December 1, 2006

P&G's Jim Stengel talks global marketing

Jim Stengel, Marketing Director Procter & Gamble (photo: Die Vision)
Jim Stengel: "Experience the consumer"
The term "marketing guru" is so often misused that one hesitates to apply it. However, the title perfectly fits Jim Stengel, Global Marketing Officer at fmcg giant Procter & Gamble.

Stengel's extremely consumer-oriented approach to the world-wide marketing of fmcg products has taken even the "Proctoids" to a new level of sophistication.

Jim Stengel believes in getting close to his customers wherever they buy P&G products.

If that means following shoppers around the store or his marketing & product development team living with consumers in their homes in order to understand user behaviour, then so be it.

In fact, Stengel will do just about whatever it takes to gain those precious insights about customers – including revolutionising current consumer research and marketing practices.

INTERVIEW

Why have you proclaimed to the industry that the existing marketing model is obsolete?

Our approach to marketing at P&G is changing because the consumer is changing dynamically. The biggest change is that we are trying to get very close to our consumers.

How has this changed your corporate culture?

Our marketing strategy no longer uses just one model or template, but a variety of very creative marketing tools based on understanding what is important to the key consumers of each of our brands in each country.

You want to provide your consumers with advertising which is interesting to engage with. How do you do this with a stable of work-a-day brands?

I believe that none of our brands are prosaic to any of our consumers when they are actually using them. Obviously we are primarily in the household brands business, but we aim to make the experience of our brands as delightful and pleasant as possible.

Status has been redefined in the West with growing affluence. “I want to be normal” has become “I want to be special”. How are you catering for this change?

10 to 15 years ago, we thought of consumers very much as a mass audience. Now we try and define what small group of consumers are the most important for each brand’s future and design for them correspondingly.

But doesn’t that severely limit your market?

Obviously our approach will appeal to more consumers than just the group we are designing for, but that group is the most important for each of our brands. 

How do you find out what your key customer target groups really want?

Our product designers, package designers, communications people and advertising agencies spend a lot of time with them in order to create something very special for them.

Could you give an example?

Our “Pantene Color Expressions” launch was very successful in Germany because we concentrated on a well-defined group of consumers who are very fashion-forward and who believe very much in beauty and beauty products.

Did you define them by demographics?

No, by lifestyle, and then we found ways to be part of their life and to reach them. We leveraged print, TV, interactive websites, and mobile phones in order to find ways to design our marketing to fit their lifestyle.

Why do you not mention classical consumer market research?

We have found that consumers never tell you what they really think so we try to experience their daily lives as directly as possible.

This also involves keeping our people in assignments longer in order to increase their knowledge and intuition of what is important to our consumers.

So you won’t be continuing with focus groups?

If I had my way, I would ban them because I think they are misleading. Often consumers cannot articulate what they really feel. The psychologists tell us that much, if not all, of our behavior is powered by the subconscious.

So you can’t listen to what people say because it may not be what they really need.

So what can replace focus groups?

If I had my way, 100 per cent of our research would be “cultural immersion”. By this I mean going into homes, shopping with consumers, talking with them in their social environment, watching them and how they experience our brands.

This is where the insights are, if we hire people who have curiosity, empathy and intelligence.

Do you still believe in TV advertising?

In many countries where we do business, and especially in developing markets, TV is still a very effective medium because it is the primary source of entertainment.

But how about in the West?

TV has a role there too, but we must stay with the consumer whose media habits are changing dramatically. So you will see our media mix become far richer and our marketing more diverse.

Are you making changes to the way you advertise on TV?

We must use TV more effectively. If consumers watch an ad of ours for 30 or 60 seconds, we should give something back to them because they are giving us their most precious asset  their time.

So we should not only give them information, but also delight, entertain, reward and engage them.

Could you specify the shift in your budget from TV ads to alternative media in percentage terms?

Our spending varies by market, brand and category so it is very difficult to generalize. Where the key consumer group is younger, we are much more strongly interactive in mobility.

For a high-frequency household brand in a country where consumer media habits are still relatively simple we would still use TV. The general trend, however, is towards interactive and mobility.

At trade venues you have voiced your doubts as to the efficacy of the old TV ad rating systems. In this context why have you signed on as an early customer of the Arbitron and VNU service “Project Apollo” announced in 2004?

It’s part of our corporate strategy to improve our measurement systems. The initiative aims to understand consumer media habits better. Project Apollo will tell us what media today’s very mobile consumers are exposed to and how they interact with it.

This is particularly useful because we know that, even if the TV is on in the house, the consumer is often not in front of the screen.

How does the project work?

