VI. Resume

1. Read the article “Will she, won’t she?”. Will she, won't she?

Aug 9th 2007

From The Economist print edition

Having bought Gillette and focused on big brands, the world's largest consumer-goods company is betting that scale is the way to success

IN THE corner of a meeting room next to the bosses' office at the headquarters of Procter & Gamble (P&G), a large sculpture of a woman in a hat watches over proceedings with a serene smile. “She is at the centre of all our decisions,” says Richard Antoine, head of human resources and confidant of Alan Lafley, the company's chief executive.

Founded in 1837 by William Procter, a candle maker, and James Gamble, who made soap, P&G is the world's biggest consumer-goods company. It sold $76.5 billion-worth of them in the year to June 30th. And it probably knows more about consumer marketing than any other firm on the planet. Interestingly, many people at P&G do not use the word “consumer”. Nor might they ask if a “customer” or “shopper” would buy a putative new product. They are more likely to ask: “Would ‘she’ buy it?”

Women have long accounted for four-fifths of P&G's customers. Over the years, the way P&G sells to them has changed dramatically. In the 1930s it sponsored radio shows—the original soap operas—to encourage women (usually housewives) to buy its detergent. Now radio has been surpassed by television and the internet as a means of promotion; and “she” has become ever more independent, demanding and fickle. The variety of products on offer has exploded, not just from makers of branded goods, like P&G, but also from the big supermarket chains that now dominate the retail end of the business and sell their own labels alongside the big brands.

“She is in control now,” says Mr. Antoine. The consumer-goods giant is spending lots to find out what she actually wants. Staff from its Consumer and Market Knowledge division tour the world and spend entire days with women to observe how they shop, clean, eat, apply their make-up or put nappies on their babies. They try to understand how a woman reacts in the first three to seven seconds after she sees an item in a shop (the “First Moment of Truth”, in P&G-speak) and when she tries it at home (the “Second Moment of Truth”).

But the marketing techniques are getting more and more sophisticated. In May Wal-Mart and P&G started the rollout of Prism, a system of infrared sensors that counts the number of times shoppers are exposed to product displays, banners and televisions, in order to measure the effectiveness of in-store marketing. Typically obsessive, P&G also sends out staff to trail round after other customers' trolleys, double-checking the sensor system. “We depend on them as much as they depend on us,” explains Jeff Weedman, of P&G's external-business development team.

For retailers and makers of consumer goods alike, the complexity and cost of advertising and marketing have increased. As the world's biggest advertiser, P&G has tremendous clout in ad land. It spent $6.8 billion in 2005-06 and at least 10% more in 2006-07 (Advertising Week, a trade publication, reckons $7.5 billion). It has often been a pioneer of new marketing techniques. This year Publicis, a French advertising firm, and Dassault Systèmes, a French software company, turned to P&G for advice before launching a digital-marketing joint venture in June. The scheme allows consumer-goods companies to create and adapt new products online with the input of consumers.

To continue to build up its superbrands P&G needs to focus more on emerging economies, where the scope for growth in sales of basic consumer goods is far greater than in rich countries. Already more than 40% of P&G's growth comes from emerging markets, which contribute more than one-quarter of its sales. P&G forecasts that by 2010 emerging economies will account for 30% of the group's sales. Continuing to tune its products to the budgets and aspirations of local shoppers will surely be of the essence. And knowing what consumers want—and creating new wants—is still one of the things P&G does best. In the past it used this skill mainly for women in Western countries with relatively high incomes. But in future years P&G will target women, rich and poor, everywhere—as well as the other half of humanity.