ASSIGNMENT 1 Case Study: Procter & Gamble treating business customers as strategic partners For decades, Procter & Gamble has been at the top of almost every expert's A list of outstanding marketing companies. The experts point to P&G's stable of top-selling consumer brands or to the fact that year in and year out P&G is the world's largest advertiser. Consumers seem to agree. You'll find at least one of P&G's blockbuster brands in 99 percent of all American households; in many homes, you'll find a dozen or more familiar P&G products. But P&G is also highly respected for something else-maintaining strategic partnerships with business buyers. P&G recognizes that building enduring relationships between consumers and its category leading brands starts with building enduring relationships with its large retail clients. On the front lines of this effort is P&G's iconic sales force. When it comes to selecting, training, and managing salespeople, P&G sets the gold standard. The company employs a massive sales force of more than 5,000 salespeople worldwide. But at P&G, it isn't just sales it's "Customer Business Development" (CBD). This might seem trivial, but at P&G the distinction goes to the very core of the company's customer relationship strategy Developing the Customer's Business P&G understands that if its business customers don't do well, neither will the company. To grow its own business, therefore, P&G must first grow the business of the retailers that sell its brands to final consumers. In P&G's own words, "CBD is more than mere 'selling'it's a P&G-specific approach which enables us to grow our business by working as a 'strategic partner' (as opposed to just a supplier) with those who ultimately sell our products to consumers. Says one CBD manager, "We depend on them as much as they depend on us." By partnering with each other, P&G and its customers create "win-win" relationships that help both to prosper. To deal effectively with large accounts, P&G salespeople must be smart, well trained, and strategically grounded. They deal daily with high-level retail category buyers who may purchase hundreds of millions of dollars' worth of P&G and competing brands annually. It takes a lot more than a friendly smile and a firm handshake to interact with such buyers. Yet individual P&G salespeople can't know everything. And because of the nature of P&G's B-to-B interactions, they don't have to. Instead, P&G salespeople have at hand all the resources they need to resolve even the most challenging customer problems. I have everything I need right here," says a household care account executive. "If my customer needs help from us with in-store promotions, I can go right down the hall and talk with someone on my team in marketing about doing some kind of promotional deal. It's that simple. The multifunctional nature of the CBD team also means that collaboration extends far beyond internal interactions. Each time a team member contacts the customer, he or she represents the entire team. For example, if during a customer call an account executive receives a question about a promotional, logistical, or financial matter, the account executive acts as the liaison with the appropriate specialist. So, although not each CBD member has specialized knowledge in every area, the CBD team as a unit does. Competitors have attempted to implement some aspects of P&G's multifunctional approach. However, P&G pioneered the CBD structure. And it has built in some unique characteristics that have allowed it to leverage more power from its team structure than its rivals can, giving it real competitive advantage. A Competitive Edge One of the things that gives P&G an edge when it comes to maintaining deep relationships with its business customers is a CBD structure that is broader and more comprehensive, making it more multifunctional than similar team structures employed by other companies. But perhaps more important, P&G's structure is designed to accomplish four key objectives. These objectives are so important that they are referred to internally as the "core work of customer development. These four objectives are: Align strategy Create opportunities for both P&G and the customer to benefit by collaborating in strategy development. Create demand Build profitable sales volume for P&G and the customer through consumer value and shopper satisfaction. Optimize supply: Maximize the efficiency of the supply chain from P&G to the point of purchase to optimize cost and responsiveness. Enable the organization: Develop capabilities to maximize business results by creating the capacity for frequent breakthrough. More than just corporate catchphrases jotted down in a P&G employee handbook, for sales personnel, these are words to live by. P&G trains sales staff in methods of achieving each objective and evaluates their effectiveness relative to each. In fact, P&G's customer relationship strategy came about through the recognition that to develop true win-win relationships with each customer, P&G would need to accomplish the first objective. As one account executive puts it, The true competitive advantage is achieved by taking a multi- functional approach from basic selling to strategic customer collaboration!" If the CBD team can effectively accomplish the first objective of aligning strategy and collaborating on strategic development, accomplishing the other three objectives will follow more easily. Building such strategic partnerships creates shopper value and satisfaction and drives profitable sales at the store level. When it comes to profitably moving Tide, Pampers, Gillette, or other P&G brands off store shelves and into consumers' shopping carts, P&G reps and their teams often