This post is a comment to Mitchel Osak’s article.
I was at P&G on the Downy brand during part of the time you were there. I too am a fan at some of the things the company has done over the years and a little bewildered at other initiatives it has undertaken.
From a corporate strategy perspective, I understand where the executives are coming from and as a corporate strategist I would undertake a similar exercise. They are very successful and hold strong position in their business, but are faced with fierce international competition from cheaper brands, local competition from organic/sustainable brands and consumer spending being affected by economic hardships in their biggest markets. They have strong cash flow and good margins and in order to maintain their margins or increase their sales they need to look to other areas of business. The most logical areas are those where they can add value and has fragmented competition with limited resources.
You are correct that implementation is crucial in these sectors. This implementation requires, among other abilities, excellent customer service and localized marketing (inclusive of pricing and customer relations flexibility). Since P&G has based its success on the ability to structure and standards its mass marketed products, it does not hold the operational abilities necessary to succeed in the car wash and dry cleaning businesses. Therefore, it will have to hire individuals that are familiar with this business and help it succeed. I know one man that knows the car wash business very well at the strategic and operational level and would be happy to introduce him the the executives that are championing that business initiative.
There is no doubt,that their is a brand equity risk here. For example, do nurturing mothers (or whoever buys the Tide and does the laundry) want to buy the same detergent to wash their children’s clothes that is used to was cars? Seems like they may be leaving themselves open to some competitor marketing and advertising that may weeken their position. Then there is the potential customer dissatisfaction that could arise from the franchises themselves. But, let’s not ignore the existing players in the market. Some of the gas retailers have their own car washes in strategically located sites. Is P&G going to negotiate locations within their sites or are they planning to go head-to-head. If the latter is the case, I think they’re in for a surprise unless they focus on suburban locations.
These risks, as with any risks can be mitigated through proper business model, marketing strategy, positioning and branding. The question in my mind is does P&G have the people that know what it takes to create and implement the business model that will address these risks and leverage the opportunities?
Good work on the post Mitchel – keep it coming!