Unlike its competitor, Hindustan Unilever, P&G also did not have the distribution might. To get into rural areas with a population of 50,000, P&G tied-up local FMCG company, Godrej to leverage the latterâ€™s distribution might. The tie up lasted two years, but none of its objectives were achieved. Volumes of products like Pantene spurted for brief period after launch, but quickly retreated to their original levels.
Further, even its distribution system seemed flawed. Research showed that a third of a householdâ€™s monthly shopping budget was spent at big grocery outlets. A third of these outlets brought 60% of the sales. But with a distribution network of 2,500 stockists, P&Gâ€™s operations were very inefficient.
Globally, P&Gâ€™s stated objective is to serve the lives of consumers with their branded products. Today, P&Gâ€™s brands touch the lives of 3 billion consumers half the world population of 6 billion. By the end of this decade, the organization has set itself a target to reach 4 billion. There is no doubt that among the developing markets, one of the key opportunities to serve more consumers and improve their lives is India.
To add to the complexity, the demographics in the Indian market are changing continuously. The Indian consumer market is definitely becoming less homogeneous. In simple terms clear segments of consumers are beginning to emerge all of meaningful size and with potential to grow. Secondly, there is a retail revolution waiting to happen at the top end of the market with consumers at the bottom end of the market aspiring to buy more. Modern trade (organized retail) is a wonderful new trend. All this required manufacturers to cater to these consumers through different capabilities and resources.
A global re-structuring cut many jobs in India and severely reduced the distribution channels of the company. Over a 100 top professional were re-located to regional bases in Singapore and Bangkok. P&G even shut down a factory paying handsome retirement bonuses to employees and declined to source its hair care product from Bangkok. All this prompted even old hands in the company to believe that P&G was losing interest in the Indian market.
More than ever before, the head of P&G needs to focus on recruiting and building capabilities. Given P&Gâ€™s popularity at leading campuses their recruitment program has changed to attract and retain young talent, especially the Gen Y.
As P&G seeks to expand its operation in India, it needs more bright managers on the ground. P&G found that consumers were not buying its compact detergent, even though they produced better washing results. It was not until a smart manager found that Indians were emotionally satisfied only if they used a detergent bar to wash off dirt, could they crack the poor performance of their brand. In another instance, it was not until they whittled down the price of Whisper, could they garner enough volumes. The biggest challenge will be to build these capabilities in people and attract the right talent so that they have the capabilities to provide that leadership.
The company is tweaking everything it can to attract young talent. Today, any employee joining P&G can avail of a car loan an on interest on the first day. They are also eligible for a housing loan after three years and can take the loan more than once.
But is all this good enough to beat his biggest competitor, Hindustan Unilever? P&G is not bothered by the size of its competitors. It has the arsenal and experience is available within the global organization. All that is needed is to achieve to make its brands the No 1 or No 2 in their respective categories in the next decade. All this, will of course, be achieved by their smart employees. So, it is all about attracting the right people.