Proctor & Gamble washing cars?

 

The giant manufacturer of household staples including Pampers diapers, Crest toothpaste and Gillette razors is forging a new business model: franchising car washes.

To jump-start plans for a nationwide chain of Mr. Clean Car Wash franchises, P&G in December acquired the franchise assets of Atlanta-based Carnett’s Car Wash, which has 14 locations.

“We need to look for new opportunities to allow us to grow,” says Bruce Brown, P&G’s chief technology officer. “That isn’t limited to things within our current business model.”

P&G is under mounting pressure to find new sources of revenue growth, particularly as more cash-strapped shoppers think twice about buying its premium-priced products. Wall Street is increasingly skeptical that the mammoth company can garner meaningful gains in its slow-growing product categories and a tough economy.

Professional car washing, which rings up about $35 billion in sales a year in the U.S., according to P&G estimates, won out as the company’s first major franchise push. “We want to blow this out to a national network of car washes,” Mr. Brown says.

The car-washing business has a handful of competitive advantages, says Nathan Estruth, vice president of P&G’s FutureWorks, which develops new business ventures. It lacks a dominant national chain, aging baby boomers are reluctant to wash cars themselves and more water-strapped communities are pushing professional car cleaning as a conservation measure.

Forming a franchise system, rather than owning locations, means “we don’t have to enter a capital-intensive business,” he says.

P&G knows people may cut down on car washing in the recession. But franchise guru James Amos notes that the franchise industry typically grows during economic slowdowns. With more people out of work, “there’s a larger pool of franchise candidates,” says Mr. Amos, chairman of P&G’s franchising-subsidiary board.

P&G, which scrutinizes shoppers down to the seconds it takes to notice a bottle on a store shelf, says it will offer franchisees detailed information about car-wash locations, consumer targeting and advertising response rates — techniques developed during the Cincinnati-area tests that P&G will combine with the Arnetts’ experience.

The Arnetts have deconstructed each step of a car wash in their franchisee-training process, including the precise location of where to start wiping a window and the direction in which the first stroke needs to go. Towel care also counts. “It matters what temperature you use to wash them,” says Mr. Estruth of the lessons learned from the Arnetts.

Finally, the Arnetts say, it’s important to add a little “Hollywood” to the process, which includes a theatrical snap of a towel before it is laid down in front of the car door so the customer can wipe his or her feet before getting into their car, Mr. Arnett Jr. says.

Source: WSJ, article by Ellen Byron

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Google loyalty

Everyone Loves Google, Until It’s Too Big

By RANDALL STROSS

THE popularity of Google’s search engine in the United States just grows and grows. In the past three years, its market share gains have even been accelerating, making some people wonder whether the company will eventually obliterate what remains of its competition in search.

Certainly, antitrust scrutiny is a growing worry at the Googleplex. Last year, the company abandoned a proposed advertising pact with Yahoo when the Justice Department said it would file an antitrust lawsuit to block the deal. Last week, a small Web site operator, TradeComet.com, filed an antitrust suit against Google, accusing it of unfairly manipulating its advertising system to harm a potential competitor.

And when I asked to speak with Google’s chief economist about why Google’s market share gains were accelerating, Google’s press office also gave me, unrequested, a second, separate appointment with Dana Wagner, the company’s “competition counsel” — that is, its point person on antitrust issues.

Google maintains that its lead in the Web search market is tenuous, saying that with a simple click of a mouse, a user’s loyalty could evaporate at any moment.

But consider this: As recently as July 2005, Google was ahead of Yahoo in market share by just six percentage points, at 36.5 percent to 30.5 percent, according to comScore, the market research company. Today, however, that advantage is much wider, at 63 percent to 21 percent.

“You almost feel sorry for Google,” said Danny Sullivan, editor in chief of Search Engine Land. “They’re doing a good job and people are turning to them. But when they pass 70 percent share, people are going to be uncomfortable about Google becoming a monopoly.”

Google does not register gains every month. The comScore numbers for January reflect a 0.5 percent drop in its share from December and a 0.5 percent gain for Yahoo. But according to Hitwise, another online measurement service, Google has already surpassed the 70 percent benchmark. It estimates that Google has 72 percent of the United States market, versus 17.9 percent for Yahoo. Microsoft’s two search services, MSN and Live.com, constitute a distant third, at a combined 5.4 percent.

Mr. Sullivan said that while Yahoo’s search engine benefits from traffic from Yahoo Mail and other Yahoo sites, its ability to pull in search engine users from outside its own borders is relatively weak.

Many Web site owners who track where their visitors come from report that Google’s search engine now refers 80 to 90 percent of their visitors. For instance, almost all visitors sent by search engines to Stack Overflow — a community of software developers raising and answering programming questions — are from Google. In January, Stack Overflow received more than three million visits referred by 22 search engines. Of those, 99.34 percent were from Google.

Jeff Atwood, a co-founder of Stack Overflow, said: “I have no beef with Google. I like Google. But I’m concerned. If you project this trend forward four years, just follow the graph. A world in which there is no competition strikes me as unhealthy.”

At Google, Hal Varian, its chief economist, and Mr. Wagner said that the public was not blindly loyal to any one search engine. They cited a recent survey by Forrester Research in which 55 percent of the adults polled used more than one search engine every week.

“You buy a car, use it for four years, and then you’ll look around at your choices,” Mr. Varian said. “But for search, we’re competing on a click-by-click basis.” If more users are going to Google, he said, it’s because they are concluding that Google’s product is superior.

Mr. Sullivan, who has been studying search engines since 1995, said that similar surveys have been done for many years — and that they always fail to reflect that most people have a primary attachment to a single search engine. When users try an alternative, he said, they “don’t go into active taste-testing mode”; afterward, they revert to their favorite. “Google is a habit,” he said, “and habits are very hard to break.”

Both Yahoo and Microsoft contend that their search engines’ results have achieved parity in quality with Google’s, based on internal statistical measurements that they do not disclose publicly. But that matters little.

“Whether we’re slightly ahead or slightly behind Google in core relevance is not a game changer in search,” said Prabhakar Raghavan, Yahoo’s chief search strategist.

Yahoo’s best opportunity, Mr. Raghavan said, is to offer radically new ways of presenting information that will help users finish whatever it is they started before the search, like finding a job or buying a plane ticket. “People don’t want to search; it’s a digression,” he said. “They want to complete a task.”

What Yahoo and Microsoft haven’t been able to attain, however, is parity with the Google brand, which had become a formally recognized verb by 2002. Mr. Raghavan said he recognizes that Google is “synonymous with search.”

I asked Mr. Sullivan if we should deliberately spread our searches across several engines, doing our own small part to help keep competition alive. He said that such a campaign would not be sustainable. “I’m probably going to continue to use the thing that I have a good relationship with, which is Google,” he said. “If you suggest that someone should go use Microsoft search, it’s like saying ‘You should go get a new best friend.’”

Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail: stross@nytimes.com.