Unilever Plans To Cut 800+ Marketers, Sales As It Slashes Agency Fees, Products

If there was a single theme at Unilever's investor seminar in London today it was cuts. The company will slash marketing headcount by 12% globally, or more than 800, mostly in regional operations such as the U.S. It's also cutting the number of product varieties it sells by 30% and will continue to trim agency and commercial production fees, company executives said.

Jack Neff

Keith Weed at Unilever Investor Seminar

Unilever executives framed the moves as part of continuous cost savings of the sort that have been common since Paul Polman became CEO in 2009. But the talk of spending cuts, particularly in marketing, was more detailed than usual in this year's investor presentation, which followed a quarter when Unilever disappointed investors with top-line growth that fell behind that of its biggest global rival Procter & Gamble Co. for the first time in years.

Unilever's growth has slowed particularly in what had been its biggest competitive strength -- developed markets -- as economic growth there slowed and competition from the likes of P&G andL'Oreal, among others, increased.

Chief Marketing Officer Jean-Marc Huet said Unilever expects to find more than $470 million in marketing savings this year, up from $260 million last year, in part from reductions in "non-working media," or what the company spends on such things as agency fees and commercial production. It also expects to save by shifting more spending to digital, which now accounts for 15% of ad spending for the world's No. 2 spender. That's up from 14% last year and 12% in 2011.

Unilever also will reduce the number of stock-keeping units (SKUs), or sizes, flavors and varieties of products, 30% by the end of 2014, Mr. Huet said. It's a huge cut for a company in an industry that has been trying to control SKU proliferation for decades, but also a risky one given industry trends favoring variety and smaller players with SKU-intensive product lineups that have been taking share from bigger players in the U.S. in recent years.

A Unilever spokeswoman in an e-mail declined to give details on precisely how, when or where the company will cut marketing jobs, but said it was safe to assume the 12% applies to a base of 7.000 global marketers referenced by Chief Marketing and Communications Officer Keith Weed in his presentation at the seminar.

"The marketing world has changed dramatically," Mr. Weed said. "There's an awful lot we can do to tailor our organization."

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Part of that will be to allow global brand leaders to "go direct to big countries, rather than through regional hubs" and by using more global concepts and advertising, he said. "You can see in that organization we'll be able to remove quite a few regional people."

While Unilever has hiked advertising spending by $2.7 billion since 2009, Mr. Weed said it's also saving money through lower-cost "earned" and digital media, or close targeting, such as only showing taxi ads near stores.

Some of Unilever's biggest cost savings have come in so-called "non-working media," or what it spends on such things as agency fees and production. Mr. Weed said non-working media outlays have shrunk from 32% of advertising and promotion spending in 2010 to 26% last year and an expected 24% this year. He said his ultimate goal is 20%.

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Unilever spent $9.1 billion on advertising and promotion last year, which would suggest nearly $2.4 billion in agency and production costs. That compares to $8.2 billion in reported marketing spending for 2010 and $2.6 billion in agency and production costs.

The agency and production savings have come from doing fewer, bigger and higher-quality initiatives, Mr. Weed said, also pointing to the company having been recognized by Advertising Age as the advertiser with the most creative awards globally in the past year. Overall, the marketing spending per new initiative has risen 29% the past two years as the number of smaller projects has declined, Mr. Weed said.

Who Needs Test Stores? Virtual Reality Transforms CPG Merchandising and Marketing

The adoption of virtual reality technology is gaining steam in the CPG industry, enabling brands and marketers to transform store merchandising and shopper marketing programs.

Savvy marketers are discovering the speed, versatility, cost-savings and competitive advantage that can be achieved by incorporating virtual reality into their business strategies.

The Need for Virtual Reality Technology

Traditionally, CPG brands have used in-store planograms and set stores to evaluate merchandising tactics and visualize store layouts. In addition to being costly and slow, these approaches often failed to deliver the immediate data insights that are crucial in today’s marketplace.

