Home Blogs Chemicals and the Economy Procter & Gamble goes Basic

Procter & Gamble goes Basic

Chemical companies, Consumer demand, Economic growth, Financial Events
By Paul Hodges on 07-Aug-2009
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“.