Procter & Gamble is world famous for its innovation and brand management of consumer products. The company started in 1837 when William Procter and James Gamble, immigrants from England and Ireland, respectively, formed a company initially making soap and candles in Cincinnati, Ohio, USA.
Hugh O’Brian
Procter & Gamble is today a very, very big company. The nearly 170 year old global multinational giant has projected annual sales of an estimated $68 billion for 2006. Some of the hundreds of brands marketed under the P&G umbrella include such famous names as Crest toothpaste, Head & Shoulders shampoo, Tide detergent and Gillette razors, to name just a few, in addition to the well-known tissue brands Bounty, Charmin, Puffs and Tempo.
DAVID TAYLOR IS GLOBAL PRESIDENT FOR FAMILY CARE, which essentially is the tissue and towel business unit at Procter & Gamble. An electrical engineer from Duke University, Taylor has been with P&G for 26 years, initially working in manufacturing management, where he was plant manager of the company’s massive baby care plant at Mehoopany, Pennsylvania, USA.
In 1992 he moved into brand management working with the Pampers and Luvs baby diapers brands out of the Cincinnati headquarters and then in 1998 he relocated to Hong Kong, where he was general manager for all of P&G’s business there.
He was also responsible for the company’s hair care business in what is termed ‘Greater China’, meaning China, Hong Kong and Taiwan. In addition, he served as vice chairman on the Quality Brands Protection Committee, the industry anti-counterfeiting lobby promoting intellectual property rights in China.
In 2001 Taylor moved to Geneva to run the Western Europe Family Care operation. Then in 2003 he came back to Cincinnati as vice president of the North American Family Care group and in 2005 he was promoted to President of the Global Family Care unit.
TISSUE IS BIG BUSINESS AT P&G, with Bounty kitchen towels, Charmin bathroom tissue, Puffs facial tissue and Tempo hankies all important to the company. Both Bounty and Charmin are truly global brands, with each having annual sales of over USD 1 billion per year, ranking them among the biggest brands at Procter & Gamble.
Perini Journal was recently welcomed in Cincinnati to talk with David Taylor about the brands, the business, the markets and the commitment to innovation.
PJL: Some say that tissue brands are dying. What do you think?
Taylor: We most certainly don’t agree. Charmin and Bounty have been the market leaders in the USA for the past 25 years and these brands are growing. They are also expanding and building consumer loyalty in other new markets which we have entered in the past 10 years.
We have put a very strong emphasis on these brands to make them much more than a commodity. We do this through innovation, both technical and commercial, underpinned with a very deep understanding of consumer needs, and innovative and locally relevant marketing that builds relationships with consumers.
Our job is simply to delight the consumer. If a brand does that it will build a strong and lasting relationship with that consumer. We see it as a total proposition that goes much further than simple product performance. The total proposition includes performance, packaging, end use, the touch, the feel, the smell and the total experience which we want to delight the consumer.
If a consumer is only interested in the lowest price, then they may very well not be in our target group. Price is certainly important in the total value proposition but it is not the only factor. There are lots of consumers that are interested in many more things than simply price and our aim is to meet those needs with the best total proposition.
PJL: What is the reasoning behind your launch of your “Basic” brand extensions of Bounty and Charmin in the US last year?
Taylor: Basic is a brand extension that we have introduced for both Bounty and Charmin based on substrate innovation. Starting with the consumer, we found that there was an unmet market need for something that had a different mix of performance attributes and price. For example, Bounty is by far the leading kitchen towel brand in the USA, with about 40% share of the kitchen towel market. But for some people it is over engineered. It is simply too good and maybe a little too expensive for the applications that they considered using it for. So we engineered Basic Bounty to give good wet strength so it doesn’t fall apart when you use it wet, but without some of the extra performance that Bounty offers. And it is priced a little lower to capture that market segment.
This is an example of meeting an unmet need of the consumer and the results have been excellent as Basic is doing very well in the market since being launched in early 2005. We were able to reach a market segment that no one was serving well. This is part of our strategy to offer different products for different profiles.
PJL: And what about the MegaRoll concept for Charmin?
Taylor: Again, we sought to meet an unmet need. Nobody likes changing the bathroom tissue roll. And by putting the equivalent of four standard rolls on one mega roll we have been able to satisfy the need. Everybody benefits: The roll is changed less often, and by putting more tissue on the core, we save transport costs and space both in delivery to the retailer and getting home to the consumer. Retailers like it because they get more sales per unit of shelf space. So it is good for everyone.
PJL: Are you concerned about the growth in private label tissue products in North America? Is tissue becoming a commodity?
Taylor: Tissue is most definitely not a commodity. Our two biggest tissue brands, Bounty and Charmin, both have well over $1 billion in annual sales and rising. They are very well-performing brands and will continue to be as long as we keep up the innovation.
Of course we are watching the developments but so far we are not losing anything to private label or retailer brands. They are growing but we are growing too. We are up in our categories over the past year. And the pie is expanding so with very strong brands and an expanding market, we are very satisfied with our performance. Both Bounty and Charmin are the number one brand in their categories in the USA.
Brands with a number 4, 5 or 6 position are often losing to private label because they offer little reason for the retailer to keep them on the shelves. Of course we need to continue to innovate to delight the consumer. If we do that, the consumers are happy with us and the retailers will continue to see the value and profits that we bring to them with our brands. Retailers benefit from the innovation that we bring to the marketplace.
PJL: How important is innovation?
Taylor: Innovation, both product innovation and commercial innovation, is the lifeblood of our brands. It is extremely important. We are working continuously to make improvements and upgrades to deliver a better experience for the consumer and improve our results. Our job is to accelerate the pace of innovation. This is the challenge, especially in a relatively ‘low interest’ category like tissue, and I think we are meeting it very well.
We put enormous resources into innovation. Technical innovation to improve the product performance, as well as commercial innovation to meet unmet needs.
We have to accelerate this pace of innovation to stay ahead of the competition. I am respectful of the competition, both the brands and the private label suppliers. But by bringing meaningful innovation to the marketplace, combined with a deep understanding of consumer needs and relevant marketing that builds relationships with consumers, everyone wins. We benefit, the retailers benefit and the consumers benefit.
PJL: Looking to Europe, some people have questioned whether P&G is committed to that market for tissue. Is there any doubt about the commitment there?
Taylor: We are very committed to the Western European market and doing very well. We are in the UK, Italy and what we call DACH, meaning Germany, Austria and Switzerland.
You have to remember that we are still very young in Europe for tissue. We only entered the market for the first time in 1994 with the acquisition of VP Schickedanz and the Tempo brand. And then we came into the UK in 1999 with Bounty. Charmin is even newer, coming in 2000 to the UK and 2002 to DACH.
Bounty is doing terrifically well in the UK, where it is the market leader in branded towel. Charmin is also doing well there, the number three brand after only a short time. Austria and Switzerland have also been good for us. Germany has been very challenging but we are confident for the long term.
In the UK, kitchen towel is showing very strong growth rates. The increase in market penetration for kitchen towels in the UK is clearly brand driven. So we are expanding the pie and taking a good share of it.
As far as any doubts about our commitment, I want to point out that our strategy has never been to be everywhere in Europe. We have prioritized the countries where we feel we have the best chance of doing well. Our phrase is ‘Do Well Where In’ which means just that.
We are happy with our performance in Europe and the results are very good in the markets we are in.
I should add that we are pleased with the steady expansion of our brands in North America. In Canada Bounty is now the number one kitchen towel brand there and in Mexico, which we entered in 2000, Charmin now has a double digit market share. So we will continue to expand selectively but I certainly can’t say where we are going next. •