Virtual reality technology now offers a faster and more efficient process for gathering marketing insights, conducting visual merchandising reviews and testing environments. This provides instant and detailed data insights to help CPG brands and retailers plan and market more effectively. Designed to simulate a real-world environment, consumers and merchandising executives have the ability to browse aisles and shelves in a virtual store populated with rich, 3D product models. Virtual reality technology eliminates the need for building and maintaining costly physical test stores.

The combined impact of high-quality 3D content libraries and virtual store models enables brands to create precise replicas of stores in the virtual space, dramatically reducing speed-to-market times and improving the effectiveness of insights captured from merchandising and marketing efforts.

Benefits of Virtual Reality for CPG

There are several reasons why virtual reality technology is increasing in popularity in the CPG industry to drive competitive advantage and bottom line business outcomes.

• Speed -- Speed is clearly one of the major benefits of virtual reality in the CPG industry. It’s not unusual for CPG marketers to display virtual shelves in front of multiple sets of consumers and receive detailed consumer feedback quickly. This substantially reduces the time-to-market for new products or product lines.
• Versatility -- Virtual reality enables marketers to quickly create many different scenarios, allowing them to test several ideas, store sets and merchandising plans in less time than it typically takes to test and evaluate a single concept.
• Cost -- The long-term cost of using virtual reality for merchandising and marketing is much lower than the cost of maintaining a set store or executing other traditional market research.

The task of creating a virtual store and stocking the shelves with an accurate 3D library of products is one of the main obstacles encountered by CPG brands interested in leveraging virtual reality. But using new and innovative technologies, the transition to a virtual store is less costly and faster than you might think.

Steve Cole is the chief marketing officer at Gladson.

Read More at: 

http://www.progressivegrocer.com/top-stories/headlines/cpgs-trading-partners/id40187/expert-column-leveraging-virtual-reality-in-the-cpg-industry/

Procter and Gamble Boss declares "'Digital marketing' is dead."

Digital marketing – advertising brands to consumers through mobile electronic devices such as smartphones and computer tablets – has evolved to the point where the term has become outdated, Procter & Gamble’s global brand building officer has declared.

Now, such efforts are so common that digital marketing could simply be called “brand building,” Marc Pritchard said during Wednesday’s closing keynote address at the Digital Marketing Exposition & Conference (Dmexco) in Cologne, Germany.

“The era of digital marketing is over,” Pritchard said. “It’s almost dead. Now, it’s just brand building.”
Cincinnati-based Procter & Gamble (NYSE: PG) is the world’s largest advertiser, and the company now spends more than one-third of its U.S. marketing budget on digital media. Research indicates that the average amount of time consumers spend with digital media every day could surpass television viewing this year.

Pritchard said P&G is focused on launching some ad campaigns in the digital sphere rather than following up traditional marketing with a digital component almost as an afterthought.

“This is a mindset that we are trying to infuse in our company, and it’s creating a tremendous shift,” Pritchard said. “It’s freeing up our minds on building creative ideas that come to life through the mediums that we engage with every single day – search, social, mobile, PR, and yes, even TV.”

He cited as an example an ad campaign for a Braun shaver, one of P&G’s brands, that initially ran only online.


“It wasn’t the digital component,” Pritchard said. “It was the campaign. … Start in the digital world, and build your way back to the rest of the marketing mix. It’s an approach that is building our brand equities, our sales and our profits.”

Advances in digital technology have made it easier for companies to reach consumers almost anywhere, but capturing their attention still depends on coming up with the right message.

“We can only do that if we have this one component that has been a constant since the beginning of brand building – an idea,” Pritchard said. “Fresh, creative ideas that are powered by insights – that are powered by the way people think and feel, and are inspired by creativity – always have and always will create great campaigns.

“Digital tools just give us a new way to spread those ideas in ways that we’ve never imagined before,” Pritchard said. “Great ideas matter more now than they ever have before – because with these digital tools at our disposal, we have the chance to be successful widely beyond whatever we had imagined.”

He advised marketers to “try and resist thinking about digital in terms of the tools, the platforms, the QR codes and all of the technology coming next.” Those at P&G, he said “try and see it for what it is, which is a tool for engaging people with fresh, creative campaigns” that make consumers think and feel and laugh.


