I'm working on a business plan for a client. As a marketer, I've spent a lot of time and energy working on new initiatives to turn their business around. For the past few years, performance has been abysmal and the organization has been eating into its reserves to stay afloat.
As I was reviewing the plan (with all of its bright and shiny initiatives) I had a conversation with a board member who essentially said: "It looks good. But where is the worst case scenario? When do we pull the plug?" Being the optimist that I am, I was a little taken aback. But, the question is a good one.
Too often we get so invested in a brand that we can't see the writing on the wall that says "this brand isn't going to make it." Early in my career I worked on a new Procter & Gamble product that was a financial disaster. The product was a toilet bowl cleanser named Aerex and it was positioned directly against the category leader, Lysol. There were a lot of reasons that Aerex failed (the product was so-so, the price was too high, the advertising wasn't great), but the the real story is that the managers at Procter & Gamble didn't see disaster coming. They were definitely wearing their rose colored glasses. If the research showed that consumers were indifferent, they blamed the research. If the sales force said that major accounts were not stocking the product, they blamed the sales force. In the end I saw something I have never seen before: negative shipments. The stores were shipping the product back faster than P&G was making it.
It's interesting to see that P&G now has a different view of culling its under-performing brands. In early August, "The Street" ran this story:
By dumping under-performing brands, the company can concentrate its resources on developing its winners and finding new products. Since the early August announcement the market continues to react positively to P&G's new philosophy. The value of the company stock continues to climb as investors see the value of shedding losers.
As for the business plan I'm working on, we're going to launch some new initiatives to turn things around because I believe the marketing execution in the last few years has been ineffective. But, there's a catch. If the financials don't hit a target by the end of eighteen months, we go to the worst case scenario and stop the losses.
As I was reviewing the plan (with all of its bright and shiny initiatives) I had a conversation with a board member who essentially said: "It looks good. But where is the worst case scenario? When do we pull the plug?" Being the optimist that I am, I was a little taken aback. But, the question is a good one.
It's interesting to see that P&G now has a different view of culling its under-performing brands. In early August, "The Street" ran this story:
NEW YORK (TheStreet) -- Shares of Procter & Gamble Co. (PG_) are up $1.01% to $82.61 after it was reported that the company is working with advisers including Goldman Sachs Group (GS_) as it reviews up to 100 underperforming brands for potential divestiture, sources told Reuters.
By dumping under-performing brands, the company can concentrate its resources on developing its winners and finding new products. Since the early August announcement the market continues to react positively to P&G's new philosophy. The value of the company stock continues to climb as investors see the value of shedding losers. As for the business plan I'm working on, we're going to launch some new initiatives to turn things around because I believe the marketing execution in the last few years has been ineffective. But, there's a catch. If the financials don't hit a target by the end of eighteen months, we go to the worst case scenario and stop the losses.
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