Procter & Gamble

Based in Cincinnati, USA, Procter & Gamble (P&G) was one of the largest manufacturers of fast moving consumer goods (FMCG) in the world. In 1999, with a turnover of $38 billion, P&G ranked 61 among the FORTUNE Global 500 companies. The company marketed more than 300 brands to nearly five billion consumers worldwide. P&G had a significant market share in several product categories: laundry and cleaning (Tide, Cascade, Dawn), paper goods (Bounty, Charmin, Pampers), beauty care (Pantene, Olay, Cover Girl), food and beverages (Folgers, Pringles, Duncan Hines), and health care (Crest, Scope, Metamucil).

In the early 1990s, a survey conducted by the consulting firm, Kurt Salmon Associates Inc, had revealed that almost a quarter of P&G’s products in a typical supermarket sold less than one unit a month. On the other hand, just 7.6% of the products accounted for 84.5% of sales. The remaining products went almost unnoticed by consumers. Complicated product lines and pricing were also causing problems for retailers who had to struggle with rebates and discounts. P&G CEO Durk Jager recalled: "We created a whole plethora of allowances and deals and conditions which were just simply confusing and added cost to the system."

In the late 1990s, P&G had taken various initiatives to deal with these problems. The company had made attempts to streamline many of its marketing practices and cut costs. P&G had also made efforts to simplify its product line by standardizing formulas and packages worldwide and selling marginal brands. P&G had also been cutting inefficient promotion expenditure and curbing new product launches.

In January 1999, Jager, a P&G veteran became the new CEO taking charge at a time when P&G was in the midst of a major restructuring exercise. Jager faced the challenging task of revamping P&G’s operations and marketing practices. Soon after taking over as the CEO, Jager told analysts that he would overhaul product development, testing and launch processes. He also announced plans to lay off 15,000 workers, take a $ 1.9 billion charge and close down up to ten plants to cut costs by $ 900 million annually. The biggest obstacle for Jager was P&G’s culture. Jager realized the need to change the mindset of the P&G employees who had been used to lifetime employment and a conservative management style.

In June 1999, P&G launched the Organization 2005 Program to streamline its organization structure, and work processes. The program aimed to speed up decision making to enable the company to innovate and bring new products to the market more quickly. Till 1998, P&G had been organized along geographic lines with more than 100 profit centers. Under the new structure, P&G had seven global business units organized by product category.

Procter & Gamble was established in 1837 when candle maker William Procter and his brother-in-law, soap maker James Gamble merged their small businesses. They set up a shop in Cincinnati and nicknamed it "porkopolis" because of its dependence on swine slaughterhouses. The shop made candles and soaps from the leftover fats. By 1859, P&G had become one of the largest companies in Cincinnati, with sales of $1 million. The company introduced Ivory, a floating soap, in 1879 and Crisco, the first all-vegetable shortening, in 1911.

In the 1940s and 1950s, P&G embarked on a series of acquisitions. It acquired Spic and Span (1945), Duncan Hines (1956), Chairman Paper Mills (1957), Clorox (1957; sold in 1968) and Folgers Coffee (1963). In 1973, P&G began manufacturing and selling its products in Japan through the acquisition of Nippon Sunhome Company.

In 1981, when John G. Smale became the CEO, P&G’s financial performance was under pressure. Manpower strength had crossed 100,000 due to P&G’s acquisitions. P&G also faced intense competition from companies such as Kimberley-Clark and Colgate. P&G stumbled in many categories, losing market share and profits. It had to withdraw its Rely tampons from the market after the product was linked to the deadly disease—Toxic Shock Syndrome. P&G responded by slowing down its research efforts. It also modified compensation plans for managers and plant workers to eliminate the obsession with short-term returns.

P&G moved into health care when it purchased Richardson- Vicks and G D Searle’s non-prescription drugs division in 1985. In the same year, P&G announced several major organizational changes relating to category management, purchasing, manufacturing, engineering and distribution. In 1988, the company formed a joint venture to manufacture products in China. P&G became the biggest cosmetics company in America when it acquired Noxell (1989) and Max Factor (1991).

In 1990, Ed Artzt, who had been heading P&G’s international operations since the 1980s, replaced Smale as the CEO. Two years later, the company initiated an everyday low-pricing policy that reduced its reliance on coupons and trade promotions. The move helped in smoothening demand fluctuations and allowed P&G to cut prices on major brands. A year later, P&G initiated another restructuring program, cutting 13,000 jobs and closing 30 manufacturing plants. After years of trying to penetrate the orange juice market, P&G disposed off its Citrus Hill juice line and took a $200 million charge in 1992.

another Sun engineer designed their own microprocessor, SPARC (Scalable Processor Architecture). Sun’s initial objective in creating the SPARC chip was to create a processor that would be faster than the 68030 (Motorola processor) for running UNIX. By the end of 1988, the company had achieved this objective.

As a next move, Sun decided to compete aggressively with Intel in the general-purpose microprocessor business. First, Sun tried to promote the SPARC architecture as an open architecture. Then it explained the advantage of UNIX compared to proprietary operating systems such as VMS which were only available to the inventor company. Sun licensed the SPARC architecture to many semiconductor companies around the world (including Fujitsu, Toshiba, LSI Logic, Texas Instruments and others) to ensure that there would be plenty of vendors to supply the chips at low prices. Sun also formed an international SPARC users group to demonstrate that SPARC was an open architecture. Sun claimed that UNIX based PCs using SPARC microprocessors would replace Windows based PCs. The company urged PC manufacturers to build Sun clones just like IBM PC clones.

Sun, however, faced many problems. There were many semiconductor companies competing to supply a very small SPARC market. It seemed that none could afford the investments needed to keep the development going if they were to sell only a small quantity of chips. SPARC system clones were also competing for this small market. To make matters worse, Sun while claiming that UNIX was an open system, did not release its latest version to other PC manufacturers. Intel’s 486 quickly surpassed SPARC’s performance in 1991. Intel had incorporated RISC and other better architectural ideas and was able to rapidly improve the performance of its chips. By 1990, it became quite clear that Sun’s assault on PCs and Intel microprocessors had been unsuccessful.

In 1994, Sun shifted its emphasis to selling solutions, i.e. entire software/hardware packages with services required by customers. Sun targeted midsize companies and offered its systems as a less expensive but comparable alternative to IBM mainframes. Sun also offered them integration and consulting services through its service arm.

In 1995, Sun introduced Java, a new programming language. Java language applications could be executed on many different processors and operating system architectures without the need to port application for those systems. Java also had a sophisticated security model, a key requirement for any Internet application. It used multiple program threads, which meant that more than one task could be run at a time, even on what would normally be a single task operating system. Virtually, any traditional PC application – like a word processor, spread sheet or databases – could be written as one or more Java applets.

