---
title: "How P&G, the FMCG Giant, Is Winning Back Lost Consumers"
description: "All brand crises stem from failing to follow consumers. P&G's growth in China has followed a classic S-curve, with two stall points; the latest, starting in 2014, was due to consumers perceiving the brand as too mass-market. By applying first principles and consumer-centricity, P&G has crossed non-linear growth gaps through personalization in positioning, packaging, communication, and experience, reigniting growth."
author: "何亚彬"
publisher: "New Distribution"
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published: "2019-03-06"
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# How P&G, the FMCG Giant, Is Winning Back Lost Consumers

> All brand crises stem from failing to follow consumers. P&G's growth in China has followed a classic S-curve, with two stall points; the latest, starting in 2014, was due to consumers perceiving the brand as too mass-market. By applying first principles and consumer-centricity, P&G has crossed non-linear growth gaps through personalization in positioning, packaging, communication, and experience, reigniting growth.

Click to read the original for details.
All brand crises stem from failing to follow consumers.
—He Yabin (President of Braun & Innovation Investment & Consumer Insights, P&G Greater China)

**P&G's growth curve in China is a classic S-curve.**
**Over 30 years in China, P&G has experienced two stall points. The first was when it was ambushed by Diao Pai, after which it returned to rapid growth. The second, and most recent, stall began in 2014, when consumers felt our brands were too mass-market, our premium products were a bit cheap, and they were rejected. After a series of adjustments, P&G has begun to grow again in the past two years.**

**Behind this story is P&G's journey of understanding consumers and crossing non-linear growth.**

**The First Principle of Marketing:**
**Success and failure both stem from HBG**

When we talk about brand growth, there is a ready-made theory called HBG (How Brands Grow), proposed by Professor Byron Sharp. This theory holds a biblical status in marketing. It reveals patterns of user purchase and sales growth, mainly including three points:
1. **Penetration**
2. **Mental availability**
3. **Physical availability**

Professor Sharp's advice to brand owners is to strive to be a **big brand**, as big brands have many users. You must continuously grow your user base to grow. You should use **big media** as much as possible, because big media makes consumers remember you. Then enter **big channels**, because big channels make it easy for consumers to buy you. Multiply these three factors, and you get your market share.

Based on HBG, we can derive two insights:

**1. Brand growth is user-based**
This theory tells us that if you have more users, you have higher loyalty, so loyalty is a result. **Businesses should focus on acquiring more users, i.e., increasing penetration, rather than increasing loyalty.**
This is not to say loyalty is unimportant, but it is not the primary goal in marketing. Under HBG, small brands face difficulties: they have fewer users and lower loyalty, suffering a double jeopardy.

**2. Use media and channels well to make users "remember" and "buy"**
Regarding media and channels, we can use Daniel Kahneman's System 1 and System 2. When making decisions, we typically have two types:
Decision 1: Emotional, very fast, based on intuition and feelings, happening anytime.
Decision 2: Rational, very slow, based on thinking, facts, and analysis.

**However, 95% of human decisions are emotional.** People make 10,000 decisions a day; if all required System 2 thinking, the brain couldn't handle it. Returning to brand purchases, unless you're buying a house today, most brand purchases are emotional decisions. This process should greatly save mental effort—the faster and less effortful, the better. If I recall you have an ad, that's enough; I'll buy.

Combining these points, HBG tells you to do three things: **Brand growth must increase users, increase "affordability" (mental availability), and increase "availability" (physical availability).**

However, the more classic a theory, the more crises it faces.

So, what crises did we see at P&G?

**1. The big brand strategy fails**
We found that the big brand effect is in crisis. Ten years ago, the top 5 brands (including P&G brands) held about 50% market share; today, only 27%. But according to Professor Sharp's theory, you should be a big brand because small brands suffer double jeopardy. Why do small brands seem to be doing well today?

This is intuitively easy to understand. Ten years ago, if a housewife went to the supermarket to buy shampoo, the whole family used the same bottle, the same Safeguard soap. But today, the housewife has her own brand, kids have theirs, the elderly have theirs, and even men have their own brands.

In FMCG, we know that men's commercial value is lower than dogs. So when you see a trend where **even men want their own brands**, it's amazing. It shows that small, beautiful, and segmented markets have great potential.