“So let’s celebrate the end — the death — of digital marketing, and let’s focus on celebrating the great idea of these brands,” Pritchard said.

P&G and Walmart Colab "Family Movie Night" - A Model Example of Consumer Insights Meets Entertainment = Increased Market Growth (By William Thompson)

P&G and Walmart Colab "Family Movie Night" - A Model Example of Consumer Insights Meets Entertainment = Increased Market Growth (By William Thompson)

I recently stumbled across this project from 2011 between P&G and Wal-Mart, which, to be frank, I found very interesting, intuitive and overall brilliant in it's strategy and implementation. Having operated and being published in the Entertainment Law arena, I'm quite well aware of the headache (and overall puffery) of the "whose product/image association is worth what" dances　involving product placement or usage and infringement issues. Being somewhat of a stats lover, I was often amazed and how often positive correlation claims were proffered up as fact by party opponents, and when questioned, lacked adequate (or often any) statistical relevancy that showed even a minuet possibility　of a positive correlation between product placement/usage and favorable opinion by viewers (let alone a link between　placement and determinable income for damages).

This project, however, not only goes the total opposite route (which is a golden deal when compared to dealing with "after the fact" negotiations,　but likewise　utilizes a product/category strategy that created tangible revenue growth through a socially positive creation that funded the　production of a cinematic piece of art and had very, very, very minimal obtrusiveness into the artistic creation process. But, best of all, was　VOID of actual product　placement.　

Anyhow; very impressive.　(The case study is currently unavailable online due to site reconstruction, but you can request one from Effie.org by sending a case study request

here.) Below is an article from 2011 on the project from the P&G Newsroom (Original release can be located here.)

P&G and Walmart Celebrate 1 Year of Family Movie Night Announcing More Great Entertainment Thru 2012

Thursday, April 14, 2011 2:31 pm EDT

Last April, P&G and Walmart kicked off the Family Movie Night initiative when we presented the premiere of "Secrets of the Mountain." This Saturday, April 16, 2011, P&G and Walmart are celebrating a year of family entertainment with the premiere of our next Family Movie Night film, 'Truth Be Told' at 8/7c on FOX. In the past year, Walmart and P&G's Family Movie Night has been welcomed into homes across America 16 million times and we're happy to announce we'll be extending Family Movie Night into 2012, with four more films this year following "Truth Be Told."

P&G and Walmart initially decided to partner on Family Movie Night last year when industry research showed that parents wanted more options for television programs they could watch with their entire families. Today P&G and Walmart revealed [link to news release] results of new research they conducted which reinforces that parents are still seeking more family entertainment options. We learned that entertainment is a primary way families get together, in fact 81% of those surveyed told us they enjoy watching movies with their families and 75% of them admit that they still have to dive for the remote to change the channel or pause a program because of inappropriate content during what they thought was a "family" program. We're proud that Family Movie Night continues to offer parents films that can be enjoyed by the entire family without concern over questionable content.
Please click the video below to hear what the stars of the Family Movie Night films think of our initiative.
Celebrating 1 Year of Family Movie Night

To see a sneak peak at of "Truth Be Told" please watch the clip below. We hope you tune-in to enjoy it on April 16, at 8/7c on FOX!

Truth Be Told Trailer

To learn more about Family Movie Night you can visit www.familymovienight.com or www.facebook.com/familymovienight.



How Procter & Gamble achieved zero waste to landfill in 45 factories

How Procter and Gamble achieved zero waste to landfill in 45 factories

(Original Article Posted via http://www.guardian.co.uk and can be viewed here)

(Gillette's World Shaving Headquarters in Boston is one of the factories to have achieved zero waste status. 82% of employees have opted in to the zero waste space programme. Photograph: Dave Walsh. Today Procter and Gamble (P&G) are announcing that 45 of their facilities across the world have now reached zero manufacturing waste to landfill status.)

Globally P&G has already ensured that 99% of all materials entering their plants leave as either finished product or end up being reused, recycled or converted to energy. But in the 45 plants that have achieved zero waste status, through innovative technologies and creative reuses, the company has managed to find ways to divert that remaining 1% from landfills. Better still for the company's bottom-line, they have found ways to convert this waste stream into a new revenue stream.