In 1997, Sun’s rivalry with Microsoft deepened on the issue of distributing Java compatible products. Sun filed a suit in the court accusing Microsoft of violating the rules of the contract. During the same year, Sun entered into an agreement with Intel Corporation to optimize Sun’s Solaris operating environment for Intel’s Merced processor. Under this agreement, Intel agreed to support Sun’s efforts on porting and optimizing the applications for Solaris on Intel chips. Sun and IBM also began to modify Solaris software for Power PC-based machines.

from retailers on Aurora’s behalf till March 1998. The people working in Duncan Hines would be re-deployed to other parts of P&G’s food and beverage business.

In September 1998, P&G announced plans to redesign the company’s management and operating structures. Under the Organization 2005 program, as it came to be known, P&G announced that it would revamp the work processes to improve efficiency and cut costs. P&G also explained that it would take several measures to provide a stimulating work environment to its employees.

In October 1999, P&G signed a global cooperation agreement with Tupperware Corporation to explore joint-marketing and promotion opportunities. The $ 1.1 billion Tupperware, was one of the world’s leading direct sellers whose premium products reached consumers in more than 100 countries. The alliance would explore global business building opportunities including the co-promotion and cross-endorsement of products.

P&G had started as a soap and candle manufacturing company. Over the years, it had diversified into many businesses. The company had divided its entire business into five segments: Laundry and Cleaning, Paper, Beauty Care, Food and Beverage, and Health Care.

In Laundry and Cleaning and Paper products, P&G achieved significant growth during 1998-99 in all the regions (North America, Europe, Middle East and Africa, Asia and Latin America). Volumes increased by 5 % in 1999 due to the reformulation of Tide for sanitization and clean rinse benefits and the launch of Febreze fabric refresher. Febreze, introduced in 1998, had exceeded all expectations and become one of the company’s most successful brands. In Europe, P&G faced stiff competition from local players. In the Asian region, Japan recorded strong results despite continuing economic recession. This was mainly because of new product innovation and launch of new brands such as Febreze.

The paper segment generated satisfactory volume and earnings growth in North America. Tissue and Towels and feminine protection products also registered gains. The acquisition of Tambrands Inc. and its global brand Tampax gave a boost to the paper sector in North America.

Beauty care was another profitable area in 1999. Much of the growth in this segment was due to the launch of Oil of Olay cosmetics and deodorants and good performance by Old Spice in 1998. The performance of Oil of Olay cosmetics exceeded expectations and increased P&G’s market share.

The Food and beverages segment experienced a 5% decline in volumes in North America during 1999, due to stiff competition in the snacks market. In Europe, the segment did not perform well mainly due to competition from local juice brands.

The Health care segment registered a 3% increase in volumes in North America in 1999. While all categories recorded an encouraging performance, pharmaceuticals made the strongest contribution.

P&G was one of the first consumer product companies in the world to conduct formal market research. In 1879, when customers wrote to P&G for more of its "floating soap" (an accidental product that was a result of extra stirring during the soap making process), it quickly changed the soap so that all the bars would float.

P&G was one of the pioneers in ‘in-situ’ research. Researchers went into customers’ homes to observe them directly as they went about their daily chores. P&G’s in situ market research had helped in solving problems, which the customers themselves were not aware of. In the 1970s, P&G’s researchers had observed consumers opening detergent packages with screwdrivers and razors. Consumers did not feel there was any serious difficulty but P&G went ahead with efforts to develop a box which would be easy to open. The new design, which incorporated a plastic insert in the cardboard, became very popular. In another such study, P&G observed that some of the liquid laundry detergent, when poured ran down the front of the bottle. Customers were happy to wipe the drip with a piece of cloth. P&G’s researchers however saw an opportunity and reported the problem. Soon, P&G came up with a simple redesign of the spout that funneled any drips back into the bottle. This simple innovation led to a dramatic increase in sales. In many parts of Eastern Europe, P&G’s researchers found that the apartments were quite small. Since the bathroom was adjacent to the living room, the smell of the detergent filled the apartment whenever clothes were washed. The problem was worsened due to inferior detergents, having an offensive odor, made by sate owned factories. When P&G conducted market research, customers articulated the need for good cleansing power. P&G however, realized that fragrance would be equally important. The products launched by P&G ultimately became very popular in Eastern Europe.

P&G had attempted to be meticulous and precise in its research methodology. It worked hard to use information objectively and critically. P&G’s researchers were aware that customers would sometimes wrongly interpret the questions asked of them. The researchers were trained to frame questions carefully so that customers found them easy to answer. In some cases, the answers given by the customers were ambiguous. Researchers were trained to detect ambiguity in answers and continue discussions with the customers to understand the true meaning. Researchers would ask customers whether "clean" meant the way it looked or the way it felt, whether clean hair meant lively, bouncy, fluffy, shiny or easy to comb and so on.

P&G attached great importance to the quality and reliability of information. Managers regularly checked and validated data. Questionable information was ignored. P&G strongly believed that no research was better than wrong research. While determining the best fragrance for Camay soap, P&G realized that the smell of the perfume was quite different when it was diluted and became a part of the soap. Not only that, the strength of the fragrance changed as the soap was consumed and came in contact with water. As a result, P&G rejected its earlier research findings and decided to test the soap while in actual use.

When P&G’s researchers reported quantitative research results, they also disclosed the statistical significance of the data. P&G used qualitative research findings very carefully. The company did not arrive at generalizations or take major decisions on the basis of a few focus groups. Instead, P&G used focus groups to gain useful insights. These insights then became the basis for developing the hypothesis to be tested or for designing a quantitative research program. For example one such hypothesis was whether using a fabric softener had any perceived connection with being a good mother

P&G emphasized objectivity in market research. It realized the importance of separating facts from implications and actions that they might suggest. Research reports normally contained facts but not editorial matters. P&G believed that if researchers looked for conclusions, there might well be a bias that could distort an objective presentation of the data. Normally, it was the brand group and not the research department, which analyzed the information.

To improve the quality of research, P&G imparted rigorous and extensive training to new entrants. They would typically be asked to spend months on the telephone and in the field conducting interviews with customers and collecting data. A trainer would be alongside the new recruit. Gradually, researchers learnt how customers responded to questions and how misinterpretations took place. The new entrants picked up skills in identifying ambiguous responses and probing for more accurate answers. Over a period of time, the research interview became more like a conversation as the researcher memorized the structure of the interview and did not find the need to use a questionnaire.

P&G responded to consumer letters promptly. Letters, Emails and summaries of incoming phone calls were routinely circulated to brand managers, product development teams, production teams and the top management. In the 1970s, P&G began to follow up some of the correspondence with phone calls to get more inputs from the consumers. The company received over three million phone calls a year. When one consumer inquired whether Oil of Olay lotion came in unscented version, P&G’s brand group took the cue and developed an unscented version. The brand group also conducted focus groups among the telephone operators, who handled the Oil of Olay calls to identify key benefits, which customers were looking for.

In the late 1990s, time and money constraints made it more efficient for P&G to send questionnaires by mail and conduct telephone surveys. Consumers were given scanners to register which groceries they purchased. This device registered the bar codes on packages before customers put them in the cupboard. For some customers, P&G also placed a box on the television sets to monitor what programs they watched. The company also used hidden video cameras in grocery store parking lots to monitor the habits of shoppers.

