With its value-added cleaning abilities and color agents, Tide detergent has long enjoyed a reputation as an innovative, high-end brand in the laundry detergent category. Yet the brand’s owner, Proctor & Gamble, is suffering some market share losses as the detergent champ gets replaced by less expensive cleaning agents in consumers’ shopping baskets.
Tide still leads the category, but All, Arm & Hammer, and private-label brands have improved their formulas, and consumers are starting to notice their value. Thus far, P&G had resisted selling a lower priced competitor, but apparently the time is right to at least test the market.
The new, lower-priced product, Tide Basic, will attempt to lure buyers away from mid-tier or private-label brands. At a 20 percent lower price than regular Tide, Tide Basic offers fewer anti-pilling and color preservation technologies. However, if current Tide buyers just decide to trade down to Tide Basic, cannibalization ensues, and the product will be a dismal failure for P&G. Yet the consumer goods company has had some success in other categories with similar approaches, such as when it introduced Charmin Basic and Bounty Basic in 2005.
This experience is evident in the choices P&G has made about launching the new product. The Tide Basic yellow packaging will sit on the shelf next to the mid-tier brands, rather than next to the existing orange Tide products. Consumers spend an average of 7 seconds choosing laundry detergent; the yellow color should catch their eye, but the location should help prevent current Tide consumers from switching down to Tide Basic. It will only come in powdered form, which is less expensive than liquid detergent in general.
- Why is Tide developing a lower-priced product when it is a high-end brand?
Ellen Byron, “Tide Turns ‘Basic’ for P&G in Slump,” The Wall Street Journal, August 6, 2009.