The Long Blue Line

The Long Blue Line

A History of Selling at Procter & Gamble

Davis Dyer

2010s

John Seaman

2000s

1990s

1980s

1970s

The Long Blue Line

A History of Selling at Procter & Gamble

Davis Dyer

John Seaman

The Long Blue Line A History of Selling at Procter & Gamble Š 2014 by the Procter & Gamble Company. All rights reserved.

Unless otherwise noted, all photography courtesy of the Procter & Gamble Heritage and Archives Center.

Book design by Judy Kohn Chicago, Illinois Photo research by Greg McCoy, Senior Archivist Procter & Gamble, Cincinnati, Ohio Production management by Susan McNally Cambridge, Massachusetts Printed and bound in the U.S.A. by Puritan Capital Hollis, New Hampshire

Contents

8 Foreword by Bob Fregolle 12 Prologue Chapter 1:

14 Building a Strong Foundation

1837– early 1920s

17 Modest Beginnings and Abiding Principles

21 The Branding Revolution: From Push to Pull, from Region to Nation

24 Going Direct

Chapter 2: 30 Maturing at Home, Expanding Abroad early 1920s – mid-1980s

33 Selling Matures in the United States

36 First International Ventures

43 Penetrating Western Europe

44 Into Japan

Chapter 3: 48 Finding New Formulas mid-1980s – early 2000s

53 The Walmart Disruption and the Rise of Modern Trade

55 Pathfinders

61 A New Foundation for the Future

65 Spreading CBD to Europe

69 “The Wild East”: Into Central and Eastern Europe

77 Developing the ARM Model in China

85 “Distribution, Distribution, Distribution”: Into Emerging Markets

95 Diversity as a Competitive Advantage

Chapter 4: 98 Becoming One CBD since the early 2000s

102 A Commercial Strategy to Win at the First Moment of Truth

108 Implementing the Commercial Strategy I: Focusing on the Shopper

111 Implementing the Commercial Strategy II: Emerging Markets

115 Updating the Commercial Strategy

124 Epilogue: Winning Wherever People Shop 132 Afterword by Werner Geissler

136 Notes

140 Acknowledgments

8 The Long Blue Line

Bob Fregolle

Foreword When I joined P&G as a Sales Representative in 1979, I knew I was joining a winning team, a company with strong values and immense skill at getting great products in front of shoppers who valued them. I joined, like so many of us, because I was impressed with the Sales people I met and what I thought were great prospects for the future. Little did I know how much more vital selling would become to P&G’s ongoing and increasingly global success.

“If I have seen farther it is because I am standing on the shoulders of giants,” Sir Isaac Newton famously acknowledged.

So, too, for all of us in CBD. What we’re doing today is funda­ mentally what William Procter, Hastings French, R. R. Deupree, Mike Milligan, Mariano Martin, and countless other outstanding salespeople in our history taught us to do and what I know, under Carolyn Tastad’s leadership, you all will do moving forward. But as The Long Blue Line makes clear, how we carry out our work owes an incalculable debt to those who came before us.

That said, another constant for us has been change and the imperative to adapt to it. When I started my career, most of P&G’s business was in the United States, although even then its horizons were expanding in nearly every region of the world.

By far most of our sales occurred in the grocery channel. We were roughly a $9 billion company in 1979 and since then we’ve grown more than ninefold.

Today, of course, we sell to customers across multiple selling streams, from specialty chemicals, to retailers of consumer packaged goods to professionals in health and dental care, pet

9

10 The Long Blue Line

stores and veterinarians, and luxury retailers of prestige brands and fragrances. We’re growing in nearly every market in the world. We serve customers of all sizes in multiple channels, from individual vendors in remote bazaars in emerging markets to huge hypermarket customers building their presence in their home markets and around the world. While our business is still overwhelmingly in ‘bricks and mortar’ outlets, a huge piece is rapidly moving to on-line. It’s no accident that we’ve continued to thrive amid such change—we’ve become good at anticipating, adapting to, and shaping new realities.

