As in-store marketing grows in importance and marketers focus more at winning over consumers at the shelf, one discipline is seeing its star rise: design.

No less a giant than Procter & Gamble Co. has incorporated design into its comprehensive brand-building function under the group headed by Global Brand-Building Officer Marc Pritchard. After initially carving design shops out of its new “Brand Agency Leader” model for managing and paying marketing-services shops, P&G now increasingly includes them in the system, in which lead creative agencies essentially function as general contractors over other marketing services shops.

A Fresh Approach
P&G Global Design Officer Phil Duncan sees the Febreze Home Collection and Pantene‘s new line of products as an example of the sorts of design-intensive initiatives that are growing business. The growing importance of the store has been central to Mr. Pritchard’s “store back” concept, in which all marketing ideas need to prove their mettle by whether they work at the shelf. And bringing design into the brand-building organization is a key part of implementing that strategy.

A study last year by Nielsen Co.’s Bases unit found in-store marketing clearly beats TV as the leading medium creating awareness of new package goods in the U.S. and five other key developed markets. About half of consumers in Bases’ survey cited in-store as their source of awareness of new products, vs. only a third citing TV. Peel the onion further, and it turns out of that half of consumers who became aware of products for the first time in store, 71% became aware simply by seeing them on the shelf. And what drives that shelf awareness is the package.

Early gains
It’s been less than a year since P&G incorporated design into the global brand-building organization, so the initiatives it’s started to develop under the new system haven’t hit stores yet.

But Mr. Duncan sees the Febreze Home Collection as an example of the sorts of design-intensive initiatives, with product, packaging and marketing seamlessly aligned, that the new order can help bring. Designers spent time in consumers’ homes and boutiques, segmenting consumers by home-decor preferences and developing fragrance and decorative ranges for each segment that include battery-powered flameless luminaries with changeable scented shades, along with reed diffusers, scented candles and room spays. The initiative has helped P&G add two share points in air fresheners since launching last year.

Bigger ideas are critical, because designers at P&G and other package-goods companies are staring at two huge dilemmas these days.

First, even as in-store marketing becomes more important, big retailers have been putting more restrictions on it as they adopt or toughen “clean store” policies that restrict use of displays and point-of-purchase advertising. That makes the role of the package that much more important, but the second dilemma is that under the banner of sustainability, retailers and consumers are also pressuring marketers to make their packages smaller.

“It’s a constant challenge,” Mr. Duncan said, “but one that makes design so critical.”

Big ideas
His solution to the problems is far more easily said than done: Come up with better ideas. When retailers see big ideas, they tend to give them more space, he said, so the challenge is coming up with big ideas that work in the store. “We’re really asking our communications agencies,” he said, “to vet [their] idea first in store, because that often can be the most challenging environment for us to communicate that idea.”

The clean-store movement is one Mr. Duncan supports, because he believes “the pendulum had swung too far to everyone trying to break through, which meant nothing breaks through.” Less-cluttered stores also mean the payoff for a big design idea that gets a green light from retailers can be all that much bigger, because shoppers see fewer competing marketing programs in the store.

Having more design impact with less space, less cost and less environmental impact is a classic “design thinking” challenge, Mr. Duncan said.

For Pantene, whose last restage didn’t go over so well with consumers, a “design thinking” session was the start of the solution, Mr. Duncan said. Design thinking, which includes heavy doses of consumer co-creation and prototyping concepts, helped lead to a lineup hitting stores in June in the U.S. and early 2011 in Europe that will include 25% fewer items, considerably less packaging material and cost, and more prominently color-coded packages that delineate product ranges for different hair needs.

“We’re paying attention, finally, to the things that matter to consumers, and stripping out the things that don’t, as well as thinking about footprints across the franchise,” Mr. Duncan said.

Herbal Essences
Five years ago, P&G began applying a similar “design thinking” approach to another hair-care brand in trouble: Herbal Essences. P&G took a team to its offsite Clay Street facility in Cincinnati’s impoverished but architecturally rich Over-the-Rhine neighborhood for what Mr. Duncan calls “design thinking on steroids.”

Pantene’s new line of products
The result was the launch in 2006 of a dramatically different look and product lineup that ultimately made Herbal Essences a survivor in the battle with L’Oréal’s Garnier Fructis and Unilever’s then-upstart, now largely vanquished brand Sunsilk.

But design thinking isn’t just about turning around hair-care brands. P&G is also applying it to a broad range of business issues. The decision to reorganize P&G’s beauty care and grooming marketers along women’s and men’s lines rather than product category lines, for example, also culminated from a design-thinking session, Mr. Duncan said.

For just about any problem, design thinking now can be a solution at P&G, he said. So Mr. Duncan spends a lot of time in meetings looking for problems, specifically ones he believes a design-thinking session could help solve.

Mr. Duncan is perhaps the highest-level outsider that traditionally promote-from-within P&G has recruited, though he wasn’t entirely an outsider. He started his career with P&G with four years in brand management before becoming a design executive for 13 years, ultimately with P&G shop Landor Associates, including a stint heading the Cincinnati office and the P&G account.

For design, he sees a lot of potential both for improving efficiency and breaking new ground in marketing.

So he’s in the process of helping P&G winnow a large palette of package colors built up from years of product launches by 30% to 40%. And he sees opportunities for electronic inks and other digital and packaging technologies to create breakthroughs in in-store marketing, like displays where each package becomes a component in a big-screen presentation not unlike an electronic billboard.

“You always have to be looking at frontiers of innovation for ideas,” he said. “It’s kind of like haute-couture fashion. It’s eventually going to come in. You may not recognize it in the same form, but it’s going to be there.”

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