Procter & Gamble is the world’s biggest consumer products company with more than $80bn in sales. Yet P&G distributes one of its most innovative products – Pur water purifier – through a non-profit model because executives are convinced it generates more value for the company than a traditional for-profit model ever could. This benefit comes from increased brand presence in emerging markets, opportunities to open new markets and tuning in to the philanthropic sympathies of its employees and consumers.
While P&G has a strong history of philanthropy, the decision to adopt a non-profit model for Pur was difficult and required generating internal support.
Evolution of a strategy.
Pur is a water purification powder that can decontaminate water by stirring it in and straining the water through a cloth. Studies show Pur’s effectiveness in cutting the incidence of diarrhoeal fatalities in the developing world.
In spite of P&G’s success in marketing consumer products, disappointing sales in initial market tests led P&G to consider cancelling the Pur product in 2004. The time required to persuade consumers they needed Pur, and for them to learn how to use it, was too long.
Pur, however, had a tenacious advocate in Greg Allgood, a senior P&G executive. Also, in the aftermath of the devastating tsunami that hit south-east Asia in December 2004, the company donated $3.1m in products and cash, including 13m packets of Pur to Sri Lanka, Indonesia and the Maldives. According to Mr Allgood, this was a turning point because employees understood at “a gut level” that the company was contributing to society and that it could turn a commercial failure into a humanitarian success.
The model of donations along with steady sales at cost-recovery prices to international aid organisations meant Pur could stay viable in the market, with partners distributing the product for free. Also, goodwill was generated by providing a public health benefit.
A.G. Lafley, P&G’s then chief executive, moved Pur into the company’s corporate sustainable development unit, in the form of the Children’s Safe Drinking Water programme. By the end of 2005, Pur and the programme enjoyed strong support within P&G as staff saw how the company could do good and learn about emerging market consumers and its own employee motivations. Today, more than 100 partners work with CSDW, including governments, aid agencies, public health and emergency response organisations, other companies and celebrities.
At a time when more graduates said they were looking to join companies whose social values fitted with their own, it also acted as a recruitment tool.
Measuring the effects.
In terms of qualitative data, P&G has built a stronger reputation with staff and with important partners than it would in a purely commercial endeavour.
In terms of hard sales data in its home markets, one way P&G supports Pur is through its Brandsaver initiative, whereby consumers can support the clean water programme by redeeming coupons on P&G products. In March 2010, P&G donated “a day of safe drinking water” for each coupon redeemed. The following week, P&G achieved its biggest sales week in its 173-year history, and 30m days of clean water were donated.
The programme has also garnered valuable, and sometimes free, marketing attention. When Mr Allgood and 12 celebrities climbed Mount Kilimanjaro to raise awareness and funds, it was the second-most popular trending topic on Twitter and the Pur brand gained 50,000 Facebook fans in one day.
At the 2010 Clinton Global Initiative, P&G’s chief executive Bob McDonald said its commitment to clean water “is good business, as well as good philanthropy”.
After the commercial failure of Pur in emerging markets, P&G has shown how a company can repurpose a brand and build value through philanthropy.
A product champion, internal buy-in, strategic partnerships and a willingness to quantify success through non-financial metrics were all critical.
The authors are assistant professors of sustainability and management strategy at UNC’s Kenan-Flagler Business School
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