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In 1837, two British immigrants co-founded a company in Cincinnati, USA. They used the abundant lard produced locally to produce candles and soaps of "perfect weight". This seemingly insignificant workshop at the time changed the life experience of billions of people on the earth in the next two centuries.

187 years later, thousands of Chinese babies were recorded for their body shapes using the world's only three "one-second imaging devices", and the big data from these little butts was used to improve diapers that fit better: close-fitting, leak-proof, and not tight. Chinese mothers no longer need to use "folk wisdom" to cut many holes in the waist of their children's diapers for ventilation.

The company that has gone to great lengths to solve the problem of itchy red bottoms for Chinese babies is the 187-year-old company named after its founder's initials: P&G. This year is also the 36th year that P&G has entered the Chinese market.

36 years ago today (August 18), P&G landed in Guangzhou, China for the first time, and started its in-depth exploration of the Chinese market. Today, this daily chemical giant is still growing at a high speed.

Satisfying Chinese consumers is both the hardest and easiest thing

Looking around the world, Chinese consumers can be said to be spoiled children. With abundant product supply, fast logistics, and refined consumer levels, the vast market data can also provide feedback for companies to innovate and improve, so they can often enjoy newer and better products.

It is very difficult for companies to satisfy Chinese consumers. The population base is large but the population is complex, the consumption power is stratified, the tastes are diverse, and the market trend changes rapidly.

However, no matter how things change, the underlying needs of consumers to be respected, understood, and understood remain unchanged. When it comes to consumer insights, the competition is about who can best understand them and who can deliver product value while also satisfying emotional value.

But many times, consumers lack the "perspective eyes" to see the underlying reasons behind the superficial demands.

Everyone is worried about clothes that turn yellow the more they wear. It’s hard to tell where they are dirty, but they don’t look bright and new after washing. In fact, it’s because of the growth of bacteria. The more you use hand sanitizer, the cleaner it will be. It has to be at the "optimal value" to be effective. Girls who love beauty often complain about their hair loss and low hair volume, but as long as the hair roots are fluffy and not sticking to the scalp, they can also look beautiful with "head covering the face".

It is precisely because consumers cannot see clearly that companies need to use technical capabilities to help "eliminate blind spots." These capabilities are hidden in more than a dozen R&D laboratories in P&G's R&D center.

When we talk about the scent of laundry detergent, what feeling do we mean at that moment? Is it the wet smell right after washing, the smell of the wind blowing in when hanging on the balcony, or the smell left on the body after wearing it for a day or two? These detailed feelings can all be analyzed with big data, thus affecting the concentration of fragrance in the product.

The analytical laboratory of P&G's R&D center can separate and analyze odor components, and use the dynamic odor detector developed in cooperation with the Chinese Academy of Sciences to convert odors into odor visualization heat maps, turning "smell" into "visual" effects, allowing people to "see" odor changes and capture odor molecules. This capability can also be used to study the release of fragrance during the rubbing process, helping to improve the design of products such as fragrance beads, so that the timing of fragrance release is just right.

The same is true for Pampers' innovation and upgrade. The birth of a soft and comfortable diaper that does not bind the belly has left traces in major laboratories: the bionic touch sensing technology of the analysis laboratory studies the baby's touch and uses data to define the true "softness"; CLC's "baby room" observes and tests interactive behaviors in the closest consumer use scenario; 3D imaging technology is used to analyze the body shape of Chinese babies, so as to design a zoned decompression elastic waist that does not bind the belly and is appropriately tight.

These insights are internalized in every department of P&G, and innovation is not just the responsibility of the market research department. Xu Min, Chairman and CEO of P&G Greater China, told Huxiu that when insights are transformed into core operating concepts, higher requirements are placed on talent capabilities. "We have always emphasized internally that we hope that both technical talents and production talents, including R&D departments, need to understand consumer needs."

