On the wings of an eagle

Just imagine, from a business standpoint, what it would be like if Ford merged with GM. Two huge companies selling a range of competing products in the same markets would gradually have to coalesce into a unified whole, despite years of established business relationships and modes of operation.

That scenario gives you some idea of what the 1990 merger of Georgia-Pacific Corporation and Great Northern Nekoosa Papers was like. For the Communication Papers Division of Atlanta-based Georgia-Pacific, the $3.8 billion takeover of Nekoosa meant that the former competitors now had to work together and find a way to incorporate product lines, sales forces, and customer bases.

G-P's Communication Papers Division is a $1.2 billion unit of Georgia-Pacific Corporation, a company that makes a host of products from gypsum wallboard to bathroom tissue. The Communication Papers Division produces a variety of uncoated, free sheet business and writing papers. The merger also affected the operation of Hopper Paper Company, a G-P unit that produces cover, text and specialty papers, because Nekoosa had a similar line of papers.

Status quo

Immediately after the merger the best course of action for the time being was to preserve the status quo, says Frank Murray, marketing director for G-P's Communication Papers Division. Early research found that "there was a fair amount of nervousness in the marketplace about which direction the newly merged company would take in terms of its product lines, distribution approach and relationships. The desire within the industry was very much one of 'keep it the same.' Given all of the other things that were on the plate for the manage-ment of the two companies, such as putting the systems of the companies together and the personnel issues involved, the easiest and most prudent thing at the time seemed to be to preserve as much as possible a separateness and acquiesce to the industry's desire."

But as time wore on it became clear that something needed to be done to address the redundancies caused by the merger. That 'something' took the form of what Georgia-Pacific Papers called Project Eagle, a wide-ranging reorganization program that began in early 1992.

"The Project Eagle task force was intended to look at our business-to-business relationships with our merchant business distributors and ask the question, what relationship should we have? As a result of the merger, from a manufacturing and supplier point of view, we could see ourselves as a much more full-line, one-stop shopping supplier, but the merchant customers didn't see us that way. They saw us as a patchwork of brands and products, which was resulting in poorer service. We needed to put in a process to resolve those issues," Murray says.

"How we had thought of ourselves internally was at variance with how our customers saw us. That required actions on our part to realign our organization, to rationalize our product line, and rethink our distribution relationships. And all of that's being done in a market where we've undergone a large merger and where our research indicated there's a fair amount of anxiousness about what the future looks like."

Host of questions

A key element of Project Eagle was a research effort designed to determine how to structure the future operation of both the premium papers and the "everyday use" business paper sides of the company.

The research conducted for Project Eagle was three-pronged:

- Focus groups were held in four cities with printers and designers who were major users of Hopper and Nekoosa premium papers.

- In addition, one-on-one interviews were conducted with senior management of the key merchant distributors of G-P's papers.

Quantitative studies were used to survey office paper buyers as well as printers and designers.

Most questions centered on the value that respondents saw in a number of restructuring possibilities: Would there be value in a focused sales force that sold only premium papers? Would there be value in having shipments come from one location instead of two? Or in being able to sort and amalgamate products by putting the two brands together?

As with any business-to-business related project, when manufacturers talk to anyone who is part of the production and distribution chain, respondents may fear that what they say will come back to haunt them, that they may be punished for their candor. The company knew that independent research was the best route, Murray says. "We decided that we wouldn't be able to answer the questions we had within the walls of Georgia-Pacific and that if we talked to people directly there would be so much interviewer accommodation and positioning that it wouldn't be fruitful. So we decided to go with research approaches that would get at those issues independently."

Two types of paper

What the research showed was that the merger had left the new Georgia-Pacific Corp. with two separate businesses. "They weren't Georgia-Pacific and Great Northern Nekoosa businesses, they were different types of paper businesses," Murray says.

The first type was the premium cover and text papers used primarily by designers and specialty printers. They come in a variety of colors and textures, tend to be relatively high priced, ordered in small quantities, and require fast turnaround and a high level of service.

The second - and biggest - is the uncoated white papers business that includes office copier paper and other commonly used business paper items. It is characterized by longer lead times, lower prices and larger orders.

