Peter Lund can safely walk the hallways at Clorox Co. now. The director of consumer promotions has been ducking managers for a few years as he leads a studied evolution in the $4 billion company’s promotions marketing strategy, building staff from three to 17 in four years and tackling more sophisticated campaigns.
That kind of hiring is remarkable in tight times (Clorox’s total headcount declined six percent in 2001 and ten percent in 2002), but it isn’t without rigorous backing: Figures-fixated execs at Clorox get ROI proof for every move that Lund makes. “There’s a standing joke here that if you’re going to present a promotional concept with a five-page talk sheet, the first page is the concept and the next four are the facts and figures showing why it’s the right thing to do,” says Lund, a 12-year veteran of Clorox who grew up in packaged goods.
Oakland, CA-based Clorox has just brought Brita, the last of its seven divisions, on board with its expanded (and expanding) consumer promotions group. Lund’s revamp of the group began with service to two divisions, Glad and pet products. It’s also ramping up co-marketing with a new department and agency, Southfield, MI-based Mars Advertising, hired late in 2002. (Its three other agencies of record are Colangelo Synergy Marketing, Darien, CT; PowerPact LLC, Midlothian, VA; and Frankel, San Francisco, hired in January after a year of projects.)
Hiring more promo pros doesn’t mean additional headcount — in fact, the company is trimming brand management ranks through attrition — but a different mindset. Clorox’s marketing strategy has shifted to fewer, more sophisticated promos, and continues to evolve this year with cross-divisional campaigns. First work is on deck to pair Glad trash bags with cleaning products, and Kingsford charcoal with Hidden Valley dressing and K.C. Masterpiece barbecue sauce. This year, consumers may see marketing from Clorox’s joint venture with Procter & Gamble on its Glad business, with Clorox in charge of day-to-day management. (P&G gets 10-percent interest for sharing R&D smarts and may add 10 percent later; Clorox keeps current Glad assets.)
Promotion spending is up, and could reach an estimated $175 million this year. Ad spending jumped 77 percent to an estimated $528 million for calendar 2002, per CMR/TNS Media Intelligence. (Clorox reports ad spending rose 30 percent to $347 million for fiscal 2002 ended June 30, mostly behind core brands.)
“We’re creating a sub-specialty of consumer promotions” that complements in-house creative, target marketing, media and p.r. departments, says director of marketing communications Anne Hickey, who oversees those divisions. At Clorox, promo managers lead marketing strategy.
A string of effective — and cost-effective — campaigns helped Lund persuade management to consolidate promotional planning with the 17 promotion managers, rather than leave it scattered among 40-plus junior brand managers straight out of grad school. “That system works great if all you’re doing is cranking out FSIs,” says Lund. “But if you wanted to do games of chance, added value, reward incentives, sponsorship or sampling, it was going to strain the system. The company began to diversify in promotion tactics, and that required more expertise.”
Lund credits then-VP marketing George Roeth with championing in-house growth. “He said, ‘Take two divisions, make it work, and we’ll go from there,’” says Lund. (Roeth is now part of a future-growth think tank at Clorox.)
The promo group now fields bigger, more sophisticated promotions. Product divisions were converted as fast as the consumer promotions department could serve them.
It wasn’t fast enough for some. “I’d have to dodge some marketing directors in the hallway because they’d heard how well things were going in the divisions that had dedicated promotion support, and they wanted it too,” Lund laughs.
Clorox’s adoption of co-marketing has been even more deliberate. Some divisions tinkered with it, but management wanted proof of better ROI before forming a corporate department. “Clorox took a wait-and-learn position before getting deeply into co-marketing,” says Lund. Now 13 co-marketing managers (some from brand-side, some from sales) collaborate with promo and brand managers on strategy. All promotion plans come with ROI and incremental volume estimates from promo managers using Clorox and industry data and two templates (see sidebar). Some of the programs Lund and team did for Glad and pet products that first year earned more incremental volume for the same or less money. They’ve even given money back to brand groups.
“They’re a very intense, anal-retentive, numbers-driven organization,” says a trade-marketing expert familiar with Clorox and its reputation among retailers. “Customers think they’re stingy with trade dollars, but they pay attention to detail and are very disciplined.”