Though much of P&G’s product development was not highly innovative, the company sought to introduce products that offered a noticeable difference to consumers. Finding this difference involved detailed research into obscure aspects of consumer habits and practices. For instance, P&G collected washing machines from around the world to study how they worked and what kind of detergents would be suitable. In the test labs, a researcher used a ruler to measure how deep the lather was in a machine. Bar soaps were tested by continual hand washing to see how many movements were required to make a good lather.

Touch testers at P&G were trained to determine the softness of towels. P&G chemists also undertook experiments to study how human skin reacted to their products. When P&G was developing its Wondra lotion, thousands of consumers were given the lotion in unmarked packages for home use. Each person’s hands, elbows, and legs were examined under magnifying glasses before and after applying the lotion.

Clinical trials constituted an important part of P&G’s product development activities. P&G regularly carried out tests on animals. Human tests however provided the most useful data. P&G’s "armpit sniffers" and "bad breath brigades", inhaled employees’ armpits before and after they used the company’s deodorants and mouthwashes. "Trained judges" rated odor from zero (lack of offensive odor) to ten (very strong smell). P&G’s dentists enlisted employees for various experiments involving dental products.

P&G sometimes took several years to develop a product. In the case of "Pampers", it took more than ten years just to figure out how to develop the product and commercialize production. Crest was another product that had taken a long time to develop. It took fifteen years after stannous fluoride had been identified as a potential anti cavity fighter to introduce Crest toothpaste in 1955.

Experience had taught P&G the importance of offering customers value for money products. When P&G was ready with Pampers, it found that customers were resistant to the idea of using disposable diapers. Research revealed that cloth diapers accounted for about 99.8% of the diaper changes in the US. Customers also felt that the quality of cloth diapers was much better than that of disposable diapers. They also found the prevailing price of about 8.6 cents too high. Most families restricted the use of disposable diapers to special occasions such as while travelling. P&G felt that Pampers was substantially better than the prevailing brands. It test marketed Pampers at 10 cents per piece but soon realized that there would be few takers at this price. P&G realized that to bring down the price, it would have to reduce costs significantly. One way to do this was to increase volumes and generate economies of scale in manufacturing, marketing and procurement. Higher volumes would also be needed to convince supermarkets to distribute the product. Distribution through super markets would be more efficient as supermarkets operated on far lower margins compared to drugstores, the traditional outlets for diapers. P&G conducted three more test-marketing exercises before fixing a price of six cents per diaper. Pampers rapidly gained popularity among customers. In the late 1990s, 98% of diaper changes in the US were made with disposable diapers of which P&G accounted for more than one third.

Pringles "newfangled potato chips" was a dismal failure when it was first introduced. Subsequently, P&G scientists developed a new technology that made uniform, elliptical chips from dehydrated potatoes. The chips were stacked in a "tennis ball container" to keep them from breaking or becoming stale—a problem for conventional bagged potato chips. It took P&G years to determine the right taste. Pringles potato chips were made of Olestra-a fat free substitute that tasted and fried like a fat but did not digest like a fat. In the late 1990s, a study in the Journal of American Association concluded that consumers suffered no higher levels of gastric distress from Olestra-made potato chips than from traditional ones. The Journal however mentioned that consumers did not like the taste of Olestra chips. In 1998, P&G announced that it would soon begin selling fat-free Pringles made with a new recipe and a new flavor.

Pantene was a small shampoo brand that came along with P&G’s Richardson-Vicks acquisition in 1985. Though a seemingly good product with the mystique of a high-priced department store brand, it was still a minor brand in its category. In the 1990s, P&G converted it into a shampoo-and-conditioner product with its patented "2-in-1" technology.

P&G attempted to improve its products on an ongoing basis. The company had improved Tide detergent’s product formulation and packaging more than seventy times. P&G had changed the formulation of its Crest toothpaste several times. In 1955, when Crest was first developed, it had stannous fluoride. Subsequently it began to use sodium fluoride, a more effective cavity fighter. Then researchers took on the challenge of coming up with a tarter-control product. P&G scientists discovered an anti-tarter ingredient, soluble pyrophosphate that reduced tarter. The Wall Street Journal named Crest tarter-control toothpaste one of the "milestones of the decade."

In the 1990s, P&G’s product development activities seemed to have slowed down. In June 1999, the Economist magazine reported that P&G’s last real new product innovation had come way back in 1982, when it had launched its ‘Always’ feminine hygiene range. Analysts felt that more consistent innovation would be needed to generate faster growth opportunities in the 1990s. P&G’s risk-averse culture seemed to be stifling innovation and standing in the way of commercializing new ideas quickly. The company responded by setting up innovation teams to explore promising ideas rapidly around the company and bring them fast to the market. P&G also indicated that it would take more risks, reduce pre-market laboratory testing requirements and launch products faster.

In the late 1990s, P&G launched Swiffer, Febreze and Dryel, none of which were variants of old products. Febreze was launched in June 1998 and was a success with sales of $230 million in the US in its first year. Swiffer went from test marketing to global launch in just 18 months. P&G also looked outside for new ideas. To develop Nutri Delight, a fortified orange drink, P&G worked with UNICEF and licensed the technology that allowed iron to exist with iodine and vitamin A in stable form. This helped undernourished children put on weight.

In the late 1990s, P&G announced the Organization 2005 program. P&G introduced changes in its new product development process to bring innovative offerings to the market faster. The Global Business Units (GBUs) would develop and sell products on a worldwide basis replacing the old system that allowed P&G’s country managers to set prices and handle products as they saw fit.

In addition to marketing and pricing, GBUs would supervise new product development. P&G also planned to move away from its traditional "sequential" method of testing where products were first introduced in US cities before being launched globally. Test marketing new products worldwide instead of only in American cities was expected to cut down product development cycle time.

P&G announced in September 1999, that it would launch a website, reflect.com, which would use an interactive question and answer process to understand each woman’s needs. P&G’s research and development lab would customize both the product and packaging to suit the requirement of each customer. P&G was confident that customization could be possible without any significant addition to costs.

For several years, P&G had followed the strategy of producing technologically superior goods and used clever marketing to sell them at a price that would not only cover the high R&D costs but also generate adequate profits. In the early 1990s, P&G realized that most of the growth opportunities lay in emerging markets, where customers could not afford to pay premium prices for its technologically sophisticated products. Consequently, P&G changed its approach to R&D. P&G collected feedback from marketing executives regarding the preferred blend of price and features and then worked to make the product within the price limit. P&G offered Pampers Uni, a lower-priced and simpler version of the sophisticated Pampers line, in developing markets such as Brazil.

When a P&G product emerged from the R&D department and was ready to be marketed, it was assigned to a brand manager. P&G’s classical brand management structure gave brand managers great power. A brand manager basically focussed on a single product or a small family of products coordinated activities ranging from market research and manufacturing to sales, package design and advertising. Each brand manager had profit and loss responsibility for his or her brand(s).

