NEW YORK — Ed Shirley, Procter & Gamble Co.’s vice chair, Global Beauty & Grooming business unit, believes innovation must evolve outside of just product development.
“It is the lifeblood of the industry and still a critical driver of growth,” Shirley said Wednesday night at the Q&A session of Cosmetic Executive Women at The Harmonie Club in Manhattan.
But Shirley, who joined P&G five years ago with the $57 billion acquisition of Gillette, admitted, “we quit on innovation too quickly. We are so focused on new.” He pointed out that the trial curve on most new products is three years — at minimum — and that the “launch-and-leave” strategy P&G has employed is now replaced with “launch and leverage.”
“We keep on launching new products because that’s the only way we think retailers will give us merchandising support, and we end up choking the shelves and really confusing the consumer. And yet we have products that we launched last year and the year before based on great clinicals that are still new to most consumers,” Shirley said.
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It takes on average three years minimum to get to 80 percent trial, he said, using triple-bladed razor Mach3 as an example.
“Mach3 was still generating trial with new users eight years after it launched [which was in 1998],” Shirley said.
Getting retailers on board to this three-year-minimum plan includes pitching them merchandising ideas that revolve around solutions, not new items. Products from hair care to hair color to cosmetics that have earned the beauty industry’s equivalent of an Oscar — the “Best of Allure” seal — can be placed within “Best of Allure” sections. Products that meet the needs of high school graduates leaving for college — everything from the dorm room (Swiffer) to the laundry room (Tide) to the bathroom (Crest, Gillette) — can be placed in “Back to College” sets, Shirley said.
What is most on consumers’ minds now, Shirley said, is finding more value, especially since the economic crisis.
“Some of our categories that we participate in dropped 20 to 30 percent.…It caused us to think differently about how we talk to consumers. We reframed a lot of messages to focus on value.…A lot of choices take place at the shelf…so we worked hard to get power claims on the packaging.…If we can convince them with a claim that is meaningful and relevant from a value point of view, then they’re more predisposed to choose our products than a competitive set.”
Shirley does not think the crisis is over but said that data reveals there are brighter days ahead.
“People did try private label brands and we saw a surge [in sales there]. But most recent Nielsen data would suggest people are coming off retailer brands and coming back to the most trusted brand marks.”
Shirley is an example that P&G is able to break its own rules, seeing that he earned one of the highest executive rankings at the company after only several years of being a part of the firm. Typically, P&G’s top brass is promoted from within, rising through the ranks. Shirley attributes earning his role to helping Bob McDonald, P&G’s chief executive officer; A.G. Lafley, P&G’s former ceo, and Susan Arnold, the company’s former president of global business units, to see that organizing P&G around the consumer will help bring R&D and technologies to all of its different divisions.
“We weren’t focusing on [the woman consumer] holistically. We were focusing on her different body parts and we felt we needed to meet her needs and his needs more holistically. Low hanging fruit was just falling on the ground in terms of opportunities,” he said.
For example, with Gillette, the “best man’s brand in the world” according to Shirley, P&G was really “only winning with wet shave. But when you combine [the technologies and knowledge we have in] deodorant, skin care, body washes, bar soaps and hair care, it’s a no-brainer.”
By building opportunities to have “conversations with consumers,” P&G can get its products, which may not necessarily be new, in front of consumers. Shirley pointed to P&G’s partnership with the U.S. Olympic Committee and how its “Thanks, Mom” campaign generated six billion impressions and changed P&G’s reputation with consumers by 10 percentage points.
“People didn’t know we had this full portfolio of products,” he said.
Playing off of P&G’s strengths is also helping to fill gaps in its portfolio. Recently, the Prestige Fine Fragrance division was renamed the Prestige Beauty & Grooming division, emphasizing the point that the division will move beyond scent and is charged with addressing all men’s and women’s prestige beauty needs. So now, for example, The Art of Shaving is being led by a team that knows the market, and “a whole portfolio of prestige men’s products” is to follow.
“We are going to roll out a whole portfolio of prestige guy’s products, whether it is fragrance or skin or shaving or hair care, because there is a consumer that is interested in delighting themselves and pampering themselves. Why should we leave all of that to women?”