In sum, there were three critical where-to-play choices for P&G at the corporate level:

• Grow in and from the core businesses, focusing on core consumer segments, channels, customers, geographies, brands, and product technologies.

• Extend leadership in laundry and home care, and build to market leadership in the more demographically advantaged and structurally attractive beauty and personal- care categories.

• Expand to leadership in demographically advantaged emerging markets, prioritizing markets by their strategic importance to P&G.

CHAPTER THREE: Where to Play

“Laundry care, feminine care, and fine fragrances had all been written off as unwinnable categories, before P&G found a way to play to its strengths in only the most attractive segments. In each case, choosing where to play explicitly involved choosing where not to play as well, all within an overall industry structure.

Fine fragrances, however, were important to hang on to, for two strategic reasons. First, a fine-fragrance presence was an important component of a credible and competitive beauty business. P&G wanted to be a beauty leader, on the strength of hair care (Pantene, Head & Shoulders) and skin care (Olay). But to be truly credible with the industry and consumers as a beauty player, the company needed a position in cosmetics and fragrances as well. The knowledge transfer between the different categories is significant, meaning that what you learn in cosmetics and fragrances—through both product R&D and consumer research—has a lot of spillover into hair care and skin care, and vice versa. In other words, just being in the fragrance business makes you better in beauty categories overall.

Like the home-care team, it attacked in an area of least resistance—men’s fragrances and younger, sportier scents, rather than in the heart of the most intense competition in women’s prestige brands. The team found new ways to win by creating brands based on specific consumer needs and wants, partnering in distinctively successful ways with fragrance houses and designers. In doing so, the fine-fragrance business became part of P&G’s larger how-to-win strategy, another way to differentiate brands along a dimension that consumers care about and to leverage the benefits of global scale.

Industries with fewer rivals and with competitors that seek to serve different parts of the market with unique offerings are more attractive than those in which a number of competitors compete fiercely for the same consumers in the same way. P&G favored beauty and personal care, including feminine care, because these were industries with low capital cost in which highly fragmented rivals attempted to differentiate their products in unique ways.