"If your grandfather hadn't worn it, you wouldn't exist."
That's the inscription on the back of my Old Spice deodorant bottle, and every time I read it I smile because, indeed, my grandfather used Old Spice and, truly in the mindset of my era, that's exactly why I buy it. I have stayed loyal to it from the days when I first needed to wear deodorant, or at least when I thought I first needed to wear it.
Will I ever switch? No more than I would ever switch from the Apple ecosystem to some "who cares" handset company.
Now, isn't that the crux of the matter of all of those company comparisons, sector face-offs and, ultimately, all stock valuations?
Yesterday Procter & Gamble Co. (PG) reported in the morning and Apple Inc. (AAPL) reported in the evening, which is appropriate, because they couldn't be more day and night. (My Action Alerts PLUS charitable trust owns Apple.)
If there was a theme running through the P&G conference call, it's that people around the world change their behaviors and preferences rapidly, often on price. Brand loyalty is a real challenge to keep, something P&G will put to the test now as it applies a 5% price hike on Bounty, Charmin and Puffs.
It's a risky, risky bet for one of the world's top five consumer products company as nobody can guess if the price hike can stick or if competitors follow. The company acknowledges that raw costs have skyrocketed and companies must pass these price increases to their consumers or risk extinction. Maybe that's fine for tissues. But with important, lucrative franchises such as grooming decreasing 3%, price increases may be impossible to come by.
Now, let's consider Apple. It has a 96% customer satisfaction rating on all its products, a list that's quite prodigious these days, including a 98% on the latest phones. Remember, those phones were supposed to flop; no one would ever buy a phone with a pain-in-the-butt facial recognition for $1,000.
As Apple CEO Tim Cook says, the customer sees the value proposition and seizes it. Or, another way to look at it, the buyer is willing to pay the freight. It has a $9.5-billion service stream growing at 31%. Apple now has 300 million paid subscriptions.
When you have those customer satisfaction numbers, when you can pick up share as easily as Apple can because of that reputation -- oh, and the reputation that comes from not selling your name to anybody who asks -- then you can have the average selling price of a cellphone going from $606 to $724.
Now, the most important number in the P&G lexicon is organic growth. I'd like to think that's a sign of winning through innovation, adding new categories and product lines. P&G gave you 1% organic growth.
Apple? There are so many different growth measures, but all of them point to what I only can describe as double-digit blend, and a consistent one at that with accelerating revenue growth.
It's not just new phone users who, lovingly, get embedded deeper and deeper into the Apple web. Tim Cook talked about how an Apple Watch may intrigue an Apple phone user, and vice versa. That's a persistent sub rosa analog on the call.
Procter? It has no ecosystem anymore. Nobody links any of its myriad products with each other.
I used to use Old Spice body wash until, one day, I checked off a box for bath wash from the Dollar Shave Club and now it keeps coming automatically to the house. One less item in the grocery bag.
So I ditched the Old Spice. They didn't even have that body wash product in Grandpop's day, so it's no betrayal.
Oh, let's not bury the lead too far. I always used Gillette blades and razors but I switched, even though I liked them, because I hated to chase down a clerk to open the plastic case they stood behind. Anyway, they use reams of unneeded plastic. Dollar Shave uses more environmentally friendly cardboard. I think we soon are going to have a dramatic decline in price by Gillette to keep share.
Needless to say, millions of people are subscribing to Apple products, with 300 million called out on the call.
Let me give you a metaphorical, yet financial, analysis: That grandfather inside-joke come-on line on the back of the Old Spice bottle? Do you think that means anything to these Gen Xers and Millennials? Brand loyalty? It's an oxymoronic term in the traditional packaged goods industry.
And here's another piece of truth in the new world where people are increasingly online: You don't even see the other side of the bottle, the side where the most promising part of the ad shtick lives.
Even if they knew what their grandfathers used, it no longer matters.
Now here's the punchline: Procter & Gamble's stock sells at 19 times earnings. Apple has a 17 multiple. All I can say is, how nuts is that?