P&G’s Case in India: Aligning Strategy with Innovative Management

Aspiration driven consumption is unfolding with gusto in the rural markets of India.

For instance, take baby diapers. Today, rural sales of baby diapers are in excess of Rs 200 crores. Over the last two years, rural category sales have grown by over 150%, with rural diaper sales accounting for 15% of total value sales of diapers, which is Rs 1300 crores.

A key reason that could be driving such “aspiration driven consumption” is the lowest price of Rs 10/- offered by Procter and Gamble India.

Pampers (P&G’s diaper) has the greatest share of the baby diaper market across India and has also been growing value share consistently. It is a clear sign that rural consumers are choosing to buy branded diapers for their babies”, said a P&G spokesperson.

On the other hand, sale of rural sanitary napkins grew by 74% over the last three years, with sales now at Rs 366 crores.

In this case too P&G’s ‘Whisper’, which is the market leader across India, including rural markets, has also been made available at the lowest priced SKU of Rs 25 for a pack of 8s, which turns out to be Rs 3/- per unit.

(source of all figures & quotes: The Times of India, Kolkata, Friday, March 29, 2013)

The important thing to notice here is the deep relationship between company’s strategy, product design, manufacturing practices and marketing. They are all in sync. Else market leadership isn’t possible.

It does not come as a big surprise when we understand strategy formulation process of P&G.

In the book Playing To Win the former Chairman and CEO of P&G, A. G. Lafley describes the strategy formulation process as answering five important questions, which are the following:

1. What is our aspiration?

2. Where do want to play?

3. How do we play to win?

4. What resources we must have?

5. What management systems must be in place?

Answering these questions did three things for P&G in India:

1. The company matched their aspiration to the aspiration of their consumers.

2. The different management functions that generally run in silos were aligned and were in sync.

3. Helped them to be a market leader in a very short time.

It possibly serves as a clear case where strategy and innovation work together.

While strategy provides the direction and the energy of a vision, innovative management paves the way for achieving the aspirations of both producer and their consumers. And these must be in sync with the aspiration of their customers. Else efforts meet with inauthentic constraints to make operation meaningless.

What do you think about it? Do you think this should be the way to go in such tough economic times?

Other references:

1. Happiest People Pursue the most Difficult Problems:  http://blogs.hbr.org/kanter/2013/04/to-find-happiness-at-work-tap.html

2. Playing to Win: A.G. Lafley, Roger L. Martin, Havard Business Review Press, 2013

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