P&G: Building A Company on Brands

Proctor & Gamble (P&G) was formed in 1837 as a partnership between a candle maker and a soap maker who happened to marry sisters. After riding the wave of Nineteenth Century post-Civil War urbanization and industrialization, P&G found itself in a state of stagnating growth. By 1870, candle sales were declining in the wake of the popularity of oil lamps. This left the company to look to its soap line, which was benefitting from innovation and experimentation, as its salvation. Whether by accident, experiment, or a fateful combination of the two, the invention of Ivory soap would launch Proctor & Gamble squarely into the uncharted land of brand building and mass marketing. What is most intriguing is that the techniques and principles developed in delivering this pioneering brand to consumers in the Nineteenth Century are still relevant today.

                First, to be a brand the floating white soap in question needed a name. While in church reading the Bible, Harley Proctor came across a passage from the book of Psalms where it states “all thy garments smell of myrrh, and aloes, and cassia, out of the ivory palaces where they have made me glad” and was inspired. After presentation to and vote by the partners of the company, the term Ivory was trademarked on July 18, 1870. The journey down the path of mass marketing and brand building was just getting started.

                After trade-marking the name, Proctor went to work on packaging design that would catch the eye of those who passed by grocer’s shelves. Traveling salesmen were dispatched to major markets with briefcases full of samples to pitch to wholesalers who were a major component of the distribution chain at the time. The earliest advertising of the soap was in trade publication aimed specifically shopkeepers, but would soon migrate to popular magazines such as Harper’s, Scribner’s, and Ladies’ Home Journal. These publications were the beginning of consumer-focused advertising and established the soap’s market position as a high quality, yet affordable product. In order to meet demand in the mid-1880’s, the company built a new plant equipped for mass production and distribution. P&G even named the plant complex Ivorydale as a display of commitment to the brand. From 1884 to 1886m the company tripled its advertising spend and by 1889, 71% of the advertising budget ($158,000) was focused exclusively on Ivory.

                What made P&G’s branding and marketing different from other manufacturers and distributors of the day was that P&G employed marketing research such that the budgeted dollars could be allocated properly. The company set up a Market Research Department, which was unheard of at the time. P&G’s market research was simply rooted in the “art of asking questions”, from test group evaluations to conducting door-to-door surveys. Through the data collected from this scientific market research, Proctor & Gamble learned how to listen to its consumers.

                The advertising and market research surrounding Ivory soap was one component in a process of how Proctor & Gamble became a company that built itself on its brands. The other components of brand building are research & development, product development, and brand management. In the next century, P&G would display to the world the mastery of all of these. Future journal posts will document how Proctor & Gamble developed and marketed additional brands, all of which today are household names.

Resource:

Dyer, Dalzell, and Olegario. Rising Tide: Lessons from 165 Years of Brand Building at Proctor & Gamble. Harvard Business School Press (Boston, Mass). 2004. 23-31, 35-38, 57-65.