Corporate
Management Should Wear Bifocals
November
28, 2004 - by
Robert E. Stevens, GENESIS II
(The
Second Beginning) E-Mail: views@aol.com
A recent article in
the Cincinnati
Enquirer (7/16/04) summarized the new P&G History Book,
"Rising
Tide." The very last paragraph of the article cited P&G's 2000
stock
market slump that resulted in a nearly $40 billion drop in market
value.
They
blamed the slump on P&G's focus on big product innovations that
investors
were demanding while in the
process neglecting the customer's desire for current market
maintenance/improvements.
This seems to be
very much out of
character for P&G. Especially during my career with the company. I
found
that during those days, P&G focused on both today and tomorrow.
That
is, they were wearing bifocals of time. Through the lower part of the
glasses
they were focusing on the market today. Looking out of the top half of
the
glasses they looked further down the road of time. They had groups that
focused on the market today or for the current fiscal year while
another group(s) looked five and ten years down the road. Not only were
they looking to the future but the objective was to "create
the future".
The
object was to keep the
current
brands healthy so that they could finance future research.
By looking at the
different periods
of time, you become more aware of Life Cycles. Not only the Consumer
Life
Cycles but also the Life Cycles of the Customers (trade) as well as the
Brand
Life Cycle.
By being aware
of
the factors affecting a brand's life cycle such as technology,
consumers,
customers, raw
materials, etc., you position yourself to react to market changes. For
instance,
were the features in the Luvs brand going to cause Pampers to disappear
from
the market (it did not, but could have) or would the entrance of the
Tide
brand cause
Oxydol and/or Duz to disappear, or the emergence of Pantene to cause
Prell to
disappear from the market? How was the introduction of Dawn going to
affect
Joy's market share? Should the Ultra technology be introduced under the
Tide or
Ariel name? How was Crest going to affect Gleem? How was the Era brand
going to
affect Tide's image as well as share?
These questions
were not only considered
but they were researched well before the new technology was introduced.
It's
called "Keeping the Pipe Line Full."
The
Power of
Information
The effects of
the Life Cycles of the
Trade were evident in a recent article about Wal*Mart, a company with
3,600
stores and 100 million customers each week. There was a time when the
trade
relied on the manufacturer for information about their customers. Now,
the
tables have been turned. In Wal*Mart's case, they have information
about their
customers, such as social security numbers, license numbers, location,
and
family composition to go along with their sales data. By Wal*Mart's own
count,
they have 460 terabytes of data stored on Tera-data mainframes at their
Bentonville headquarters. To put that in perspective, experts say the
Internet
has less than half as much data. With all
this data,
forecasting becomes a breeze. No wonder they were able to predict that
they would
sell seven times as much
Strawberry Pop Tarts prior to Hurricane Frances as normally sold. But
who would
ever believe that with all their inventory control data they would some
day
eventually use their technology to institute what is called scan based
trading,
where the manufacturers own each product until it is sold. For a
clearer
picture, look at scan based trading as what it really is, consignment
sales.
Think of the hugh saving involved with shedding a$50 billion inventory.
Information is Power.
Sponsor: Sorensen Associates Inc
Portland, OR: 800.542.0123
Minneapolis, MN: 888.616.0123
the
in-store research company™ -- Dedicated to the
relentless pursuit of WHY?
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