How we do what we do has changed dramatically as well.

Technology enables us to work faster and smarter, to accumulate and analyze vast quantities of information for insights into shopper behavior, and to visualize key trends and identify new opportunities. We’ve learned to go to market collaboratively, supporting our distributors, strengthening our partnerships with trade customers, and using our deep knowledge of shoppers to mutual benefit.

Even who we are has changed remarkably during my career.

White male Americans once dominated our ranks, and most of them began and all of them grew up in the P&G way from day one. Today CBD is represented by the talents of people from diverse backgrounds and from all over the world. We have gained thousands of exceptional salespeople from the nearly 180 countries in which our goods are available. Thousands more—a quarter of CBD staff in fact—have joined us from the companies we’ve acquired. My predecessor as Global CBD Officer was a Spanish man; my successor is a Canadian woman.

P&G has led the industry, and CBD is helping lead the company, in the increasing diversity of its employees. And diversity has been a powerful competitive advantage, enhancing our capacity

to share ideas and perspectives and enabling us to sell to an ever more diverse array of customers and consumers.

What you’re about to read is surely not an exhaustive account of Sales and CBD over the 175+ years of our history. To do that would require volumes. What we hope to share, however, during this, the 20th anniversary of the birth of the concept of Customer Business Development, are some of the highlights of our Sales journey and examples of CBD excellence from around the world, both on the business and organizational sides of what we lead.

Given the breathtaking speed of change in our world and the many challenges (some known, some unknown) that lie ahead, we can take confidence from the examples recorded in The Long Blue Line that show just how much we’ve accomplished to date.

We have a mighty foundation on which to build.

Happy and productive selling and, as always, I’ll see you in the field.

Bob Fregolle Global CBD Officer, Procter & Gamble

11

12

Prologue

Selling is vital to the success of any business enterprise. A company that offers intriguing products and services can only thrive if it can get these in front of customers willing to pay for them. Selling generates the cash that is the lifeblood of business. Yet selling is more than merely inducing a transaction. It is both science and art: science, because it entails solving hard problems of distribution and merchandising; art, because packaging and storytelling are key elements of success.

This publication tells the story of the science and art of selling at Procter & Gamble, from its modest beginnings in Cincinnati, Ohio, USA, in 1837, to the potent function Customer Business Development (CBD) is today in the global powerhouse P&G has become. This story tells of dramatic changes— growing capability, expanding scope, and increasing sophistication, for example—yet also of fundamental continuities. Early on in its existence, P&G built a foundation for success in selling that endures today: Build trust with customers by doing the right thing and keeping your promises. Sell only quality products and make them available wherever people shop at a good value. Over time, the company added more core principles.

Try to be first and best with new items.

Understand where, why, and how shoppers make purchases. Find ever-more innovative ways to get products to market. Reduce costs relentlessly. Treat your trade customers as partners and recognize that your success is tied to their success. Pursue winning with passion.

Lead the way forward. Compete externally, collaborate internally.

These principles have remained constant guideposts to P&G through the years and they’ve been reinforced by a corporate culture that demands and rewards high performance, ingenuity, and tenacity. Each principle is illustrated repeatedly in the story that follows.

The title of this publication—The Long Blue Line—deliberately emphasizes the continuities in the story and is drawn from an image used by CBD leaders from Mike Milligan in the 1990s to Carolyn Tastad in 2014. This metaphor is adapted from the history of West Point, the elite training ground of American army officers, where “the long gray line” extends from and connects the heroes of the past with those carrying on the mission today. The metaphor is particularly apt for P&G, where sales constitutes the front lines of competition, where consumers are delighted or not, and money is made or not. The image of the long line can be a source of pride and hope, because it emphasizes tradition and heritage, as well as an abiding ability to rise to new challenges and achieve enduring success.

