Procter & Gamble: regional leadership, national brands

In the competitive world of consumer marketing, Procter & Gamble is undoubtedly one of the leaders. Its UK business is worth £1.4 billion a year from brands as famous as Ariel, Fairy Liquid, Pampers, Vidal Sassoon and Max Factor. This profile focuses on its consumer products business – mainly laundry and cleaning products – and the UK legal and corporate centre which are located in Newcastle. (The separate personal toiletries and prescription pharmaceuticals businesses are based in southern England.)

Historical origins

Procter & Gamble’s origins go back to the last century, based on the industrialisation of soap-making. In 1837 in Cincinnati, Ohio, an English candle-maker, William Procter, and an Irish soap-maker, James Gamble, started up in business together, having married a pair of sisters. In the same year in England, Thomas Hedley began soap-making on the Tyne river-bank in Newcastle. When the Hedley business ran into difficulties in 1930, Procter & Gamble took it over, so entering the UK market for the first time. Today, P&G has a world-wide turnover in excess of US 630 billion and employs 103,500 people in 55 countries.

Community review

Three years ago, a review of community activities in Newcastle concluded the company could not claim a similar leadership position for corporate involvement as it has in its business sector. So it set out to improve. Although long-standing, community activity prior to the review was low profile and mainly philanthropic. After the review, four main areas were selected to focus on – economic regeneration, education, special social projects and leisure including the arts. In managing the programme, normal P&G business disciplines were to be applied, characterised as a high level of management skill input, marketing excellence and an emphasis on training, the results of which should be regularly appraised.

The programme’s objective is now formally defined as “to establish partnerships which enable the talents and expertise of our people and the strengths and skills of the company to make a real contribution to the communities in which we live and work”. With only a limited number of employees and an inevitably limited budget, support is concentrated on projects which can offer ‘leverage’ – where a focused P&G input can achieve a bigger impact, partly in partnership with other participants and partly by seeking a continuing benefit beyond the funding itself.

A typical example is the partnership with Tyneside TEC to offer training in business skills to schools. Keen to help in education, P&G selected the training of teachers as the best route to transfer its own business skills in a way that would endure for many years. Marketed by the TEC, P&G hosts in its own training department a three day course covering subjects like time management, total quality, listening and speaking skills and project management. Schools send up four senior members of school staff including the head. P&G bears little direct cash cost, the main burden being the opportunity cost of the specialist staff and facilities used. The value to the schools in open market terms has been estimated by TEC as around £500,000.

Regional leadership

One of the catalysts for the review and subsequent changes was Mike Clasper, a local man returning to the north east as Manager Director from an overseas posting and keen to get P&G involved in the local community. A BITC Seeing is Believing trip impressed him with the opportunities available. As the senior P&G executive, he is drawn into many regional activities, such as Tyneside TEC and The Newcastle Initiative. P&G is not the dominant employer in Newcastle in the same way as its worldwide headquarters is in Cincinnati, but some similarities do apply. For example, closely-knit networks between public, private and voluntary sectors mean that the effort to build a strong reputation was much quicker and easier than would have been in London.

Company reputation versus brands

As in many companies, one of the main objectives of the focused programme is to enhance the company name and reputation – Procter and Gamble in the north east. For a company so based on the strength of its product brand values, one might be forgiven for thinking that P&G’s business-focused community programme would seek to enhance brand values, not just corporate reputation. In fact, P&G makes a clear distinction.

The marketing department does undertake cause-related marketing. Examples include use of the National Childbirth Trust logo on Pampers, WWF logo on Pampers and Ariel Ultra and a Christmas link-up between Fairy Excel Plus and Barnardos. But these are strictly seen as a commercial relationship managed by marketing; Community Relations is not involved, except occasionally at the margin.

Partly this is because marketing has a national focus while the community relations programme is strictly regional. Mainly it is because P&G, unlike some companies, does not link its name with brands – on its product TV adverts. there are no star-bursts like Lever or tear-off corners like Cadbury.

Monitoring and evaluation

The application of business disciplines to community relations is most evident in monitoring and evaluation. In common with most companies, the actual tools are not well developed, still being largely qualitative. So the market research department, long skilled in monitoring the impact of big advertising budgets, has been brought in to advise. Already favourable press mentions, mainly local, are recorded; performance has moved from just four two years ago, to 60 last year, with a target of more than 75 in the current year. The number of applications received for funding is also monitored as a measure of the spread of knowledge about the programme.

Furthermore, community relations is now specified as one of the key objectives for the Managing Director, Mike Clasper, so is integrated in the performance target reporting mechanisms for directors responsible to him and so on down the hierarchy.

Employees

Although many employees are involved personally in community activities, volunteering has not been a focus for the programme up to now. As a starting point, a survey is underway of activity which draws on company resources in some way. Then an assessment of options will consider experience in other companies, such as matched funding schemes. Generally, P&G is reluctant to encroach too far into what must remain a voluntary activity by staff.

One area where the community programme is expected to make an impact on employees is in recruitment and retention of key staff, sometimes a problem in the north east. In addition to its reputation for career development and training, the support provided to arts and the leisure infrastructure in the region aims to help, although this is not explicitly measured.

Future

P&G sets as its first priority finishing the work on applying business-like measurement to the programme. At the same time, it wishes to continue to spread community involvement throughout all departments. This started as a top-down effort, led by the Managing Director; greater employee involvement, such as volunteering, will bring a bottom-up element. On evaluation, if Procter & Gamble can really develop some effect measurement tools, other companies would certainly be interested.

They will also be interested if a merciless marketeer like P&G (cf the recent highly-public assault on Lever’s Persil Power) ever decides to build links between brand values and corporate reputation through the community relations programme. The chairman of that other brands-based company, Grand Metropolitan, Allen Sheppard, believes the consumer is increasingly looking behind the individual product brand image to the core values of the producer, including corporate responsibility. Will others follow in his footsteps?

FactFile

Procter & Gamble Limited

Year ended June 30, 1993

Managing Director: Michael Clasper Main area of business: consumer products for laundry and household cleaning – brands include Ariel, Daz, Bold, Fairy, Dreft, Lenor, Bounce and Flash; paper products for personal care – brands include Pampers and Always. (Personal toiletries and prescription pharmaceuticals are separately managed.)

Turnover: £1,255 million* Profit before tax: £72.8 million* Employees: 5,500* (1,000 on Tyneside)

Charitable donations: more than £200,000 Total community contribution: more than £1 million % of profits: 1.3% (total)

Memberships: BITC, Per Cent Club Director of Community Relations: Ray Cole Address: Procter & Gamble Ltd, St Nicholas Avenue, Gosforth, Newcastle upon Tyne NE99 1EE Phone: 091 279 2000 (fax: 091 279 2282)

* figures for the whole of Procter & Gamble’s UK business, including toiletries and pharmaceuticals

Corporate Citizenship Briefing, issue no: 17 – August, 1994