P&G’s brand names were typically one or two syllables long, easy to pronounce, distinctive and easy to remember. P&G looked for design elements consistent with the brand’s positioning. The Tide graphics conveyed power and heavy duty. The baby on pampers suggested gentle softness. The shape of Mr.Clean bottle resembling its mascot – Mr. Clean character with the cross-armed stance, suggested the strength of the product. P&G attempted to maintain consistency while presenting its brands to the consumers and was very cautious about changing anything about the brand that the consumer had become familiar with-- logo, package design, colors or flavors.

P&G encouraged the promotion of rival brands within the company to compete against one another. In the early 1920s, when Lux, Palmolive and Cashmere Bouquet soaps were introduced by its competitors, P&G introduced Camay. When Camay did not perform up to expectations, the management concluded that it had been held back by "too much Ivory thinking." They felt Camay had fared poorly because it had not been allowed to compete head-to-head with Ivory. The result was the creation of a brand management system which Time magazine referred to as "a free for all among brands, with no holds barred."

P&G brands had different performance characteristics and provided distinguishable consumer benefits. For example, when Tide was introduced as the first heavy duty synthetic detergent in 1946, it was claimed to be the most effective detergent in the marketplace. Soon other effective detergents came to the market to compete. Some were positioned to compete head-to-head with Tide; others offered additional benefits such as cleaning and whitening. Other brands were positioned for different applications such as cleaning delicate fabrics. All these brands competed with one another around the edges, but they stood for different primary benefits.

P&G maintained a fairly centralized approach to brand management. In the beginning, the approach worked well. However, over the years, excessive centralization began to create problems. Gradually, almost every decision was pushed to the top. There were rumors that a decision about whether the company’s new decaffeinated instant Folgers Coffee should have a green or a gold cap had been taken all the way to the CEO. In the early 1980s, P&G’s share in a number of important markets began to slip, raising serious doubts about the effectiveness of its brand management strategies.

In the 1990s, P&G responded to these difficulties, by taking steps to reorient its bureaucratic culture. It decided to replace the one-page memo by a talk sheet. The talk sheet was an informal outline that allowed managers at several levels to develop and refine a proposal through discussions, rather than through written memos alone. P&G also encouraged the formation of business teams and task forces in key result areas. The management also emphasized greater cooperation among the different functions. In the past, if a P&G brand manager put forward a proposal, it had to pass through the hierarchy of functional unit heads and the top management. Under the new approach, teams were often put together that included representatives from different functional areas who were involved right from the start of the proposal. This system enabled P&G to cut costs, reduce product development time and increase sales.

P&G did not seem to believe in product life cycles and took steps to ensure that its brands did not mature. The company regularly revitalized its brands by improving their performance or adding functionality. In the 1950s, white cotton was the predominant fabric. So P&G improved Tide’s whitening power with fluorescers. In the 1960s and 1970s, brighter colors and synthetic fabrics became more popular resulting in clothes that were tougher to clean. P&G’s "Extra Action" Tide came with new technology that facilitated soil removal for all kinds of clothing. In 1984, a liquid version of Tide was introduced. In the case of Crest, the development of tartar control technology was a major achievement and added vitality to the brand in an important way. P&G also evolved a product through different forms, such as gels and pump dispensers.

In the late 1990s, a key issue for P&G was rationalization of its product line. Hardly 25% of P&G’s new products remained in national distribution in the US for more than two years after the launch. The company began to review its brand extension policies. In the late 1980s, P&G had launched separate disposable diapers for boys and girls. In the late 1990s, P&G announced that its diapers had become so absorbent that such anatomical targeting was not necessary anymore. The company continued its efforts to prune the product line.

P&G was one of the world’s biggest advertisers. In 1999, the company spent approximately $ 5.5

billion on advertising worldwide. P&G used both print and electronic media to promote its brands across the globe.

P&G’s first advertisement in 1882 featured Ivory Soap. This advertisement showed a pair of feminine hands using a heavy thread to divide a bar of Ivory into two cakes. It had the caption: "The Ivory is 99-44/100% pure." The text concluded with an incidental benefit: "The Ivory Soap will float." To dramatize the mildness of Ivory, P&G later introduced "The Ivory Baby" and provided every grocer with a life size cardboard cutout for display.

To enhance the appeal, P&G pioneered the use of pre-printed color inserts in print advertisements. The company was the first to use outdoor posters for product advertising. P&G commissioned leading artists to paint babies and children for its advertisements. When P&G realized that listeners wanted to be entertained and not instructed, the company’s program planners developed soap operas. When the TV arrived, Ivory Soap was among the first to be advertised. In 1939, researchers found that viewers wanted a TV show to flow as smoothly as a movie. P&G promptly developed a film at Hollywood.

P&G’s Television commercials typically opened with a verbal statement of a problem or a situation that needed to be resolved. (Refer Table-F). The verbal opening line was usually the critical part of the commercial, while the visual played an important supporting role. Most P&G commercials spent only as much time with the problem as was necessary to convey the solution or the benefit. Traditionally, P&G commercials introduced the brand right at the beginning of the commercial or within five seconds. A few of the commercials inset the brand logo in the lower part of the screen at the outset of the commercial. P&G commercials rarely mentioned competitors by name. P&G referred to competitor’s brands as "the leading liquid detergent with bleaching power", "a premium detergent", "other leading liquid", or "regular shampoo" and so forth. Some of the commercials compared the end result for the P&G product and the competitor’s product. One advertisement explained that clothes cleaned in Tide were cleaner and brighter than those cleaned in "the leading liquid detergent with bleach power." Another emphasized that hair washed in Head and Shoulders had no dandruff while hair washed with "regular shampoo" was full of dandruff.

Most of P&G’s print ads had a single, dominant visual. Often, the visuals enabled the viewers to identify themselves with the ads. Ads for Clearasil, Always, Oil of Olay, Pantene and other brands showed people with whom consumers could identify themselves. P&G ads also showed the product’s performance in action. For example, a bounty towel ad showed two visuals comparing the performance of a sponge and bounty towel. While one visual showed that a tray cleaned by sponge had traces of germs, the other visual showed a tray cleaned by bounty towel without any germs. In most of the P&G ads, the audio and video were tightly coordinated. (Refer Table-G). Statements in P&G commercials were normally supported by compatible visuals.

Some of the most striking P&G print ads used very few words. A Cheer ad showed a bright, lime-green shirt dominating the page with a label that used only six words: "HELP KEEP LIMES LIME. WASH IN CHEER." The Pantene Gold-Cap collection ad was a two-page spread that featured a woman with glorious golden hair. It used only nineteen words: "GLISTENING. GLEANING. GLORIOUS. GOLD. THE PANTENE GOLD COLLECTION. EXPERIENCE IT FOR YOURSELF. PANTENE. FOR HAIR SO HEALTHY IT SHINES."

