Courtesy of 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
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.