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Last week Procter & Gamble announced the purchase of the retail chain the Art of Shaving. Stepping into retail might seem like a peculiar move for the consumer products company, but it follows a pattern of increasing innovation for the organization.
Back in 2005 P&G made a lot of noise when it bought Gillette. At the time, I was interviewed by BusinessWeek, which picked up on the innovative shift signaled by the $57 billion deal. [The article is available here: Branding: Five New Lessons.]
The deal made a lot of sense for P&G. Gillette was a master at marketing a cohesive family of products under one brand. P&G is growing in this area, extending brands like Crest into broad families of related products. Gillette also benefitted from the combination of innovative hardware paired with consumables — the razor and the blades. P&G has expanded greatly in this area with electric toothbrushes, Febreze air cleaners, Mr. Clean car wash kits and Swiffer wet mops.
So if putting hardware and consumables together and building product families can boost your brands, why not control even more of the consumer experience? The Art of Shaving deal could teach P&G some important lessons, but only if they do it right. Back in the 1980s, P&G picked up the Vidal Sassoon product line, but left the high-end hair salons alone. The brand languished, and Sassoon and P&G found themselves on opposite ends of a heated lawsuit. In retrospect, P&G might have missed an opportunity to explore the connection between product and service. A connection the folks at Starbucks exploited when they expanded from selling bags of coffee beans to serving the coffee in upscale bistros. When brands mix product and service, the resulting experience can increase customer loyalty, reduce price sensitivity and boost differentiation.
Given its position as the leading consumer products manufacturing company, P&G could content itself with sticking to the existing formulas and leaving the innovation to smaller, nimbler players. But with this entry into retail experiences, it looks like the company that invented brand management might just be on its way to reinventing it.
Spend much time reading today’s headlines and you’ll get the impression that big businesses are just decaying hulks of greed and corruption. But a new article in Fortune reminds us that many corporations are not only surviving, but earning the admiration of their peers.
The list of the world’s most admired companies includes innovative consumer brands like Disney, Apple, Google and Southwest Airlines, along with respected holding companies like Berkshire Hathaway and Procter & Gamble. Skim through the top 50 and you’ll be reminded there are still leaders in this world.
Brand-builders should note there are two key qualities exhibited by most of the companies on the list: The vision to avoid the crowd and the wisdom to build long-term stability. As always, individuality and predictability are the building blocks for great brands.
The Top 20:
2 Berkshire Hathaway
3 Toyota Motor
5 Johnson & Johnson
6 Procter & Gamble
7* Southwest Airlines
9 General Electric
11 Wal-Mart Stores
13 Walt Disney
14 Wells Fargo
15 Goldman Sachs Group
20 J.P. Morgan Chase