P&G’s WOM Marketing

Gunjan AgarwalNidhi UpadhyayAnjali RajVasundhra AgarwalDimple Lalwani

BACKGROUND NOTE

• In 1837 candle maker William Procter and his brother in law James Gamble a soap maker merged there small businesses and established P&G. there shop in Cincinnati was nicknamed “porkopolis”.

• By 1859 P&G had become one of the largest companies in Cincinnati, with sales of 1million us$

• 1879 P&G introduced an all purpose soap ‘ivory’.

• By 1880’s P&G sold brands like white, famous, perfect, Lenox, princess olive, etc.

• By 1890 P&G was selling more than 30 different varieties of soap. They advertised there products in full colour print ad’s in national magazine.

• In 1920’s when Lux & Palmolive were introduced by P&G’s competitors, P&G introduced Camay.

• Camay did not perform well, management felt that it did not compete head on with ivory. This resulted in development of a brand management system.

• In 1924, P&G became one of the first companies in the world to establish a marketing research department.

• In 1980’s company introduced category management model .

• In early 1990’s they focused on a global branding strategy.

• Organization 2005 was a 6 year old organizational restructuring exercise under which P&G sought to reorganize its organizational structure into five product based global business units instead of four geographically based units.

• In 2000 P&G introduced ‘cohort management ‘ strategy.

• In 2001, P&G launched a division named Tremor that engaged teenagers to promote brands through the WOM route.

• In 2002, P&G celebrated its 165th anniversary. 12 of the brands in its portfolio were billion $ brands

• By 2004 P&G marketed over 300 brands in more than 160 countries.

• The company had 5 product segments fabric and home care, baby and family care, beauty care, health care, and snacks and beverages which were realigned on July 1st 2004 to three business segments i.e., global beauty care, global household care and global health, baby, and family care.

• In 2005 P&G acquired Gillette company.

• As of 2005, P&G had almost 140000 employees working in over 80 countries world wide.

TREMOR THE BEGINNING• Tremor was a marketing service launched in 2001 with

Steve Knox as the CEO

• It was a WOM program aimed at teenagers.

• They were selected based on the response to a survey questionnaire.

• Only 15% of the applicants got through the screening process to become members.

• Only between 8% and 10% of the original applicants went on to reach “connector” status.

•The company provided Tremor members with exclusive information, surveys, music, sneak peeks, etc. In return, the teens were expected to share news about the company’s brand with there peers.

•P&G also gave its connector members sample kits and other goodies.

•According to P&G for a product or service to be talked about, it had to have two elements Advocacy and Amplification.

•Advocacy was what happened when a connector experienced a product and liked it.

•Amplification means that product message or experience is easy to talk about.

•The result was that tremor campaigns were spontaneous and authentic without any need for scripted dialogues.

•Tremor limited its connectors to 20 campaigns a year .

• ‘ Influence Campaigns ‘ solicited ideas from the members during a products pre launch phase as well as for existing products.

•Campaigns were run for P&G products as well as for external clients.

•According to P&G after five years of running the tremor program it had cracked the code on the creation of predictable WOM advocacy.

•Tremor was targeted at teenagers whereas most of P&G products were designed for and targeted at adults.

•As a result around 80% of tremor campaigns were for external clients such as music and movie companies.

VOCALPOINTTaking WOM to the first level:

• It was launched in march 2006.

• It presented P&G with the opportunity to run campaigns for more of its own brands thus filling the gaps in tremor.

• Vocalpoint used women who have children aged 19yrs or below unlike tremor which used teenagers.

• Small scale recruitment of vocalpoint members started in mid 2005.

• Large scale recruitment of members started in December 2005.

• Recruiting these members for the program required a different approach as this segment was not as tech- savvy as the teens.

• Women were selected carefully through the internet with ads on websites such as www.ivillage.com

• Interested women were provided with more information.

• The screening process was similar to tremor.

• Once selected, members receive samples of the latest P&G product.

• Vocalpoint moms were also kept up to date on latest ideas and products in home care, personal finance, pharmaceuticals, and entertainment.

• A bi-weekly news letter called inside track provided information about products and also provided the moms a medium to exchange there views with the company and with others.

• Members filled out surveys and participated in new product trials

• Members of vocalpoint were not obligated to do or say anything. They were welcome to share there opinions with others whether it was positive or negative.

• The insights gained from tremor helped P&G tune its WOM strategy to have more control over the buzz created and increased its influence on sales.

• The messages and packaging were unique for the vocalpoint members which made them feel special.

• As of may 2006 connecters of vocalpoint were promoting more than 10 P&G products.

• Vocalpoint connecters did not get paid but, they feel empowered because they get a voice with the company.

• By june 2006 P&G had enlisted around 600000 members in its vocalpoint program

•Success of P&G’s WOM program was because of 4 characteristics:

-simplicity -honesty -exclusivity -privacy

WOM- HOTTEST TREND/ DECEPTIVE MARKETING???

• WOM marketing was a powerful advertising tool which was estimated at 100 million us$ in a 150million us$ industry.

• This type of marketing ranked amongst marketing’s highest growth areas.

• More than 85% of US’ top 1000 marketers were using some form of WOM effort

• They were many marketers who offered consulting services to companies which wish to design and implement WOM marketing

• In October 2005 a complaint was filed by the CA (customer alert) with the FTC regarding such forms of marketing.

• They complained that people who were exposed to such marketing were not aware that they were being marketed and hence it was deceptive marketing.

• They said it’s deceptive because they are talking to a regular person where as they are actually talking to a shill.

• Inclusion of teenagers also was criticized because teenagers are easy to deceive and tend to be more impressionable.

• Enlisting minors in such sophisticated marketing programs and not requiring them to disclose their affiliations were having deep ethical and moral implication.

• They were using kids and asking them to engage in immoral behavior for the benefit of the firm

• It led to commercialization of human relationships

• It would make the public more mistrusting and cynical if they came to know they were being deceived by their loved ones

• P&G defended by saying that they were not requiring disclosure thus putting connectors in full charge of what they want to say

• They also said that since the connectors were not being paid the complaints did not have any ground

• They also said that they don’t provide training to talk to people and they also don’t encourage or discourage participants to talk about the product

• In the end many consumers were annoyed but another half of the population felt it was like a person going to a supermarket , testing the product and referring it to others if they liked it

FUTURE OUTLOOK • P&G with its vocalpoint and tremor are far ahead of

other corporations as far as WOM marketing is concerned

• Mom’s are the most influential segment among buyers and from a business standpoint it’s a huge opportunity

• Next big challenge for P&G would be to devise ways to use WOM for customer retention

• There is a major threat to WOM from the FTC which might act on the complaints filed against it

• FTC might even sue the company in a civil court

• The biggest problem with WOM marketing is that it’s a double edged sword because if the consumers felt betrayed , their criticism would also spread through the WOM hampering the image of the company. Negative word spreads 3 times faster than a positive one . So if a consumer doesn’t like a product , that word will spread faster than if the customer was satisfied

• On a brighter note , if vocalpoint and tremor succeeds in the long run , it would enhance the WOM marketing industry on the whole which will open up many opportunities for smaller marketing companies

THANK YOU