By Mr. Gerardo C. Ablaza Jr.
This article, first published in the November 2009 issue of Universitas, is an excerpt of a lecture delivered by Mr. Gerardo C. Ablaza Jr. at UA&P to a class of IMC students, sharing his knowledge and insight gained through decades of experience in the corporate world. He was then the Senior Managing Director of Ayala Corporation and the former CEO of Globe Telecom Inc.
Seven months ago, I marked 35 years as a corporate executive—which probably means that I started working when most of you were not even born yet! Over those many years, I went through four major career shifts.
I began work in the fast-moving consumer goods sector, spending over four years in Philippine Refining Co. (PRC, now Unilever), and two years in a start-up marketing company called Amalgamated Creameries Corporation. I moved into the agribusiness field, where I worked for three years, learning about the production and sales of hogs and cattle in Monterey Farms, and then poultry in San Miguel Corporation. In late 1983, I entered the world of banking and stayed there for 15 years. I joined Citibank at a time when it began hiring professionals with a non-banking background to help propel its new consumer banking business. And in 1997, I accepted the challenge of participating yet again in a new sector I was thoroughly unfamiliar with—telecommunications. I was blessed with the opportunity to lead Globe Telecom from being a troubled start-up with merely 50,000 subscribers 12 years ago to becoming a major service provider with over 25 million customers when I handed over its leadership to a new CEO early this year.
I learned my marketing ABCs at PRC. It was there that I began to understand some core marketing fundamentals. Among them:
- Marketing is about serving and serving customer needs profitably.
- A solid consumer proposition must have a coherent and compelling marketing mix revolving around 4 Ps: Product, Price, Place, and Promotion.
- To achieve success, a brand must have sustainable competitive differentiation: Those who manage it must be able to answer: “Why should I choose and buy Brand X over Brand Y?”
- The brand must be value-creating, not value-destroying, for the enterprise. Thus, the brand manager must be accountable for the brand’s P&L (profit and loss) and its resource utilization.
As basic as these principles may sound, I have found them to be true and unchanging regardless of the business or industry. Beyond these fundamentals, I gained other insights and lessons from my early stint as brand assistant, brand manager, and product group manager in almost five years at PRC.
Humility
The first lesson is humility. You graduate with honors from a notable university, you have consistently received A’s for your tests and term papers, you are used to engaging in academic debates and intellectual analysis. Therefore, you feel you know everything, and are prepared to conquer the world. Then, you find out quickly enough that the real world is a different place.
In school, you made an effort to submit long and involved term papers, crafted for beautiful language (sometimes, even flowery language) to impress your professor with your command of English. I did exactly that on my first memo to my boss, a Nigerian from the royal Ibo tribe, educated in Cambridge. He massacred my paper, and scrapped big pieces of it. Less than a third survived. Business communication is about simple and clear language that directly exposes the objective of the report, the problem or issue being addressed, the alternative solutions in light of the business context, and the recommendation and the rationale for it. The rest is fluff, therefore irrelevant. It was a humbling experience.
This experience taught me humility. It is an important one because humility is about acknowledging that you don’t know everything. In fact, you know very little. Consequently, you open yourself up to learning and growth. Graduation from school is not the end of learning, but must lead to the continuation of it. Keep this in mind when you begin to practice your profession.
Market awareness
Another early lesson is that a good marketing man needs to be aware of his market, in all of its important dimensions. He must have a sense of the ecosystem made up of the consumer and his milieu, the distribution structure and how its different segments behave in the delivery of his product to the consumer, the other products and brands that directly or indirectly compete with his brand, and his suppliers who form an important part of his product’s cost and supply chain. I realized early that the key to good market awareness is to understand that it does not reside within, but rather outside oneself. None of us is representative of the consumer; therefore we must continuously validate our hypotheses about him—his lifestyle, wants, needs, and behaviors—through actual consumer contact, immersion, and marketing research. It is not sufficient that we are able to imagine what goes on in the distribution chain and in various trade channels; we must go out and see for ourselves.
Value of brand
I also learned early that a brand’s value or equity goes beyond the product’s functionalities. The brand has an emotional character formed by reputation, heritage, as well as quality and performance perceptions that ultimately determine consumer choice. Throughout the length of my stay with the Fats and Oils Product Group, PRC’s refrigerated margarine product consistently beat that of P&G in all blind product tests. It had superior taste, better melting values, more appetizing smell, and a more attractive color. But in part 2 of researches where we tested the margarine products on a branded basis—our Milkrema against P&G’s Dari Crème—we were always clobbered. Exactly the same respondents evaluating the same products gave different judgments. Dari Crème’s image was simply superior. The name connoted creaminess and butter-like qualities; its advertising played on motherly care (“Pinipili ng mapiling ina.”) and benefited from a long heritage of leadership and acceptance in the Filipino home.
