P&G is one of the world’s top marketing companies. So P&G’s focus on expanding into services such as Tide Dry Cleaners and Mr. Clean Car Washes is worth a bit of discussion. Is this the future for consumer brands?
You can see the logic behind the move. Perhaps most importantly, it opens an enormous growth area. In a mature economy like the U.S. growth is hard to come by in many categories. There just isn’t a lot of growth happening in the world of household cleaners these days. Expanding into services, however, opens up almost limitless opportunities. Why not Mr. Clean home cleaners, or Mr. Clean carpet cleaners?
In addition, by embracing services P&G is able to deliver a richer brand experience. Using Mr. Clean at home isn’t a stimulating experience. Visiting a Mr. Clean Car Wash, however, could be something very special.
But this isn’t exactly a lay-up.
One issue is that running a service business is quite different from running a product business. The skills are different and the basic business model is different.
Another challenge is that if the service experience isn’t top notch, the service could actually weaken the brand. Tide won’t be enhanced when all the buttons are broken, or a shirt goes missing. A consumer won’t have fond feelings for Mr. Clean if the antenna breaks off the car. The franchising approach, while an obvious move from a financial perspective, will make consistently delivering great service a greater challenge. Managing a franchise organization is not easy.
Finally, it isn’t clear how much value some of these brands add. How much better is Tide Dry Cleaners than some other dry cleaners? Many service businesses have low barriers to entry, lots of competition and low differentiation. It just isn’t a pleasant world.
It is worth exploring opportunities in services, of course. But I suspect P&G won’t find it an easy road to riches.