know more than the retail buyers they advise. In fact, P&G's retail partners often rely on CBD teams to help them manage not only the P&G brands on their shelves but also entire product categories, including competing brands. Giving advice on the stocking and placement of competitors' brands as well as its own might seem unwise. But believe it or not, it happens all the time at P&G. In fact, it isn't uncommon for a P&G rep to tell a retail buyer to stock fewer P&G products and more of a competing brand. Although that may seem like retail suicide, keep in mind that a CBD team's primary goal is to help the customer win in each product category. Sometimes, analysis shows that the best solution for the customer is more of the other guy's product." For P&G, that's OK. The company knows that creating the best situation for the retailer ultimately pulls in more customer traffic, which in turn will likely lead to increased sales for other P&G products in the same category. Because most of P&G's brands are market-share leaders, it stands to benefit more from the increased traffic than competitors do. Again, what's good for the customer is good for P&G-it's a win-win situation. Honest and open dealings also help to build long-term customer relationships. P&G salespeople become trusted advisors to their retailer-partners, a status they work hard to maintain. "It took me four years to build the trust I now have with my buyer," says a veteran P&G account executive. "If I talk her into buying P&G products that she can't sell or out-of-stocking competing brands that she should be selling, I could lose that trust in a heartbeat." At P&G, collaboration is usually a two-way street-P&G gives and customers give back in return. "We'll help customers run a set of commercials or do some merchandising events, but there's usually a return-on-investment," explains another CBD manager. "Maybe it's helping us with distribution of a new product or increasing space for fabric care. We're very willing if the effort creates value for us as well as for the customer and the final consumer." It's Better to Give... Then to Receive As a result of collaborating with customers, P&G receives as much or more than it gives. For starters, P&G receives information that helps it to remain innovative and create better products. The collaborative nature of its customer relationships also allows for optimizing the product mix, which also optimizes revenue. And the kind of transparency that results from strategic partnerships enables P&G to remain efficient and keep costs low. Indeed, during the first decade of this millennium, P&G was flying high as revenues, profits, and stock price all maintained healthy growth. But P&G's strong performance flattened out as its vast portfolio of brands began showing a major weakness. Despite holding top positions in many product categories, many of P&G's brands were small, poor performers, or both. This limited the growth and profitability of its stronger brands. So P&G undertook a major restructuring of its product portfolio. Over the past few years, P&G has sold off about 100 brands (including Duracell, Aleve, Nexema, lams, Clairol, Wella, and Covergirl) in order to focus on the 65 strongest-performing brands (such as Crest, Bounty, Tide, Gillette, and Dawn, to name just a few). Although it may sound like P&G dumped a whereas another 17 account for at least $500 million annually. Last year, P&G sold more than $10 billion worth of diaper products under the Pampers brand alone. Eliminating the weaker brands not only relieves P&G of a heavy financial burden, but the stronger portfolio also enables P&G to better meet the needs of its customers. The company expects that there will be far fewer occasions where the best solution for the customer will be to recommend a competing brand. P&G's approach to maintaining customer relationships is much, much more than "selling." "It's a P&G-specific approach (that lets us) grow business by working as a 'strategic partner with our accounts, focusing on mutually beneficial business-building opportunities," states the CBD website. All customers want to improve their businesses; it's (our) role to help them identify the biggest opportunities. At P&G, building and maintaining enduring customer relationships involves working with customers to solve their problems for mutual gain. The company knows that if customers succeed, it succeeds. Big chunk of the company, the 65 remaining brands have long been responsible for about 90 percent of total revenues and 95 percent of profits. The now- leaner brand portfolio is also a much better fit with P&G's approach to strategic customer partnerships. Of the 65 remaining brands, 18 bring in more than $1 billion a year. Case Questions 1. Compare and contrast the nature of the business market structure and demand relative to consumer market structure and demand for a specific P&G product. 2. For the same product, discuss the differences in the types of decisions and the decision process for business and consumer markets. 3. This case covers the various members of a P&G Customer Business Development team. For a P&G corporate client, illustrate how the different roles of the buying center might interact with that CBD team. Be specific. 