P&G’s print advertisements attempted to communicate the product’s benefits to the consumers in a credible way. Pantene Pro-V promised healthy hair because of its exclusive pro-vitamin formula that penetrated root to tip. Oil of Olay body wash ads promised superior skin care because the product had more moisturizer than even the best beauty bar. Clearasil ads promised to stop pimples before they appeared because the product worked deep down where the pimples formed. Tag lines were used to reinforce the brand’s strategic positioning: "FOR HAIR SO HEALTHY IT SHINES;" "IF IT’S GOT TO BE CLEAN, IT’S GOT TO BE TIDE;" "CASCADE. SO CLEAN IT’S VIRTUALLY SPOTLESS."

In the 1970s and 80s, P&G had been producing television shows to promote its products. In the early 1990s, P&G stopped producing television shows because of high production costs. However in the mid 1990s, P&G went back to Television shows in a big way. In March 1995, P&G announced a three year alliance with Paramount Television Group to produce Television shows. P&G feared that with the growing popularity of the Internet, interactive game channels and other ad-free media, traditional ad-sponsored programs would soon lose their importance. P&G felt it would have no place to run its commercials unless it owned some of the shows.

In the late 1990s, P&G introduced fundamental changes in the way it dealt with its advertising agencies. Durk Jager announced that P&G would move towards pay-for-performance for advertising agencies and "squeezing more per dollar" from media spending. In September 1999, P&G announced that it would pay its agencies—Saatchi and Saatchi, Leo Burnett, Grey, and Euro RSCG a percentage of global sales effective from July 1, 2000. While the global norm was 2 percent of sales, it could vary depending on individual brand sales and strengths. Bob Wehling,

P&G’s Global Marketing Officer commented: "Our overarching objective is to increase top-line sales growth. It will empower them to better align resources and talent, break down geographical barriers and focus on the global growth of P&G’s brands."

In the late 1980s and early 1990s, P&G noticed inefficiencies in its supply chain due to complicated product lines and pricing strategies. Complicated pricing was the result of special promotional offers to gain temporary market share rapidly. Special promotions led wholesalers and retailers to book orders for as much as three months supply of some products in order to take advantage of favorable terms. P&G estimated that one-third of the existing inventory was held in the pipeline between its plants and the consumer. Variations in product, pricing, labeling and packaging necessitated by extensive promotions had created a highly complicated supply chain system which did not add value for customers.

P&G began to simplify its operations in the 1980s. It made efforts to prune the product range, consolidate suppliers and streamline manufacturing processes. P&G also realized the importance of streamlining logistics practices. By the 1990s, more than 40% of P&G’s shipments were automatically linked to withdrawals from customers’ warehouses. This minimized paperwork and reduced inventory costs. As part of its simplification exercise, P&G restructured its US hair care business by selling Lilt home permanents, and mega brands such as Prell and Ivory shampoo. The Head and Shoulders product line was reduced to 15 variations. P&G also tried to simplify the special deals offered to retailers and distributors. In 1990, P&G eliminated many of the discount schemes it offered to retailers and instead lowered the list prices on most of its products.

P&G took several steps phased over a five year period (1992-97) to streamline its operations. In 1985, P&G introduced a program known as Continuous Replenishment (CRP). Using Electronic Data Interchange (EDI) P&G was able to approximate a "Just In Time" supply of products. In 1992, the company instituted a comprehensive program, called Efficient Consumer Response (ECR) to remove unwanted costs from the supply chain. ECR concentrated on four key areas: efficient replenishment, efficient promotion, efficient introduction and efficient assortment. Efficient replenishment linked the replenishment process to consumer demand. Efficient Assortment led to a 20% reduction in the number of stock keeping units (SKUs). Efficient introduction strengthened the criteria for introducing new products based on genuine customer needs. Efficient promotion enabled the success of the other elements of the ECR Program.

P&G launched three other programs called Streamlined Logistics Initiatives (SLIs) to support its ECR program and further increase supply chain efficiency. Launched in 1994, SLI I began to simplify pricing and trade terms across all categories. The objective was to make P&G operate like a single, integrated company with one set of trade terms across all the five business segments. SLI II, introduced a year later, gave retailers new, low product prices if they met supply-chain efficiency criteria: two-hour carrier turnaround; on-time customer pick-up and electronic purchase orders. In 1997, P&G launched SLI III, called Streamlined 97, to reduce costs arising out of damaged merchandise in the supply chain. P&G’s Logistics Development Incentive (LDI) replaced the old item-by-item damage inspection programs with flat-rate compensation to the retailer. The LDI, reduced unloading times by 1-1/2 hours in 1997, saving the trade more than $60 million.

P&G did not pursue overseas markets vigorously until after World War II. P&G had very limited export activities and its operations in Canada, Cuba, Philippines and Indonesia were regarded as mere extensions of its US operations. After the war, P&G began to view overseas markets as a potential source of growth and profits. In the late 1950s, and early 1960s, as P&G started expanding internationally, it built its overseas organization around geographic markets.

P&G took full advantage of its superior technologies, product development capabilities and accumulated marketing expertise while expanding overseas. The management however quickly realized that consumer tastes and habits varied widely from one country to another and replication of products or strategies which had been successful in the US, in overseas markets would be a mistake. Subsidiary Managers were gradually given the freedom to develop, modify and promote products to suit local consumer needs. At the same time, P&G used tight central administrative systems and tracked performance against budgets. The top management also carefully reviewed major investment decisions.

By the late 1970s, P&G faced a saturated and increasingly competitive market abroad, particularly in Europe. With costs rising much faster than revenues, P&G decided it could no longer allow product development to be driven by the local interests of each national subsidiary. The lack of coordination between the national subsidiaries had led to a great deal of duplication and overlapping efforts. P&G initiated a program that required European subsidiaries to collaborate in developing and executing Europewide product market strategies. Instead of trying to coordinate from headquarters, it delegated responsibility to Euro Brand Teams. A typical Euro Brand Team included brand and advertising managers from country subsidiaries and key functional managers from headquarters (marketing, manufacturing, logistics). Euro Brand Teams enabled managers to discuss issues such as standard pack sizes, consistent brand positioning, and common advertising themes. The teams also discussed strategic issues such as launch timing and the need to coordinate responses to moves by competitors.

P&G’s attempts to share knowledge across subsidiaries had led to some innovative products. After a failed attempt to introduce a heavy liquid detergent in Europe, P&G scientists developed a new liquid detergent. The new product was successfully launched as Vazir in Europe. Meanwhile, researchers in the US had been working on a new liquid. Around the same time, P&G’s subsidiary in Japan was trying to develop a more robust surfactant (the liquid that removed greasy stain) that could be more effective for the cold water washes that were common in Japan. When P&G’s head of Research and Development for Europe was promoted to the head of R&D at P&G Headquarters, he stressed the need to have more coordination and cooperation among different subsidiaries. The world liquid detergent project became a test case. Plans to launch Omni, the liquid on which the US group had been working, were postponed until innovations from Europe and Japan had been incorporated. The result was the launch of Liquid Tide in the US, followed by the successful launch of Liquid Cheer in Japan and Liquid Ariel in Europe.