Today, consumers of P&G products find them at retail outlets ranging from extremely small-scale carts and bodegas, to global mass merchandisers, to small-, medium-, and large-sized shops, convenience stores, grocery stores, drugstores, and other establishments in between, as well as online. How these goods arrive at the point of sale and are presented to shoppers often is, but should never be, overlooked. Sometimes, as in the advanced economies, P&G ships direct from its factories and warehouses to its retail customers. In other contexts, such as in many emerging markets,

the company works with intermediaries including wholesalers, distributors, and subdistributors to move its products into retail outlets. However the products come to the attention of shoppers, P&G’s sales force plays a critical role in encouraging, enabling, and facilitating the transaction.

The Long Blue Line covers the history of selling at P&G in four chapters. The first chapter deals with the company’s first 85 years, when it built a highly successful consumer goods business based primarily in the United States. P&G initially sold to a fragmented base of retailers through wholesalers and distributors, but in 1920 took the bold step of selling direct to hundreds of thousands of retailers, mostly grocery stores, across the country.

Chapter 2 begins with the aftermath of the “going direct” decision and carries the story forward to the mid-1980s. The chapter describes the maturing of the company’s go-to-market approach in the United States, where it perfected a geographical structure to serve a rapidly-growing and increasingly affluent consumer population, and covers the company’s early international ventures, including determined efforts after World War II to penetrate parts of Latin America, Western Europe, and Japan.

Chapter 3 picks up with P&G’s encounter with two disruptions in the 1980s: the retailing revolution in the United States led by Walmart, which fundamentally challenged P&G’s traditional approach to working with retailers; and the sudden collapse of the centralized economies of Central and Eastern Europe and

China, which opened vast opportunities for P&G but also required it to figure out new ways to sell to consumers just beginning to engage in the contemporary market economy.

The chapter describes how P&G creatively adapted to these disruptions aided by a major reorientation in selling and the formation of Customer Business Development (CBD), which transformed the way sales was conducted in the industry. CBD helped drive the company’s revenue growth by changing the focus of selling from simple win-lose transactions to win-win collaboration with customers through multifunctional teams.

Chapter 4 opens with the formation of global CBD and the development of P&G’s initial commercial strategy. It portrays the company’s evolving partnerships with large, and sometimes global, retailers. The chapter covers P&G’s accelerating growth in emerging markets based on a remarkable ability to place products into outlets frequented by hundreds of millions of low-income shoppers. Finally, the chapter describes how the CBD organization continued to adapt to the dynamic trends of the new millennium.

An Epilogue sums up P&G’s progress so far and considers the formidable challenges that lie ahead, including channel fragmentation, accelerating urbanization of the planet, and the rapid growth of e-commerce.

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14 Building a Strong Foundation

Chapter 1 Building a Strong Foundation (1837– early 1920s)

Bartlett’s store, Chicago circa 1880

15

Founding Partners

William Procter

Englishman William

In 1837, following a

Procter (1801–1884)

banking crisis, father-

emigrated to the United

in-law Alexander

States in 1832, where

Norris (also a candle

he eventually settled

maker) encouraged

in Cincinnati and found

his sons-in-law to pool

work as a candle maker.

their resources and

He married Olivia

combine their power

Norris, whose sister

to purchase common

Elizabeth Ann, was the

raw materials. The new

wife of Ireland-born

partnership became a

James Gamble (1803–

thriving business, with

1891). A soap maker,

Procter focusing on

Gamble had come to

sales and distribution

Ohio in 1819 eventually

and Gamble on

settling in Cincinnati

manufacturing.

and launching his own business.

