Tide Turns 'Basic'

Tide Turns 'Basic' - Wall Street Journal AUGUST 6, 2009...

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Wall Street Journal AUGUST 6, 2009 Tide Turns 'Basic' for P&G in Slump By ELLEN BYRON DALLAS -- Co., under assault by penny-pinching consumers, has quietly rolled out a version of Tide detergent that the company freely admits isn't "new and improved." The product, Tide Basic, is currently for sale in about 100 stores throughout the South. It lacks some of the cleaning capabilities of the iconic brand -- and costs about 20% less. Its very existence is one of the most telling signs to date of how the sour U.S. economy is forcing mass marketers to shift course. On Wednesday, the company reported an 18% plunge in fiscal fourth- quarter profits as sales of its premium-priced brands shrank amid tightened consumer budgets. View Slideshow The decision to develop Tide Basic didn't come easily. For decades, P&G had held fast to a strategy of promoting new features to convince shoppers to pay a premium for detergent, shampoo and other household staples. Then, as cheaper store brands gained traction in the aisles, P&G began offering lower-priced versions of some products -- Charmin toilet paper, Bounty paper towels -- to suit leaner budgets. P&G agonized over whether to go down a similar path with Tide, its top-selling brand in the U.S. A more "basic" version would balance Tide's premium prices. It could also help expand its market share, which while dominant, has been slipping. For the four weeks ended July 12, Tide held 41.4% of the liquid laundry-detergent category and 44% of the powder detergent category, both down from a year ago, according to estimates by Information Resources Inc. Figures don't include data from Wal-Mart Stores Inc.
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Executives feared that a cheaper version might cannibalize sales of regular Tide, which accounts for more than $3 billion of P&G's $79 billion in annual revenues. Marketers at the company have been so loath to sully their prized soap brand that they've wrestled with the matter at least eight times in the past three decades. Last November, two managers at P&G's Cincinnati headquarters walked into a roomful of executives to gently suggest another try. "Just listen and keep an open mind," Suzanne Watson, an associate marketing director, told them. More Vote: Has the recession changed your shopping habits? There was good reason to pay attention. Many people for the first time are clipping coupons, trying cheaper brands and buckling down in ways they never had to before. Economists aren't sure how long the trend will last. But a recent report from IRI identified a new class of fiscally cautious consumers. Some 52% of respondents said that in the coming year they plan to buy store brands to save money; 47% plan to eat at restaurants less frequently; and 48% plan to use home beauty treatments rather than visit a salon. In Houston, Jaime Ball, a marketing director for a local apparel maker, says she hasn't really felt
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This note was uploaded on 01/22/2011 for the course MSOM 303 taught by Professor Philpot during the Winter '10 term at George Mason.

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Tide Turns 'Basic' - Wall Street Journal AUGUST 6, 2009...

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