PILLSBURY REALIGNS BROKERS, USES FULL-YEAR CONTRACTS

JAMES TENSER

MINNEAPOLIS -- Five months after its $2.6 billion acquisition of Pet Inc., Pillsbury Co. here has embarked on a sweeping broker consolidation it says will strengthen and unify its go-to-market force and rewrite the rules of broker management.

A highly structured selection process, which began last month, will reduce the size of Pillsbury's combined broker force from its present 129 brokers to 48, or one broker per market.

The company expects to emerge from the process by March 1, 1996, with its remaining brokers under one-year renewable contracts. This standard is probably unprecedented in the consumer packaged goods industry, where 30-day renewable commitments are customary.

"This is about going to market with one voice," said Ken Sobaski, vice president of sales.

"It's about exercising marketplace power," he continued. "We will be making one call on a customer representing all our businesses. Our funding approach, category management standards, all of that needs to be the same across all the company."

Steve Aase, vice president of customer marketing at Pillsbury, said the one-year term is intended to reward and give incentive to brokers who "co-invest" with Pillsbury in the necessary information technology, systems, training and human resources required to properly service retail accounts.

"We want to create true long-term strategic alliances with our brokers," he said.

"None of this is driven from a cost of sales standpoint," said Sobaski. "It is driven by doing what is right to meet customer needs in the marketplace. It is more about effectiveness."

While remaining brokers will enjoy closer contractual ties with Pillsbury, there will be more losers than winners in the selection

process, a reality that the company appears determined to soften.

In evaluations now under way, brokers are vying in a process that some compared to an advertising account review. Top sales executives, including Sobaski, Aase and Scott Barth, vice president sales for Pillsbury Specialty Brands (the former Pet businesses), are traveling the country interviewing the current brokers in each market. Both the Pillsbury and Pet broker advisory boards were consulted in designing the process.

"We have taken an incredibly objective approach to this," said Sobaski, who noted that some broker relationships go back many years, with excellent results. "It means there are some markets where it is a very tough decision."

Aase and Barth said that the selection process would be conducted in two phases, the first of which began June 5 and will continue through Sept. 30, covering 33 of the 48 markets.

"Of those, two were already single-broker markets -- Houston and Richmond," said Aase. Another 15 were "obvious appointments," either because one broker withdrew or owing to Pillsbury's experience. Another 16 markets are now in interviews.

The interviews will be completed by July 24, and all decisions for Phase 1 will be made by Aug. 1. A two-month training and transition period will follow, he said.

In a departure from usual custom, losing brokers will be offered 60-day termination agreements, 30 days longer than the industry standard.

Phase 2 will address the 15 remaining markets by March 1, 1996.

Aase said the phased approach reflects several real-world limitations. "One is our organizational capacity to accomplish this smoothly. Another is our capacity to conduct training."

With the addition of the Pet brands, Pillsbury's business is now 55% brokered; 45% handled by its direct sales force.The company is not making any changes in its direct sales force, added Aase.

Barth said that the resulting broker coverage would need to be highly customized to individual market conditions, including the information technology and service requirements of key accounts.