**2. The big media strategy fails**
Big media is gradually failing, especially with the emergence of small, beautiful brand segments. If you use traditional media to acquire customers, the cost is far higher than social media.

This is also easy to understand. Previously, traditional media targeted a mass audience, and using mass media to reach the mass audience was highly efficient. But using mass media to reach a segmented audience is like using a cannon to kill a mosquito—very ineffective.

So if you have a small, beautiful, segmented brand today, you should use data-driven methods, such as your own DSP or CRM, to find a specific circle of people and reach them precisely. Only when your communication reaches a certain scale can you consider using your cannon and traditional media again.

**3. Footprint effect: The big channel strategy struggles to cross non-linear consumption growth**
Let's take an example: chewing gum. Chewing gum occupies a very special mental and physical space. Why does chewing gum exist? Largely because of the "checkout counter." When you wait or pay at the checkout, you see gum and make an impulse purchase.

But today, with e-commerce, there is no checkout counter, so the logic for gum's existence is gone. Offline, foot traffic has declined significantly. Even if you're offline and queuing at the checkout, you might be scrolling your phone; the mental space is gone. You don't notice the gum, so no impulse to buy.

Many brands, including P&G, have this "footprint effect": we were very successful offline, but today, to do e-commerce, we must abandon many vested interests. Big brands are not as determined as small brands to do this.

Thus, brands in the market are divided into two types: those riding the high-speed rail, growing very fast, and those riding the green train, moving slowly. **Although all brands work hard, if they don't solve their "footprint effect," the green train will never catch up with the high-speed rail.**

Why do these problems arise with HBG? Why does a good brand growth theory suddenly face so many crises?

Because, in essence, our consumption upgrade has a non-linearity. We need to cross this non-linearity in consumption upgrade.

**Adhering to "Consumer First":**
**Crossing Non-linearity**

So, in the past few years, how has P&G used our first principle to cross non-linearity and discover our second curve? What is the first cause of P&G's growth?

It's not brand, not innovation, not scale, not employees—it's "consumer first." **We believe that all brand crises stem from failing to follow consumers.**

In the era of consumption stratification, what is most scarce? Or what do consumers care about most?

**It's personalization.**

In the consumption era (before 2005), the most scarce was quality. A big brand giving you a reason to believe could reduce your choice cost; that was the logic of brand existence.

However, in the era of consumption upgrade and stratification, this logic has changed.

Why? Because your scarcity has changed. Quality is no longer scarce; what's more scarce is personalization. Today, as a brand, you must not only give consumers a reason to believe—why should I buy you?—but also give them a reason to show off and share, enabling personalized expression.

Here's an example:
A friend of mine runs a pastry studio, inviting mom friends to make pastries in a class. He hired a professional photographer. During the one-hour class, you don't need to take selfies because the photographer takes many beautiful photos. After the class, the photographer has already edited all photos, and everyone creates a group chat to share them. Almost all students post to their Moments after the class. Because all services are prepared for you, you have a reason to share and show off.

So, today's brands need to provide more of this personalized service.

**1. Crossing brand non-linearity through personalized positioning and packaging**
P&G once conquered the market with the 16 brands on the left. But in the past 5-10 years, due to their mass-market positioning, they struggled to make personalized expressions, making it difficult to be future growth engines.

So we launched the brand matrix on the right. First, we introduced Pampers Premium for Pampers, and Whisper Liquid Sanitary Pads. Also, Metamucil, an internet-famous weight-loss brand with many social media followers.

In the past 3 years, these brands contributed over 80% of P&G's growth. So you see a completely different approach to crossing non-linearity: previously big brands, now a matrix of small, beautiful brands.

Similarly, packaging needs personalized expression. We brought American designers to China and had in-depth conversations with many consumers. They told us which materials are low-end, why packaging should be glass, the heavier the better, ideally double-layered with a transparent outer layer, etc.

**2. Crossing media non-linearity through personalized communication**
In crossing media non-linearity, P&G did the following:

**First, 5 years ago, 80% of our advertising was on traditional media; now, 80% is on digital media.** But everyone knows today's media is very fragmented. How should we use fragmented media? Before answering, we must analyze the essence of fragmented media.

