Laundry detergent manufacturers have done it again; doubling the potency of detergent while cutting the bottle size in half. The Wall Street Journal talks about the marketing challenge that Procter & Gamble Co. (NYSE: PG), Unilever (NYSE: UL) and their competitors are about to face. The impetus for this move is not a greener earth or a more useful product, but instead, pressure from retailers like Wal-Mart Stores Inc. (NYSE: WMT) to squeeze more product into the same shelf space. You will be able to do just as many loads with half as much detergent, and the price will be the same per bottle. The problem is getting people to realize that and, more importantly, convince them that they aren't somehow getting ripped off.
As the Journal says, "Retailers are pushing the big shrink in detergent bottles because when their shelves are full with smaller bottles, they lose fewer sales to products being out of stock and less employee time is spent replenishing product. Retailers also save on transportation costs because more of the smaller bottles can fit on a truck. Meanwhile, manufacturers, which over the past two years have been hit hard by high oil prices, save on the petroleum-based plastic packaging as well as the costs of shipping to retailers."
Wal-Mart CEO Lee Scott's strategy of promoting the products as green-friendly makes sense, given how in vogue that is right now -- less plastic, less transportation -- it actually is environmentally friendly. But there's still the emotional, less rational problem: How do you convince someone to pay the same amount for 50 ounces as they used to pay for 100? And what's more, why do the retailers and manufacturers get all the benefits?
I think they'll need to market this aggressively, and cast it in a favorable light: Remind people how little fun it is to lug in a bottle of detergent and emphasize the environment. It reminds me a little bit of the hesitance that paying for downloaded music generated at first: I remember thinking "If I'm going to shell out cash, I want something tangible: A CD and a little booklet and a plastic case." But I came around and, based on the declining sales of compact discs, so did most consumers.
But I still have one question: Given all the cost savings associated with the smaller bottles, couldn't they pass some of it on to the consumer too?
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Reader Comments (Page 1 of 1)
5-23-2007 @ 10:04AM
candice martinez said...
I completely agree with the idea of passing the lower cost onto the consumer. After all it is volume that creates revenue. If there is more space, more detergent than there will be more sales and less sales staff to pay to maintain stock.Thus, the consumer can have a lower price. If the detergent is priced the same, than people will fill someone else's pockets by buying off brand or what they are currently used to. With more sales there is no need to become greedy. give to the consumers- after all, we are the reason your still in business.
5-25-2007 @ 4:37PM
gailganong said...
My daughter visited Switzerland this year and reports that because they do not have a lot room for landfills and waste management, they simply sell most household products as refills in a paper carton(like our milk cartons) you simply buy one expensive bottle and keep refilling it. Makes alot of sense to me, if we did that here the reclycling would be cut on half.