Product performance
Consistent product performance is a necessary and minimum condition for a brand’s continued success, if not survival. In fact, there was a saying in our early days as marketing practitioners that “good advertising kills a bad product faster.” The brand promise that is conveyed through advertising and other forms of marketing communication must be fulfilled with every experience the customer has with the product. Otherwise, purchase is unlikely to be repeated, and the brand’s reputation will be undermined.
During my stint as Milkrema Brand Manager, we lined up a range of new sandwich spreads that would extend the brand and expand the range of choices that we would offer to the consumer for breakfast, snacks, and other meal occasions. One of these was Milkrema Choco Spread. It was similar to the product Nutella. It was targeted towards children and younger consumers. The packaging and advertising were geared towards this market. It took off like a rocket. In its first few weeks, off-take was 2-3 times the planned volumes. Then disaster struck. The product began to develop molds on the shelves and in the store bodegas. I can no longer remember the technical issues, but it had to do with how that particular formation of sugar, cocoa, and vegetable fats promoted the growth of molds. We had to recall the product and correct the formulation. We tried to reintroduce it, but the trade had lost confidence.
This example is dramatic because it speaks of a large and visible problem that caused a product’s demise. But there are many more examples of products that go through a slow and attritional death because they are unable, in more subtle ways, to meet the customer’s expectation of quality and performance that were promised by the brand.
There is, furthermore, a supplementary insight in this: that even failures bring valuable lessons. This is important to the marketing professional who needs to be on the edge of innovation, identifying evolving customer needs if not creating them, who should be willing to experiment and try new things. And yet, no one can be a perfect batter. If we accept that there will be misses, we can use them to make adjustments towards achieving a powerful hit.
Product cycles
I am sure you are familiar with the classical product cycle: introduction, growth, maturity, and decline. As sure as night follows day, products go through a life cycle. Even great brands die. I had the privilege of being a product group manager for one of them—Royco Chicken Noodle Soup. Royco was one of the well-established household brand s in our time. It was part of the home. It was a dominant market leader with a 75% share of the Soups and Broth category. Because of its market strength, Royco was also the most profitable brand in the Foods Division of PRC.
In some parts of the country, Royco was consumed not only as a soup but also as a viand. Its use as a viand surfaced in the geographies where there were more lower-income households who considered it nutritious enough as stand-alone ulam (viand) and satisfying enough when eaten with rice. It may not have been fully evident to us then, but this behavior should have tipped us off to an emerging consumer need: that of an inexpensive, easy-to-use, but filling viand substitute.
It was long after I had left PRC that Royco faded away, and in its place emerged the instant noodle product. Instant noodles are better suited for main meal consumption. They were more robust and satisfying, had better taste (and eventually offered a wide range of flavors), easy to cook, and most of all, affordable. Today, it is reported that more and more lower-income consumers, especially workers, get by for lunch with instant noodles, rice, and a bottle of Coke. Instant noodles for taste and nutrition (whatever little it provides), rice to feel full, and Coke for the energy kick from the sugar!
The lesson is: every product will inevitably go through a life cycle. At some point, it will decline and give way to another product. This decline can be triggered by any one off a whole range of reasons such as the introduction of a superior product, a change in the factors of production that make the product unprofitable. Therefore, as marketing managers, we need to keep an eye on clues and emerging trends that may possibly hasten the life cycle of our products. We must constantly search for ways by which we can lengthen that cycle either through functionality and feature enhancements, marketing to new consumer segments, opening up of new distribution channels, or improving the price-value equation of our offering. Most of all, we must plan for our own product’s eventual replacement. If we don’t, somebody else will.
The marketing man as enterprise leader
In my years at PRC, I realized that a marketing man’s greatest contribution to his enterprise is providing effective leadership. And yet, the marketing man often does not have the hierarchical authority over all the functions in the enterprise. This suggests that he needs to lead, not by formal authority, but by influence, or better yet, by inspiration. I remember being a 22-year-old branch manager working with a 45-year-old sales director to try to get him to allocate sales resources in support of my brand’s marketing programs. He was more senior in age and experience, and he did not report to me. Unless I had ideas powerful enough to make him listen, you can imagine how easily he could simply walk away.
As a leader of his brand, the marketing manager must put a stake in the ground, establish a destination for his brand, and create a sense of purpose that the organization in its various parts can rally to. As important, he must ensure that enterprise resources are lined up toward the fulfillment of that brand vision.
There are some of the lessons from my years at PRC that have stuck with me over the years. I believe they are as relevant today as they were in the mid-70s, although there are, today, even richer examples that give evidence to the principles underlying those lessons.#
Banner photo by mohamed Hassan from Pixabay.
Leave a Reply