Former President Suharto of Indonesian once famously dismissed the concern over his country’s corruption by saying: Well you come out here from Washington with these high ideas to tell us….
Why have competitors not been able to match it? Explain your opinion as marketing manager of this company
Selling Through Customer Business DevelopmentIt seems that when it comes to personal selling, the term “win-win” gets thrown around so much that it has become a cliché, but at Procter & Gamble, the sales concept that the company benefits only as much as the customer benefits is a way of life. Since William Procter and James Gamble formed a family operated soap and candle company in 1837, P&G has understood that if the customer doesn’t do well, neither will the company.That’s why even though P&G boasts a massive sales force of more than 12,000 employees worldwide, P&G people rarely utter the term “sales.” At P&G, it’s called “customer business development,” or CBD. The title alone pretty much says it all. Rather than just selling detergent or toothpaste, P&G’s philosophy is to grow its own business by growing the business of its customers. In this case, customers are the thousands of retailers and wholesalers that distribute P&G’s brands throughout the world. P&G isn’t just a supplier. It’s a strategic business partner with its customers. “We depend on them as much as they depend on us,” says Jeff Weedman, a CBD manager.THE CORE COMPETENCY OF CUSTOMER BUSINESS DEVELOPMENTAs the big box retailers get bigger and bigger, they also grow more complex. Take companies such as Tesco or Carrefour. How can a vendor like P&G ever fully understand such a customer? These complex organizations have so many arms and legs that it becomes nearly impossible to get a full and firm grasp on their operations and needs. To deal with such customer complexities, P&G organizes its sales representatives into customer business development teams. Rather than assigning reps to specific geographic regions or products, it assigns each CBD team to a P&G customer. For the company’s biggest customer, Wal-Mart (which tallies a massive 20 percent of all P&G sales) the CBD team consists of some 350 employees. For a customer like a pound store, the CBD team might have only about 30 employees.Regardless of the teams’ size, the strength of the CBD concept derives from the fact that each team, in and of itself, is a complete customer service unit, containing at least one support specialist for every important business function. In addition to a general CBD manager and several sales account executives (each responsible for a specific category of P&G products), each CBD team includes a marketing strategy, operations, information systems, logistics, finance, and human resources specialist. This” multifunctional” structure enables each team to meet the multiple and vast needs of its customer, whether the needs revolve around those of a chief finance officer or an entire IT department. A real strength of the CBD teams is that team members function as a collaborative whole, rather than as individuals performing their own tasks in isolation. Team members share information, organizational capabilities, and technologies. “I have all the resources I need right here,” says Amy Fuschino, a HealthCare and Cosmetics account executive‘. “If I need to, I can go right down the hall and talk with someone in marketing about doing some kind of promotional deal. It’s that simple.” But the multifunctional nature of the CBD team also means that collaboration extends far beyond internal interactions. Each time a CBD team member contacts the customer, he or she represents the entire team. For example, if during a customer call a CBD account executive receives a question about a promotional, logistical, or financial matter, the account executive acts as the liaison with the appropriate CBD specialist. So, although not each CBD member has specialized knowledge in every area, the CBD team as a unit does. Competitors have attempted to implement some aspects of P&G’s multifunctional approach. However, P&G pioneered the CBD structure. And it has built in some unique characteristics that have allowed it to leverage more power from its team structure than its rivals can.THE TRUE ADVANTAGEFor starters, P&G’s CBD structure is broader and more comprehensive, making it more multifunctional than similar team structures employed by other companies. But perhaps more important, P&G’s structure is designed to accomplish four key objectives. So important are these objectives that they are referred to internally as the “core work” of CBD. These four objectives are:• Align Strategy to create opportunities for both P&G and the customer to benefit by collaborating in strategy development.• Create Demand- to build profitable sales volume for P&G and the customer through consumer value and shopper satisfaction.• Optimize Supply-to maximize the efficiency of the supply chain from P&G to the point of purchase to optimize cost and responsiveness.• Enable the Organization to develop capabilities to maximize business results by creating the capacity for frequent breakthrough.More than just corporate catch phrases jotted down in an employee handbook, for CBD employees, these are words to live by. P&G trains sales employees in methods of achieving each objective and evaluates their effectiveness in meeting the objectives. In fact, the CBD concept came about through the recognition that, in order to develop true win-win relationships with each customer, P&G would need to accomplish the first objective. According to Bill Warren, a CBD senior account executive, “The true competitive advantage is achieved by taking a multi-functional approach from basic selling to strategic customer collaboration!”Strategic collaboration starts with annual joint business planning. Both the P&G team and the customer come to the table focused on the most important thing: