Procter & Gamble Overview Procter and Gamble is the world’s largest and most profitable consumer packaged goodscompany. Headquartered in Cincinnati, Ohio, it is a branded consumer products company thatmanufactures and markets products in more than 180 countries. P&G competes in a total of 37product categories and owns 25 “Billion Dollar” brands and 50 “Leadership” brands, which havethe highest market share in their respective product categories. Introduction of Tide PODS to the Global Market Tide PODS were launched in February 2012 and became available on shelves nationwidein March of 2012.Market Share and Growth ● The 2011 laundry care global market size was $77,422.1 million. ● The 2011 laundry detergent global market size was $59,605.4 million. ● P&G has claimed a 68% market share in the laundry pods category, an emerging segment representing 7.3% of the $7 billion U.S. laundry market. ● Tide PODS have generated $131 million in revenue this year compared to $23.6 million generated by Purex brand packets (second leader in market share). ● P&G expects to sell $300 million of Tide PODS in its first year of availability. ● P&G expects single use packets as a category to account for about 30% of the laundry detergent market in the next 10 years. Competitive Scanning Because of the delayed release of Tide PODS, competitors were able to quickly develop and release their own entries into the single use laundry packet market.. Some of the competitors to Tide PODS are: ● Arm & Hammer Toss ‘N Done Power Paks ● All Mighty Pacs ● Clorox 2 Stain Fighter & Color Booster Packs ● OxiClean Max Force Power Paks ● Purex UltraPacks ● Seventh Generation Detergent Packs
Marketing MixProduct ● Tide PODS are three-chamber liquid packets that deliver the usual great Tide cleaning in a form that is twice as compacted as liquid detergent. ● The packets are pre-measured and concentrated, making laundry more efficient and convenient. Unit Price vs. Quantity Purchased ● Tide PODS are available in small and medium bags, as well as XL and XXL tubs, and in three scents: Spring Meadow, Ocean Mist, and Mystic Forest.Price ● Procter & Gamble sells the Tide PODS at about a 10-25% premium over the regular Tide detergents.Promotion ● Procter & Gamble’s first promotion of Tide PODS was a $150 million promotional campaign featuring repeated phrases such as “Pop of fresh,” “Pop in. Stand out,” and “Get ready to pop your laundry.”Place ● Tide PODS are available at a wide variety of well-known retailers such as Target, Wal- Mart, Meijer, Safeway, Dominick’s, CVS, Walgreen’s, Rite-Aid, Amazon, soap.com, drugstore.com, and the P&G online store.People ● Tide’s customer service is highly accessible, offering several contact options: Procter & Gamble’s customer service line, an emergency listing for after-hours medical/first aid issues, e-mail, a Tide FAQ, as well as the Tide Facebook page and Twitter account. Environmental Scanning As a second mover, the relative strengths and weaknesses of P&G’s Tide PODS are notjudged by the intrinsic qualities common to all of these products, but rather by P&G’sinnovations.Strengths ● Tide PODS have obtained a commanding share of the single use laundry packet market, with over two-thirds of the current market, and projected sales of $300 million in 2013. ● Tide PODS have a gelatin capsule that is fully soluble in water of any temperature. Earlier entrants to the market have had issues with a “residue.”
● Tide PODS offer a higher level of convenience to the consumer by incorporating a stain removing agent as well as a whitening agent with the detergent. This convenience is largely absent in Tide PODS’ competitors’ products. ● The separate chambers of Tide PODS (detergent, stain remover, whitener) have allowed Tide PODS to create a highly recognizable brand logo on each sub-unit of the product (See Left).Weaknesses ● As a result of several launch delays, many competitors released single use laundry packets before P&G. ● Tide PODS, as pre-measured tablets, are not sub-divisible. Many consumers avoid the product because they are not capable of using fractions of the recommended portion to do a “light” load or as a money-saving technique. Analysts’ ReactionsPositive: ● “This long delayed launch is an example of what P&G can do when it focuses its resources [...] P&G generated $131 million in revenue from Tide PODS this year, five times the $23.6 million generated by Henkel’s Purex brand.” - Bill Schmitz, Deutsche Bank analyst ● “Tide PODS product is likely to hit its first-year sales goal. It seems when Procter does anything in the laundry category it makes a huge wave.” - John San Marco, Janney Capital analyst ● "Theres tremendous romance around the idea of pioneering, breakthrough innovation. Its not a big deal. They still have all the other advantages of being Procter: brand, distribution, great execution and the ability to keep improving the product." - Patrick Barwise, London Business School professor emeritus ● "I ... applaud Procter for driving the category through innovation, this is an innovation, and as far as what percent of the category it will take, thats to be seen.” - Jim Craigie, CEO of Church & Dwight ● “This product looks really interesting. It’s certainly going to stand up and shout. It looks very good - it looks very enticing - and certainly the latest indications about pricing seem very competitive.” - Ian Bell, Euromonitor International, head of home care and tissue and hygiene research
● “Tide Pods will overrun the competition. Foremost, Tide is one of most recognized brand names worldwide. Secondly, 98% of all American households have at least one P&G product, which makes consumer switchovers to new spin-offs easier when following the same product name.” - SymphonyIRI GroupNegative: ● “For P&G investors, [the second delay in release] represents another frustrating misstep. Had [P&G] stuck to the original timeline of September for launching PODS, P&G would have likely had a six-month jump on competitors.” - Bill Schmitz, Deutsche Bank analyst ● Tide PODS are "one of the crowd […] Do I think its innovative? No." - Mary Marlowe Leverette, About.com laundry expert ● “It strikes me that from an execution perspective, P&G is not delivering.” - Wendy Nicholson, Citigroup analyst ● “P&G is losing because consumers want a less expensive product [...] Do consumers really want better laundry detergent?” - Ali Dibadj, Sanford C. Bernstein & Co. analyst ● “P&G had to reportedly raise prices. This has put the nations largest maker of packaged goods in a spot of bother as the price of Tide PODs should be set cautiously with P&G struggling to woo budget-conscious customers and distract them from cheaper alternatives, like Arm & Hammer, Purex and Xtra.” - Zacks Equity Research Final Recommendation It is the opinion of Team Beta that Tide PODS will be a star product for the P&G lineup.The critics of Tide PODS simply fail to understand P&G’s strategy, and instead focus on theshort term consequences of a delayed release. To refute this criticism point by point, P&G waswise to delay release of the product to ensure that it conformed to expected product function. Alaunch before these issues were resolved would have been disastrous for P&G. Tide PODS aretruly innovative. They are the only product in the category to fully dissolve, and their 3-chamberdesign elevates the product to new levels of convenience by eliminating the need for measuringand adding additional products to each wash cycle. Regarding price issues, Tide PODS are aimedat a premium market - those who can afford convenience will not hesitate to purchase in spite ofa minor price increase. Finally, the financial numbers speak for Tide PODS. Tide PODS, as a new entrant,already have a commanding share of the market. The projected sales figures for the next year areincreasing, and most analysts believe P&G will hit these goals. It is the opinion of Team Betathat Tide PODS already qualifies as a P&G “Leadership” brand, and given 1-2 years, will qualifyas a “Billion Dollar” brand.
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