Dynamic Marketing Communiqué

P&G: Candles, soap, and chance. How can you use innovative marketing to grow your business? [Monday Marketing Marvels]

February 3, 2020

DYNAMIC MARKETING COMMUNIQUÉ
Monday Marketing Marvels

182 years old

135,000 employees

$65 billion US net sales

180 countries

5 billion customers

Procter and Gamble’s (P&G) legacy all started with chance.

William Procter was from England who migrated to Cincinnati, USA with his first wife who later became ill and passed away a few months after arriving.

He used his past experience to become a candle maker, taking advantage of the oil and by-products from the meatpacking industry.

In the process, he met and married his second wife, Olivia Norris, daughter of Alexander Norris, a prominent candle maker in town.

James Gamble was from Ireland and migrated with his family to the US. Originally bound for Illinois, James became ill during the trip. They needed to make a stop in Cincinnati. When he recovered, the whole family decided to stay.

He became an apprentice to a local soap maker at 18 years old. After some time, he decided to open a soap and candle shop with a friend.

It wasn’t long until he met and married, Elizabeth Ann Norris, Alexander Norris’ second daughter.

Both son-in-laws competing for the same raw materials, Alexander Norris suggested and eventually persuaded both men to join forces.

On October 31, 1837, the Procter & Gamble Company was born.

Chance – William and James might have never met and founded P&G if they didn’t marry Olivia and Elizabeth

“Proctor and Gamble began as a small family-run candle and soap business, that grew through innovation, creative marketing, and partnerships to become the largest consumer goods company in the world.”

How did this bold new enterprise climb its way through the ranks and became so successful?

Their innovation strategy – pioneered new consumer products and had progressive company policies

–     Eliminated wholesalers from their process and sold directly to retailers = production was stabilized, reduced employee layoffs, and created new jobs (hiring salesmen)

–     Introduced innovative products = like Ivory Soap, Tide Laundry Detergent, Joy Dishwashing Liquid, Head and Shoulders Dandruff Shampoo, Pampers Diapers, and Pringles

–     Acquired other companies to further expand = like Clorox, Mr. Clean, Folgers, Pantene, Vicks, Olay, Old Spice, Tampax, and Gillette

–     First to introduce profit-sharing program for their workers

–     First to establish research and development laboratories in the US

Not to mention their awesome marketing and advertising strategy

–     One of the first major sponsors of cooking shows and soap operas on network radios

–     First to promote products through sampling and promotional item giveaways

–     With their market research department, they were the first to study consumer purchasing habits

–     Introduced a brand management strategy that paved the way to an industry practice – Market Segmentation

P&G’s Earning Power: Valens Research vs. As-reported numbers

Procter and Gamble makes for a great case study that we come back to regularly. One great reason? The firm truly has proved to be a phenomenal earning power generator.

Those are the true blue bars representing earning power (Uniform Return On Assets). The number is well over 20% for more than 15 years.

The global average of this number over the last 60 years is just 6%.

The orange bars are the as-reported financial information. If you relied on these numbers, you wouldn’t know this—you’d just see the 8% orange bar when you look at the as-reported ROA (return on assets, measure of earning power).

That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.

So, how is P&G actually doing now, and how have innovation, creative marketing, and partnerships been effective tools in their business?

The research and results don’t lie. Earning power (the blue bars) has been up and continues to show results much higher than what traditional databases show.

The stock price performed better than the rest of the stock market (the blue line) over the past ten years (except in 2018), with returns well above 1.0x the market.

P&G’s innovative business strategies and marketing ideas were what played the biggest roles in their success.

Their unending passion to seek out new and better ways to grow their company and understand their consumers have also made a difference in the industry as a whole.

It definitely goes without saying that they have earned their title as the largest consumer goods company in the world.

About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”

Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.

…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.

The true ROI in marketing can’t be separated from the business as a whole.

What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?

At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.

Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.

However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).

By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.

We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.

Hope you found this week’s marketing marvel interesting and helpful.

Stay tuned for next week’s Monday Marketing Marvels!

Cheers,

Kyle Yu and Joel Litman
Head of Marketing & President and CEO
Valens Dynamic Marketing Capabilities
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