Jeff Hill spent three years of his childhood in a hospital. Then he worked 18-hour days selling T-shirts from the back of a trailer just so he could re-pay his medical bills. A beach-based bartering business paid his college tuition for a year.


Tenacious? You betcha. As a college student, Hill woke up at two-thirty in the morning to make sure he got an interview with a Procter & Gamble campus recruiter. He laughs about it now. "I was the only moron who would show up in the middle of the night, wearing a high-water, green corduroy suit. No one else got there until about five hours later."

It paid off, though. Hill cleared all the hurdles and became one of a handful of undergrads to be accepted into P&G's "freshman class" that year, which was 1977. When the offer was made on a Friday, he was at his new desk the following Monday -- at age 20 one of the youngest marketing people ever hired into Procter.

After Procter it was Tambrands and then a tour with the late, great Glendinning Associates consulting firm.Today he's a founding partner -- with Mike Shinall -- of Meridian Consulting Group in Westport, Connecticut. In just a few short years, he and Shinall have captained Meridian into industry leadership. It's a rare week that passes when a Meridian consultant isn't quoted in the trade or business press.

Of course, consultants are supposed to have opinions, and Jeff Hill is no exception. Much of his perspective is shaped by the reality that retailers are no longer just distribution channels but marketers in their own right. That means brand marketers must learn how to work effectively with retailer marketers by re-inventing brand plans as business plans. Hill opens the discussion by getting up close and personal, by pointing out the consequences to marketing people who fail to adapt to the emergence of retail marketers...



Most of what got consumer packaged goods marketers recognized and promoted in the past are not going to get them recognized and promoted in the future. The core competencies are the same in many instances. But the component parts of those competencies, the tactics that are employed in the marketplace, today are entirely different.

What drove the marketplace over the last twenty-five years was a total focus on the consumer, on finding ways to assess consumer needs and then developing overall products and programs to encourage consumers to purchase the brand.

In many respects, marketers conceived of themselves as the conscience of the consumer and communicated directly via consumer media and marketing programs -- TV, print, direct, promotion, et cetera.

The rising power of the retail trade has changed all of this. Key issues are the consolidation of the retail customer base, the increasing availability of data and the ability of retailers to evaluate their own data, as well as the increasing desire by the retail community to establish loyalty to their stores versus loyalty to the brand.

In my youth I developed raw business techniques but knew I needed some fundamental training. So I majored in marketing and got a job with Procter & Gamble.

Another overwhelming factor is that the U.S. marketplace is increasingly global. Consequently, international disciplines are being brought to bear in the U.S. marketplace, in particular an increasing focus on store brand equity development -- i.e., private label. In essence then, retailers are competing with the manufacturer at the branded level with private label.

At issue is not just the power of the retailer; it's also the dynamic of the consumer. We now have two-wage earners in the family, creating a fundamental lack of time and therefore a focus on convenience and simplicity. We also have an increasingly educated consumer who is constantly challenging the notion of the price-value relationship.When you combine this consumer trend with the retailer trend, a conundrum is created for the consumer packaged goods marketplace and marketer.

Brand marketers today must find a way to reach the consumer not only directly, but through the retail trade. In many respects, this notion of reaching consumers through retailers is in fundamental conflict with the gut instincts of how the marketing community has grown up. This is especially true of senior marketing management, which for the last 20 years was taught that the trade is a distribution location -- and in many respects the enemy. To the contrary, the trade -- especially the dominant trade factors -- is far from the enemy. The trade today is essential to achieving volume and profit goals.--

The brand marketer must completely re-think and re-engineer the brand plan development process, which historically has treated the retail trade as second-class citizens. For most consumer packaged goods companies, the trade dynamics are literally outside of the brand planning protocol.

The typical protocol has been for the brand marketing community to lead a business review process that provides lessons learned from the previous year. In addition, from a consumer perspective, this process suggests the overall spending levels for the following year as well as the consumer-specific marketing efforts that are appropriate to achieve brand objectives.

A percentage allocation against trade support has always been a part of the brand plan. Typically, the trade budget is evaluated on a percentage or case-rate basis. As the brand marketer is going through the brand planning process, a certain percentage of total support is going against trade spending.

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The brand plan typically is not focused, in any significant way, on the trade dynamics, except for a paragraph or two regarding the trade spending rate that will be integrated into the plan for the following year. This information is then turned over to the vice president of sales or head of trade marketing for development of programs against that budgeted amount.

