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The Consumer Is Boss! AMA Collegiate Conference March 14, 2003 Jamie Egasti Vice President NA Snacks The Procter & Gamble Company 1 Objective Share some insights into the marketing challenges you will all face as you launch into your business careers Keep you awake after your night in New Orleans 2 Background Graduate of Harvard University 22 years with P&G Variety of sales, marketing and general management assignments VP NA Snacks 2002 The Best Marketing Job in the world! 3 P&G – A Company of Brands $40 Billion in Sales Worldwide - 7% volume growth - 5% sales growth Market 250 brands - to 5 billion consumers - in over 130 different countries Operations in 80 countries 4 9 Statement of Purpose “We will provide brands of superior quality and value that improve the lives of the world’s consumers…” 10 The Changing World Consumers . . . - More dynamic than ever - Higher expectations than ever Performance Quality Value - Demand brand relevance 11 Change of Power Consumers have more choice - Brands, Retail, Media 1960’s - 3 spots could reach 70% hsh’s - One of 30 “messages” a day Today… - 30 spots to reach 70% hsh’s - One of 600 messages 12 Change of Control Consumers are demanding more control - Health Care - Tivo Consumer believe they….not manufacturers are the “owners” of brands…(they’re right!) 13 The Consumer is Boss! Coca-Cola - New Coke…Coke Classic e-bay - “as members of the e-bay community… together we are building the people’s most abundant and efficient marketplace” 14 The New World Of Marketing 15 Functional product benefits Consumer solutions Shopping and product use Consumer experiences Transactions Consumer relationships The New World Of Marketing Functional product benefits 16 Consumer solutions Consumer Solutions Tide - Superior Cleaning plus: Tide Kick Tide Stain Detective 17 18 Consumer Solutions Tide - Superior Cleaning plus: Tide Kick Tide Stain Detective 19 20 Consumer Solutions Iams - From Pet Food to Pet Health - Pet Services 21 22 Consumer Solutions Iams - From Pet Food to Pet Health - Pet Services 23 Consumer Solutions Impact on Marketing Moving away from messages about product benefit Moving toward multi-dimensional marketing about solutions and brand experience Think holistically about your consumers’ needs 24 The New World Of Marketing 25 Functional product benefits Consumer solutions Shopping and product use Consumer experiences Consumer Experiences Creating new and better experiences that make “the Boss” happy - Consistent experiences at all consumer touch points: in-store, in-home, via key influencers . . . and beyond - Rewards beyond product functionality 26 Consumer Experiences 1. The first key moment of truth …. in the store - Retail environment is as much a communications medium as TV, radio, print or the Internet - More than 100MM people shop Walmart each week - Leverage the store to create unexpected value and a more enjoyable shopping trip 27 Consumer Experiences Speaking of Women’s Health - Wal-Mart - National Sponsorship with the Foundation - In-store activity + out-of-store components Information Education Entertainment 28 29 Consumer Experiences Speaking of Women’s Health - Wal-Mart - National Sponsorship with the Foundation - In-store activity + out-of-store components Information Education Entertainment 30 Consumer Experiences 2.Role of Design - First Moment of Truth Easy identification of product “Pop” on shelf Simple, easy to read packaging - Second Moment of Truth Experience that supports the equity of the brand Delivers on demanding consumer expectations 31 Consumer Experiences Pampers: The Consumer Opportunity - Highly concentrated group of users: 80% of Sales come from 3.7% of total households - High per consumer dollar ring: approx. $500/year - Behavior/condition predicates entry into the category, not attitude (presence of children vs. “hair involved”) Short product lifecycle Specific points in time where Mom’s purchase and preference were most in-play 32 Consumer Experiences Consumer Insight: - Interested in anything that enhances child’s development - Raising kids to be prepared for the “real world” - Product choices based on ability to help child’s development Brand Equity - Pampers helps me uniquely meet and celebrate my child’s development as we grow together 33 34 Consumer Experiences Consumer Insight: - Interested in anything that enhances child’s development - Raising kids to be prepared for the “real world” - Product choices based on ability to help child’s development Brand Equity - Pampers helps me uniquely meet and celebrate my child’s development as we grow together 35 36 37 38 Direct Mail The New World Of Marketing 40 Functional product benefits Consumer solutions Shopping and product use Consumer experiences Transactions Consumer relationships Consumer Relationships Targeted Marketing vs. Mass Marketing - Prime Prospects - Group of consumers who will drive a brand’s growth now and in the future - Fundamental Objectives Understand them and their needs deeply Find more consumers like them Direct marketing activity towards them 41 Consumer Relationships Crest Whitestrips - Sold over the internet for one year - Great appeal among: Brides to be Teen Girls Hispanics Gay Men - Continued to create a lot of buzz - 35% awareness before we shipped a case!! 42 43 44 A Short Story- Febreze A $250MM new brand for P&G The first successful new “category” launch in over 25 years. A brand that safely cleans odors on fabrics 45 Febreze Launched in July 96 Positioning on a clothing/smoke focus Failed miserably..25% of trial objective…many trial barriers - Not relevant to me - New behaviors - How does it work 46 47 Febreze Launched in July 96 Positioning on a clothing/smoke focus Failed miserably..25% of trial objective…many trial barriers - Not relevant to me - New behaviors - How does it work 48 Febreze Spent a week with loyal/heavy users in test mkt. - Diverse lower income - Passionate insights about the versatility..how it works - How it fits in my life..increased relevance & appeal Restaged as an Everyday, AllPurpose Odor Neutralizer “Discover the Uses” 49 50 Febreze Spent a week with loyal/heavy users in test mkt. - Diverse lower income - Passionate insights about the versatility..how it works - How it fits in my life..increased relevance & appeal Restaged as an Everyday, AllPurpose Odor Neutralizer “Discover the Uses” 51 Discover the Uses Quadrupled trial, doubled awareness But..we needed to create a higher order benefit Zaltman/Emotional research with users/non-users 52 Higher Order benefit Odors are have deep emotional response..elicit strong memories Gold standard….cleaning - “What my mother taught me” Reposition as “the only Spray that cleans odors away” Fabrics need Febreze 53 54 Higher Order benefit Odors are have deep emotional response..elicit strong memories Gold standard….cleaning - “What my mother taught me” Reposition as “the only Spray that cleans odors away” Fabrics need Febreze 55 Fabrics Need Febreeze Doubled trial…drove heavier everday use. - The emotional needs hierarchy provided the functional & emotional barriers to trial & use. - Strongest Verbatims…”changed my life” Launched National in May 98 $150MM in year one sales 56 57 Fabrics Need Febreeze Doubled trial…drove heavier everday use. - The emotional needs hierarchy provided the functional & emotional barriers to trial & use. - Strongest Verbatims…”changed my life” Launched National in May 98 $150MM in year one sales 58 Key Learnings At every step…going back to the Boss moved us forward Consumers had a much better understanding of how to use…& why You must build relevance & emotion to sustain the relationship 59 The Consumer Is Boss! If brand marketing is a symphony . . . The consumer is the conductor Marketers are the musicians Marketing tools and media are the instruments 60 P&G’s Principles Recognizing “The Consumer is Boss” and living ALL its implications in our business Commitment to advancing the craft of marketing Commitment to creating/sustaining the world’s pre-eminent marketing community Recognizing that brand building and marketing is the core competency of our organization . . . We are first and foremost a company of brands 61 62 63 64 65 66