Today's phone is an extension of a person; your phone apps are extensions of your will. When you use a food delivery app, it's an extension of your laziness. When you browse Weibo, it's an extension of your curiosity. When you follow an influencer or KOL, it's an extension of your personality. So, phone apps are infinite extensions of your personality and will.

From this perspective, fragmentation is actually great. If you capture this fragmented media, you capture the entry point to people's will. One method to achieve this is "programmatic buying."

**Programmatic buying** refers to the automated execution of ad media purchases on behalf of advertisers through digital platforms. For example, when you open any app today, you see a splash ad. In those few seconds, much data analyzes you. If you're an 18-24-year-old male, that data might be sent to Gillette (a P&G sub-brand), which might think you're its audience and show you an ad. Then, when you open the app, a Gillette splash ad appears. That's the principle of programmatic buying.

So, even if today's media is very dispersed and fragmented, it doesn't matter. You can connect all media to programmatic buying, aggregating fragmented media through the platform.

Whether you're sitting on the toilet for 2 minutes in the morning scrolling Weibo, or on the subway after breakfast browsing Toutiao, or slacking off at noon watching iQiyi—these scenarios are fully represented in programmatic buying.

**Second, shifting from a big media strategy to a community media strategy**
Previously, we focused on reaching as many people as possible. But today's media strategy must be social media first, building authentic word-of-mouth.

"Word-of-mouth is the lever of media; authenticity is the lever of word-of-mouth." Only content with inherent word-of-mouth can spread widely on media. Only when your word-of-mouth is authentic can you maximize the leverage effect.

**3. Crossing channel non-linearity through improved experience**
Today's channel scarcity is not just about convenience, but experience.

**First, we achieved "goods finding people," not "people finding goods."**
**For example,** when you buy on an e-commerce platform, do you make the decision yourself? No. Data shows 50% of decisions are made by algorithms. Whatever JD or Tmall recommends, you follow—it's a System 1 decision.

Similarly, in the IoT era, all smart sensors—your smart home, smart fridge, smart washing machine—have vast data about you and will make recommendations that feel comfortable, and you'll follow them.

**Second, increasingly precise scenarios.**
**For example,** CrossFire is a very old game. Its protagonist is called Blade, which naturally fits Gillette. So the game embedded Gillette as a weapon, bringing Gillette into the view of young online audiences.

Later, we brought this game into 2,000 offline stores, where many young audiences went. We also created a game scenario, a very contextual marketing approach. For instance, we dressed promoters as Blade—very ugly but very effective at selling, moving a lot of product.

**Summary**
**In short, what's most scarce today is no longer quality, information, or convenience, but personalized content and experience. "Small and beautiful" is disrupting big brands, social media is disrupting big media, and new retail is disrupting big channels.**

In 1998, looking back at P&G's first 10 years in China, we might wonder if we did something wrong. Why did we make brands so expensive? Many laid-off workers couldn't afford our brands. But in 2014, looking back at the past 10 years, P&G's business was very good, but we felt we made brands too mass-market, and high-end consumers were rejecting us. Did we do something wrong?

So, cognition is an iterative process. You will always have self-doubt and anxiety. But remember, your goal is to cross that limit point, that stall point. The most important thing is to survive.

Finally, I hope today's sharing helps you better revolutionize big companies. (End)

Source: Chaos University (ID: hundun-university)

New Distribution will hold the **2019 (5th) FMCG + Internet Conference** during the Chengdu Spring Sugar Fair from March 15-18. This conference will focus on the theme **"Breakthrough"** , with in-depth discussions among brand owners, supply chain service providers, distributors, retailers, and others.

Compared to previous conferences, this summit will be fully upgraded. In addition to original topics like **channel innovation, city logistics, and distributor transformation** , we've added parallel forums on **new marketing cases, IP + FMCG empowerment, community group buying, and innovative retail** . Through three days of ten high-density, high-quality expert sharing sessions, we believe every brand owner and distributor can learn the latest business models, expert insights, and practical methods, finding new tools and approaches for their 2019 breakthrough and returning to high-speed growth.

Review of Previous Conferences

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