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01/30/2008

Swimming Against the Tide

I must confess that I find it hard to get excited about laundry detergent. I find it harder still to get excited about the marketing of laundry detergent. But there's little question that smart marketers ignore Proctor & Gamble at their own peril. This excerpt from Roger Martin's recent book The Opposable Mind: How Successful Leaders Win Through Integrated Thinking, featured in BusinessWeek , is a perfect example as to why. He offers an anecdote concerning A.G. Laffley, President & CEO of P&G, that offers some useful takeaways for marketers.

Lafley's originality came into play when he faced a big decision about compacting packaged laundry soap. Though P&G's research and development folks had devised a way to compact the big fluffy granules of powdered detergent into a form that was less than half the volume, consumer tests showed a lukewarm response and P&G mastery would have said that without a clear test win, the new product should not be launched.

But that verdict didn't sit right with Lafley.

With his carefully nurtured capacity for originality, though, Lafley focused on what was potentially unique about the situation that might call for a novel response from P&G. He saw that, unlike the majority of product upgrades, this one had the potential for massive cost savings for retailers since the smaller boxes would take up half the space in warehouses and on store shelves for the same dollar of sales. In addition, P&G's manufacturing and logistics operations would reap the same cost benefits as the retailers. And the voluntary comments that some of the consumers added to their quantitative research forms revealed that while consumers weren't wildly enthusiastic about compact detergents, few were actively hostile to the idea.

Lafley totted up the data points. Retailers saw compact detergent as a big win, and so did P&G manufacturing. Consumers were neutral at worst. So despite the lack of conclusive consumer evidence, Lafley argued for a huge investment to convert all powdered detergents to compact. It turned out to be a big win for P&G. "We ran and we won the race," Lafley says. "It was huge, absolutely huge."

A couple of things struck me here. First, Lafley trusted his instincts and was not blinded by the results from consumer research. Research is useful but too often substitutes for innovative thinking. Research participants, it should be noted, often don't know what they don't know. There's something to be said for gut instinct and common sense.

Second, Lafley considered the economic and strategic benefits of the new product to his company as well as the benefits at various points along the entire value chain. He then weighed the cumulative benefits against the research. In so doing, the new product launch seemed a no-brainer. As marketers become more and more active in product development, they need to understand the business they're in as much as the needs of the market.

 

January 30, 2008 in Discipline of marketing, New product launches | Permalink

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