Much of the success in tackling that 1% of landfill waste is attributed to the company's Global Asset Recovery Purchases (GARP) team which was formed in 2007. The GARP team, which is headed up by Forbes McDougall, do not look at "waste as waste," but as something "that can always be reused for another purpose." So, for example, when they found that after recycling scraps of paper from their Charmin plant in Latin America, they were still left with unusable fibres, they found a way to convert those fibres into low cost roof tiles. Similarly, waste that is left from making shampoo is turned into industrial fertilizer and scraps from feminine care products are turned into pellets that are used to make plastic soles for low cost shoes. The genius behind GARP, says McDougall, is that his team specialise in purchasing and are not an environmental team per se.

"It's very easy to just press the scrap button. But now we tell people 'don't scrap stuff, call GARP.' Purchasing guys are good at finding viable solutions financially, so we treat (handling waste) as a business opportunity. Once you start delivering revenue for the business, then you are everyone's friend."

Repurposing waste also requires innovative (and often simple) uses of technology. McDougall describes how rejected feminine care pads at one of their plants in Budapest, Hungary ended up being diverted from landfills to be used as fuel to make cement. Initially the pads which contained both paper and plastic were sent to the cement plant whole. But they soon discovered that they burned much better and became a better energy source if they were shredded down. So they developed a new shredder and a vacuum that enabled them to separate the paper from the plastic and vacuum off the material as it went along the line. What was once landfilled became a good source of fuel and a good source of revenue for P&G.

One of the sites that has achieved zero waste status is the Gillette Plant in Boston, better known as the World Shaving Headquarters. The no waste philosophy is immediately evident when you enter their office building. At almost every work station there is a small sign saying this is a "zero waste space" meaning that the employee has volunteered to give up their individual bin in favour of using the centralised waste station where the company has found they tend to recycle more and trash less. At each waste station as well as recycling opportunities, there is a compost bin where employees can dispose of any raw or cooked food. Some stations also have a bin for plastic bags. The sustainability team at the site proudly note that 82% of their 1,320 employees opted in to the zero waste space programme.

The same no waste ethos is also highly visible in the employee cafeteria. There are huge signs everywhere encouraging employees to recycle and compost and even better signs explaining exactly what is compostable. All of the packaging for takeaway items is made from either corn or sugar and so ends up back in the compost bin where it is later taken to a local farm along with any food or beverage waste and converted into industrial fertiliser. The same biodegradable material is also being used in packaging for Gillette and other P&G products. The packaging for the Gilette Fusion ProGlide razor is made from a combination of sugarcane, bamboo & bulrush which the company says has led to a 57% reduction in plastic and a 20% reduction in gross weight.

On the manufacturing floor great care is taken to ensure that nothing that has value or can be repurposed ends up being trashed. Under each machine there is a bin to collect any discarded or rejected items.

These pieces of scrap metal or plastic are then transferred to pristine containers where employees are instructed to take care to keep each resource separate. Mixing metals or plastic can cause contamination and will reduce the reuse value. The Site Solution Provider, who handles all the plant's recycling, will then find the appropriate vendor for each specific material stream. Plastic from dispensers is ground up to make new dispensers. Scrap metal is recycled into new metal for marketplace and scrap wood pellets are turned into particle board or biomass fuel chips.

At the manufacturing level, P&G is well on its way to achieving their zero waste to landfill goals in all their plants. More challenging is their long term goal of achieving zero consumer waste as well. Approximately 4.6 billion people around the world are using P&G products. According to Len Sauers, VP of global sustainability, the company is constantly engaged in research to quantify the impact of its products across their life cycle so they can direct their research and development efforts where the impact is.

An obvious high impact area is the energy and water used with cleaning products, so the company has developed both cold water and reduced rinsing detergents to counteract this. For obvious reasons, no date has been set for when the company may achieve their goal of zero consumer waste. "It's a journey," Sauers says, "and the destination keeps on changing."

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P&G has achieved double whammy of zero waste status and increasing revenues with innovative technology and re-use. You have to admit... that's impressive.