Tag Archives: P&G

Amazon Changes Everything in a New Way

Tide Dash Button

The arrival of the Internet began major disruption to decades old methods of consumer packaged goods (CPG) distribution. The tried and true method of manufactures selling to a collection of wholesalers, who then sold the product on a range of retailers began to be reexamined. We saw the arrival of online retailers like Amazon who sought to compete with brick and mortar retailers, trying to offer a wider selection while also offering potentially a more convenient (and possibly cheaper) shopping experience for a few (or possibly for many). We saw retailers experiment with selling on Amazon (adding an extra layer of intermediation) and grocery stores experiment with online ordering and local delivery.

But at the same, in 2010 we saw manufacturers like P&G start to experiment with selling direct to consumer over the Internet via sites like pgshop.com and then in 2013 P&G started selling their wares on Amazon. Below is a screenshot of a Pampers product listing on Amazon:

Pampers Amazon Screenshot

As you can imagine, when companies like P&G start selling direct to consumers and via Amazon, this makes traditional retailers nervous. And while maybe some day their nervousness will translate into major volume declines, we’re probably not quite there, yet. But for manufacturers, the possibility of selling direct to consumers or via Amazon changes everything. It changes everything because it requires companies selling consumer goods to build new marketing capabilities, and possibly even new manufacturing and distribution capabilities as well.

Frito Lay Amazon Box

Here we have an example of a Sweet and Salty Box being sold to consumers via Amazon by Frito Lay. Compare this with a P&G Pampers page on Amazon and you’ll see that Frito Lay is still learning how to market via the Amazon channel and hasn’t completely figured out how to optimize the experience they create for consumers or likely how to maximize their conversion. But, you may also notice that the Amazon channel offers Frito Lay the opportunity to sell something they probably couldn’t sell in a Krogers, or Whole Foods, or Tesco, or 7-11.

In both of these examples, Amazon is taking and selling the inventory much as a grocery store would, but the customer wants, needs and expectations in the Amazon channel are different, and the skills to effectively market in this channel are different too. These are the reasons that Amazon changes everything for CPG companies. As Amazon continues to grow in importance as a channel for nearly everything, and as other sites like Facebook make a stronger push into eCommerce, and as consumer preferences for where and how they want to buy things changes, it presents a great opportunity for the forward thinking among us to take existing products and create new offerings that resonate with consumers showing a preference for existing and emerging digital channels and to create entirely new solutions that may involve a new product or possibly move beyond a product. Companies in CPG must continue to ask themselves:

  1. What is possible online that isn’t possible in-store?
  2. What do online shoppers want that is different than in-store shoppers?
  3. If we were to move beyond the confines of the product (and how it is packaged and presented), what would resonate with this type of consumer?

You can see on the Pampers page on Amazon above they’ve done a number of different things without changing the product:

  • Offering a range of product quantities
  • Coupons
  • Amazon Dash buttons (push the button and it automatically orders for you)
  • Etc.

And Frito Lay took their existing products and re-packaged them in a different way to suit the capabilities and needs of the channel because selling one individual bag of Doritos doesn’t make economic sense (and so Amazon won’t let you do it unless it is part of a larger Prime Pantry box).

If you were in charge, and had the product range that P&G or Frito Lay have, what would you do to optimize your results in the Amazon channel, or even more broadly in a direct to consumer context?

Please add your comments below.

Build a Common Language of Innovation

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How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts – Part Two

How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts - Part OneIf you missed How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts – Part One, you can find it here.

So what do leading organizations do to encourage the successful use of external talent?

They build a solid foundation:

  1. Seek to understand where the challenges will lie in the transformation
  2. Have passionate business owners
  3. Secure top level support
  4. Make a long term commitment to the use of external talent
  5. Negotiate master agreements with external talent providers at the center
  6. Create a common language of innovation and external talent
  7. Implement the processes and systems to manage and measure innovation efforts

They get strategic:

  1. Create an external talent strategy
  2. Make a plan for achieving the strategy
  3. Attach goals to the strategy (e.g., P&G’s 50% goal)
  4. Communicate the goals of the strategy and measure goal achievement

They focus on communications and ownership:

  1. Do not underestimate the importance of communications, education, and dialogue
  2. Create guidelines for when and how to use different external talent sources
  3. Have someone own and manage the external innovation efforts
  4. Have owners and champions in place in different business units or product groups
  5. Educate employees on how to engage owners and champions

They continuously reinforce their efforts:

  1. Recognize and reward those who go outside
  2. Weave external focus into internal systems (e.g., innovation system prompts)
  3. Get cross-functional input into problem definition and challenge formation
  4. Make resources available for integration
  5. Work to make the organization more flexible and adaptable

In addition, successful organizations understand that it is about making and maintaining connections and community – you build it for when you need it, instead of building it when you need it. Successful organizations understand that attracting and managing external talent is as important as finding and hiring the best internal talent, and are changing their budget allocations to fit this new paradigm. The role of HR in the near future will not be just to recruit, develop, and manage staff, but also to build and curate talent pools. The HR profession will have to build new core competences in network orchestration and managing talent – no matter where the talent lives (inside or outside the organization). It is time to start preparing.

Build a Common Language of Innovation

Before moving on to the final section, let us look at a few brief examples of different companies engaging external talent for business success and one case study of a leader pushing farther:

  • Threadless decided to base their whole business on external talent and build a community of designers and customers that they could leverage to come up with the t-shirt designs that they sell.
  • Quirky has taken the Threadless model of utilizing external talent to simultaneously make invention accessible and build a consumer products company. You submit your idea, the community curates it, the company evaluates it, and actually produces and sells the chosen inventions online, and even at a handful of retailers.
  • P&G went outside with a plastic technology and created a joint venture with competitor Clorox that focuses on trash bags, food storage, and related areas.
  • Intuit uses its Collaboratory web site to connect with entrepreneurs and to publicize their open innovation challenges, and their Labs web site to engage with the developer and customer communities to get immediate feedback on some of their experiments in order to engage in some level of co-creation.
  • Psion Teklogix has built one of the more robust corporate open innovation communities – Ingenuity Working – complete with a video from their CEO front and center.
  • SAP has started The Global SAP Co-Innovation Lab Network (aka COIL) with HP, Intel, NetApp, Cisco, VMware, and F5 Networks to facilitate project-based co-innovation with its members and to enhance the capabilities of SAP’s partner and customer ecosystem through an integrated network of world-wide expertise and best-in-class technologies and platforms.
  • MyStarbucksIdea.com is an example of engaging the creative energy outside your organization that most companies will not want to follow. They throw things wide open for all idea submissions, not focused on any particular challenges, for all to see. As a result, Starbucks exposes the company to the risk of brand equity destruction from not following through on suggestions. At the same time, this approach provides free market research for competitors and creates a lot of sifting and communications work for internal resources.

If you missed How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts – Part One, you can find it here.

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