P&G looked for good ideas that could be replicated in other countries. P&G’s success with Joy detergent in Japan in the late 1990s, was a good example. The highly concentrated version of the American dish-washing detergent was launched in Japan in 1996. It was based on a new technology developed specifically for Japan by P&G’s scientists in Europe. The commercial was an adaptation of the documentary style "Show and Smell" campaign originally created by Daz detergent in Britain and subsequently adapted to Gain in the US. The product’s leak-free cap, developed in Japan was later used on P&G products in the US. The Joy marketing program was so successful that it was later extended to the Philippines and other Asian markets.

In the 1970s, P&G entered Japan through a joint venture with a small Japanese company named Nippon Sunhome. Eventually, P&G bought out its Japanese partner and took complete management control. Cheer laundry detergent a direct lift from the US was P&G’s first major product in the Japanese market. Cheer could clean clothes at three different temperatures—hot, warm and cold. Most Japanese women washed their clothes in cold tap water. The idea of washing clothes in three different temperatures had no relevance for them. The product failed in the test market. P&G reintroduced Cheer in a high density formula in very compact packages. An appealing new lemon fragrance gave the brand the uniqueness it had earlier lacked. P&G finally managed to establish Cheer in the Japanese market. Later, Japanese scientists invented a low temperature bleach activator for use by Japanese customers. P&G used a new detergent formulation in a small space saving package and named it Ariel. With Cheer and Ariel, P&G successfully established itself in Japan.

When P&G first introduced disposable baby diapers in Japan, it offered the American product without any modification. The American product was thicker and more expensive. Besides Asian babies were smaller than American babies. When the product failed, P&G offered a redesigned version that was smaller, three times thinner, less expensive and packed in a more compact way so that it was easier to store and carry while travelling.

China was the largest emerging market in the world. P&G realized the tremendous market potential for its products. Disposable diapers were used in only about two percent of diaper changes in China compared to 98% in the US. The per capita consumption of toilet tissue was 5.4 rolls in China, compared to 53.3 in the US. P&G changed its marketing approach in China. It came up with a more reliable way to target and distribute product samples—through the Communist party.

Retail outlets in China were very small and sold only a couple of units in a week or a month. Retail outlets made their own decisions regarding the assortment of brands to sell. P&G used street maps of Chinese cities to pinpoint the location of the retail stores and sent locally hired ‘ground troops’ to sell and service each outlet.

P&G customized its hair care products to suit the needs of Chinese customers. In China, dandruff seemed to be a big problem that few Chinese shampoos solved. P&G entered the market with Head and Shoulders followed by Rejoice (Pert in the US) and Pantene, adding anti dandruff formula to each of these products. The three shampoo brands together grabbed over 50% of the market in China’s major cities.

P&G advertised its products taking into account cultural differences across the globe. In Japan, it was considered highly impolite and inappropriate to discredit a competitor’s brand. On the other hand, the Japanese respected an objective presentation of relevant facts. The introductory Ariel advertisement presented the performance of the product in a factual and objective manner. It was left to the judgement of the Japanese consumer whether to use Ariel or a competitor’s product. P&G used different advertising campaigns for Camay soap. In France, the advertising was fairly direct with an overt display of affection. In the UK, the product was conveyed with traditional British wit and understatement.

Whenever possible, P&G used existing packages, product formulas, and advertising campaigns in as many markets as possible, rather than customize the brand for each market. Pampers, Pantene, Whispers, Pringles and Oil of Olay were global brands whose products had more similarities than regional differences. Vidal Sassoon shampoos and conditioners contained a single fragrance worldwide, with variations only in amount—less in Japan, where subtle scents were preferred, and more in Europe. Ariel detergent, a brand developed in Europe, was sold throughout Central and East Europe using the same packaging.

Initially, P&G deputed managers from its domestic operations to key positions in overseas subsidiaries. However, P&G soon realized that this practice worked against sensitivity towards the local culture. Product and marketing failures in Japan convinced P&G to make more extensive use of local nationals. Subsequently, P&G relied less on expatriate American managers to fill international positions. Instead, it tried to attract foreign nationals attending leading American business schools. After a brief stint in the parent company, it transferred them to their home country. P&G also transferred its executives across the globe. P&G India had sent 10% of its executives outside India to other countries for short stints. The Indian company also had a few managers from abroad, not all of whom were in top positions.

In the late 1990s, P&G generated over half of its revenues outside the US and Canada. P&G’s revenues in Asia had increased ten fold in the period 1990-99, to $ 3.6 billion. Sales in China alone, which the company entered in 1988 had been growing at a rate of more than 50% per year to reach $ 1 billion in 1999.

	1997	1998	1999
North America	17,625	18,456	18,977
Europe, Middle East and Africa	11,587	11,835	11,878
Asia	3,573	3,453	3,648
Latin America	2,306	2,640	2,825
Corporate and Other	673	770	797
Total	35,764	37,154	38,125

In its formative years, the P&G management had treated workers like family members. In 1885, P&G decided to give workers Saturday afternoons off with pay. By 1887, P&G had started a Profit Sharing plan. In 1915, the company began to offer a sickness, disability, and life insurance plan. Eight years later the company guaranteed workers forty-eight weeks of employment in a year. While the Great Depression of the 1930s forced other manufacturers to shut down, P&G’s soap plants continued to function. P&G had traditionally encouraged lifetime employment by offering stock options and other benefits to those who stayed with the company. Even secretaries retired with P&G stock worth more than half a million dollars. In the 1990s, however, P&Gers tended to leave after a few years to take up senior level positions in competing firms.

P&G had an elaborate recruitment process. Resumes were scanned for promising candidates, including those students who had not signed up for interviews. Top executives gave talks at colleges. Strong relationships were developed with college placement offices and faculty. P&G hired students for various functions such as finance, manufacturing, marketing, research, and sales. P&G hired from all major universities in general and from the big business schools, such as Harvard, Wharton, Stanford, and Northwestern in particular. P&G generally had more applicants than it needed. Written tests were conducted to evaluate an applicant’s aptitude for leadership and problem solving. P&G used its own version of the Graduate School Admission Test, known as the M Test. The test measured a candidate’s interpretative and reasoning skills. Studies inside P&G showed a strong positive correlation between high scores on the M Test and success on the job. P&G’s interviewing process was purposeful and behavior based. A candidate’s past experience and accomplishments were examined for leadership, problem solving capabilities, initiative, follow-through and ability to work with others. P&G’s manpower policies attempted to convert the company’s 110,000 employees worldwide into "Proctoids". Fresh recruits from college campuses and those entering P&G as a result of acquisitions were "Procterized"

P&G had taken various initiatives to develop its employees. Supervisors were encouraged to coach and help in the development of their subordinates. The vehicle for this process, used around the world, was the Work and Development Planning System (W&DP). An employee’s W&DP was linked to the OGSM (Objectives, Goals, Strategies and Measures) of his or her department. The department’s OGSM was linked to the OGSM of the region and of the company as a whole. The W&DP had four components: the previous year’s plan versus the results; areas for further growth and development; near-term and long-term career interests; and a development and training plan for the year ahead. The W&DPs were reviewed annually and updated regularly. In addition to the formal review and updates of the W&DPs, supervisors were encouraged to supplement the program with informal, ongoing coaching.