4. Discuss some ways that P&G's CBD structure is more effective than a single sales rep. Why have P&G's competitors not been able to duplicate its customer relationship strategy? As the case study explains, P&G gives a lot of importance to its sales department; to the extent that it refers to it as "Consumer Business Development." For P&G it is not just about maintaining or increasing their level of sales but establishing a good and long term relationship with its retailers (their customers). If this massive multinational company had limited itself to one, or even a few, sales rep they would not have reached where they are today. I believe it is about the mindset that P&G has implemented within their organisation where their goal is not just to increase their sales but to take care of their customers too. The job of a sales rep is just to make sure that the company is generating specific levels of revenue. Since they have an entire department that is dedicated to overlooking their customer relationships, they have proven to be more successful as compared to their competitors. Overall the whole department aims to put the customer first, and the business' needs second; the case study also mentions that P&G has gone to the extent where it advises their retailers on how to stock up on competitors products too. While that may seem extremely selfless on their part, and it is, P&G has been quick to realise that attracting more customers towards their retailers automatically means attracting more customers for themselves; something that their competitors might not have thought of. In my opinion, P&G's competitors would aspire to be market leaders too, and for that they would have to increase their market share by levelling up their sales levels. The mistake that they might be making is that they are not giving the same importance to their retailers and customers as P&G does. They may be focusing more on their marketing strategies and attracting customers, but may be forgetting that retailers have to be won over too before their products reach the final consumers. 5. Will P&G's divestment of 100 brands pay off? Why or why not? P&G has always been known for being the market leader and owning multiple and successful brands. However, one must also remember that less is more; P&G is quick to realise this as well. Even though setting up those brands must have involved huge amounts of investment and time, they had to be let go off because they were bringing down the successful brands as well. I believe that the divestment of the 100 brands will definitely pay off because if those brands would have still been associated with the P&G tag, their unsuccessfulness would have rubbed off on the other 65 powerful brands. Secondly, when certain brands are poor performers, it is natural for a company to divert more of its resources to fix its problems. If P&G would have not sold these brands, resources would have been used in a sidetracked manner; the resources that should be employed to the more successful brands might be shifted over to the loss making brands, limiting the growth of those 65 brands. Thirdly, the case study also mentions that the divestment relieves P&G of the financial burden which will help them focus more on their popular brands and also help them make them more successful. ASSIGNMENT 1 Case Study: Procter & Gamble treating business customers as strategic partners For decades, Procter & Gamble has been at the top of almost every expert's A list of outstanding marketing companies. The experts point to P&G's stable of top-selling consumer brands or to the fact that year in and year out P&G is the world's largest advertiser. Consumers seem to agree. You'll find at least one of P&G's blockbuster brands in 99 percent of all American households; in many homes, you'll find a dozen or more familiar P&G products. But P&G is also highly respected for something else-maintaining strategic partnerships with business buyers. P&G recognizes that building enduring relationships between consumers and its category leading brands starts with building enduring relationships with its large retail clients. On the front lines of this effort is P&G's iconic sales force. When it comes to selecting, training, and managing salespeople, P&G sets the gold standard. The company employs a massive sales force of more than 5,000 salespeople worldwide. But at P&G, it isn't just sales it's "Customer Business Development" (CBD). This might seem trivial, but at P&G the distinction goes to the very core of the company's customer relationship strategy Developing the Customer's Business P&G understands that if its business customers don't do well, neither will the company. To grow its own business, therefore, P&G must first grow the business of the retailers that sell its brands to final consumers. In P&G's own words, "CBD is more than mere 'selling'it's a P&G-specific approach which enables us to grow our business by working as a 'strategic partner' (as opposed to just a supplier) with those who ultimately sell our products to consumers. Says one CBD manager, "We depend on them as much as they depend on us." By partnering with each other, P&G and its customers create "win-win" relationships that help both to prosper. To deal effectively with large accounts, P&G salespeople must be smart, well trained, and strategically grounded. They deal daily with high-level retail category buyers who may purchase hundreds of millions of dollars' worth of P&G and competing brands annually. It takes a lot more than a friendly smile and a firm handshake to interact with such buyers. Yet individual P&G salespeople can't know everything. And because of the nature of P&G's B-to-B interactions, they don't have to. Instead, P&G salespeople have at hand all the resources they need to resolve even the most challenging customer problems. I have everything I need right here," says a household care account executive. "If my customer needs help from us with in-store promotions, I can go right down the hall and talk with someone on my team in marketing about doing some kind of promotional deal. It's that simple. The multifunctional nature of the CBD team