"Plan Global, Win Local" was the theme of a speech given at the recent IGD conference on Global Retailing by John Millen, Vice President, Customer Business Development at Procter & Gamble. Mr Millen explained P&G’s philosophy of getting the benefits of being a global company but never forgetting the importance of winning locally in every market where the company does business.

In his speech, Mr Millen noted the global scale of P&G’s operations, with around 300 brands being sold to 5,000 million consumers in 140 countries generating a turnover last year of $37 billion. He also touched on recent reorganisation at P&G which has led to the creation of 7 Global Business Units, responsible for overall business strategy and planning for P&G brands worldwide, and 8 Market Development Organisations, including one for Western Europe, whose role is to drive sales of P&G brands in individual markets. This re-structuring, which is part of the company’s well publicised Organisation 2005 programme, will, he said, ensure that P&G is well placed to address the issues facing manufacturers, retailers and wholesalers at the outset of the 21st century. Examples of these issues are the internationalisation and consolidation of retailing, consumer loyalty and retention, category management, the potential effects of the Euro currency and dramatic advances in information technology.

P&G’s sales organisations have already been reorganised around customers, rather than being based on geographies. Increased consumer loyalty to brands and stores is key to long-term success and retailers and manufacturers must work together. Mr Millen indicated that as far as the consumer is concerned, no distinction is drawn between the retailer and the manufacturer, "We are one ", he says.

Mr Millen highlighted two key focus areas for P&G in working together with retailers to build consumer loyalty, driving efficiency and driving differentiation. On efficiency, much progress has been made through ECR but differentiation remains a major opportunity for P&G to work with retailers to help them differentiate their consumer offering from their competitors. Category management, said Mr Millen, can help retailers differentiate their assortment, pricing and merchandising based on their overall strategy and the role that each category plays in delivering that strategy.

Mr Millen touched on the complexity of the retail business in Western Europe from P&G’s perspective. Truly ‘global’ customers operating in Europe and elsewhere in the world represent less than a quarter of the company’s business in Western Europe but they are growing fast. A further 12 per cent of customers have stores in several European countries but still nearly two thirds of P&G business in Western Europe is with customers with stores in just one geography. On the other hand, 10 customers account for one third of P&G’s business and 50 customers account for 70 per cent. Accordingly, P&G is developing principles for doing business with multi-national customers which are consistent with the way the company does business with local customers. Elements of these include moving towards a set of European pricing and terms, finding a balance between Europe-wide visions for brand line-ups, pricing and logistics and local market needs and also finding the balance between range standardisation for business efficiency, and having a sufficiently broad mix of SKUs to allow customers to differentiate their offering to consumers.

In Western Euope, P&G now have close to 40 teams working with major customers and in specific business channels such as e-commerce. These teams not only have sales people in them, but also Marketing, Logistics, Systems and Finance experts, all dedicated to working with their customers. These teams are built to mirror the customer’s organisation. Global teams work with global customers, regional teams work with regional customers and so on. They focus on three things: understanding the customer’s individual needs better, creating demand together by understanding the consumer and shopper better and then working to optimise the fulfilment for the demand that’s created through tailored logistics work with individual customers. Examples of success in this work include joint P&G/customer assessments to set priorities, assortment, pricing and promotion analysis, testing new store layouts etc.

Real alignment between P&G and the customer is the key to success. The easiest way P&G has found to achieve this, Mr. Millen says, is to agree a common scorecard, typically focusing on a 12 month period with clear measures in areas like efficiency, service level improvements, sales and profitability. Around 80 per cent of P&G customer teams have this type of scorecard in place with their customers.

In creating demand, too, P&G have seen major success with shopper research. The company has developed a Europe-wide Shopper Research Programme involving interviews with over 30,000 shoppers. When this is combined with other research data and retailers’ shopper data, there is a powerful combination of information available to shape mutually beneficial business plans.

Expanding the relationship with customers from a purely transactional buying/selling relationship to a co-marketing relationship is a huge opportunity. Mr Millen cited the example of the highly successful launch of Sunny Delight, where a key element was the combination of the right kind of instore support and joint co-marketing with customers to shoppers with kids. Likewise, with Febreze, the right instore distribution, shelving and focusing of co-marketing support to different consumer groups like pet owners and smokers is delivering outstanding results.

P&G, Mr Millen concluded, is changing its whole approach to how it does business with its customers. Manufacturers and retailers must be open to new ways of doing business together in the Europe of the coming millennium, so that to the consumer they "Act As One!."

Date article published: 2000

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