The Warc Blog

The Warc Blog

Throwing in the Towel
 
Robert Passikoff, President, Brand Keys, Inc
 
Robert Passikoff

It turns out that Robert McDonald, CEO and President of Procter & Gamble, is a former military man with two missions: win back ground his company has lost as thrifty shoppers opt for cheaper products, and to invade foreign markets currently dominated by CPG rivals Colgate and Unilever.

Supported by massive ad budgets and ubiquitous distribution, P&G has in the past managed to persuade consumers to pay more for household basics. But a combination of the recession, consumers’ ability to engage with brands in the absence of traditional advertising, and increased brand commoditization has severely undermined that strategy.

More than two-thirds of consumers say they switched to a cheaper brand for at least one basic household product this year alone. And while consumers’ day-to-day spending more-and-more reflects persistent penny-pinching and a search for added-value that only a truly resonant brand can deliver, P&G’s response was to slash prices. Among the premium brands P&G has discounted were Tide, Charmin TP, and Bounty paper towels.

Is this surprising? Well, maybe. But the problem is more than just the recession. Or the habituation of frugality. Certainly the current economy gives people a reason to look for savings where they see no discernible differences, but the development of brand meaning, engagement, and loyalty to a brand shouldn’t be discounted either. Yes, yes, there are always those who will buy purely on price, but a loyal customer is six times more likely to rebuff competitive offers, especially price-based offers.

We track two of the price-promoted categories in our Customer Loyalty Engagement Index and here’s how brands currently rank when it comes to the value of the brand itself:

Paper Towels:

1. 7th Generation / Bounty
2. Viva
3. Basic / Brawny
4. Scott
5. Mardi Gras

For Laundry Detergent, there’s a bit more differentiation:

1. Cheer
2. Tide
3. Wisk
4. Gain
5. All
6. Purex
7. Era / Bold
8. Arm & Hammer

So is a price war the way to go? Getting consumers used to paying less for more makes it very difficult to compete and make a solid profit, unless you can really provide differentiation and value. But ultimately investing in what drives loyalty is where a brand can clean up.


Subjects: Consumers, Brands, Marketing

14 September 2010 14:38
 

There are 0 comments on this blog

(Want to have your say? Add your Comment)

Comments IconAdd your comment here:
Email :  
Forename :  
Surname :  
RadEditor - HTML WYSIWYG Editor. MS Word-like content editing experience thanks to a rich set of formatting tools, dropdowns, dialogs, system modules and built-in spell-check.
RadEditor's components - toolbar, content area, modes and modules
   
Toolbar's wrapper 
 
Content area wrapper
RadEditor's bottom area: Design, Html and Preview modes, Statistics module and resize handle.
It contains RadEditor's Modes/views (HTML, Design and Preview), Statistics and Resizer
Editor Mode buttonsStatistics moduleEditor resizer
  
RadEditor's Modules - special tools used to provide extra information such as Tag Inspector, Real Time HTML Viewer, Tag Properties and other.
   
 

Blog Search

Archives

  • 2014
    • July (21)
    • June (22)
    • May (23)
    • April (20)
    • March (14)
    • February (10)
    • January (5)
  • 2013
  • 2012
  • 2011
  • 2010