Left out is the strategic marketing thinking that is relevant to drive the largest trade factors that, in turn, drive the enterprise. The missed opportunity is to completely re-think conventional marketing planning and programming, to integrate the trade factors. That is, the allocation of a meaningful percentage of direct-to-consumer communication to co-marketing. Co-marketing is equity-building consumer communication (television, print, direct and promotion events) done in concert with the trade.

In addition to co-marketing, other forms of retailer-driven equity-building opportunities, such as store-within-a-store or retail solution centers, also need to be addressed.

If you're in the sun care business, for example, developing consumer equity in a particular franchise may be enhanced by investing meaningful dollars into activities that establish a special shopping experience inside a particular retail location. Such activities would encourage incremental consumption of sun care products, specifically of the brand sponsoring the store-within-a-store or solution center.

By introducing those opportunities into the brand planning process, the trade opportunities will be exposed to the highest court of strategic opinion within a consumer packaged goods enterprise -- as opposed to being relegated to a line item called "trade support."

Consumer packaged goods companies have already taken the step of reorganizing along customer teams. But they have left out the single-most important dynamic success. It's not enough just to re-engineer the organization. They've also got to re-configure the planning process to allow that new organization to be successful.

he issue for the marketer is that the historical brand plan has recognized the direct-to-consumer portion of brand equity development but has overlooked the in-store component of brand equity development. Customer teams are not a new idea. As packaged goods companies continue to increase the number of customer teams, they must concurrently re-engineer the planning process that allows these customer teams to develop their own plan specific to their customers. The customer team input is the essence of the difference between the brand plan and the business plan.

In the context of this reorganization to customer teams, which has been evolving over the past several years, two things have happened. One is, to pay off these customer teams, packaged goods firms are increasingly challenging the team leaders to perform as general managers. Indeed, they often have the goal of evaluating customer team performance at a customer P&L level.

So they are evolving the compensation and the goal structure of these people to focus on general managership and P&L management. Yet they have not empowered these people to deliver against that. The empowerment comes by allowing that individual who is responsible for P&L to develop a plan, a customer plan, to sell that plan to management and be responsible for the P&L that comes from that plan. That's the fundamental missing link.

What's happening is, the brand plan is going forward with modest input from these customer teams. Once the brand plan is accepted, and an overall generic customer plan is established, each of the customer team leaders is fighting for crumbs from the table. That's antithetical to the overall objectives of establishing general managers, evaluating P&L's of those general managers and the customers they're responsible for.

The true way to empower general managers is allow them not only to manage their people and their customers, but also to develop a business plan that will deliver the volume and profit number that management considers acceptable.

In categories that are experiencing consolidation of volume in a few customers -- particularly Wal*Mart, Kmart and Target -- the brand plan may involve specific trademark development with that retailer. This is already happening on three levels. At the primary level, the manufacturer is maintaining the exclusivity of its mark on behalf of the manufacturer, and offering variations of product execution on behalf of the retailer. This might manifest as an exclusive assortment of colors or flavors.

Level two is developing store brands on behalf of that retailer, and co-branding the trademark with the retailer.

On the top end, some manufacturers are developing entirely proprietary trademarks for that retailer, only sold at that retailer. The challenge is, when you build a brand in a particular retailer location, who owns the mark? To what extent is the manufacturer giving up its most important equity, the trademark? That's not a risk because the trademark is clearly owned by the manufacturer. What you're giving up is proprietary distribution rights.

The second question is, if I develop this for one retailer, won't their competitors get irritated? The answer is, absolutely. So when you get into this business you've got to get into it all the way. You've got to be prepared to offer proprietary trademarks to Wal*Mart, Kmart and Target, for example.

In some categories you may see manufacturers develop retailer-specific brand groups. This group of very talented marketing people will be managed by a general manager, against a P&L, to develop business with a particular retailer. The responsibility of the group will progress from an executional co-marketing focus, to a new product development and launch focus.

I'm not saying that this is necessarily where I want the industry to go. This is what reality is. As you move further up the continuum, increasing care should be taken, since control of the equity is at risk as you move up the continuum.

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The bottom line is, as the customer teams more fully develop and understand customer-specific strategy, the customer plan that comes forward must define the appropriate level on the continuum that the customer team believes the company should take. The ultimate business plan should vote "yes" or "no" against that recommendation and allocate funds accordingly.

The consumer packaged goods player should own the consumer of the 21st Century, but only if they recognize fundamental change in strategy and marketing tactics. Those who understand this will be driving the train. Those who don't will be run over by it.