At the P&G Innovation Open Day, Xu Min also shared P&G's R&D and innovation system: using the "Glocal globalization + localization" strategic layout to combine the world's deep technical reserves and resources with local insights, strengthen global R&D and innovation collaboration, use the world's top technology to serve Chinese consumers, and at the same time reversely export China's innovation to provide more support for global innovation.

This is an innovative measure based in China and benefiting the world. By satisfying the most "picky" Chinese consumers, it will be natural to promote higher-standard products to the world.

Why China

With its red brick exterior and gray bricks similar to those in the Hutong area, the Beijing R&D Center has a Chinese style at first glance. It is located in Shunyi District, less than ten kilometers away from the Capital International Airport. It has been expanded since last year and is now officially in use. This is P&G's second largest R&D center in the world and the largest in Asia.

One-fifth of P&G's consumers are in the Chinese domestic market. Xu Min is also the first CEO trained in China in P&G's 187-year history. This year marks the 36th anniversary of P&G's roots in the Chinese market. "High-quality innovation is the first engine of P&G's business growth in China." Xu Min shared that it is necessary to improve quality and speed at the same time based on consumer insights, technological accumulation and a deep understanding of the market, "from a green train to a high-speed train."

Since its establishment in 1998, P&G has attached great importance to the Chinese market. Today, 95% of its products are introduced to the Chinese market by the Innovation Center. With 800 scientific researchers, the Beijing R&D Center supports the launch of more than 100 new products on average each year. The Beijing R&D Center not only leads R&D projects in China, but also undertakes the important task of exporting "Chinese innovation" to P&G's global market.

On August 13, at the P&G Innovation Open Day, Xu Min, Chairman and CEO of P&G Greater China, was interviewed

Why is P&G so deeply involved in the Chinese market?

China is a vast country with great differences between the north and the south. It is a market sample set with complete elements. Even a common fragrance smells slightly different in the dry climate of Beijing and the humid and hot climate of Guangzhou. Products that can meet the needs of the Chinese market will be more adaptable in countries with the same latitude and different regions.

In order to "restore" the differences between regions and get closer to the actual living environment of consumers, P&G's Beijing R&D Center has set up a sensory laboratory. Each small room has independent ventilation and can freely switch the temperature and humidity. It also introduced advanced water temperature and flow rate adjustment devices in the water pipes, and can even adjust the water hardness to feel the water quality in different regions.

Sensory Laboratory

In addition to the large geographical differences, the consumer groups in the Chinese market are clearly stratified, and innovation targeting different segments of the population is an incremental opportunity for brands in the existing market.

P&G has always been focusing on large single products. In the past three years, it has launched a large number of segmented single products with the Chinese market as the starting point. At the same time, China's digitalization and e-commerce environment provide opportunities for lower trial and error costs. Xu Min revealed to Huxiu that currently 80% of P&G's business is still large single products, and 20% of the business comes from segmentation. Those "small and beautiful" segmented products can be accurately promoted to consumers through e-commerce and retail channels.

"Nowadays, it may not be difficult to quickly produce a new product. Instead, creating enduring 'big single products' and evergreen brands that can transcend cycles are what the market needs most. Secondly, 'big single products' do not mean ignoring segmented needs. The product matrix can keep pace with the times and penetrate into more new groups of people." Xu Min said.

In addition, China's huge population base allows each category to have over 100 million data points for modeling and analysis. Huxiu learned that P&G has built models for each category. The trivial comments scattered on the e-commerce platform are collected by the model, and then converted into product design dimensions. Models are built based on categories to complete C to P to T, and finally consumer needs can be put into the laboratory through product testing, and then feedback innovation can be provided.

The fierce competition in the Chinese market is also forcing companies to upgrade their capabilities and push them to the extreme in all dimensions.

Take the product upgrade of Pampers as an example, 3 months, 6 months, 9 months... P&G does not upgrade based on product lines, but rather adds the baby's "age in months" and subdivides the baby's leg shape, behavioral habits, body shape and fatness to make innovations.

"Our implementation of a category development strategy is not just a slogan, but something real. The brand must be able to achieve the goals of five elements. Achieve excellence in five aspects: product, packaging, brand communication, retail experience, and customer and consumer value. There are very few very good brands, which is an opportunity and a spur for P&G," said Xu Min.

