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Proctor and Gamble Hopes to Turn the Tide

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My thoughts: P&G should lower prices, run sales, rather than spend on gimmicky ad campaigns. - Ilene  

Proctor and Gamble Hopes to Turn the Tide

Proctor and GambleCourtesy of Mish 

Proctor and Gamble has been stung by consumers turning to low cost brands. In response, P&G Plots Course to Turn Lackluster Tide.

Procter & Gamble Co.’s chief executive on Thursday laid out measures to address lackluster profits and sagging market share, including price cuts, overseas expansion and plans to reposition the Cheer brand as a low-price detergent.

Robert McDonald, who assumed the post of CEO in July, offered his most detailed plan yet on how to reignite flagging sales as cash-strapped shoppers forgo the company’s premium products for less-expensive options. Speaking at a conference, he assured investors that P&G was "in touch with reality," and had "a sense of urgency."

P&G has resisted cutting prices because of factors such as high commodity costs and a fear of hurting its brands’ image of superiority. But throughout the recession, less-expensive versions of household staples have dented the dominant market share that P&G’s products have long held. To narrow the price differences with competitors, the company said it would reduce prices or increase promotional spending on about 10% of its business.

Tide and Cheer laundry detergents are among the brands targeted for reductions. Tide, which can cost more than twice as much as private-label detergents, will have "targeted interventions" on its larger sizes, the company said.

P&G also is testing Tide Basic, a version that costs about 20% less than regular Tide. Meanwhile, P&G plans to reposition Cheer as a value brand, cutting its price by about 13%.

Some analysts remain skeptical of P&G’s plans. "The company is broadly losing share across its portfolio in the core U.S. market, and emerging-market sales have lagged peers," Goldman Sachs analyst Andrew Sawyer wrote in a research note. "Although the company is clearly devoting more resources to brand support, many of its key competitors are doing the same on a proportionate basis."

Tide Basic?

Will Tide Basic be any different that regular Tide? Assuming it it, then it will be missing a brightener or something else that consumers will quickly figure out. Customers may then think of it as inferior yet not want to pay more for the


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