James Gamble

Building a Strong Foundation (1837– early 1920s)

Between the founding of P&G in 1837 and

time wore on, however, the company found

the company’s decision in 1920 to sell direct

itself constrained by its approach to the

to its trade customers lies a span of 83 years.

market and frustrated by lost opportunities to

The story of selling in these initial decades

work more closely with retailers and improve

divides into two distinct periods of growth

its understanding of consumer purchasing

punctuated by a critical turning point that

decisions. In 1920, P&G placed a big bet on

occurred at about the mid-point. The first

its future by deciding to sell direct to retailers.

period features the company’s founding and early years as a successful regional producer of candles and soap. The founders and their descendants built a thriving business by making excellent products and getting them to market through an expanding network of wholesalers and distributors. Along the way, P&G also built a strong reputation for quality, integrity, and treating employees and customers fairly and respectfully.

The turning point came in the 1870s, when P&G faced a strategic dilemma in the form of the irreversible decline of the candle business. Resolving the dilemma involved the transformation of soap from a commodity to a branded packaged good—Ivory—a breakthrough that heralded a new period of impressive growth serving the rapidly developing national market. In the four decades following the introduction of Ivory in 1879, P&G prospered by making and selling brands that consumers wanted and retailers were eager to stock. The principal job of the Sales Department entailed working with wholesalers and distributors to satisfy soaring demand and raise the visibility of P&G brands in stores, especially in the grocery trade, across the United States. As

Modest Beginnings and Abiding Principles 1837–1875 In 1837 in Cincinnati, time and place favored the launch of a venture to make everyday essential items like candles and soap. People needed light and they valued cleanliness, and Cincinnati was well positioned to help with both. The city and its surrounding region were booming through industry, especially meatpacking, and trade. Lard and tallow, byproducts of meatpacking, constituted essential raw ingredients for candles and soap, and these ingredients were available in ample volume and at low cost. Cincinnati’s location along the Ohio River enabled merchants to ship goods downriver to St. Louis, New Orleans, and the Gulf of Mexico and beyond, while canals opened up additional markets via the Great Lakes network. Winter freezes made trade seasonal, though the imminent arrival of the railroads was about to ignite an economic revolution, enabling year-round commerce and underpinning the development of a national market for manufactured goods.

17

18 Building a Strong Foundation

When partners and brothers-in-law William

The partners lacked the capital to cultivate

Procter and James Gamble opened the doors

distant markets, and investing in a large,

of their new firm there were at least 17

proprietary sales force was out of the

candle and soap producers in Cincinnati. The

question. To get their products to distant

partners were determined that P&G would

locations, P&G formed relationships with a

not be just another firm, however. They

network of wholesalers serving thousands of

were already thinking big, planning to grow

small general stores, the typical retail outlets

the business beyond the city. They were

of the era. A single proprietor operated

ambitious and competitive, and they shared

most such stores, holding inventory behind

an important insight: theirs was not a

a counter or in a back room while expecting

boutique business, but one that could be

consumers to ask for what they wanted.

scaled. Early on, P&G built a factory, and early

Candles and soap were commodities, and

on, as a result, the firm faced an enduring

consumers did not know or care who

challenge to keep the factory running and

manufactured them. Via the wholesaler, a

its workers employed. Rising to the challenge

store proprietor might have some information

meant managing both sides of the market

about an item’s producer, product features,

equation, production and consumption. The

and suggested pricing, but whether this

partners did not explicitly divide responsibili­

information was used shrewdly was another

ties but Gamble gravitated

matter. This was also still a barter economy.

toward manufacturing, while Procter tended to focus on selling—the latter emphasized nearly 175 years later, when P&G honored its most exceptional salespeople, designating them William Procter Sales Masters.

