Taking the big gamble

It has been a season of huge changes for Procter & Gamble. The FMCG giant is hardly one to make quick changes to its sprawling empire, but last year saw it take a succession of many as part of a major productivity plan, making a decision to cut costs of US$10 billion over the next five years.

For its massive marketing operations, this meant much re-structuring as well as the company outlining goals to slow increases in marketing spend by US$1billion. One of these changes included having its massive external relations, or its communications unit, shrunk and realigned under brand management operations.

It has been several months since these announcements. I caught up with chief marketing officer for Asia, Freddy Bharucha (pictured), to find out more about the implications for the region.

A 17-year-old P&G veteran, Bharucha has been with the company since it recruited him from school, and has been with the firm in markets such as India, China, Europe, Japan, the US and now Singapore, across several categories.

The first time we met was late last year, and Bharucha talked about the many changes the organisation would be making to the structure of its marketing operations. By now, most of these should have taken place, so what will the next steps in the region be? (Because of the company’s rigorous public relations policies, Bharucha requested to answer my questions over email.)

First up, he tells me about the company’s 40/20/10 strategy (earlier outlined by chief executive Bob McDonald as focusing on 40 of the largest and most profitable product categories in key geographic markets; focusing resources on 20 of its largest innovations and targeting the top 10 markets with the most potential for growth.)

He declines to say what these are in Asia, citing competitive reasons, but says the region holds many of the top 40 categories with its more established markets such as China and Japan and its “most promising” developing markets such as India and Indonesia, the latter two of which have been pulling in double-digit sales growth for the past few years.

Then there is the question of P&G’s plans to slow its marketing budget increases. Just last year, the company spent US$13.7 billion on marketing alone, making up the third largest category of corporate expenditure, behind people and materials. How is Asia affected I ask?

Again, Bharucha doesn’t give more details on Asia, but says its tools such as its “Market Mix Modelling” will enable the company to predict which investments will bring in higher ROI.

A greater emphasis on digital and social

He did, however, say this means the company will be able to place a greater emphasis on digital and social media, while steering away from giving details on how budgets will shift in that direction.

He talks about the new structure for its marketing operations, saying the company is considering how to make the various marketing functions more synergistic.

“Where does marketing end? Where does PR and digital begin? Our structure helps shift the focus from organisation silos to the things we have in common: big, inspirational ideas that connect with the heads and hearts of our consumers,” Bharucha says.

Agency relations

The drastic productivity exercise will obviously also affect its agency relations, though this will not mean specifically reducing enrolment in any specific function, according to Bharucha.

“We are also looking for opportunities to better leverage our scale and drive simplification in the overhead organisations,” Bharucha says.

And this simplification could be anything from limiting the number of meetings to re-evaluating production systems to finding inefficiencies in every process, he adds, when I ask him what that means.

He also says the company will still find ways to nurture long-term relationships with agency partners.

After 17 years with the company, Bharucha says it is the company’s ethical culture and values that have him hooked. Recruited into P&G since graduation, he says the opportunity to straddle marketing and business strategy was what intrigued him at first.

He recollects what the vice-president of sales in India, Vivek Chandra, told him at the time of his recruitment on campus. “In P&G, you will sleep well, every single time, knowing you always do the right thing.”

And, he says, this approach of maintaining the high ground is what gives him pride in his work.

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