Camillo Pane (CP): I don’t think it is too difficult. I wouldn’t describe Cillit Bang’s advertising as emotional but it works because it has a point of difference.
We’re not shy of talking about our brands’ points of difference against the rest of the market. We build our creativity around a culture of concentrating on innovation, insight and premium performance. That can be more than enough to create brand loyalty among consumers.
We’ve just launched a new Strepsils product called Strepsils Warm, for example. We launched Strepsils Cool last year, which did extremely well.
Just like with Marmite – where you either love it or you hate it – we discovered that there is a clear split between people who like a cool sensation when they take a sore throat remedy and those that prefer a warm sensation, so we set about developing these new products.
Donna Clegg, brand manager at Birds Eye, asks: Consumer engagement is moving higher onto the agenda within FMCG. Is this something that Reckitt Benckiser sees as a high agenda point?
CP: Our new Lemsip and Nurofen Facebook pages are growing every day. I don’t know of any other OTC brands with Facebook pages. We’re trying to lead. We also have a Nurofen app where you enter the application and you can get advice and tips about pain management.
Many of our household and healthcare brands are in a great position to forge a role as a place to come to for expertise and authoritative advice. That sort of engagement is priceless.
We’ve recently appointed someone from a digital agency to help us gain a more consistent approach towards digital. We’ve made a global commitment to embrace new tools and do better from a digital point of view. So we are moving a lot of spend from traditional media towards digital. The percentage of spend in digital was substantially increased from 2009 to 2010 and we plan to double the 2010 digital spend in 2011.
MW: The healthcare business has been brought together with the household and personal care business, which you already had responsibility for. Now that you’re in charge of all these areas, what do you feel has been the most visible effect of bringing these businesses together?
Camillo Pane (CP): Marketers can spot game changers. The healthcare business hadn’t seen any game changers among its brands for a while. Now we have brought that team together with the personal care and household teams, it is learning quickly that there is the same need to search for new ideas and game changers.
MW: What was behind the idea to combine the two businesses?
CP: [Chief executive] Bart Becht decided it was the time to see if we could combine the two UK businesses and grow our opportunities.
It had become quite visible that managing the two units separately meant we were missing some synergies, learnings and best practice. For example, why would you have two teams working with Tesco, Sainsbury’s and Asda? There were some things we would do in common, such as buying media, but now we can be faster and share best practice.
These are two different industries growing at different pace from one another but essentially we are both communicating to the same customers as one another and we weren’t taking advantage.
MW: Has it paid off? And did you have to lose a lot of your people?
CP: We embarked on the mission to get everyone under one roof and did quite well. It wasn’t easy for everybody because of the question of whether they wanted to physically relocate. We kept more than 60% of our people. That showed a great loyalty to the company. It showed that people understood why we were doing it and believed in the idea. But yes, we still needed a fairly heavy recruitment drive.
MW: What sort of people do you look for in new recruits?
CP: Because people are expected to take early responsibility and can’t hide, there is no long learning curve here. When I conduct interviews I try to look for that adrenalin, the energy, a passion in their eyes to drive things forward fast. To love what they are doing. With accountability and freedom comes a potential downside if you are not the right person, the pace can be too much for a lot of people.
MW: You spent much of your career as a marketer before going into general management. Have the skills you learned as a brand manager helped you in your current role?
CP: At RB, our marketers are well trained in all sorts of areas, including financial skills. Our marketing spend is heavy but it also has to be effective and efficient. Yes, we are bold in making decisions on bringing new products to market and investing heavily in them but we are also bold in taking products off the market or taking advertising off the air if we feel something isn’t working.
It is in the DNA of our marketers to be always looking for results. They understand what is good for the business which means they must be clear and focused. Some companies see it as a risk from a financial point of view to bring marketers to the top. In fact, we see it as an advantage and not a risk. It’s an opportunity.
MW: RB was recently fined £10m for marketing rigging in relation to the Gaviscon brand. Has this been settled now?
CP: We clearly believed that we were acting within the law at the time. We have co-operated with the OFT from the beginning and are pleased to have settled.
MW: We heard recently from several non-marketing board directors that the marketers they’ve worked with simply haven’t understood the wider needs of the business. How do you ensure this is not the case at RB?
