Tampon maker's European unity: Tambrands is reaping the rewards of its unified European marketing strategy, reports Heather Connon

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The Independent Online
ALAIN STRASSER, group vice-president of Tambrands, the US company that makes Tampax tampons, is bemused by the political and economic upheavals over Europe. While the politicians seem obsessed by European differences, his company is reaping benefits by exploiting the similarities.

Tambrands believes that Europe can already be seen as one unified area rather than a collection of 17 countries. Last year, it completed a restructuring of its operations to reflect that, replacing the old national-based structure with one company covering the whole of Europe. Flushed with the success of that strategy, it is now planning to extend it to North America - where it is combining Canada, the US and Mexico - and South America.

The group's European operations used to be controlled by four companies, each a separate legal entity, located in Britain, France, Belgium and Spain covering that country and neighbouring territories. Each had its own managing director, sales force, marketing operations, finance and so on, all reporting separately to the US headquarters.

All these functions have now been consolidated into one European company, in Woking, Surrey - which is also the international headquarters for all Tambrand's non-US operations. There, the European strategy on everything from manufacturing and marketing to personnel and information systems is agreed, leaving detailed implementation to be carried out by the eight country managers.

Tampax purchasers will already have noticed one effect of the changes. Previously, each European country had a different set of packages for the different types of tampons - 220 in total. Now, there are just two, one with six languages and the other with seven.

The direct benefits of that change - in production and manufacturing costs and the reduction in stock levels required - are enough to make one wonder why it was not thought of before. But it also brings indirect benefits. It brings the group closer to its aim of ensuring that a woman in Belgium will pay exactly the same for Tampax as she does in Spain. And it makes it easier to implement a pan-European advertising strategy.

Advertising is one of the main areas to be given a pan-European look. Before the restructuring, the group used different agencies in different countries; now it has just one - Euro RSCG - which has helped the group to devise a set of interchangeable texts and pictures which can be used anywhere in Europe. It is asking RSCG to follow its lead - for example, it has asked them to implement central billing for advertising, regardless of which country carried it out.

Some things are, however, left to a local level. The group places a heavy reliance on direct marketing and education, in schools and so on. Tampons are little used in Greece, whereas they are the preferred form in Britain. That means local managements have to take radically different approaches to promotion.

The benefits are already showing. Europe has been the fastest growing areas for the group since 1989, achieving a 48 per cent increase in sales to dollars 185.2m (pounds 109m) in the two years since then compared with 13 per cent for the group as a whole. In 1989, each European employee was responsible for selling 1.56 million tampons, now that has increased to 1.88 million.

Other companies - such as Unilever and Reckitt & Colman - have also been pursuing an integrated European strategy, concentrating production in one area, rationalising packaging and so on.

But Charles Chapman, Tambrands's president and chief operating officer, believes that the group is ahead of its competitors in the sanitary protection field.

Johnson & Johnson's OB tampons have different names across Europe - including Lil-lets in the UK, where it is handled by Smith & Nephew. Procter & Gamble and Kimberleigh, the main sanitary towel producers, do not yet have a pan-European product.

Potentially the greatest benefits, however, are the least visible ones. Under the country structure, the territories that were most successful tended to be the ones that expanded the most, while those where penetration was lower stayed small. Now that Europe is viewed as a whole, the group can focus its resources on the areas where there is most potential. 'It means we can allocate resources to the right place at the right time instead of consolidating in areas where we are already big,' said Mr Strasser.

International expansion is the key to growth. Tambrands already makes half the 12.5 billion tampons manufactured internationally a year and has more than 56 per cent of the market in the UK, the US and many European countries. While the potential for expansion in these areas is small, there are large areas of the world - including South America, China, Eastern Europe and some EC countries - where usage is small. Only by focusing on these areas can it hope to achieve the target of 15 per cent earnings growth that it has set itself for the 1990s.

There is certainly potential. Mr Chapman said: 'If we accomplish in emerging markets, such as Eastern Europe, China and Latin America, the per capita consumption which we now enjoy in the UK, the companies sales will be five-and-a-half times larger.' Last year, sales were dollars 660.7m and its net earnings were dollars 79m, after dollars 30.3m of restructuring charges.

Mr Chapman says it already has a head start in many of those areas. In the former Soviet Union, where it has been operating since 1989, it is the only manufacturer of commercial sanitary protection - everything else is a home-made remedy. In China, it has a clear lead over its rivals, selling in four major cities.

Mr Chapman's conviction that Tambrands can grow by sticking to one product marks a switch for the company. He joined the company in 1989, along with Martin Emmet, chairman and chief operating officer, charged with revitalising the group after a patchy growth record. It had been diversifying, concerned that its reliance on one brand was a weakness, rather than a strength.

'It had chosen to get into sanitary pads, which is a completely different market to tampons. It acquired a small cosmetics company and was struggling to compete against giants like Revlon. It had a diagnostics business, but this was high-tech and had little in common with the core business. Trying to do all these things at once was just adding to employment and expense.

'We came to realise we had a gold mine in the core business, which was being neglected,' said Mr Chapman. 'Since 1989, we have found the opportunities from being focused are like an onion. Every time we peel off a layer, there is a new one underneath.'

(Photograph omitted)