Commentary

The Tide Is Turning. Also Febreze.

by Bob Garfield , Featured Columnist, August 4, 2014

To: A.G. Lafley, CEO, Procter & Gamble

Re: Beyond reorg

Yo, A.G. May I call you A? I was struck by your bold plan to consolidate your brand portfolio to focus on core businesses and avoid further creeping incrementalism that depresses margins and distracts management. (Hello, Swiffer, your ears burning?)

Here’s hoping increased profitability assuages any Wall Street spilkes on gross revenue. Just to be on the safe side, I’d suggest you commit some of your non-recurring gains from the divestitures into a couple of affordable acquisitions with a big upside. Like Dollar Shave Club.

Or Greece.

But as long as you’re being all strategic and so forth, why not take it up a notch -- by rethinking the very core of your core businesses? Namely, promotion and distribution. There’s more than one way to increase margins, after all. What if you could dramatically reduce marketing costs and simultaneously streamline your distribution by subtracting one little element from the fulfillment chain…such as, oh, I don’t know…retail?

Just an experiment, mind you. But how about a spinoff? Imagine taking a few brands and -- instead of shedding them for cash -- you develop a direct-to-consumer model along the lines of Nespresso and (well, I’ll be!) Dollar Shave Club? If it’s too expensive to build out a distribution infrastructure for one brand, you could bundle a few for economies of scale. Just blue-skying here (and I’m sure these aren’t the brands you’re planning to offload), but what about a stand-alone business called Paper Boy: Charmin, Always, Tampax, Puffs, Bounty, Pampers and Luvs ordered online and delivered from warehouses to consumer addresses. Boom.

If Amazon can do it as a third party, why can’t you? The marketing can then be achieved by sustainable, direct online connections, delivering promotions, content and all the stuff of relationship building minus the enormous investments of media advertising, trade promotion, and -- of course -- retail markup. Digital technology already offers the data infrastructure tied not only to efficient warehousing but also just-in-time manufacturing. The only missing element is the fleet of trucks for the last mile.

But that’s already there, too, isn’t it? Amazon has managed to make use of third-party ground vendors. Why couldn’t you? Will FedEx or UPS not cut a most-favored-nation deal with a manufacturer that would overnight be its biggest customer?

Beyond that, on the subject of distressed assets, there’s a prospective partner out there even more desperate for volume than Greece. It’s called The United States Postal Service. And I’ll bet you could buy Netflix’s DVD shipping hubs for a song. They don’t really need them anymore, because -- unlike Tampax -- their products can be delivered via broadband.

Give it some thought, A. Because the paper goods overload my trunk and Walmart is a nightmare. And, DVR equipped as I am, I haven’t seen a Charmin commercial in 5 years. Neither has anyone else.

Once you take care of this, we can discuss my ultimate P&G fantasy: Pepto-Bismol airdropped by drone.

brand marketing, packaged goods, retail

5 comments about "The Tide Is Turning. Also Febreze.".

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Stephen Block from Amazon Partners, August 4, 2014 at 11:20 a.m.
You make a good point, Bob. But to twist your idea just a slight turn, perhaps P&G could buy the US Postal Service and give Amazon a run?
Reply

Kathryn Gorges from Kathryn Gorges Courses, August 4, 2014 at 11:33 a.m.

Excellent idea -- takes Amazon's first move into the second step. Subscription services to all the paper products I use -- automatic replenishment through the mail, no need to make a dash to whatever store I don't like going to. Hope it happens...

Dana Todd from SRVR LLC, August 4, 2014 at 12:30 p.m.

Great post - I hope they read it! More importantly, I hope they act on it. While it's likely that the decision is far more about pleasing shareholders and a need for "up and to the right arrows on charts", it's a prime opportunity to use this as a catalyst for larger shifts in vision and strategy.

Benjamin Glatt from Jumpshot, August 4, 2014 at 5:18 p.m.

They already did this.

http://www.pgestore.com/

Michael E. Keenan from Keenan & Company, August 15, 2014 at 4:19 p.m.

Bob's right-on again: smart, nimble, and out-of-the-box thinking used to be P&G's MO, notable example: furror and action caused in late '80s/early '90s by P&G's call for agency industry's involvement, innovation, and action as had been the case with previous turning points (introduction of radio, TV). Dinosaurism creeps upsowy, then you've got it.