CP: We foster close relationships between sales and marketing. We send marketers to join their sales colleagues when they go and meet retail buyers. They bring that extra consumer insight to the meeting and I think the retail customers appreciate that.
MW: You saw the recession as an opportunity to increase investment as opposed to decrease it. Why?
CP: It all starts with belief in our brands. Bart says we are obsessed with brands and that’s true, we want to communicate the difference between ours and the rest all the time. So when we saw the recession coming we saw it as an opportunity.
While we put some programmes in to save cost to offset the extra input costs we would face, marketing was not an area where we looked for savings. We were the third biggest TV advertiser in the UK last year. When you consider the size of the company, that is quite astonishing. And if the Government cuts [advertising] spending we might become the second after P&G.
Game changers: product innovation that lifts the business
Camillo Pane talks through Reckitt Benckiser’s game-changing products
“Most of the products in this market were drops, which consumers find difficult to use. There wasn’t a lot of innovation in this category and most products were priced between £2 and £4. We came up with Optrex ActiMist, a product that you spray onto your closed eyes from about 5cm. It penetrates through the closed eyelids, refreshes you and aids dry eyes.
In the UK we launched this for £14.99, a breakthrough in the market that moved our share from about 44% to 57%. The market grew for the first time in years and is still growing at around 15-20%.”
Bonjela Complete Plus:
“Bonjela has always been a gel that you apply to a mouth ulcer with a dirty finger.
We created a format of the product that comes in a jar and is applied with a small brush.
The product launched in the summer and has already delivered a 6% market growth and 500 basis points of share.”
“The air freshener category was dominated by aerosol cans until we launched Airwick Freshmatic. We have the base freshmatic, which squirts at fixed intervals, and one with a motion sensor, which senses you passing nearby and releases fragrance when you are near.
I worked on the launch around the world when I was global category manager of healthcare. The idea came from a brand manager in Korea. He came to us with the idea of taking something that is largely for commercial and public bathrooms and making it for mass markets. We tested it with consumers and received fantastic results in the two key markets of the UK and France. We brought it to the EC in February 2004 and it was in Tesco by September 2004.
This changed the entire category. It had never been done. If you open up the unit you’ll see it contains wires, batteries, sensors, lights and a different type of aerosol. This would have taken maybe two years to go from idea to shelf elsewhere.
Four months after we launched it in the UK we were in 60 countries and Airwick Freshmatic now accounts for 15% of the total global air freshener market.
At the time there was no air freshener in the world selling for more than £5, $5 or €5. We launched this at £9.99. We intentionally doubled the price. The message was that this is a high end, premium product. Consumers loved it. They could set the timings. This is one of our biggest successes and it took us six months to put on shelf. It was a lot of work and required us to build an entirely new factory in China, but you can get things done that quickly if the entire company is behind it.”
Dettol No-Touch Handwash:
“The liquid soap you often find in domestic bathrooms tends to come with a base pump. Innovation [in this area] had mostly concerned new fragrances or a different shape of the bottle and so on. We wanted to provide something new. The problem we identified was that so many dirty hands touch the bottle pump that bacteria spreads easily.
We came up with a battery operated automatic soap dispenser. This was an idea from the global team that was launched in the UK four months ago. [Before the launch] Dettol had 2% of share in the liquid hand soap market. We’re now the number two brand in the market with almost 16% of share.”
Facts and figures
£7.75bn revenue (2009)
£1.9bn operating profit (2009)
€39.8bn revenue (2009)
€5.02bn operating income (2009)
Procter & Gamble
US$78.9bn revenue (2010)
$16.1bn operating income (2010)
Dec 2009–present Reckitt Benckiser UK General manager UK with overall responsibility for household, personal care and healthcare.
2007–2009 Reckitt Benckiser UK General manager for healthcare.
2003–2007 Reckitt Benckiser Global category director for air care and dehumidifier.
2001–2003 Reckitt Benckiser Latin America Regional marketing director for Brazil and Latin America.
1996–1999 Reckitt Benckiser Various roles in Italy and North America.
1994–1996 Kraft Jacobs Suchard Italy Brand manager roles in the coffee category.
1993–1994 PIMS (Profit Impact of Market Strategy) Consulting Company Business analyst.
1992–1993 SDA Bocconi (postgraduate management school) – marketing area. Academic research assistant on applied consumer analysis.