It was begun in the US with test consumers. The technology is very simple. Test persons wear a portable meter which picks up a signal from radio & TV advertising. Ultimately it will be able to receive signals from magazines, bill boards and other outdoor advertising.

The results are encouraging, and we should like to expand the scope of the project.

Are you also pursuing consumer behavior in-store?

Yes, we also need to have better in-store metrics. We are therefore cooperating in a joint-industry initiative run by the In-Store Marketing Institute. Participants also include retailers such as Wal-Mart or Albertsons and suppliers such as Disney or Coca-Cola.

What is the purpose of this new initiative?

It is designed to measure consumer traffic and reach in a retail store. The system tells us who passes what aisle and who passes through the racetrack around the store.

Where are the practical benefits of tracking the consumer around the store?

More information as to what exactly happens within the store by category will help us to improve product availability, merchandising, shelf-set design and shelf location.

This will create a better retail experience for the shopper and increase what we call “joint value creation” with retailers.

What technology do you employ?

A simple scanner or beam as is used in car traffic. It simply measures how many times a person crosses beams placed in strategic areas throughout the store. Also, there is no data capture, and there are no privacy issues.

Have the results been encouraging?

To date the test only covers ten stores, but the predictive quality of the model has surpassed our expectations. We have found a high correlation between consumer traffic and expected sales or between sales and past traffic.

How have you started to market your products via internet search engines?

First of all, in any given country on any given brand we study the media habits of those consumers who are important for each of our brands’ future.

If we find that search or interactive are important for the key consumer group, we strive to understand what kind of things they are searching for and what their information needs are.

We then look for the right partners to help us create the right experience for that consumer. So, obviously, we also talk to people like eBay, MSN, Yahoo or Google.

What is behind your interactive program “For Me”?

It is a type of lifestyle site where hopefully we can help consumers with some of their information needs and connect them with our brands where and when it’s appropriate and relevant. Through trial & error we are figuring out what are the right words, behavior and approach.

Above all we want to meet the consumer’s needs when and where she is receptive to our message.

What is your thinking as regards other forms of modern electronic marketing?

If we get into text messaging, instant messaging, streaming video through mobile devices etc., we don’t just jump in because it is hot.

We have to offer something that is helpful and useful for our key consumer target groups, or it will be a waste of money, and worse than that, it will make them negative about our brand, which is never what we want.

How far have you actually advanced with cell phone marketing?

We are in the test phase and are experimenting with many different partners. Much of our experimentation to date has been with contests, promotions, coupons.

We have a lot going on in many of the Asian markets because of the sophistication of the consumer there in terms of technology. In Korea, for example, our consumers redeem price-off coupons with a mobile device.

We are also able to track purchases and provide a reward or a benefit when they get to a certain level.

How about video streaming?

We do a lot of video streaming within our interactive marketing and work with all the major interactive companies and portals. We are not far from broadband being available on wireless devices; in fact it’s already happening in some countries.

As this technology becomes more broadly available and accepted, the consumer will be able to experience almost all kinds of entertainment on a mobile device. We intend to be at the forefront of the learning curve regarding how we communicate our brands in this environment.

Particularly as regards electronic marketing, isn’t there fine line between being helpful and being intrusive in consumers’ lives?

I think that our marketing must be invited in. If consumers feel that we are stopping, interrupting or frustrating them, that won’t help our brands. Obviously, we don’t achieve that with everything, but our people and the advertising agencies need to have a service mentality.

What does this mean in practical terms?

We need to bring service to the consumer in what they are trying to do. If a customer is searching for ways to remove a cooking oil stain from her clothing, we can help and direct her, for example via an appropriate link, to one of our brands which can help solve the problem.

This is the type of marketing which will be invited into her life because it is relevant. So the name of the game is permission marketing with problem-solution.

How can you localize all this marketing and still harness global scale?

Our ultimate competitive advantage is our breadth of business where we learn from the local consumer and transfer this knowledge across businesses and brands.

However, we only look for global scale where it is appropriate because at the end of the day we win or lose by how local consumers choose us.

We believe that there are no global consumers; there are only individual consumers who live in villages, towns and cities around the world in different countries. Also we believe that we win by delighting each one of them day-in, day-out.

How do you react to your company nickname, “Che Guevara”, in reference to the marketing revolution you are seen to be instigating within P&G? 

I am not a revolutionary, but part of a corporate culture whose tradition has been innovative, especially in marketing, for 170 years. In fact, the last five years in my present position have been a journey rather than a fight.
 
  
Related article in German: Interview by Mike Dawson & Jürgen Wolfskeil in Lebensmittel Zeitung, no. 48, 01.12.2006


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