Meanwhile, the partners agreed on

Consumers might trade produce from the farm for a bar of soap. Even wholesalers made do without cash; one, for example, exchanged a buggy for a series of shipments from P&G, an enterprising transaction on the part of both the wholesaler and the company.1

fundamental business principles, to establish the firm as a reliable and trustworthy source

During its first few decades, P&G added

of goods. As honest and hardworking men,

distributorships and increased its coverage

they also determined to make and sell only

across the Midwest and southern states,

high quality goods, offering them at a range

building a steady volume of business. In the

of price points to serve the needs of as many

early years, candles proved a bigger business

people as possible.

than soap, with P&G’s “Star Candles” particularly popular and the inspiration for the company’s first enduring logo. The company shipped its products in wooden

In its first year, P&G used descriptive advertising (lower right) to attract business. The company also cultivated a reputation for producing goods of high quality (lower left) that would remain an enduring hallmark. Although it sold vegetable glycerine to other businesses—a B2B selling

stream in chemicals that continues today— the company increasingly focused on consumer products sold primarily through the grocery trade.

The Kroger Company (photo below), founded in Cincinnati in 1883, has been an important P&G customer ever since.

19

20 Building a Strong Foundation

boxes or crates (forerunner of today’s ubiquitous cases) mostly carried by water, though some by horse-drawn wagon, before the coming of the railroads. To help identify the contents quickly, some wharf hands marked the boxes with symbols, including a crude Moon-and-Stars for Star Candles.

The symbol caught on, and after the 1850s, it would morph into a company logo that endured for more than 125 years.

On the eve of the American Civil War (1861–1865), P&G recorded annual revenues between $150,000 and $200,000 per year. Much of it originated within a 200mile radius of Cincinnati, but the company also sought to penetrate the nation’s flourishing cities. While urban growth would explode later in the century and continue unabated into the next two, P&G early on sensed the looming opportunity.

In the 1850s, George Procter, William’s son and one of the company’s first sales reps, called on customers in Chicago, New York, Philadelphia, and Baltimore with impressive results: back in Cincinnati, production soared from an average of about 150 boxes to as many as 2,000 boxes per day on the basis of the new orders.2

The sales function in this context consisted of ensuring product availability and providing price lists and a few sales aids that wholesalers could pass on to retailers if they were so inclined.

During its first 83 years in the U.S. market, P&G relied on distributors to get its goods into retail outlets. The company equipped distributors with price lists and sales aids to stimulate business.

top: Established in 1859, the Great Atlantic & Pacific Tea Company (A&P) became one of P&G’s first national customers. A&P—like P&G— initially moved products from factories and warehouses to stores via horse-drawn wagons.

P&G also placed factual, descriptive ads in local

new strategic challenge emerged. As a

newspapers and sent out circular letters indi-

consumer necessity, candles were coming

cating terms and suggesting ways to attract

to the end of their run, as oil and gas (and

customers. The key to success was to identify

soon electrical) lighting provided superior

capable and reliable wholesalers to serve the

alternatives. P&G had little time to adjust.

21

evolving market as the population grew and urbanized—which P&G evidently did.

The way forward would involve converting a commodity, soap, into a branded consumer good, with dramatic changes in the way P&G

The Branding Revolution:

conducted its business. By then the company

From Push to Pull, from Region to Nation

was in the hands of the second generation, with William A. Procter, Harley Procter, and James N. Gamble the key figures. Like

During the American Civil War, P&G lost

their fathers, they divided responsibilities,

business in states that seceded from the Union

with William A. Procter providing executive

but more than made up for it by securing big

leadership, Gamble focusing on research and

contracts to supply candles and soap to the

manufacturing, and Harley Procter in charge

Union Army on the Western front. Revenues

of sales and what today is called marketing.

climbed five-fold and necessitated expanding

A trained scientist and one of the first

production capacity and a rush to secure raw

industrial chemists in the United States,

materials. As it happens, two members of the

second generation, William A. Procter and

managed to lock up vast stores of key raw

materials and arranged to ship them upriver

Gamble’s disciplined approach to scientific

to Cincinnati. Without such resourcefulness,

experiments found a match in Harley

an early characteristic of the sales force, P&G’s

Procter’s approach to sales and advertising.

business might have suffered greatly during

As he surveyed the rapidly expanding and

the war.

evolving business environment of the late

James N. Gamble, were in New Orleans on a sales trip when the war broke out. They quickly

Gamble transformed soap making from an ancient craft into a modern science, developing rigorous standards and procedures to achieve consistent, high-quality production.

