C O R P O R A T E

• Marketing at P&G, by Gene Rigoni, MBA1
• The Fast Lane, by Sam Valenzuela, MBA1

Throw Out The Textbooks:

Marketing At P&G Is 'Brand' New As Consumer-Products Giant Shifts FocusTo 'Customer Business Development'

by Gene Rigoni, MBA1

Marketing at Procter & Gamble is more than "Brand." P&G recently shifted its marketing focus from sales to something known as Customer Business Development. What is Customer Business Development? It is the wave of the future in marketing for John Lipinski, MBA2, who has accepted a position with P&G in Customer Business Development. With this new way of marketing, P&G is partnering their efforts with retailers.

The objective of the Customer Business Development function is to extend the partnership from logistics and sales to consumer research. P&G wants to help retailers understand how a consumer makes a decision in the store, with the hope that the consumer will "feel good" about the purchases he or she makes. Retailers have their own data about what is selling in the store, but P&G adds market research and consumer preference data. P&G invests in research and development, new product development, and marketing strategy--all of which hopefully will transfer to the retailer and increase sales.

By going to the Cutomer Business Development approach, P&G plans to save $1.35 billion over the next four years by reducing transaction costs, paperwork, complexity, and inventory carrying costs. The consolidation in the marketplace due to the growth of mass retailers outdated P&G's approach of dealing with store managers. P&G hopes to influence decision making at the corporate level through the cross-functional teams P&G is forming with customers. These teams are composed of individuals who understand business systems, reduce cost, and increase sales--the people who are hired into the Customer Business Development program.

P&G is revising the market-segmentation strategy to align offerings relative to segment size. The goal is to focus on variety in segments that have large potential and to eliminate duplication. The result is that marketing text books are starting to be rewritten. The future will focus on being a good seller. In other words, the goal should be to ensure that products the customers want are on the shelf. Previously, promotions to distributors lined the trade's pockets and became addictive.

The process is a reaction to a lot of things. The increased buyer power at the retailer level is a big factor. Flat or declining population growth in the United States has also served as a catalyst. Moreover, consumers have less time and more choices--30,000 of them--at the store. An average consumer spends approximately 20 minutes in the store and purchases approximately 18 items.

The Customer Business Development function evolved over the last 10 years. IBM worked with P&G in multi-functional teams and inspired P&G to think about forming collaborative relationships with their customers. P&G decided to take the Logistics and Order Entry functions away from the sales personnel. This allows the sales people to focus on customer relationships to suggest shelving and placement alternatives. The result is that the customer's and P&G's business will grow.

For those at Michigan interested in pursuing a career in marketing, have an open mind and think about P&G from several different angles. P&G offers multi-functional opportunities, not just Brand. At the presentations, talk to the representatives from Customer Business Development and explore this dynamic opportunity.

John Lipinski, MBA2, contributed to this article.

The Fast Lane: This Week in Automotive News

Canadian Study Points To Perils Of Using Cell Phones While Driving

by Sam Valenzuela, MBA1

In response to consumers' desire to deactivate passenger-side airbags for children riding in passenger-side front seats, a Florida congressman will introduce legislation allowing automakers to install cut-off switches in airbag-equipped cars that are currently on the road. The Big Three U.S. automakers all endorse the proposed legislation. In addition, Chrysler has sent videos to every elementary school in the country trying to convince kids that "it's cool to ride in the back seat," arguably where all kids who ride in airbag-equipped cars belong.

Even more dangerous than airbags are drivers using cellular phones, according to a study by the University of Toronto. Researchers say the risk of an accident while using a cellular phone, with or without hands-free operation, is the same as the risk driving drunk. A telecommunications trade group, however, says that the study only shows an association between accidents and cell phones but does not directly evaluate whether the phones caused the accidents. The group claims cell phone use is up and traffic accidents are down. In an editorial accompanying the report, Dr. Malcolm Maclure and Dr. Murray Mittleman of Harvard Medical School estimate that accidents caused by cell phones would cost the nation between $2 and $4 billion by 2000. Interestingly, Brazil, Israel, and Australia have already banned the use of cellular phones while driving.

Rover's production of Land Rovers will increase about 3% this year to 131,000 units; 1998 production is planned at 180,000, a 37% increase, mostly due to growth in a smaller off-road vehicle currently called the CB40. In related news, Bavarian Motor Works (BMW, which owns Rover) denies plans to acquire Rolls-Royce, a unit of the British aerospace conglomerate, Vickers.

General Motors successfully averted a strike at American Axle and Manufacturing, a supplier of rear and four-wheel drive axles for almost every GM pickup truck and sport utility. American also supplies axles for the Camaro, Firebird, some other GM passenger cars, Ford's Expedition and Explorer, and some rear-drive Chrysler cars. Analysts say the strike could have caused GM to shut down 11 North American light truck plants within two days of the strike and could have cost GM $20 million in profits every day.

In May, 1994, at the San Marino Grand Prix in Imola, Italy, three-time Formula 1 World Driving Champion Ayrton Senna of Brazil died from severe head injuries after his car went off the road and slammed into a concrete barrier at 195 mph on the exit of the Tamburello curve. Six people are currently standing trial in Italy on manslaughter charges for Senna's death, which was apparently caused by steering failure. Among the accused are Frank Williams (team owner), Adrian Newey (car designer), Patrick Head (Williams' top engineer) and three race track officials. If convicted they face up to five years in prison. But new photographic evidence has surfaced and suggests that Senna may have swerved to avoid debris in the road because he was driving on a deflating tire (this is only a theory). Despite the trial, the 1997 Formula 1 season will continue as planned. The first F1 race of the year takes place Sunday, March 9 from the Albert Park circuit in Melborne, Australia.

Finally, replies to the favorite car e-mail were great. Keep the messages coming regarding your top five cars to buy. Although it may have been unclear in the original email solicitation for responses, they do not have to be convertibles. In the lead is the BMW Z3, followed by various Saab and Lexus models. Look for road tests of these cars coming soon.