Lou Prichett: Negotiating the

P&G Relationship with WalMart

Lou Pritchett

Lou Pritchett rose from soap salesman to VicePresident, Sales and Customer Development for
Procter and Gamble and over the course of 36
years, made corporate history as an Agent of
Change at P&G.

It was Lou Pritchett who changed the way America

does business by creating an audacious concept
that came to be known as Partnering.

It was Lou Pritchett who, in 1987, boldly

engineered an adventuresome partnership
between two corporate titans (P&G and Wal-mart).

The Market Context in the 1980s

The
The Business
Business Aproach
Aproach

By the mid 1980s, P%G was a $40 billion global empire, and
one of the most successful companies of the 20th century.

Historically, P&G would bring extensive, comprehensive reearch

on consumers to retailers and use it to argue for more volume,
more newspaper ads, and more shelf space.

Load em and leave em [strategy].

Changing
Changing Market
Market Dynamics
Dynamics

The last strategy should be replaced with rtailer-supplier

partnership

Load em and leave em strategy was alive and well in the

Philippines.

Succed in solving some inventories prolems in Philippines, made

Pritchett prepared for his next post.

Overcoming the Supplier-Retailer

Barrier

The prevailing sentiment in the consumer products industry was

that suppliers had market power and no one retailer controlled
the market.

P&G Pritchelt announced his proposal to try to work more closely

with Wal-Mart.

The proposition of partnering was simply looked at by the

supplier as a tactic for the retailer

The supplier did not see any direct benefit to relationship with
Wal-Mart.

Internal and External Negotiations

First
First Moves
Moves

Walton told Pritchett that he just want to sell what the customer
wants.

Pritchett and Walton agreed that in order for both companies to

not only survive into the 1990s, but to prosper.

From the short term, adverarial, confrontational win-lose

relationship that had been the hallmark of the past 20 years to a
partnership built on trust and committed to a shared vision.

They had to work collaboratively to meet the consumers needs

while in the process drive excess cost out of the system.

Mapping the Internal Strategy

When the rate of external change exceeds the rate
of internal change disaster is imminent
Pritcheet woul require several rounds of internal negotiations
Some vice president of P&G didnt want P&G brands to sell in
discount store like Wal-Maert because lack of understanding and
lack of knowledge about the costumer
They want to revolutionize the way they do business

They want to make new relationship to look like

First Steps Toward Trust and a Common Vision

Prichettt & Walton create draft join vision

Create multinational team

Subtitue information for inventory trough electronic data interchange

Confront radically different pricing philosophies

EDLP (Everyday Low Price) and HL (high Low)

Test ELDP versus HL

To learn if a onecompany approach

with costumers could
create better results,
potentially at lower
sales expense

To see what internal

changes would be
required to enable the
concept

Operational
efficiency
The test required to
see the potential
internal cost savings
and offer operational
cost savings to WalMart and other retail
costumers.

Top-to-Top
costumer team
approach would lead
to benefits well
beyond operational
cost savings

Wal-mart was a
pioneer in a new
form of retailing, and
P&G became a
pioneer in a new
form costumer
selling or CRM
(costumer
relationship
management)

Negotiating Principle
Stop viewing the future solely as an extension of the past and start working together with
costumers and suppliers towards inventing the future
Challenge the conventional thinking

Start using information technology to manage the business, not just audit it

Stop creating internal functional fiefdoms

You have to be issue focused, not position focused

Never sacrifice yourself on the fiels of battle;rather live to fight another day