also means that collaboration extends far beyond internal interactions. Each time a team member contacts the customer, he or she represents the entire team. For example, if during a customer call an account executive receives a question about a promotional, logistical, or financial matter, the account executive acts as the liaison with the appropriate specialist. So, although not each CBD member has specialized knowledge in every area, the CBD team as a unit does. Competitors have attempted to implement some aspects of P&G's multifunctional approach. However, P&G pioneered the CBD structure. And it has built in some unique characteristics that have allowed it to leverage more power from its team structure than its rivals can, giving it real competitive advantage. A Competitive Edge One of the things that gives P&G an edge when it comes to maintaining deep relationships with its business customers is a CBD structure that is broader and more comprehensive, making it more multifunctional than similar team structures employed by other companies. But perhaps more important, P&G's structure is designed to accomplish four key objectives. These objectives are so important that they are referred to internally as the "core work of customer development. These four objectives are: Align strategy Create opportunities for both P&G and the customer to benefit by collaborating in strategy development. Create demand Build profitable sales volume for P&G and the customer through consumer value and shopper satisfaction. Optimize supply: Maximize the efficiency of the supply chain from P&G to the point of purchase to optimize cost and responsiveness. Enable the organization: Develop capabilities to maximize business results by creating the capacity for frequent breakthrough. More than just corporate catchphrases jotted down in a P&G employee handbook, for sales personnel, these are words to live by. P&G trains sales staff in methods of achieving each objective and evaluates their effectiveness relative to each. In fact, P&G's customer relationship strategy came about through the recognition that to develop true win-win relationships with each customer, P&G would need to accomplish the first objective. As one account executive puts it, The true competitive advantage is achieved by taking a multi- functional approach from basic selling to strategic customer collaboration!" If the CBD team can effectively accomplish the first objective of aligning strategy and collaborating on strategic development, accomplishing the other three objectives will follow more easily. Building such strategic partnerships creates shopper value and satisfaction and drives profitable sales at the store level. When it comes to profitably moving Tide, Pampers, Gillette, or other P&G brands off store shelves and into consumers' shopping carts, P&G reps and their teams often know more than the retail buyers they advise. In fact, P&G's retail partners often rely on CBD teams to help them manage not only the P&G brands on their shelves but also entire product categories, including competing brands. Giving advice on the stocking and placement of competitors' brands as well as its own might seem unwise. But believe it or not, it happens all the time at P&G. In fact, it isn't uncommon for a P&G rep to tell a retail buyer to stock fewer P&G products and more of a competing brand. Although that may seem like retail suicide, keep in mind that a CBD team's primary goal is to help the customer win in each product category. Sometimes, analysis shows that the best solution for the customer is more of the other guy's product." For P&G, that's OK. The company knows that creating the best situation for the retailer ultimately pulls in more customer traffic, which in turn will likely lead to increased sales for other P&G products in the same category. Because most of P&G's brands are market-share leaders, it stands to benefit more from the increased traffic than competitors do. Again, what's good for the customer is good for P&G-it's a win-win situation. Honest and open dealings also help to build long-term customer relationships. P&G salespeople become trusted advisors to their retailer-partners, a status they work hard to maintain. "It took me four years to build the trust I now have with my buyer," says a veteran P&G account executive. "If I talk her into buying P&G products that she can't sell or out-of-stocking competing brands that she should be selling, I could lose that trust in a heartbeat." At P&G, collaboration is usually a two-way street-P&G gives and customers give back in return. "We'll help customers run a set of commercials or do some merchandising events, but there's usually a return-on-investment," explains another CBD manager. "Maybe it's helping us with distribution of a new product or increasing space for fabric care. We're very willing if the effort creates value for us as well as for the customer and the final consumer." It's Better to Give... Then to Receive As a result of collaborating with customers, P&G receives as much or more than it gives. For starters, P&G receives information that helps it to remain innovative and create better products. The collaborative nature of its customer relationships also allows for optimizing the product mix, which also optimizes revenue. And the kind of transparency that results from strategic partnerships enables P&G to remain efficient and keep costs low. Indeed, during the first decade of this millennium, P&G was flying high as revenues, profits, and stock price all maintained healthy growth. But P&G's strong performance flattened out as its vast portfolio of brands began showing a major weakness. Despite holding top positions in many product