"The dimensions and dynamics of the sales of the two different types of papers are very different. That caused us to look at organizing our company into two distinct business groups, one of which would sell premium cover and text papers (under the Hopper, Nekoosa, Proterra, and Velorum brand names) and the other part of the division would be our uncoated free sheet division and would become known as Georgia Pacific Papers," Murray says.

"We would then be able to manage our manufacturing facilities more in line with the needs of each of these individual businesses rather than trying to put in a 'one size fits all' approach when one size really doesn't fit anybody. That's what came out of those research findings."

"Our learning indicated that we needed to focus ourselves against those two businesses and divide our product line and sales force accordingly," says Frank Perkowski, director of marketing services, Georgia-Pacific Papers.

Benchmarks

The telephone interviews with printers and office paper buyers lasted approximately 20-25 minutes and consisted of a range of questions designed to get a benchmark on awareness of Georgia-Pacific as a company and of its brands and also those of competitors; respondents also rated the brands on key dimensions that were important to them.

"The second phase of research was to figure out, now that we have these two businesses, how do we position ourselves?" says Perkowski. "What's our competitive edge? Where are our weaknesses? If we have gaps in the product line, what products do we need to develop? If we have redundancies, which products should be deleted, which brands should we maintain or discontinue?

"We looked at the key dimensions that were important to them in terms of suppliers and we asked them to rate each of the suppliers against those criteria. We also got into questions about what would convince them to choose one supplier over another, what promotional programs or concepts they would find interesting. One of the things that came out of there was that there seemed to be an opportunity to encourage trial and repeat purchase through promotion. We had never done anything like that so that gave us some rationale for doing things like offering rebates and holding sweepstakes with end users of our products."

High recognition

The research showed low awareness levels for many of G-P's brand names. But the Georgia-Pacific name had high awareness and recognition among a broad array of customers and external groups. "As a result, an identity was developed that would leverage the Georgia-Pacific name and create 'Georgia-Pacific Papers' as a superbrand," Perkowski says.

"What emerged from those studies were some pretty clear findings. In the case of the basic everyday papers, what was important to customers was that there was a reputable company behind these papers. That gave them confidence in the paper. We discovered that Georgia- Pacific had a good image with printers and large companies that buy paper. So instead of marketing ourselves under six or seven different brands, it was clear we should focus on Georgia-Pacific and make sure that we communicate to these people that G-P is a big company and that we have all the resources to make quality paper and the clout to get the paper to them economically.

"Looking at ourselves relative to the competition we found an opportunity to position ourselves as a state-of-the-art paper company. Users want to make sure that the paper is consistent and that a quality control system is in place. Nobody was positioning themselves that way."

Premium papers

For the premium papers, the objectives of the research were to understand the buying process for text, cover and premium offset papers; to assess industry impressions of Hopper and Nekoosa; and to assess the feasibility of consolidating Hopper and Nekoosa brands.

"In the research," says Jim Miller, director of marketing, Hopper Papers," we really went through the whole chain of the buying influence from the distributors - who are the initial customers - to their customers, who are the printers and designers. We wanted to get a good feeling for how Hopper and Nekoosa were perceived right now, not only by them as customers but their impression of how their customers see Hopper and Nekoosa. We got a lot of input about current perceptions of the products and some insights into how we might improve them in the future.

"In the focus groups we looked at aided and unaided brand recognition and got some perceptions of the quality and value and so on that were put in the brand name. We wanted to elicit feelings about those brands and the companies that make them, both at the printer level and the designer level. Designers had more recognition of Hopper, which has been a cover and text brand for a number of years. The Nekoosa brands were more familiar to many of the printers; that's more how they've been marketed, as printer house brands."

The research found that the Hopper and Nekoosa brands were looked at as established brands with solid reputations, but there was a near consensus that the product lines needed a shot of vitality.

Quantum Leap

To give the premium papers some of that vitality, G-P began Quantum Leap, its code name for efforts to redesign the premium paper line. "The name Quantum Leap is appropriate because the scope of the change we're making is tremendous. We're literally changing every product line we have, eliminating overlapping products, coming out with new products at the same time, changing colors and making all of our product lines compatible," Miller says.