The laundry and homecare division wasn’t yet working with the consumer promo group when it rushed to launch ReadyMop last January. Clorox had gotten wind that P&G was going to beat it to market with its Swiffer WetJet, so the brand team took just six weeks to get on-shelf. A promotion manager wrote the launch plan at the brand team’s request.
“They asked if we could moonlight for them, even though they hadn’t been allocated dedicated [consumer promo] support yet,” Lund explains. “There was a lot of money at risk and a huge opportunity if we were successful.”
Clorox fielded a $31 million ad campaign via DDB, San Francisco, and the biggest-ever in-store demo for a packaged goods launch, with 70,000 demo days to reach the household penetration goal. (That amount also assured enough time with key retailers for early distribution and incremental merchandising.) Robinson & Maites, Chicago, handled.
“There was so much consumer interest behind this product that people were eager just to try it out for themselves,” says Lund. Demonstrators let shoppers swab away on a portable piece of flooring. ReadyMop costs less than WetJet, so demos drove home ReadyMop’s performance. But in-store demos don’t come cheap — especially 70,000 of them.
“You can bet we wracked our brains to try and figure out alternatives to making that type of investment,” says Lund. “But you’re not going to put out trial-size samples of Clorox ReadyMop.”
The tactic paid off: Clorox earned six-percent household penetration in six months, and is the top convenience-mop brand. Sales hit $68.7 million in supermarkets and drugstores for the 52 weeks ended Dec. 29, per Information Resources Inc.
Two earlier campaigns proved the promo departments’ mettle. Bake Your Holidays Glad put baking-related premiums (think cookie cutters, sprinkles and frosting) in 6 million packages of food bags, wraps and containers to woo moms who bake for family and friends. Glad is usually locked out of holiday merchandising by SC Johnson’s Saran Wrap, and used to rely on couponing. Incremental volume jumped, and the premiums offer has been key to getting merchandising support each year since its 2000 launch (a year after Clorox bought Glad parent First Brands). Colangelo handles.
“We had other tools out there [also] influencing merchandising, but this program provided a rallying point for field sales and [retail] customers,” says Lund.
In the same period, the company’s Fresh Step cat litter launched a loyalty program to stem brand-switching. Heavy trade dealing keeps shoppers focused on price, so Fresh Step launched Paw Points to foster brand loyalty. Consumers collect on-pack points to redeem for premiums from carriers and toys to free 9-Lives food via partner H.J. Heinz Co., or donate to the American Society for the Prevention of Cruelty to Animals (10 points equals a $5 donation). It took a year to sell upper management on the upfront investment, but the three-year-old program has paid off, making Fresh Step a value-added brand, not a price-driven commodity. Response was twice what Clorox expected the first year; Paw Points has since rolled across all Fresh Step SKUs. Colangelo handles.
Diversity of brands is a blessing and a curse. Although it’s relatively small at $4 billion, Clorox has 30-plus brands with wildly diverse audiences. Picture Brita water filters (popular with upscale urbanites) next to Combat insecticide (lower-income users), or ethnic-skewed Pine Sol with macho Armor All.
“In 12 years I’ve never been bored,” Lund shrugs. “We’re challenged by the diversity in our product line.”
But that scattered portfolio makes it tough for Clorox to compete against bigger CPGs for retailers’ attention. “They live in Procter & Gamble’s shadow,” says the trade marketing expert. “Clorox does not have the critical mass to impact the entire store.”
Clorox has used its long relationship with broker Acosta to good advantage. “They’re one of the few companies that have figured out how to make brokers work for you,” the trade expert adds.
While Clorox’s product divisions run separately, dedicated sales reps present one face to key customers. The co-marketing group helps sales reps address retailers’ needs. Two liaisons new to the consumer promotions group help co-marketing managers leverage national promos with retailer-specific extensions. Co-marketing managers (field marketing staff) talk to sales reps to find key retailers’ hot buttons. The intersection of marketing and sales will evolve this year.
And then there are multi-brand promos, a new tack at Clorox, with first work set for spring and summer. “Some of our divisions don’t fit together very well, but some do. One of the benefits of consolidating promotion planning with a small group like ours is that we can do more cross-division promos than ever before,” says Lund.
