labels: procter & gamble india
P&G finally realises Indiannews
Mohini Bhatnagar
21 September 2001

This comes almost a year after P&G cut the price of its feminine hygiene brand Whisper Ultra from Rs 80 to Rs 65 on the basis of a research conducted by the company which suggested that though 88 per cent of women in the upper middle income category preferred Whisper Ultra to other brands, they said they could not afford it.

The $3-billion detergent Tide is Procter and Gambles flagship brand, and is available in over 23 countries. It is one of P&Gs best-performing brands globally and, therefore, it was unlikely that the company would watch silently when the brand failed to take off in a big way in the Indian market.

Tide was launched in May 2000 at Rs 120 a kg. Its positioning was midway between concentrates like Ariel and Surf Excel (Rs 160 a kg) and the premium segment (Rs 85 a kg) of the detergents markets, occupied by Hindustan Levers Surf.

At present, curiously, the premium compact powder market is growing at a faster pace at 16 per cent than the overall growth rate of the powder detergent market, which is growing at the rate of about 5 per cent. Thus, for P&G, the route to expansion in the detergents market is clearly through its best bet Tide.

Analysts see the company's price cut on Tide as a threat to HLLs Surf detergent brand, which is currently priced at Rs 86 a kg. To counter P&G's move, HLL is expected to shore up its brand too.

And they may well be right.

For P&G, the problem is not only the price conscious Indian consumer; it is also the presence of its age-old adversary HLL. Over the years, despite numerous attempts, P&G India has never been able to counter HLL, Unilevers subsidiary in India.

Though the technology-focused P&G managed to secure an initial victory in whatever products it introduced in the market, it ultimately lost out to HLLs sheer market penetration and pricing power. Market experts say P&G has also never been able to react adequately to pricing, a reason why it has consistently lost out.

Top sources in P&G candidly admit that the company has failed to do its homework well analysing Indian market realities. Most P&G products are technology-intensive and the company just could not afford to lower prices to compete in a truly mass way with products like Lux or Chik shampoos.

P&G's strategy finally appears to focus on the value-for-money consumer, and this may represent the companys strongest effort so far to grab volumes in the country.

When Tide was launched, it was positioned in the premium slot. Consumer perception of Tide is that of a superior quality detergent, while HLLs Surf is perceived as a product of average quality. Now that Tide is priced alongside Surf, it is likely to pose problems for the latter.

HLL has responded to the price-cut of Tide by saying the cut would have no implications on Surf, which was recently relaunched with an improved formulation of better stain removal.

Surf's market share as of June 2001 by value was 4 per cent of the entire detergents market. Since its launch in May 2000, Tide has managed to capture about 2 per cent share of the market share.

For P&G, this could be the best and the most successful strategy it has ever employed in the Indian market.

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P&G finally realises Indian