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Subject: Procter & Gamble: Rising Tide Date: 2/18/2009 12:04 AM
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“Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble,” by Davis Dyer, Frederick Dalzell, and Rowena Olegario, Harvard Business School Press, Boston, 2004. This 467 p. hardback tells the story of Procter & Gamble from its founding in 1837 as a candle and soap manufacturer in what was then Porkopolis, now Cincinnati. William Procter and James A. Gamble were married to sisters, Olivia and Elizabeth Ann Norris. The location proved well suited to the national market with nearby hog processing offering suitable raw materials, and access to New Orleans via the Ohio River system and the eastern seaboard via the Miami Canal completed in 1840 and the Erie Canal. Railroads soon followed.

A key player in the early company was James Norris Gamble, son of the founder, who studied chemistry, undertook analysis of competitive soap products and experimented with new raw materials such as vegetable oils. As kerosene and gaslights began to replace candles, the emphasis shifted toward soap-making.

One of the initial new developments was Ivory, a soap based on vegetable oils that floats. The story that it resulted from a soapmaker over cooking a batch of soap is discredited. P&G had been interested in floating soap at least since 1863. The goal was a quality soap from readily available raw materials. The Ivory name, selected from a Bible verse, was trademarked in 1879. In 1884, fire destroyed the lard oil factory. P&G took the opportunity to rebuild a modern, efficient plant, Ivorydale. It was located on the outskirts of town on a site well suited to shipment by rail.

Crisco came to market in 1912, after an independent scientist, EC Kayer, approached P&G with hydrogenation technology that converted liquid oils to solid fats. As with Ivory, advertizing was used to gain acceptance in grocery stores, but working through wholesalers proved cumbersome. P&G began the switch to direct marketing to retailers in 1910. A fierce battle with jobbers resulted. Sales did not recover until 1926. Market research and brand management concepts had been adopted by 1925. Soap operas evolved in radio advertizing in 1933.

Another major development was Tide, a very successful laundry detergent with much improved cleaning power. The first synthetic detergents came out of World War I Germany, where fats used to make munitions were in short supply. The first detergent using this technology, Dreft, appeared in 1932, but high performance cleaning awaited the development of phosphate builders. Tide was ready for market in 1946. As manufacturers struggled to supply ingredients, the product was gradually introduced in regions. Cleaning was so superior that customers called demanding the product before it could be supplied. Tide rapidly captured 30% market share and has remained the leader ever since.

An array of additions followed World War II. They included Spic and Span (acquired 1945), Joy (1949), Cheer (1952), Dash (1954), Zest (1955), Cascade (1955), Comet (1956), Ivory liquid (1957), Mr. Clean (1958), Downy (1960), Safeguard (1963), and Bold (1965). Gleem, Crest, Prell, Head and Shoulders, and Pringles came along in the same era. Acquisitions included Big Top peanut butter, Duncan Hines, Folgers, Clorox (until forced to divest by the FTC), and Charmin. By the late '60s leadership had been achieved in paper technologies and Charmin, White Cloud, Bounty, Puffs, and Pampers were successful forays.

In the '70s, P&G encountered a series of challenges. International growth continued but the justice department limited acquisitions. Meanwhile, the Rely tampon incident shook the company. An effort to allocate the best technology to Luvs premium disposable diapers, made Pampers vulnerable to Huggies, a strong competitor. The book relates these stories in considerable detail.

In the '80s, strategic acquisitions brought the company into soft drinks (Hires, Sundrop, Orange Crush) and orange juice (Citrus Hill). Entre to OTC medications was begun with the acquisition of Norwich-Easton (Pepto-Bismol, Chloraseptic) from Morton-Norwich. Next came GD Searle's OTC business (Metamucil) and Richardson-Vicks (Vicks cough syrup, DayQuil, NyQuil, Oil of Olay, Clearasil, Vidal Sassoon, Fixodent, etc.). Success of Oil of Olay marketing led to the acquisition of Noxell in 1989 (Noxzema, Cover Girl).

In the '90s, P&G set out to refocus. Acquisitions included Old Spice, Max Factor, Tambrands, Iams, Clairol, and Wella. Dispositions included Crisco, Spic and Span, Lesoil, Bain de Soleil, Ivory shampoo, Lava soap, Biz, Duncan Hines, Jif, Citrus Hill, and Fisher Nuts. Coverage ends in 2000 before the acquisition of Gillette–continuing expansion in personal care. The book ends with prospects for future growth and a discussion of the Walmart challenge.

The Appendix includes a company time line, financial results summary (1929-2003), and a list of brands with dates of introduction. References. Index. P&G watchers will find this a useful overview of the company and especially its brand strategies.
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