19th century, Procter sought new ways to At the end of hostilities, the company expected

reach consumers and hard evidence, even

sales volume to drop but hoped that it could

if based on trial and error, that innovations

still make use of its new capacity and human

would yield positive results.

resources to resume healthy growth. As it began to make headway, however, a daunting

A son of P&G co-founder

Three primary attributes

William Procter, Harley

distinguished Ivory:

Procter was the father

purity, which signaled

of marketing at the

high quality; mildness

company and one of

(“No chapping�), and

the great figures in

floating, which made

the history of modern

it easy for consumers

business. As director

to find in basins and

of sales, Harley

tubs. Behind national

Procter oversaw the

advertising, Ivory

transformation of soap

became a hot product

from a commodity to a

that retailers were eager

differentiated consumer

to stock.

product.

Harley Procter

The development of P&G’s first branded

national magazines such as The Saturday

product, Ivory soap, reflected the

Evening Post, Century Magazine, and Ladies

convergence of progress along lines the

Home Journal. As critical as the new media

young partners pursued. During the 1870s,

was new messaging, learned through a

Gamble corresponded with leading soap

process of rapid-cycle trials with different

makers and chemists around the world while

copy in monthly magazines. By the late

conducting careful experiments using new

1880s, P&G had a successful formula for

raw materials to replace tallow and lard. By

selling soap—not only on the basis of

1878, he had developed a pure white soap

cleaning power, but also of purity, reliability,

that cleaned both clothes and skin well,

convenience, and lifestyle. Ivory proved a

was mild to the touch, and could float, an

blockbuster and one of the seminal brands in

appealing feature since users could find it

the history of consumer packaged goods.

easily in a basin of water.

It is hard to overstate the impact of Ivory Sold initially as White Soap, Harley Procter

on P&G. The scale of operations increased

gave it a new name, Ivory, as well as eye-

dramatically, prompting the construction of a

catching packaging. The name not only

vast new manufacturing complex, Ivorydale,

evoked the soap’s color but also signaled its

near Cincinnati. Employment surged, creating

more-than-ordinary value. The packaging

an imperative to upgrade and professionalize

was chosen to stand out on grocers’ shelves

personnel management, resulting in the

and inspire consumers to ask for it by name.

development of such distinctive employment

Finally, Harley Procter experimented with

practices as a regular work week, guaranteed

ways of advertising the product, more than

employment, and a profit-sharing program.

doubling the company’s advertising budget

The company intensified its commitment

to appeal directly to consumers. A terrific

to R&D and sought steadily to upgrade its

salesperson himself—he once journeyed

products and engineer features in them that

to San Francisco to book a single order for

consumers would value. Ivory validated and

17 rail cars of Ivory—Procter believed that

confirmed the partners’ disciplined approach

advertising amounted to “salesmanship in

to manage­ment based on research and

print” and that “only steady and persistent

experimentation and involving thorough

advertising would pay while hit-and-miss

analysis.

advertising would be sheer speculation.”

3

Although P&G continued to spend on news-

In the marketplace, Ivory was a hot consumer

paper advertising and circulars for local

product, one of the first in modern business

markets, it set itself apart from the competition

history, and wholesalers and retailers

by placing ads in the new media of the day,

clamored to get it. Consumers asked for Ivory

23

24 Building a Strong Foundation

by name and wanted their retailers to order

Although wholesalers benefited from the

it when it was not available. Before

enlarging pipeline of products and the

Ivory, P&G sales reps were pushing product into the retail pipeline; after Ivory, consumer demand was pulling P&G products through. In the 1880s, Harley Procter founded P&G’s Sales Department to meet the growing demand. The organization initially

new way of doing business, they also grew wary of P&G’s growing influence in the marketplace and frustrated by their own relative weakness. Some took to games­ man­ship in invoicing and stockpiling, and attempted to play off P&G against other suppliers. This was more than a

consisted of himself, his assistant Hastings

mere annoyance to P&G, as it could

French, who had joined the company at

trigger fluctuations in production, factory

age 16 in 1869, as well as three sales reps.