How can each best provide value for the final consumer? The team and customer give much attention during this planning phase to how products can best be presented and placed in the retail setting. This is because P&G and its customers know that the end consumer assesses value within the first three to seven seconds of seeing that product on the shelf. At P&G, this is known as “winning the first moment of truth.” If customers quickly perceive that a product will meet their needs, they will likely purchase it. CBD team members are very good at demonstrating to the retailer that the best way to win the first moment of truth is most often with a P&G product. But P&G is so committed to the principle of developing the customers’ business as a means of developing its own, it is open to the possibility that the best way to serve the customer may be through a competitor’s product. The CBD team’s primary goal is to help the customer win in each product category. Sometimes, analysis shows that the best solution for the customer is “the other guy’s product.” For P&G, that’s okay. P&G knows that creating the best situation for the retailer ultimately brings in more customer traffic, which in turn will likely result in increased sales for other P&G products in the same category. Because most of P&G’s brands are market leaders, it stands to benefit more from the increased traffic than competitors. Again, it’s a win-win situation. This type of honesty also helps to build trust and strengthen the company customer relationship. The collaborative efforts between P&G and each of its customers do not only involve planning and the sharing of information. They may also involve cooperative efforts to share the costs of different activities. “We’ll help customers run these commercials or do those merchandising events, but there has to be a return-on-investment,” explains Amy Fuschino. “Maybe it’s helping us with a new distribution or increasing space for fabric care. We’re very willing if the effort creates value for us in addition to creating value for the customer and the consumer.”An example of such a joint effort is the recent rollout of Prism. A P&G partnered with Wal-Mart to implement this system of infrared sensors that counts the number of times shoppers are exposed to product displays, banners, and video monitors. The goal with Prism is to improve the effectiveness of in- store marketing, making consumers more aware of the value provided by P&G’s products.If the CBD team can effectively accomplish the first objective of aligning strategy and collaborating on strategic development, accomplishing the other three objectives will follow more easily. For example, if strategic planning leads to winning the first moment of truth, not only does the consumer benefit, but both the retailer and P&G achieve higher revenues and profits as well. Through proper strategic planning, it is also more likely that both P&G and the customer will create greater efficiencies in the supply chain.IT’S BETTER TO GIVE THAN TO RECEIVEAs a result of collaborating with customers, P&G receives as much or more than it gives. Among other things, P&G receives information that helps in achieving the fourth CBD objective, enabling the organization to achieve innovation. Where the research and development process is concerned, this means creating better products. This is one reason why, at the 2007 Product of the Year awards held in London, P&G cleaned up, winning 10 of the 32 categories and taking home a special prize for “most innovative company. “P&G’s dominance in innovation is no one-time fluke. Gianni Ciserani, vice president and managing director of P&G UK & Ireland, claims that some of P&G’s strongest innovations are yet to come. “We have shared this portfolio with the key retailers and got strong collaboration on how we can drive these ideas forward.” In the five years leading up to 2008, P&G’s profits doubled, revenues nearly doubled, and stock rice increased by more than 50 percent. P&G the world’s largest consumer products firm with $76 billion in revenues. P&G manages a whopping 23 brands that each bring in over $1 billion every year. Last year, Pampers sales exceeded $7 billion, a figure that would have placed the leading diaper brand all by itself as number 350 on Fortunes prestigious list. Many factors have contributed to P&G’s growth and success. But the role that CBD plays can’t be overestimated. And as P&G moves forward, Mr. Weedman’s words that “We depend on them as much as they depend on us” ring ever truer. As P&G’s mega-customers grow in size and power, developing P&G’s business means first developing its customers’ business. And the CBD sales organization lies at the heart of that effort.Sources: Officials at Procter & Gamble contributed to and supported development of this case; with other information from wvvw.pg.com.Question A1:As you are recruited Marketing manager and need to market forecast. Assume that P&G is doing well as a competitor and holding its current market share in many countries due to excellent performance of their sales force team. Which of the sales force structures discussed in the text best describes P&G’s consumer business development (CBD) structure? From the perspective of team selling, discuss the two positive and negative aspects to the customer business development sales organization.(25 marks)Question A2:As a manager you might think that P&G has accomplished this accomplishment by being the product leader, always introducing the latest cutting-edge gadget. But other competitors have actually bit slow to take advantage and should consider thoroughly the consumer needs, interests, lifestyles and behaviors of various market segments. It seems that P&G has the most effective sales force structure compared to any companies in its industry. Why have competitors not been able to match it? Explain your opinion as marketing manager of this company