Promo managers are assigned to one or more product division, but the group swaps ideas via semi-weekly meetings. Most are seasoned CPG promo pros; three came from Clorox brand management, and they help other promo managers navigate the bureaucracy.
“They don’t have strong tech knowledge of promotion, but they do provide a business savvy and brand perspective that helps make our group more persuasive,” with the volume and profit models they present to brand managers, says Lund.
Promo managers also get to delegate mundane executional work to agencies’ junior staff, in-house creative services department or junior brand staff. That leaves managers — and agency execs — time and energy for strategic planning.
“Keeping the FSI artwork off their plates is really unusual, and well-appreciated,” says Lund. “Going to FSI photo shoots [at this point in their careers] is repetitive and time-consuming.”
||All dollars expressed in millions
|Clorox (bleach and laundry)
|Clorox (household cleaners)
|* Food, drug, mass (excluding Wal-Mart) sales for 52 weeks ended Dec. 29, 2002. Source: Information Resources, Inc.
|+ Measured media spending for January-November 2002. Source: CMR/TNS Media Intelligence
Despite that perk, it takes a certain personality to thrive under Clorox’s strict attention to numbers. “Generally we love [the rigor] because it makes us better business people,” says Lund. “People come here because they want to step up strategically and know the environment is so analytically rigorous, they’ll be challenged. Plus, our management recognizes we’re on the right path, and our brand teams truly appreciate us.”
At least, that’s what they say in the hallway.
Strategic Game Plan Cleans Up
Clorox Co.’s consumer promotions department uses a strategic framework to identify objectives from among three consumer behaviors: trial, purchase continuity and loading. They then choose from four incentives: price, product interaction (sampling or demo), added value, or image and awareness building. The last element is part of all good promos, of course; it’s also harder to quantify, a crucial step at Clorox.
Once strategy is set, managers choose tactics — such as premiums, alternative use, trial size sample, recipe, demo or sweepstakes. Agencies flesh out the plan, then execute, following a collection of ROI models that managers run to test their ideas. The process results in clear directions for agencies.
“The assignment won’t just be ‘Glad at the holidays for women with kids,’” says director of consumer promotions Peter Lund. “We’ll be far more specific: ‘We’re looking for a particular behavior with this particular incentive for holidays.’ The intent is to focus the agency’s account and creative teams…to deliver the behavior we want.”
Take ReadyMop, which went from R&D to store shelves in just six weeks. “We felt that allowing consumers to experience the product they’d heard so much buzz about would be a nice complement to its already lower shelf price,” says Lund. A heavy demo schedule helped ReadyMop earn nearly $70 million in sales last year despite being second to market.
“We’re analytical by nature, but we don’t just crunch numbers,” says Anne Hickey (pictured), director of marketing communications. “We value ideas, consumer insights, and connecting the dots where you don’t necessarily see a connection.” Lund sums up: “Our strategic framework and ROI models help us move faster because they create a common language for us, brands and sales to evaluate recommendations and move forward with confidence.”
Agents of Change
When Clorox started testing an in-house consumer promotions team, it hired Colangelo Synergy Marketing in increments. The Darien, CT-based shop started on pet products in 1998, Clorox’s first-ever agency of record.
“This was always going to be a test,” says agency President Rob Colangelo. “We couldn’t look beyond one year in planning because we didn’t know if the department was going to be there in a year.” Colangelo picked up one product division a year as the in-house unit grew.
The experiment has been successful enough to warrant four agencies of record. Mars Advertising, Southfield, MI, was hired in late 2002 to handle co-marketing for Clorox’s fledgling in-house co-marketing group. PowerPact LLC, Midlothian, VA, has been AOR for the auto care division for a year. Frankel, San Francisco, was hired in January for the laundry and home care division after a year of projects and a rigorous review. First work breaks this spring.
“Team chemistry is critical to them,” says Frankel San Francisco President David Haan. “The [promotions team] is sensitive about hiring agencies that’ll make their brand people confident.”
Senior agency staffers flesh out strategy and creative; junior staffers execute. Spreading work among agencies staggers planning and keeps shops from getting overloaded. It also lets Clorox match shops’ skills against brands’ needs.
“Everything has to be calculated before we do it,” says Colangelo. “We’re constantly running numbers on payback, sharpening the pencil on how to do it better and smarter.”