CLOSE-UP: LIVE ISSUE/PROCTER & GAMBLE - P&G's Golden Households signal strategy change. A new DM initiative shows P&G taking relationships seriously, Ian Darby writes

Unearthing a good Procter & Gamble story is an interesting

experience. The organisation is so immersed in secrecy that any

revelation that doesn't come via the PR department is met with apoplexy

at its headquarters.



Take Campaign's story last week about 'Golden Households'. Following

publication, not only was P&G unwilling to discuss this innovative

direct marketing programme in more detail, it also conducted a

witch-hunt among its agencies to find out which one leaked the

story.



While P&G's reticence is common to all its activity, it is not

surprising that it wants to keep mum about Golden Households: the

reasons for the programme's launch could reveal much about P&G's future

strategy.



P&G appointed Saatchi & Saatchi to handle the Golden Households project

after a pitch against the fellow P&G roster agencies Grey Desire and

IMP.



In essence it is bringing 16 of its key products together to market them

jointly through direct mail and other media that provide offers and

information about several products, rather than marketing each one on an

isolated basis.



The 16 products, including Ariel, Fairy, Pampers, Febreze and Sunny

Delight, will be divided into two groups of eight. Saatchis will then

create relationship marketing programmes for each of the two groups.



The programme will enable P&G to identify Golden Households - those of

the highest value which buy or are interested in buying one or more

products on a regular basis - and raise awareness of P&G products to

consumers unfamiliar with the full range. Perhaps most importantly it

will be able to improve its understanding of its customers.



P&G is not new to direct marketing. Through agencies such as IMP, Grey

and Saatchis, it spends pounds 28.6 million a year on direct mail alone,

according to ACNielsen MMS. This ranks it third in the UK behind the

credit card company MBNA and the book club BCA. But Golden Households

may be a sign that it is thinking differently.



By combining several brands in one programme, P&G will not only save

money but it will also open an avenue of creative possibilities.

Vehicles such as customer magazines become a viable option.



P&G's rival Unilever has a customer magazine called Voila, which it

publishes through Jigsaw, a consortium which it runs with Kimberly-Clark

and Cadbury-Schweppes. However, brands using their own agencies send out

mail separately to gain information from customers, which is fed into

the Jigsaw database. The most high value households then receive the

magazine.



The reasons for Jigsaw's inception may shed some light on why P&G is

linking its brands to form Golden Households. Gareth Waterman, the

communications manager for Jigsaw, says: 'It was launched to establish

knowledge and to find the value of each customer. Secondly, we needed to

build a relationship marketing vehicle that communicates brands to high

value customers. We've taken a long-term approach in an attempt to ring

fence customers against the competition.'



The formation of Jigsaw was a sign that the three client companies were

moving away from pure promotion-driven marketing to more strategic

long-term activity. This is likely to be the case with Golden

Households. Short-term money-off promotions will only form a part of the

activity, allowing Saatchis to participate in a more creative

approach.



For years FMCG spend on direct marketing was low given the low purchase

price of most products against the cost of direct mail. This is

changing.



In 2000, FMCG spend on direct mail was up 71 per cent to pounds 167

million (ACNielsen).



However, some believe that FMCG players still have much to learn about

building relationships with their customers. Leo Campbell, the

vice-chairman of Claydon Heeley Jones Mason, which runs direct marketing

programmes for Pepsi and Lever Faberge, says: 'It's an immature market

riddled with failure. Most FMCG direct marketing is advertising through

the post. Clever users will use a mixture of media to generate real

return on investment.'



A prime example of an FMCG company putting everything behind a failed

direct marketing programme is Heinz, which in 1994 diverted spend from

advertising into a customer magazine called At Home. It scrapped the

project in 1998 to plough money back into advertising and internet

projects.



P&G is more likely to run Golden Households alongside its advertising

activity but the programme shows just how valuable customer data has

become in the grocery sector. Retailers such as Tesco have built

databases through their loyalty card schemes, which can then be sold or

used to sell products direct. Golden Households will give P&G a powerful

resource in the battle against retailers' own-label products as well as

rivals.



Last year, P&G suffered slow sales growth. Its consumer products chief

executive, Alan Lafley, forecast that sales would increase at around 4

to 6 per cent a year rather than previous predictions of 6 to 8 per

cent.



'There is no doubt that we are facing slowing growth rates from consumer

markets in developed markets,' Lafley says. In light of this it is easy

to see why P&G may be turning to Golden Households, with its emphasis on

return on investment.



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