Grand Marketer of the Year ’05: Jim Stengel, Procter & Gamble

The annals of business are stocked with stories of mighty blue chip firms that somehow lost their way. Think Coca-Cola before Roberto Goizueta or IBM before Lou Gerstner, or Apple before the second coming of Steve Jobs.

The story’s always the same. Once-respected company loses focus and gets lost in a sea of sameness or cultural miasma. Be it an endless cola war over minor share fluctuations, letting niches erode to nimble upstarts like Dell and Compaq, or shunning the basic consumer-friendly hook that got you there. But from Goizueta’s “share of stomach,” to Gerstner’s recasting of IBM as a high-margin service provider, to the all-access iMac and iPod, the strategic shifts that rallied them back to relevance always start with relocating the pulse of their customers. “The consumers told us–loud and clear–that they are the real owners of this product,” Goizueta once said.

That insight has clearly resonated at Procter & Gamble, which has dramatically reversed its fortunes of late by adhering to a homegrown mantra: the keys to the marketplace do not reside within its Ivory towers, but deep in the minds–and hearts–of the consumers who put P&G’s vast portfolio of brands to the test every day.

P&G considers that interaction between brand and customer in store aisles and checkouts as the “First Moment of Truth.” CEO A.G. Lafley has wheeled the company back around on that nexus, with Jim Stengel, P&G’s top marketer, re-igniting the company’s myriad marketing efforts around an almost monomaniacal focus on the notion: “The customer is boss.” Stengel insists that his overseer is not Lafley, but rather some woman of indeterminate age and ethnicity even now pushing a shopping cart through a supermarket somewhere.

In talking to Brandweek, Stengel referred to the boss (as “she”) several times. “You begin with the understanding of where you fit into her life and everything goes from there,” he says when asked about P&G’s new marketing model. “It’s a total part of our culture that she is boss. It’s a sweeping concept and one that doesn’t get old.”

the customer is king–or queen–as it were, is hardly a new concept and too often a hollow catchphrase. But P&G’s numbers seem to indicate it is more steak than sizzle in Cincinnati. In its most recent fiscal year, P&G’s annual sales jumped 10% to $56.7 billion and earnings rose 12% to $7.6 billion in a market where raw materials costs climbed higher, private label continued to grow and Wal-Mart, among others, kept demanding lower prices. At the same time, P&G welcomed its 16th billion-dollar brand, Dawn, into the fold. Now that its $57 billion Gillette deal has closed, P&G boasts 22 billion-dollar brands.

By adding Gillette’s male-skewing brands to its portfolio, P&G has solidified its ranking as the world’s No. 1 maker of consumer packaged goods, further extending its global reach. That’s a far cry from five years ago, when P&G promoted Stengel to global CMO. The company had lost 10% market share in the ’90s and by early 2000, its reputation for innovation was highly suspect. Most new ideas were coming from hungrier rivals. Rumors of a merger with Warner-Lambert and American Home Products prompted a 15% drop in its stock price and then P&G revised its earnings forecast for the second half of 9000 from an increase of 7-9% to a 10-11% shortfall. Though P&G attributed the poor performance to a variety of factors, the real culprits were two major reorganizations in the ’90s, including one in 1993 in which P&G closed 30 plants and cut 13,000 positions across the globe, and another in 1998 that took P&G from four geographically based business units to seven global units based on product lines.