A.G.Lafley who has returned to P&G for his second act, remarked: “Beauty is the industry of gret promises made and never kept.:
P&G had taken a slumbering company which sold “Oil of Olay” for $3.95 and successfully modernized it by selling the product for $18.95 to a booming reception in sales. t.
“For the prestige shopper, it was great value, but not too cheap to be credible,” Lafley and Martin wrote in “Playing to Win,” “and for the mass shopper, it signified that the product must be considerably better than anything else on the shelf to justify such a premium.” The result: double-digit sales and profit growth every year for a decade, beginning in 2000. So it went for lots of other P&G beauty brands as the company moved upscale but not too upscale (“masstige” was the buzzword), playing on its research and marketing strengths as it poached customers from more idiosyncratic, fashion-oriented competitors.
That decade ended five years ago, though, and P&G’s beauty business — which accounts for 23 percent of sales — hasn’t gone much of anywhere since. Lafley returned to the sputtering company in 2013.
One problem was that P&G had put the beauty division in the hands of people who didn’t understand the beauty business, assuming that general management is fungible, and functional management gets developed by moving it around every two or three years.
On the other hand, Lafley said P&G’s beauty division risked becoming too much like other companies in the industry:
What are the risks for us in Beauty? We start thinking we’re a beauty company and we spend all our time at the Oscars or the Grammys or Fashion Week, which now runs for months, and we don’t stay focused on the consumer.
So what was the right approach for P&G?
We’ve just got to get back to the strategy that worked for us, which was fundamentally beauty capable where we needed to be beauty capable and playing to P&G strengths where P&G strengths make a difference for consumers and customers.
It needed to be a balancing act, then, and balancing acts are hard. Lafley isn’t giving up on it, but he is apparently looking to dramatically cut down on the number of beauty brands his company has to manage. One of the key questions in strategy, Lafley and Martin wrote in their book, is “Where will you play?” More often than not the right answer is, Not there.
