After its successes with Ivory and Crisco, P&G developed a new business technique called “brand management.” Because it focused attention on a product rather than a business function, brand management turned out to be similar in its effects to the multi-divisional structure introduced by Alfred Sloan at General Motors. And it had the same powerful tendency to decentralize decision making.
The shift to brand management began on May 13, 1931, with an internal memorandum from Neil McElroy (1904-1972), an athletic young man who had come to P&G in 1925 right after his graduation from Harvard College. While working on the advertising campaign for Camay soap, McElroy became frustrated with having to compete not only with soaps from Lever and Palmolive, but also with Ivory, P&G’s own flagship product. In a now-famous memo, he argued that more concentrated attention should be paid to Camay, and by extension to other P&G brands as well. In addition to having a person in charge of each brand, there should be a substantial team of people devoted to thinking about every aspect of marketing it. This dedicated group should attend to one brand and it alone. The new unit should include a brand assistant, several “check-up people,” and others with very specific tasks.
The concern of these managers would be the brand, which would be marketed as if it were a separate business. In this way the qualities of every brand would be distinguished from those of every other. In ad campaigns, Camay and Ivory would be targeted to different consumer markets, and therefore would become less competitive with each other. Over the years, “product differentiation,” as businesspeople came to call it, would develop into a key element of marketing.
McElroy’s memo ran to a terse three pages, in violation of President Deupree’s model of the “one-page memo,” a P&G custom that had become well known in management circles. But the content of the memo made good sense, and its proposals were approved up the corporate hierarchy and endorsed with enthusiasm by Deupree.
Thus was born the modern system of brand management. It was widely emulated, and in one form or another was still followed in the early twenty-first century by many consumer-products companies throughout the world. Typically, brand managers were energetic young executives marked for bright futures within a company. All of Procter & Gamble’s own CEOs after Deupree had brand-management experience. This group included Neil McElroy himself, who headed the company after Deupree retired in 1948, and who in 1957 became Secretary of Defense under President Eisenhower.
Brand management as a business technique was one of the signal innovations in American marketing during the twentieth century. It epitomized the persistent theme of balancing centralized oversight with decentralized decision making based on who in the company had the best information about the decision at hand.
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