On September 4, The Wall Street Journal published an article titled “For Tide, A New Wave,” which discusses product strategy and pricing issues concerning a contemplated lower-priced Tide laundry detergent product.
Notable excerpts from the article include:
A decision to offer a lower-priced version of the premium brand carries the risk that buyers of regular Tide could trade down and stay there.
Indeed, three years ago P&G scrapped a lower-priced powdered detergent called Tide Basic, which was tested for about a year. P&G said consumers were having a hard time distinguishing between the bargain version and the regular priced variety. The company’s concern was that regular Tide users would trade down to Tide Basic, for instance, but be unhappy that it didn’t clean as well as regular Tide.
In the year ended June, 41% of U.S. households were buying value-priced laundry brands, while just 29% who were buying premium brands, according to Nielsen data cited in an investor presentation Tuesday by Church & Dwight.
Since 2009, the value tier is the only segment of the liquid laundry detergent category that has grown. The value-segment’s dollar share grew to 29.2% from 25.9% during that time, according to Church & Dwight. Premium and mid-tier brands, meanwhile, lost share.
The article also mentions concerns over “cannibalization” as well as concerns over launching a category “price war.”
The issue of whether to offer cheaper versions of premium products is common, especially in challenging business environments.
There appears to be a variety of complex issues inherent in whether P&G should offer a lower-priced Tide product. While the article doesn’t mention it, it should be noted that the premium laundry detergents sell at a price considerably above (and in some instances multiples of) the prices of competing “value-priced” offerings.
Some of the challenges facing Tide and other higher-priced and/or premium products relates to affordability issues. The March 5, 2013 blog post (“Product And Service ‘Affordability’ Concerns“) discusses various issues that should be contemplated when dealing with product and service affordability.
StratX, LLC (stratxllc.com) is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.