Procter & Gamble goes Basic

Tide Basic.jpg

As the downturn began In July 2007, leading retailers Tesco and Wal-Mart “signalled a major shift in consumer priorities“.

And Tesco added a warning that “If you don’t have the basic things right, you will be talking at the edge rather than at the centre“.

2 years later Procter & Gamble, one of the world’s major consumer companies, has learnt this lesson the hard way. Its sales last quarter were down 4%, and profits down 18%, as they tried to maintain a premium position against low cost ‘value-based’ competition.

But large, successful companies like P&G don’t usually just disappear. They have learnt to adapt to a changing world. And P&G’s response is the the product above. It is part of a totally new strategy, which includes the European launch of a new Pampers Simply Dry product.

The new product, ‘Tide Basic’ no longer seeks to focus the consumer’s eye on the words ‘new’ or ‘improved’. Instead, it is a response to the growing mood of frugality amongst consumers, as discussed in the blog last month. It is ‘Basic’. It has no new features. In fact, P&G has deliberately reduced its performance.

From a chemical industry viewpoint, this means it offers no scope for value-added innovation. That’s very bad news for those specialty chemical companies who would normally supply the innovation. And it is further confirmation of Wal-Mart and Tesco’s warning two years ago that “coming down the road is a tougher time“.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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