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Patterson Trips I

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We’ve been field-tripping lately at Patterson; this week to Proctor and Gamble headquarters in Cincinnati, last week to Fort Knox. Both trips have, believe it or not, spawned some thoughts that may be of mild interest to those who were planning on staying home on a Friday night, anyway. This week first…

Hanging out for a day with the Proctor and Gamble folks helped to enforce just how much of their business is built around marketing and the possession of certain intellectual property rights. More on the marketing in just a sec, but while wandering the P&G archives museum (such a thing, in fact, exists), I was reminded of something that I had long forgotten:

Duracell used to hold a monopoly on the whole pink battery operated bunny thing, and apparently is still known as such in countries other than the United States. The intellectual property lawyer in the family explains that Duracell (a division of P&G) fell just short on the requirements for both trademark and copyright, thus enabling the creation of one of the more memorable advertising characters of the last twenty years:

Now you know.

In more substantive concerns, the folks at P&G talked a lot about sustainability, and suggested under questioning that environmental concern is mainly employee driven; I’m curious how common this is in American corporations, especially since P&G is Cincy based and Cincy isn’t known as a progressive town. Then again, P&G has been on the right side of several local political questions, most notably legal protection for the LGBT community, mainly for the good old capitalist reason that a backwards social environment makes it difficult to attract good employees.

The marketing discussions were perhaps the most interesting; being a school of foreign affairs, we were given a taste of how P&G markets products around the world, and how it markets to different ethnic groups within the United States. One of the funky stories from around the world is the experience of “Ariel” laundry detergent, which used to be the number one laundry detergent in Egypt. In the early part of this decade, someone apparently began spreading the rumor that “Ariel” was named for Ariel Sharon, and that all of the profits were going to Israel; despite the fact that Ariel the brand has been sold in Egypt since the 1960s and is in fact manufactured in Egypt, sales plummeted. We also got an extensive PowerPoint on how P&G markets products to white, African American, and Latino customers in the United States, which included three different versions of a commercial for the same product (Pantene) that were each focused on one of the three types of customer.

I think it would be fair to say that P&G doesn’t sell a lot of remarkably innovative products; their strength lies in canny use of IP law and extremely effective marketing. Apparently, every CEO has emerged from the marketing side of the company. Listening to the various presentations reminded me of some thoughts I’d had about marketing way back when I was driving cross-country from Seattle to Lexington. I was thinking about innovation in marketing science versus innovation in military doctrine, and it struck me that there were some important similarities, but also some important differences. Innovation in military doctrine is driven, more or less, by the desire to maximize the efficiency of the use of violence. Unlike in the field of engineering, innovation isn’t affected by intellectual property protection; military organizations have an incentive to maximize their efficiency whether or not they can “patent” their innovations, and typically have no compunctions about copying effective innovations from other military organizations. However, the drive for efficiency in military doctrine does run into a couple of difficult problems, both of which concern the development of measures of effectiveness. The first problem is that most military organizations only rarely ply their trade. Thus, it’s difficult to tell whether any given innovation actually delivers a gain in efficiency. The second problem is that, even when military organizations fight, it’s hard to tell whether a particular innovation is working because measures of effectiveness in war are hard to come by. For example, for much of World War II both the Germans and the Allies believed that their strategic weapons (submarines and strategic bombers, respectively) were devastating the enemy; in both cases, however, the enemy had a much firmer grasp on how much damage was being done. Thus, it’s hard to tell whether any particular innovation is actually delivering what it promises.

Shift gears to marketing, and by marketing I mean innovation in particular marketing strategies. Marketing strategies have to negotiate a more complicated intellectual property terrain than military doctrine, but while specific icons can by protected, many approaches and innovations cannot. As such, it’s possible to copy certain approaches from others without too much difficulty; indeed, it’s probably easier to do this in marketing than in military doctrine, because shifts in military doctrine often run up against cultural obstacles in particular organizations. Compared to military doctrine, however, marketing strategy innovation has an easy time with measures of effectiveness. Marketing strategies don’t have to wait for a war to be tested, and there are fairly clear measures of effectiveness (profit, market share) to determine whether they’re successful or not. As such, good marketing strategies quickly become apparent to all, and are quickly copied by all. To return to my cross-country trip in the summer of 2005, you may recall the concept of “employee pricing” under which one of the major automobile companies offered to sell cars at what was normally the employee discount. As soon as this strategy proved effective, EVERY car company (and every auto dealership across the country, as evinced by the number of commercials I listened to along the way) was making the same offer.

Marketing strategy innovation seems to enjoy clear measures of effectiveness, no barriers to emulation, and strong incentive for efficiency; military doctrine enjoys the latter two but not the first, which is one reason, I suspect, why marketing science seems to advance at a much quicker pace than military science. I don’t know if there are any particular lessons to this, but it did strike me as quite interesting while listening to the P&G folks, who have succeeded primarily by developing an extraordinarily effective machine for developing and implementing marketing innovations.

Thoughts on the Fort Knox trip before long…

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