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P&G Looks to Wring More Value Out of Tide Brand With Lower-Priced Detergent

Posted by Dale Buss on September 4, 2013 01:52 PM

New/old CEO A.G. Lafley is beginning to shake things up at Procter & Gamble, and one of his most interesting first moves reportedly is to explore potential further value in one of the company's most iconic and lucrative brands: Tide.

One of the things that his predecessor/follower as CEO, Bob McDonald, did well was exploit the promise of Tide Pods, which he launched in early 2012 and which already are on their way to becoming another $1 billion sub-brand for P&G. Despite growing concerns and one reported death of kids poisoning themselves by mistaking the colorful Pods for candy, Tide has managed to grow quickly—and dominate—a laundry-detergent segment that it essentially created.

But Tide Pods—which recently debuted in new, opaque packaging to curb temptation from kids—are priced above regular liquid Tide. American detergent buyers have steadily drifted to bargain-priced products to do their laundry over the last few years in adjusting to a stingier "new normal," but even regular Tide has retained a price premium.

Now Lafley is pulling the lever on a lower-price gambit for Tide that has always made the company hesitant. He announced today at the Barclays Back to School conference in Boston that P&G plans to release a lower-priced, mid-tier detergent, Tide Simply Clean & Fresh, in February, according to an AP report that noted other Tide products launching in the first quarter.

According to AP, Tide Simply Clean & Fresh will join other new laundry products launching in February including "a new Tide Plus collection that updates all existing liquid Tide detergents; Tide Ultra Stain release, which can be used both as a pre-treatment for stains as well as a detergent; extra-large tubs of Tide Pods; single-dose units of Gain detergent; and Tide Oxy, a stain remover that can be used on laundry as well as around the house."

One of the most expensive detergent brands, Tide has made headlines for being a target of US shoplifters. Now Lafley and the Tide brand team are keen to engage the lower end of the detergent market, which is a key segment—besides pods—that is growing. As he told attendees at today's Barclays conference, "There are consumers for whom a lower price is a more critical element of their personal value equation. We need to have brands and products that are relevant for them as well, and we increasingly will."

Tide experimented a few years ago with a lower-priced powdered detergent called Tide Basic, as the Wall Street Journal pointed out, but became concerned that Basic would cannibalize sales of regular Tide—and that consumers would be unhappy that it might not clean as well as regular Tide. The new lower-priced Tide would compete with existing bargain brands such as Church & Dwight's Arm & Hammer.

Lafley pointed to research indicating that a lower-priced Tide won't cannibalize existing sales, commenting today, "We're confident that our consumer understanding in premarket testing has helped us design a midtier Tide, Simply Tide, that is very attractive to midtier consumers, but not very interesting to current regular Tide users. This is exactly the same approach we use with Bounty and Charmin Basic."

Not waiting until February to show it's listening to consumers, Tide's Facebook page and Twitter feed today announced the return of Tide Plus Beach, sharing the YouTube video below.

Another way Lafley is searching for more value in Tide is an initiative that actually took shape during his first tenure as CEO, which ended a couple of years ago when he gave way to McDonald—whom he subsequently replaced in May.

Tide Dry Cleaners is a sensible extension to services of Tide's laundry franchise, and P&G now is expanding the chain into the Chicago area. The chain has consisted of three outlets in the Cincinatti area, where the company is headquartered, and about a dozen others scattered around the country, operated by franchisees. P&G also is expanding a Mr. Clean Car Wash franchise.

After incrementalism didn't cut it at P&G under McDonald, Lafley's charge to shake things up with Tide clearly means business.

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