slowdowns, and even shutdowns, which

Procter took overall responsibilities while

threatened the company’s policy of

the others served defined regions. French

guaranteed employment.

handled New England, New York, and the mid-Atlantic states, while his colleagues

At the same time, retailers were not much

respectively focused on Ohio, the South,

happier as they wanted predictable

and the West. When Procter retired in 1890,

supplies to help respond to the rising power

French succeeded him as General Sales

of consumers knowledgeable about

Manager, remaining until 1911.

brands. In the 1870s and 1880s, several

4

retailers, including F. W. Woolworth, had

Going Direct

pioneered the concept of shopper selfservice, placing goods on tables and shelves

In the late nineteenth and early twentieth

where shoppers could browse, discover,

centuries P&G built on Ivory’s success to

compare, and ultimately choose the items

introduce other soap brands and, in 1911,

they wanted. Shoppers no longer had to

its first food product, Crisco shortening.

request items by name or heed the advice

The company backed all of its brands with

of retail proprietors or clerks. This was a

national advertising and a slew of increasingly

revolutionary change that empowered

sophisticated sales and promotional tactics to

shoppers, and it soon spread from

stimulate demand: samples, trials, premiums,

discount stores into department stores and

and inserts; exhibits and staged introductions;

eventually the grocery trade where P&G

wall signs, poster ads, and streamer ads;

increasingly sold its wares. Established in

educational pamphlets offering advice and

Memphis in 1916, Piggly Wiggly is generally

tips about maintaining a clean household and

credited as being the first self-service food

preparing meals.

25

In 1920, prompted by the need to improve the flow of goods to market and stabilize employment, P&G made the courageous decision to streamline distribution and sell direct to retailers across the United States.

As a consequence, the company hired and trained hundreds of sales reps to serve the growing grocery trade.

26 Building a Strong Foundation

store in the United States, featuring open shelves, shopping baskets, and checkout counters.5 From there, self-service shopping proceeded swiftly across the trade. It was clear that consumers loved self-service, although it posed challenges throughout the retail value chain. There was little direct contact between retailers and manufacturers of popular goods, and conducting trials and promotions or offering premiums through the intermediation of wholesalers proved inefficient and confusing.

As the growing volume and complexity of its business and changing shopping behaviors strained the traditional system of distribution, In 1916, Memphisbased Piggly Wiggly ignited a revolution in the grocery trade by opening several stores using the concept of shopper self-service. Goods were arranged on shelves in aisles and shoppers could pick out what they wanted without having to ask for it.

The new format proved a boon to P&G. Its nationally advertised brands, attractive packaging, and merchandising and promotions helped draw shoppers into the stores.

P&G took a hard look at selling directly to retailers, a practice followed by only one other national consumer goods manufacturer at the time.6 Typically, P&G examined the question through experiments, data-gathering, and rigorous analysis. The company’s president, William Cooper Procter, grandson of the founder, tasked future president R. R. Deupree as General Sales Manager to investigate a direct-sales approach. In 1913, P&G began selling directly to retailers in New York City. Positive results—wholesaler protests notwithstanding—led to an expanded trial in New England in 1919. The verdict came in shortly thereafter, and P&G recognized the need to move fast: on June 28, 1920, the company announced that it would begin selling direct to retailers as of July 1—just two days later.

Teaching the Trade

“I Can’t Compete.”

In the early years,

How many times have you heard

Moonbeams frequently

a [grocer say]: “I can’t compete

included scripts for

with that other store. You sell

handling retailers’

him at a price that I can’t even

questions and concerns.

sell at. He’s a cut price man and

An example:

would like nothing better than to run me out of town ruined,” etc.

