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New P&G Picking Up the Pace : Hurt by Competitors, Firm Brings Products to Market Faster

October 04, 1987|JESUS SANCHEZ | Times Staff Writer

CINCINNATI — Shortly after bottles of Colgate Tartar Control Mouth Rinse began showing up on store shelves early last month, executives at archrival Crest were already planning a counterattack.

Procter & Gamble, maker of Crest, speeded up the introduction of its own rinse--Crest Tartar and Cavity Fighting Rinse--and began shipping the first cases to New England supermarkets last week.

It was an aggressive move that is becoming characteristic of once-smug P&G, the consumer products giant. "Five years ago they would have sat around and watched it happen," said John T. Thomas, a former P&G brand manager. "Now Colgate comes out with Colgate mouthwash and bang-o, P&G comes out with Crest mouthwash."

Besieged by intense competition in key businesses, Procter & Gamble--maker of such household staples as Ivory, Crisco, Tide and Pampers--has changed its ways and entered new industries as it celebrates its 150th birthday. If the company's legendary marketing and advertising departments were assigned to promote P&G's transformation, it would probably use the words "New!," "Improved!" and "Faster Acting!"

Built on the sales of household products that most people take for granted, P&G--the nation's leading seller of diapers, toothpaste and detergents--is a $17-billion-a-year colossus that has infiltrated many of America's cupboards, medicine cabinets and laundry rooms. To promote its products, the company produced radio programs such as "Oxydol's Own Ma Perkins" that became known as soap operas. Daytime television has been a home for many P&G-created characters, like Mr. Whipple, Josephine the Plumber and Mrs. Olsen.

P&G, despite its influence, has kept a relatively low profile for a company its size. The Cincinnati-based company has been associated with Midwestern values: reliable, practical and conservative. Never flashy. And, until recently, never very fast on its feet.

But after dominating the consumer products industry for years, P&G suffered several setbacks in the 1980s. "P&G fell asleep at the wheel," Salomon Bros. analyst Hugh S. Zurkuhlen said.

The period left many P&G executives shaken. "You go through an experience like this," said P&G President John E. Pepper, "and you emerge with additional dedication . . . to the fact that we need to stay out in front in our performance. It's our job to not let that happen (again)."

At a time when corporate America has been criticized for its fascination with short-term profits and goals, P&G has been knocked for hanging onto losers longer than necessary. "There have been times," Pepper said, "I'm sure, we have pursued too long. No doubt about it."

In other unusual moves, the company is more apt to make painful decisions, like cutting costs, personnel and products. In June, P&G said it would write off more than $800 million to cover the costs of closing down some of its older factories--including one in Long Beach. And, in a humbling move, it was forced to drastically curtail its cookie-making production after losing the "soft cookie war" it started in 1983.

As a result, P&G announced in August a $324-million loss for the fourth quarter--its first quarterly loss since 1949.

"They seem much more inclined to do things like that," said Marvin B. Roffman, an analyst at Janney Montgomery Scott, a Philadelphia brokerage house. "If something does not go right," he said, "they pull the plug."

Besides being quicker on its feet, P&G has also branched out into the fast-growing and highly profitable health and beauty care products field. In 1982, the company shelled out $370 million for Norwich Eaton Pharmaceuticals--maker of Pepto Bismol and Chloraseptic throat spray--and paid $1.2 billion for Richardson Vicks--maker of Metamucil, Vicks Vapo-Rub and Oil of Olay--three years later.

As a result of these acquisitions, P&G ranks as the largest seller of over-the-counter drugs in the nation. Health and beauty products account for nearly 20% of profits--a figure expected to rise into the 30% range by the 1990s.

"If you take P&G in its total," said Geoffrey Place, a vice president of research and development, "we're going all the way from cleaners to heart muscle."

Backed by Advertising

The worldwide P&G empire of today traces its roots to Cincinnati where, in 1837, candle maker William Procter and soap maker James Gamble decided to join forces. Each man chipped in $3,596.12 to begin their new enterprise.

Since then, the company has set the standards for creating and selling household products.

The company's research and development department, boasting an annual budget of more than half a billion dollars, nurtured ideas that became the first heavy-duty synthetic detergent--Tide--and the first widely used disposable diaper--Pampers.

And when those products reached the supermarket shelves, the company backed them by heavy doses of advertising and marketing. P&G ranks as the world's largest advertiser, spending more than $1 billion annually to tout its products.

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