categories, many of P&G's brands were small, poor performers, or both. This limited the growth and profitability of its stronger brands. So P&G undertook a major restructuring of its product portfolio. Over the past few years, P&G has sold off about 100 brands (including Duracell, Aleve, Nexema, lams, Clairol, Wella, and Covergirl) in order to focus on the 65 strongest-performing brands (such as Crest, Bounty, Tide, Gillette, and Dawn, to name just a few). Although it may sound like P&G dumped a whereas another 17 account for at least $500 million annually. Last year, P&G sold more than $10 billion worth of diaper products under the Pampers brand alone. Eliminating the weaker brands not only relieves P&G of a heavy financial burden, but the stronger portfolio also enables P&G to better meet the needs of its customers. The company expects that there will be far fewer occasions where the best solution for the customer will be to recommend a competing brand. P&G's approach to maintaining customer relationships is much, much more than "selling." "It's a P&G-specific approach (that lets us) grow business by working as a 'strategic partner with our accounts, focusing on mutually beneficial business-building opportunities," states the CBD website. All customers want to improve their businesses; it's (our) role to help them identify the biggest opportunities. At P&G, building and maintaining enduring customer relationships involves working with customers to solve their problems for mutual gain. The company knows that if customers succeed, it succeeds. Big chunk of the company, the 65 remaining brands have long been responsible for about 90 percent of total revenues and 95 percent of profits. The now- leaner brand portfolio is also a much better fit with P&G's approach to strategic customer partnerships. Of the 65 remaining brands, 18 bring in more than $1 billion a year. Case Questions 1. Compare and contrast the nature of the business market structure and demand relative to consumer market structure and demand for a specific P&G product. 2. For the same product, discuss the differences in the types of decisions and the decision process for business and consumer markets. 3. This case covers the various members of a P&G Customer Business Development team. For a P&G corporate client, illustrate how the different roles of the buying center might interact with that CBD team. Be specific. 4. Discuss some ways that P&G's CBD structure is more effective than a single sales rep. Why have P&G's competitors not been able to duplicate its customer relationship strategy? As the case study explains, P&G gives a lot of importance to its sales department; to the extent that it refers to it as "Consumer Business Development." For P&G it is not just about maintaining or increasing their level of sales but establishing a good and long term relationship with its retailers (their customers). If this massive multinational company had limited itself to one, or even a few, sales rep they would not have reached where they are today. I believe it is about the mindset that P&G has implemented within their organisation where their goal is not just to increase their sales but to take care of their customers too. The job of a sales rep is just to make sure that the company is generating specific levels of revenue. Since they have an entire department that is dedicated to overlooking their customer relationships, they have proven to be more successful as compared to their competitors. Overall the whole department aims to put the customer first, and the business' needs second; the case study also mentions that P&G has gone to the extent where it advises their retailers on how to stock up on competitors products too. While that may seem extremely selfless on their part, and it is, P&G has been quick to realise that attracting more customers towards their retailers automatically means attracting more customers for themselves; something that their competitors might not have thought of. In my opinion, P&G's competitors would aspire to be market leaders too, and for that they would have to increase their market share by levelling up their sales levels. The mistake that they might be making is that they are not giving the same importance to their retailers and customers as P&G does. They may be focusing more on their marketing strategies and attracting customers, but may be forgetting that retailers have to be won over too before their products reach the final consumers. 5. Will P&G's divestment of 100 brands pay off? Why or why not? P&G has always been known for being the market leader and owning multiple and successful brands. However, one must also remember that less is more; P&G is quick to realise this as well. Even though setting up those brands must have involved huge amounts of investment and time, they had to be let go off because they were bringing down the successful brands as well. I believe that the divestment of the 100 brands will definitely pay off because if those brands would have still been associated with the P&G tag, their unsuccessfulness would have rubbed off on the other 65 powerful brands. Secondly, when certain brands are poor performers, it is natural for a company to divert more of its resources to fix its problems. If P&G would have not sold these brands, resources would have been used in a sidetracked manner; the resources that should be employed to the more successful brands might be shifted over to the loss making brands, limiting the growth of those 65 brands. Thirdly, the case study also mentions that the divestment relieves P&G of the financial burden which will help them focus more on their popular brands and also help them make them more successful