Week of 21 Jul 08
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I'll repeat from last week: modernizing the pulp and paper industry involves modernizing our thinking. The area where we have been most deficient and abdicated a very important responsibility to others is the area of marketing. If you have (most likely) a technical or scientific background, please bear with me--there is an important punch line near the end of this column.
On Friday, 11 July 08, a very interesting event took place in many parts of the world. Apple introduced version 2 of the iPhone. In at least one of our local large malls, the line from the store selling these snaked all the way through the mall and outside. This was only to get a second generation of this product with just a few new features! But don't get hung up on this.
Now, if one thinks about it, the iPhone, through every one of its functions, really represents a replacement for printing and writing (including newsprint) paper grades. For ever since Samuel F. B. Morse invented the telegraph, uses of communications papers have been slowly, then rapidly (I mentioned the facsimile machine last week, one of the latecomers), encroached upon by electronic communications (the telegraph replaced a courier on a horse racing through the night with a bag full of dispatches). Wars bring innovation, and the first war to exploit this new-fangled "electronic communications" was the Mexican War, which started 162 years ago this past April 25th. Telegraph lines were strung all the way from the scenes of battle to Washington, D.C. One might say this was the beginning of the end for communications papers.
When was the last time you saw a line of customers snaking through a mall and out the doors to be the first to buy a new grade of communications papers?
In 1957, one of my former employers, Procter & Gamble, bought the Charmin Paper Company, the manufacturer of Charmin bathroom tissue. Procter & Gamble is an excellent marketing company that just happens to make very fine products. I left them in the late 1970's, so I am not telling any secrets here, but this is my perception of them. In order to sell soap and candles, their first products, way back in 1837 (9 years before the start of the Mexican War), I suspect they had to employ rudimentary marketing methods. Why? They were competing with "free"--the toughest marketing job there is. For many people in those days saw candles and soap as free--the woman of the house made them in her spare time, for what else did she have to do but spin thread, weave cloth, make clothes, wash clothes, render lard, dress chickens, clean house, cook, can garden produce and nurse babies? P & G wanted the family to pay cash money (a very scarce resource) for something they could get for free--a tough sell in any market.
So, between 1837 and 1957, P & G refined marketing strategies, creating, for instance, the soap opera on early radio, among many other innovations. Even with all that expertise, though, it was not obvious in 1957 that one could differentiate toilet tissue brands with superior marketing acumen. One needs to understand the setting then. Particularly for you younger readers, I need to explain the cultural world as this boy saw it in 1957 small town America (and I suspect the rest of the developed world was of a similar mindset). Let me state it this way: people did not talk publicly about bodily functions. A little stronger: people did not even whisper about bodily functions. I remember a feminine product called "Modess" (officially, Johnson & Johnson called them "Modess menstrual napkins") which was sold in a blue paper wrapped box with virtually no printing on it. I remember my mother buying this product when I would go to the grocery with her and then it being whisked away to some secret location when we got home. P & G, the marketer, decided to boldly launch into this backwater of private products for private parts. In 1964, P & G introduced Mr. Whipple (actor Richard Wilson, 1916 - 2007) to pitch Charmin everywhere--television, radio, POP displays and so forth. They turned private products into a public discussion and set tissue products on the road to high margins. Manufacturers of communications and packaging grades of paper must have thought, "what foolishness!" But over 500 different television commercials starring Wilson worked (an average of one new one every two weeks for 21 years). Yet from 1964 to 1985 Mr. Whipple never varied the punch line: "Please don't squeeze the Charmin!"
Today, there are two areas of paper manufacturing that are thriving--tissue and packaging (both what I call "fine packaging" and "coarse packaging"). They thrive for several reasons:
1. Replacements have not been found
2. Monopolistic conditions due to no. 1
3. Marketing of tissue products
The pulp and paper industry is headed by technical and operations managers that have not a clue about marketing (I should know, I am one). The feeble attempts at marketing communications papers have been laughable. "Great White," now a brand belonging to International Paper (Union Camp created it before they were acquired by IP) and used for copying and other similar functions is a good example. "Marketing" seems to consist of putting it in a package with the name "Great White" on it. It appears IP would no more think of hiring a modern day "Mr. Whipple" and spending the kinds of money P & G spent on him (during his prime in this role, P & G paid Wilson alone $300,000 (in 1960's money) for twelve days per year of work) than anything. Yet, think of it this way--in the 1960's most homes in America probably had one bathroom, and hence one toilet paper holder. Today, in the same demographic area, the United States, I'll bet the printers (home, personal, and office machines), the real consumers of "Great White," exceed the number of toilet paper holders of the 1960's. If they don't I am fairly certain their consumption on an MSF or Meter squared basis exceeds that of toilet paper holders. Why can't one successfully market the daylights out of this product? What barriers to marketing exist here that did not exist for toilet paper in 1957?
One more point and then I'll wrap this up. Alec Tindal, from Leeds, England, a member of the Cellulose Community, has posted a great white paper (no pun intended) in the Library at the Cellulose Community (www.cellulosecommunity.org, then go to the Library Group). What he has pointed out in this paper is that the consumer has their own perception of paper whiteness, forget the technical aspects. This is why technical people do not make good marketers. We get hung up in precisely measuring things, whereas the consumer relies on perception. Back to toilet paper, for instance: Procter & Gamble made (and makes) Charmin to very precise specifications, but they do not bother talking to the consumer about these. Instead they talk about softness, and today, use animated cartoon bear cubs to illustrate the point (real "Mr. Whipples" apparently became too expensive even for P & G). The consumers cares not a whit about specifications, except that, invisibly, the specifications lead to consistency from purchase to purchase, something the consumer does care about a great deal.
So, after all of this, where are we? Professional marketing boosts product sales and boosts profit margins. Here is an example of what one can do with this. I am a member of the P & G Alums Association. This past spring, A. G. Lafley, current Chairman and CEO of P & G, spoke to our local chapter here in Atlanta. He told us that P & G still has one of the greatest health care programs for employees available anywhere and he is determined to keep it (when, while as an employee of P & G, my daughter was born in 1978 with a major birth defect resulting in multiple operations and a 30 day stay in neonatal intensive care, my out of pocket costs were $15.00). With great operating margins you can do this. Which allows you to attract the very best employees. And make superior products. And fund superior innovation efforts.
It all starts with marketing. And an ad in the convention daily at PaperWeek telling readers which suite your sales people are occupying is not it--not even close. The same can be said for a full page ad in "Print" magazine. You must create differentiated demand with the end consumer and expect them to vigorously pull your product off the paper machines and through the distribution system (induce a pulling of the string rather than ineffectively trying to push it).
We are an industry of engineers, scientists and technicians. That was great when the science and know-how of making paper were being developed. There are still scientific discoveries to be made, patents to be issued. But the peak of scientific and technical discovery about our products seems to have passed, at least for the moment.
There is not one school of which I am aware that teaches marketing of paper products. Yet again, if we count the toilet paper holders of 1957 worldwide and compare them to the numbers and voracious appetites of printers in consumers' hands today, there appears to be no reason why a Mr. Whipple for communications papers would not work. And the same is true for packaging grades. We desperately need a renowned marketing department at a major university to take up the cause of marketing all pulp and paper products directly to consumers.
I promised you an important punch line and this is it: Effective marketing is the path to high margins and future innovation.
We can and must do this.
No longer can we afford to abdicate our important marketing job to middle people at distributors, commercial printers and other such places.
Heck, we can even promote safety with paper. I know of no reported cases of brain cancer due to handling paper, yet it seems as if the jury is still out on cell phone use coupled with this form of cancer.
Be safe and we will talk next week.