When a [grocer] starts to wail about his competitors, it’s hard to get him off the subject. How do you switch him? One successful salesman’s way was: “Mr. Grocer, I read in a magazine the other day that only one grocer fails because of competition to every 25 who fail because of incompetence. So you see your chances are pretty good if you stick to the rules which make a store successful.

• Keep your store clean and

your stock neat and handy.

• Keep your prices at such a point that you have to turn over goods fast to make a profit.

• Buy such goods as are so well known that they will turn over fast.

• Have a ‘special’ or a leader once a week to show old customers real value and to attract new ones to your store. Stay close to cash business and take your discounts on what you buy.

• Use the most valuable space

in your store—your windows— for the purpose intended by having a new, fresh display of price-marked goods every Saturday for the week following.

• Sell your service and your

goods with a fund of optimism and a rule of square deal.

• Turn your money fast and

competition won’t worry you.”

27

28 Building a Strong Foundation

In a single bold and swift stroke, P&G completely changed the way it went to market. The number of accounts skyrocketed from 20,000 to nearly 400,000. The company

before P&G would realize the full benefits of direct contact with retailers, but the possibilities were immense.

Meanwhile, the sales force had to take on

quickly hired and began training a full-time

new responsibilities, ensuring that P&G

sales force of 450 individuals. It established

brands received appropriate placement and

routes and calling patterns. It set up

attention. Reps visited stores with more than

150 warehouses around the country and

a sample case, arriving with hammers, tacks,

purchased or leased a thousand trucks.

and adhesive tape to mount signs. They

And it proved a bumpy ride.

brought “large and small posters, counter can and package holders, enamel signs for

The wholesalers resisted fiercely. Most

external signage, and framed embossed

disparaged P&G’s actions and some

cards for attaching to the grocer’s walls or

attempted to smear the reputation of the

chandeliers. P&G also supplied streamers and

company and its brands with retailers.

display cartons” for window displays.7 On

Some gave advantageous terms to P&G

Saturdays, then as now the busiest shopping

competitors. Some tried to get lawmakers to

day of the week in the United States, many

intervene on their behalf. And it was unlucky

sales reps turned up at the stores to help

timing. The move coincided with a national

sell the company’s brands.8 Always looking

recession and P&G’s revenues tumbled by

to contain costs, the Sales Department

nearly 40 percent. It would take six years to

pioneered off-shelf cut-box displays as an

recover the lost volume.

efficient, eye-catching technique to feature the company’s brands.

Going direct eventually worked for P&G, which clung tenaciously to the strategy. By

As P&G regained volume, it built on the

the late 1920s, not only was business back

strong foundation established in its initial

but the company also had improved its

decades. The company had made itself into

competitive position. It could better manage

a strong national competitor, with several

its costs of distribution while removing a layer

appealing consumer brands and nationwide

of complexity. The change also enabled P&G

market coverage. Looking forward, the

to work more closely with retailers for mutual

challenge for P&G was to keep the growth

benefit. It now became much simpler to run

engine humming, by adding more brands,

promotions and experiments and gather

increasing penetration in existing channels,

data about retailing and shopper behavior at

and expanding into new markets.

the point of sale. It would be many decades

A Glimpse of the Livelihoods of Sales Reps in the 1920s

The typical starting

In 1920, P&G launched

“your ordinary traveling

a version of its monthly

expenses to and from

magazine, Moonbeams,

your sales area. This

to support its sales force,

includes railroad fare,

filling it with useful

hotel, car fare, but

information, examples of

not your laundry. Any

sales best practices, and

livery costs could be

advice and tips.

covered but require your

wage for a sales rep was $100 a month.

The company informed reps that it would pay

manager’s approval.

Hotel costs were strictly limited to $2.00/day.”

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