"The research told us we needed to completely upgrade our products from a color standpoint so we have launched new products that will reflect a whole new color system. Under the Coloractive system, all of our products are designed color-wise to work together from a design standpoint to help buyers simplify their color selection process while at the same time offering them a great amount of choice.

"It's all been driven by market research. Premium papers is a fashion type business, you're dealing with colors and textures and your buyers are graphic designers so it's important that we keep on top of trends in color. We want to make sure we stay on top of that so we're forming panels of designers in three major markets for ongoing input on color selection, promotional materials, everything involving our business from our customer's standpoint."

Designers & printers cooperate

One surprise from the research, Miller says, was the degree of cooperation between designers and printers in choosing colors and papers.

"It's very much of a team effort between the graphic designer, who may have some thoughts about the colors they need, and the printer, whom they consult to determine the reliability of the product, how it runs on the press, and pricing. Together they come to a decision on the product they're going to buy. The research revealed a lot more cooperation than we might have guessed."

New logo

Another product of Project Eagle was new packaging for Georgia-Pacific and Hopper papers which uses a similar design for both the Hopper and Georgia-Pacific names. "The packaging program had a twofold objective, we wanted to make these two businesses appear to be part of the same company but also give them a different image," Perkowski says.

Frank Murray: "Using the logo and the new packaging to make a product line go from two competing products down to one, we end up with a more full product line, top to bottom, to offer the marketplace. We can truly now be a one stop shopping center."

The new packaging includes a new logo, which adapts the existing Georgia- Pacific "Blue Tree" logo into a more high-tech image. Accompanying the logo is the new name "Georgia-Pacific Papers," which will be used on all business and printing paper products. New black and white packaging for the paper products was also created to give the Georgia-Pacific products a distinctive image.

"The packaging is unique, which will separate G-P from the pack, while the logo offers a modified version of the well-known G-P corporate tree in a new high-tech, highly professional, paper-oriented configuration," Perkowski says.

In designing the logo, says Bob Wages, president of Wages Design in Atlanta, a great deal of in-the-field research was done. "We decided on black and white because it's distinctly different from the colors used by G-P's competitors. Even the way the colors are used is different. Visit any merchant warehouse and you will see that most paper companies used color tops and white bottoms on their cartons. We flipped it; the top will be white and the bottom black, giving the overall carton a striking look in warehouse and office environments."

Structure distribution

An important part of Project Eagle was to determine how to structure distribution of the company's products. Key to that effort was obtaining an estimate of paper usage on a market-by market basis. "We set out thinking that surely someone had crossed this bridge before," says Steve Fowler, manager, marketing research, Georgia-Pacific. Unfortunately, no one had. Industry statistics weren't detailed enough and at that time there were no private sources offering the information they sought. So, G-P turned to a consulting firm to compile information on the sales, market share, product lines carried, etc., of the merchants it works with.

"Once we had an estimated tonnage share for each of the merchants," says G- P's Frank Murray, "we took a look at our own requirements to move the tons that we manufacture and used that as a guiding principle to figure out how to go to the marketplace and create a business-to- business distribution network where we didn't have everybody selling our paper in one form or another but we had enough people selling it so that we could move all of our capacity. We would have some selectivity, if you will, and yet assure ourselves of sufficient market access to move all the tons."

Driven by research

The decisions around all of these moves that Georgia-Pacific Papers has made were driven by market research, Murray says. "Through market research we wanted to bring objectivity and remove emotional and historical baggage from business decisions that are going to affect how and with whom we do business in the future. We used market research as the equalizer in our decision making processes.

"What Project Eagle provided to Georgia-Pacific was a greater understanding of the marketplace, our standing in it and a methodology for extending the appeal of our products and services," Murray says. "Key to this strategy is the positioning of Georgia- Pacific as a superbrand, which would extend the user's positive image for G-P across our entire product line, as well as differentiate our products from all others in the marketplace.

"In final judgment will this project be successful? We won't know the answer to that for several years. Any cake this big takes a long time to bake. But we feel very proud and positive about the progress we've made to date."