Brandweek, September 3, 2007

Strategy: P&G Concentrates on Converting Detergents; Tide, Gain, Cheer Move to Stronger Formulas in Smaller Packages

Two key questions arose earlier this year when Procter & Gamble said it would replace its detergents with a stronger, more concentrated formula, 2X Ultra, that requires half the size of its current plastic containers to handle the same laundry load: Would the new formula pass muster? Would consumers buy smaller packages at the same price as the larger bottles without feeling as if they were ripped off?

Apparently, consumers believe 2x Ultra is the real deal. At least according to those consumers who tried the new formula during a six-month test period in Cedar Rapids, Iowa. So much so that P&G is moving ahead with its plan to roll out 2x Ultra for Tide, Gain, Cheer, Era and Dreft to U.S. states in the South and Puerto Rico this month, and nationally and into Canada by April 2008.

P&G's move is part of an industrywide, retailer-driven trend toward more efficient and environmentally-friendly packaging. Wal-Mart played a key role by urging manufacturers to create products that would use less energy and generate less waste. Unilever initiated this conversion with All Small & Mighty in 2005.

"Consumers are smart and they will adjust," said Marie-Laure Salvado, external relations manager, fabric and home care at P&G, Cincinnati. "Education is critical. Compaction is intuitive, but it is crucial for consumers to know the bottle has been compacted."

All existing SKUs are scheduled to be replaced with the 2x Ultra bottles, with the sizes ranging from 50-oz. to 200-oz. The pricing will not change on any SKUs, per P&G. For example, MSRP for Tide 2x Ultra will remain $6.49 for 100-oz. and $11.99 for 200-oz. But these would be the equivalent of 200-oz. and 400-oz. versions, respectively, of the former formula.

However, with a product that is visually half the size of its predecessor, "Marketers are going to have to retrain consumers," said Eli Portnoy, chief brand strategist at The Portnoy Group, Orlando, Fla. "There must be a change in consumer behavior to get them to accept compaction." Portnoy said people will read the label explaining they can use less liquid, "but most [will] still pour more. If they go through it faster and have to replace it more frequently, consumers will be annoyed because it will cost them more money."

Gary Stibel, CEO at New England Consulting Group, Westport, Conn., said there is sure to be some sticker shock. "The issue is the price in terms of value. With a big price on a smaller bottle, there will have to be some learning that takes place. Long term it's the right thing to do. Short term, there's bound to be some backlash, since consumers have no choice but to buy compacted bottles."

P&G will back the conversion in TV spots tied to the regional rollout. The first ad, "Going Ultra," promotes the concept of compaction via a woman shopping in a supermarket as the current bottles morph into the smaller ones. Voiceover: "One small cap can get your whole wash clean. The smaller bottle is handy for you and uses less plastic, so it's better for the environment. Now that's Ultra cool."

A second wave of marketing will highlight the benefits of each brand, i.e. Tide's improved performance and Gain's longer-lasting scent, said Salvado. Support includes POP and a dedicated Web site for each brand. P&G's ad spend for laundry products and stain removers was $186 million in 2006, per Nielsen Monitor-Plus.

Red, Cincinnati, oversees the portfolio's advertising in conjunction with lead agencies for Tide (Saatchi & Saatchi, New York) and Gain (Leo Burnett, Toronto).

P&G also is supporting its green efforts with Pure Essentials, a new SKU designed with naturally-inspired scents being added to its Tide, Downy and Bounce lines.

The line will maintain P&G's current product size and formula (2X is in the South and Puerto Rico now), then ultimately switch to 2x Ultra everywhere and compacted bottles. Support includes TV and print; Burrell, Chicago, oversees the Pure Essentials portfolio in conjunction with Saatchi & Saatchi (Tide), Grey, New York (Downy) and Leo Burnett, Toronto (Bounce).