P&G has comprehensively upgraded its five capabilities, which means that each brand must be built to a higher standard to enhance brand competitiveness. Many P&G insiders expressed to Huxiu: In the global market, if you can achieve four of the five capabilities, you may be successful. But in China, where there is a large supply, many product choices, and fierce competition, "only if you achieve all five capabilities, there is a certain probability of success."

"The most powerful thing is the ability to cross cycles"

"The most powerful thing about P&G is its ability to go through cycles, which means it has the ability to correct errors, not that it doesn't make mistakes. It makes mistakes, but the ability to correct errors can help it go through cycles." Xu Min told Huxiu that there has been a sense of urgency within P&G in the past two years.

There are always people catching up, creating and seizing the market. Although it is still in the leading position in the industry today, it may be surpassed by the market in 6 months. In particular, when the growth of the consumer market slows down and the segmented demands are keenly captured and "divided" by new consumer brands, the former big brother of daily chemical products has a sense of crisis.

Xu Min lamented to Huxiu, "The era of rapid category development is a thing of the past. No product can maintain its competitiveness. We need to use higher standards and faster speeds to build a solid brand foundation."

The volatile Chinese market makes it impossible to rest on our laurels and we have to run at high speed.

Under this sense of urgency, P&G's innovation cycle is visibly accelerating. Xu Min requires the team to upgrade every year, and the adjustment cycle of large single products and small and beautiful products will be shorter, "adjusting products every 6 months."

In order to speed up innovation, P&G spared no expense in the early stages: it spent millions to renovate a specialized laboratory to enable rapid small-batch testing before official launch, to produce innovative samples at a lower cost, and to "pre-run" and test product capabilities and effects in advance.

Looking at the business world, companies competing in the red ocean market are easily trapped in the "low price trap" and forced to engage in price wars, which is not only detrimental to themselves but also detrimental to the healthy development of the entire industry. Xu Min responded to Huxiu: "Consumers care not only about price, but also about 'value'. We use continuous innovation to enhance the value of our products."

connected home research

Nowadays, consumers care not only about the price, but also the sense of value of the purchase, and want to be "seen". When consumption "upgrades" not in price but in experience, there will naturally be growth. "Our choice is to insist on leading category growth and creating market growth as a new strategic positioning." Xu Min said.

And the facts have proved that it is useless to sell at a low price in the stock market. To achieve a win-win situation in the industry, to make the pie bigger and lead the growth of categories, we must explore incremental growth.

When Safeguard soap first entered the Chinese market, its most classic basic line of pure white and fresh fragrance solved the bathing problem of Chinese consumers with its cheap and large-bottle cost-effectiveness. With insight into the market, Safeguard added children's line products in 2016, fully considering the children's experience in product design to ensure that children under 3 years old can use it independently; subsequently, the detoxification line for mothers' relaxation and detoxification needs and the acne removal line for young people were also born in response to demand.

Pantene, which has already become the leader in the industry, is also continuing to innovate: from the classic big white bottle, explosive essence to single hair masks, all adjustments are made based on insights, thereby driving the growth of the conditioner category.

To survive the cycle, one must have an "empty cup mentality" and the courage to start from scratch. Since last year, Xu Min has repeatedly emphasized internally that "every day is the first day for P&G in China."

The 187-year-old P&G does not want to become an outdated company with a beard and a frail figure. Instead, it wants to stay young in talent cultivation and learning mentality, be curious about market changes, maintain the ability to continue learning, and be a young person who is willing to and not afraid of hard work.

"Our choice is to build a brand that can transcend cycles and stand the test of time, and not pursue short-term explosive growth. The more we are in the era of traffic, the more we cannot just 'wait for the wind to come', but we must 'become the wind'," said Xu Min.

This content is the author's independent opinion and does not represent the position of Huxiu. Reprinting is prohibited without permission. For authorization matters, please contact [email protected]