In 1992, P&G set up the P&G College to allow senior managers to share their experiences and insights with their juniors. New recruits spent several days at P&G college in their first year. There were different courses designed for first time managers. The faculty of the P&G College consisted of the CEO and the top management of the company. Some four thousand employees from various countries and different functions attended the programs offered by the college every year.

P&G had about a thousand expatriates from different countries working in locations outside their own countries. These managers helped to spread the P&G culture around the world as they moved from country to country. Incoming expatriates were provided training to help them understand the local culture and social and business environments and learn the local language.

P&G’s twenty-four page manual You and Procter & Gamble prescribed a code for ethics for the company’s employees. Workers were reminded not to disturb other employees or visit other departments, except on official business. Promptness and neatness were also emphasized. Under the heading "Good Housekeeping", P&G prescribed a few simple rules: "Always keep your things in their proper places; space is provided for hats, coats and personal belongings. You are not supposed to eat at your desk, only in the employee cafeteria. If you have a drink, you are not to come back to work."

P&G had prescribed a strict dress code for its employees. Managers had to be dressed in blue or grey suits. Some departments experimented with "casual Fridays," but most viewed it as a sacrilege not to wear suits. A memo from senior management later banned "casual Fridays.

P&G discouraged its employees from making public announcements. Only senior management staff were allowed to talk in public on a limited number of topics. Technical people were instructed not to join trade organizations. While traveling, P&G employees usually did not use any luggage ID tags, which would reveal their identity. In most towns, where P&G plants were located, the security staff also hired a local police officer to act as a consultant to the plant. This gave P&G access to a lot of police information, such as records of those suspected to be trouble makers Senior managers had to sign documents, which forbid them from disclosing company-related information.

In September 1998, P&G announced major structural changes under the Organization 2005 program. P&G wanted to take its global turnover from $38 billion in 1999 to $70 billion by 2005. The vehicle for growth would be a new structure and work culture based on Stretch, Innovation and Speed (SIS). Table F outlines the cultural goals identified by P&G.

In January 1999, P&G announced that it would cut 15,000 jobs worldwide over the next six years. More than 70% of the job cuts would be outside North America. Company sources mentioned that 10,000 job cuts would probably occur during fiscal year 2001. The rest would come in the following three years. The management also announced that 42% of the job cuts would occur in Europe, the Middle East and Africa, 29% in North America, 16% in Latin America and 13% in Asia.

Under the Organization 2005 plan, P&G changed the way it looked at individual appraisals and moved from a conservative goal-setting plan to a stretch goal plan. Earlier P&G would appraise employees on the basis of targets set and their achievements. The system seemed to have a loophole. By setting low targets, an under performing manager could project himself as an achiever. Through the stretch element, P&G sought to ensure that merely achieving targets was not good enough. Appraisal would be on the basis of how the stretch targets were fixed and what attempts had been made to meet them.

Under the Organization 2005 program, P&G discarded the old rules regarding business attire. P&G announced that it would be left to the individual to decide what was the appropriate dress to wear at the work place. P&G also introduced measures to play down the hierarchy. According to an employee: "Earlier the top executives were served tea in higher quality cups compared to what the junior level employees got. But that has changed. Now all P&G employees sip their brew in the same white bone-china which was earlier reserved for top executives".

As part of the Organization 2005 Program, P&G India announced several changes. Under this program, P&G India had initiated ‘Project Pride’ in 1999 to promote an ‘open’ work culture. All the six dispersed offices of P&G in Mumbai would be brought under one roof by July 2000. This project also aimed to create a non-hierarchical office structure, which did not discriminate between senior and junior staffers. A high degree of enthusiasm was generated as employees could actually see their ideas being implemented. The CEO like all the other employees would also sit in a cubicle in the new office. Moreover, irrespective of the rank, all the cubicles would be of the same size throughout the organization.

In 1998, P&G granted stock options to all eligible employees. On May 15, 1998, every employee was given an option to purchase one hundred shares, at the price of the stock on that date, anytime during the next ten years. The 1999 grants would be fully exercisable after three years and had a fifteen year life. P&G maintained the Procter and Gamble Profit Sharing Trust to provide funding for two primary post retirement benefits: a defined contribution profit sharing plan and US post retirement health care benefits. Outside the US many employees were covered by locally defined benefit pension, health care and life insurance plans.

P&G had demonstrated its commitment to the environment in various ways. The company had promoted the use of refill packs and eliminated unnecessary packaging wherever possible. Consumers in the US and Canada could buy refills of Downy fabric softener and those in Europe and Latin America could buy refills of Mr. Clean products. In the 1990s, P&G started using more recycled plastic in its detergent bottles.

P&G had taken various measures to make its products, packaging and operations safe for its employees, consumers and the environment. It continually monitored performance against environmental goals. In the 1990s, P&G’s focus on pollution control had resulted in a 37% reduction in waste, air and water emission from its plants.

In 1999, P&G made a grant of $ 1.25 million to The Nature Conservancy, a private not for profit organization dedicated to preserving plants, animals and natural communities. In the 1980s, P&G worked with the Conservancy to preserve some 70 miles of shoreline along Florida’s Big Bend Wilderness Coastline. In the mid 1990s, P&G donated $ 1 million to the Nature Conservancy for its "Last Great Places" campaign.

In 1999, P&G launched a special program called "Open Minds" in association with UNICEF to encourage working children to go to school in India. The project was part of P&G’s ongoing program in association with UNICEF for educating children in Australia, the ASEAN countries and India. From the sales of large size packs of Vicks Vaporub, Whisper, Ariel, Head and Shoulders, and Pantene, P&G contributed towards the cost of educating working children to the "Open Minds" fund. P&G planned to raise approximately $ 250,000 during the period November 1999 to January 2000. Employees of P&G India, contributed one day’s salary as part of the Open Minds initiative.

In 1999, P&G recorded net sales of $ 38.13 billion, an increase of 3% over the previous year. The increase in sales was the result of better prices, increased volumes and a more favorable product mix in North America. Worldwide gross margin was 44.4 % in 1999, compared to 43.3 % in 1998. Operating income grew by 3% and cash flows from operations amounted to $ 5.54 billion.

The North American region delivered satisfactory results in 1999, with net sales of $ 18.98 billion, an increase of 3% over the previous year’s $ 18.46 billion. Results in Europe, Middle East and Africa were mixed. The progress made on cost control, premium products and improved pricing was partially offset by the impact of the financial crisis in Russia and South East Asian countries. The region recorded sales of $ 11.88 billion in 1999 compared to $ 11.84 billion in 1998. The Asian region had showed some signs of recovery from the currency crisis. Net sales for the region were $ 3.65 billion, a growth of 6% over the previous year. The Latin American region continued to deliver good results despite a bleak economic scenario. Net sales grew by 7% to $ 2.83 billion against the previous year’s $ 2.64 billion.

As P&G manufactured and sold its products in a number of countries, it faced in substantial foreign exchange exposure. To deal with this exposure, P&G had entered into foreign currency hedging transactions. The company used foreign currency Swaps to hedge intercompany financing transactions. Many of the raw materials used by P&G were subject to price volatility caused by weather, supply conditions, political and economic variables and other unpredictable factors. P&G used futures and options contracts, to manage volatility, especially in the case of food and beverage products.

P&G had performed well in the late 1990s. Cost cutting measures had reduced expenses by over $3 billion since 1992. To strengthen its competitive position, P&G had identified several key result areas: Creating and launching new brands at record pace; establishing leadership positions in the more important developing markets of the world; growing its global brands with more consistent and speedy innovation; strengthening its relationship with the retail customers; and use of information technology as a strategic tool.

In the late 1990s, P&G had restructured itself to decentralize decision making and facilitate faster implementation of new ideas. The company’s goal-setting process required the employees to set stretch targets. P&G also introduced a new reward system that recognized extraordinary contributions at every level of the organization.

Under the Organization 2005 program, P&G had identified a number of restructuring projects including consolidation of manufacturing facilities, standardization, and cost reduction. Organization 2005, would also streamline and standardize business services such as accounting, employee benefits management and information technology services.

In the late 1990s, P&G set itself the ambitious goal of doubling its revenues from $ 38 billion in 1999 to $70 billion by 2005. P&G announced that it would cut down product development time. It would also test market products worldwide in sharp contrast to its traditional practice of first test marketing a product in the US. In advertising, P&G faced formidable challenges. P&G’s advertisements in the US had been traditionally directed towards housewives who tuned in to Soap Operas that P&G sponsored. In the late 1990s, with women going to work, P&G seemed to have lost this audience. However, some analysts felt that the biggest obstacle that P&G faced in the late 1990s, was probably its culture. They opined that the success of Organization 2005 program would depend on how the tradition bound P&G managers adjusted to the new work ethos.

We will provide products of superior quality and value that improve the lives of the world's consumers. As a result, consumers will reward us with leadership sales and profit growth,, allowing our people, our shareholders, and the communities in which we live and work to prosper.

We show respect for all individuals. The interests of the company and the individual are inseparable. We are strategically focused in our work. Innovation is the cornerstone of our success. We are externally focused. We value personal mastery. We seek to be the best. Mutual interdependency is a way of life.

SEGMENTS	PRODUCTS	IMPORTANT BRANDS
Laundry and Cleaning	Laundry detergents and bleaches, fabric conditioners, household cleaners and dishwashing detergents.	Ariel, Bounce, Cascade, Mr. Clean, Febreze, Dryel.
Paper	Diapers, facial tissue, toilet tissue, paper towels, baby wipes, feminine protection.	Pampers, Luvs, Always, Whisper.
Beauty Care	Facial cleaners and moisturizers, hand and body lotion, personal cleaning, color cosmetics, skin care cosmetics, deodorants, shampoos, hair conditioners, hair spray.	Clearasil, Head and Shoulders, Oil of Olay, Old Spice, Pantene
Food and Beverage	Snacks, coffee, juices, shortening and oil, peanut butter.	Crisco, Folgers, Pringles.
Health Care	Toothpastes, toothbrushes, mouthwashes, allergy remedy, stomach remedy, cold remedies, decongestant, sinus remedy, throat drops, pharmaceuticals.	Vicks Formula 44, Vicks vaporub, Actonel, Didronel, Crest, Metamucil

(Revenues in $ million)
Segments	1997	1998	1999

Laundry and Cleaning	10,892	11,099	11,517
Paper	10,101	10,862	11,451
Beauty Care	7,101	7,160	7,115
Food and Beverage	4,107	4,376	4,381
Health Care	2,895	2,849	2,836
Corporate and other	668	808	825
Total	35,764	37,154	38,125

1879- Ivory	All purpose soap that didn’t give baby a rash.
1879- Floating Ivory	Floating bar soap.
1911- Crisco	All-vegetable shortening.
1946- Tide	Heavy-duty synthetic laundry detergent.
1955- Crest	Fluoride toothpaste.
1956- Comet	Scouring cleanser with effective bleaching.
1956- Pampers	Effective, economically priced disposable diaper.
1961- Head & Shoulders	Effective dandruff- control shampoo.
1972- Bounce	Dryer-added fabric softener.
1978- Didronel	Prescription drug that reversed bone loss for those susceptible to osteoporosis.
1983- Always, Whisper	Feminine protection products.
1984- Liquid Tide, Ariel, and Vizir	Liquid detergents that cleaned as well as powders.
1985- Pantene	Shampoo cum Conditioner
1985-Tarter Control Crest,	Toothpaste with an effective tarter control formula.
1985- Ultra Pampers, Luvs	Super baby pants incorporating new technology that made diapers thinner.
1986- Pert Plus/Rejoice Shampoo	Shampoo that enabled consumers to wash and condition their hair using only one product.
1998- Febreze	Spray to eliminate smells in fabric.
1998- Swiffer	A dry mop that traps dust.
1998- Dryel	A home dry cleaning kit.

Segments	Brands
Fabric and Home Care	*Ariel, Bounce, Cascade, Cheer, Dawn, Joy, Mr.Clean, Tide.*
Feminine Protection	*Always, Always All days, Tampax, Whisper.*
Health Care	*Actonel, Crest, Didronel, Scope, Vicks Formula 44, Vicks Vaporub.*
Food and Beverages	*Crisco, Folgers, Olean, Pringles, Punica, NutriDelight*
Beauty Care	*Clearasil, Cover Girl, Head and Shoulders, Ivory, Oil of Olay, Old Spice, Pert Plus, Pantene Pro-V, Rejoice, Vidal Sassoon.*
Baby Care	*Babysan, Luvs, Pampers, Pampers Wipes.*

Audio	Video
Make them happy. Keep them dry. Pampers Baby Dry.	Laughing baby with mother. Package superimposed with: "Make them happy. Keep them dry."
Hospitals know dry skin is important to skin health, and 81% of them use pampers.	"Dry skin is important to skin health." "81% of hospitals use Pampers."
The last thing you want waking her up in clammy skin	Baby waking up, crying. Mother picks her up, feels moisture on baby’s bottom.

Before Organization 2005	After Organization 2005
Misaligned objective with high penalties for failure	The organization is aligned on common goals with trust as a foundation.
Internal inspection keeps everyone under control	A focus on coaching and teaching enables informed risk taking and team collaboration.
Risk is avoided and victory is narrowly defined	Victory is defined as stretch with trust and candor.
Complexity is delegated down	Leaders take on complex challenges.
Creating a slow moving organization that lacks stretch, innovation and speed	An organization driven by stretch, innovation and speed toward breakthrough goals.

Geographic Segments		*North America*	*Europe, Middle East and Africa*	*Asia*	*Latin America*	*Corporate and Other*	*Total*
Net Sales	1999	18, 977	11, 878	3, 648	2, 825	797	38, 125
	1998