At low tide

It's always difficult for a company to admit that the brand it's launched to shore up an existing player shows all signs of cannibalising the earlier entrant.

Procter & Gamble (P&G) is in just such a situation. When the Rs 750-crore company introduced Tide in India, it was meant to accentuate the fortunes of the company's detergent business in the Indian market.

After all, Tide is P&G's best bet globally, accounting for 10 per cent of the multinational's $ 35 billion global turnover; it is also the world's largest-selling detergent brand.

However, three years after its entry into India, there is little to prove that Tide has made that desired splash for P&G.

According to retail audit house, ACNielsen ORG-MARG, Tide has grown marginally from 0.1 per cent volume share in 2000 (it was launched in May 2000) to 0.7 per cent at present.

P&G's older brand in the Indian market, Ariel (launched in 1991), is also suffering. Ariel's volume share has dipped from 2.6 per cent in 1998 to 1.5 per cent currently. Worse still, P&G's total volume share in the detergents market has dipped from 2.6 per cent in 1998 to 2.2 per cent currently.

So what urged P&G to launch another premium detergent in a market where its super-premium brand was already present, risking cannibalisation by the new entrant?

An excerpt from Philip Kotler's Marketing Management: The Millennium Edition (Prentice Hall; 2000) throws some light on P&G's global strategy with respect to its detergents: "P&G will enter a market containing a large entrenched competitor. Instead of launching a me-too product or a single-segment product, it introduces a succession of products aimed at different segments. Each entry creates a loyal following and takes some business away from the major competitor. Soon the major competitor is surrounded, its revenues are weakened and it is too late to launch new brands in outlying segments. P&G in a moment of triumph then launches a brand against the major brand."

In the Indian market, however, this global template quite didn't work. True, P&G managed to pre-empt adversary Hindustan Lever Limited (HLL) to some extent by launching a premium brand first in the Indian market first in 1991.

But it underestimated HLL's ability to react. HLL reacted with a premium variant of Surf "" Surf Excel "" in 1992, to combat the entry of P&G's Ariel.

Surf Excel managed to wean away consumers from Ariel thanks to HLL's stronger distribution muscle (1.2 million retail outlets compared to P&G's reach of less than half a million outlets).

Ariel's value share wavered at 8 per cent of the premium detergents market while Surf Excel surged ahead with 11 per cent by 2001.

Ariel launched with two variants "" Green and Blue. But Surf Excel upstaged Ariel with variants like Surf Excel Power and Excel with Power Boosters.

Ariel then introduced variants like Super Soaker and Front O' Mat to combat Surf's moves. Between 1998 and 2003 Ariel had nine variants in the Indian market while Surf had only five.

But at present, Ariel is left with only two variants "" Ariel Total Compact (for both washing machine and hand wash) and Ariel Front O' Mat (for front-loading washing machines) "" both priced at Rs 135 per kg.

According to analysts tracking the sector, the variants did not make much of an impact on the market. So Ariel's variants were never advertised separately.

Says an ad executive who previously worked on the account, "The rationale was to build the mother brand Ariel's equity as the company believed that people were smart enough to pick out variants."

Surf's variants weren't unqualified successes either. HLL has had to phase out some variants such as Power Boosters and Automatic after it found that the variety was only confusing consumers.

The basic problem was that both companies were trying to connect to the premium consumer: the premium end at that time (between 1997 and 1999) was registering a growth of 16 per cent in terms of value, as compared with the normal growth rate of the entire market at 5 per cent.

Thus, P&G saw the route to expansion in Indian detergents market through its safest bet by far, Tide.

But by the time Tide was launched in 2000, the lather was subsidising the premium detergents market. In 1999-2000 itself, the premium market shrank by 27.09 per cent (in volume terms).

Analysts are of the view that P&G floundered by launching Tide as a premium detergent at Rs 120 per kg, just Rs 35 lower than its super-premium sibling, Ariel.

The market was already experiencing a downward pull towards low-priced options like Ghari and Fena which had increased their shares in the market.

For instance, Ghari has grown from 5 per cent volume share in 1998 to 15 per cent currently. HLL has countered this issue by aggressively promoting its mass brand, Wheel; Wheel's share of total detergents volume has increased from 16 per cent in 1998 to 18 per cent now.

Tide's growth in the Indian market was initially slow on the uptake. While Ariel stood at 1.6 per cent in the total detergents market in 2001 (in terms of volumes), Tide could manage no more than 0.3 per cent. Also, Tide's pricing was a deterrent to initial product trials.

Says Nikhil Vora, an FMCG analyst with ASK Raymond James, "The need of the hour was a value-for-money brand and not another premium brand but P&G did not take that into account."

P&G did attempt to correct its mistake: in August 2001 it made Tide cheaper by Rs 35. With the market price down to Rs 85 per kg, it could address the consumer segment that couldn't afford Ariel.

According to analysts, P&G's strategy for Tide increasingly started to focus on the value-for-money consumer and this could represent the company's strongest effort so far to grab volumes in India.

Certainly, volume share crawled up. According to Rahul Malhotra, country marketing manager, P&G, the Tide business has tripled post the price reduction. But it's not just the pricing strategy that helped Tide rise up.

Another factor, after the price game, that worked in favour of the detergent was the "whiteness" proposition (Ariel has always been promoted on the "cleanliness" platform).

Until then whiteness was an area dominated by HLL's Rin, a detergent soap. An HLL insider admits that Tide did manage to overshadow Rin's proposition of whiteness for a while.

And finally, what helped Tide gain momentum is the communication channels it chose to reach to its target audience, which was different from that of Ariel.

For Ariel P&G focused the communication on the modern and upwardly mobile family.

To reinforce the tag of premium quality, it tied up with consumer durable companies such as Videocon, to vouch for its quality when used with their brand of washing machines.

In the mid-1990s, celebrities like Shabana Azmi were roped in to endorse Ariel's fabric care properties.

In the case of Tide, though, P&G focused on the traditional Indian housewife (the ideal core target for any detergent brand) from the beginning.

The company introduced its second premium offering to the Indian market with a "doorstep challenge" where television personality Shekhar Suman visited homes, challenging housewives to test the efficacy of the product. This ploy was the first of its kind in the Rs 4,000-crore Indian detergents market.

Shekhar Suman's popularity rubbed off on the brand's recall. Today, according to a media buyer, it makes perfect sense for P&G to put most of its resources behind Tide.

For instance, says the media buyer, the media spends ratio for Tide and Ariel is now 60:40, compared to 50:50 a couple of years ago.

However, for ad agency executives who handle P&G's account, the current strategy is to increase the company's market share with two differentiated offerings.

Says Kamal Basu, executive vice president, Saatchi & Saatchi (ad agency for Ariel), "The mid-priced detergent segment is ballooning in Indian at present, eating into the shares of both low and top-end segments. The price drop has only arrested the shrinkage of this segment."

But has that happened in reality? While P&G's total volume share in the detergents market has wavered at 2 per cent from 1998 till 2003, its competitor HLL's Surf Excel "" it competes with both Tide and Ariel "" has grown from a small 1 per cent volume share in 1998 to 2.8 per cent in 2003.

Building further on Tide's equity and the doorstep challenge that consumers have grown to relate with the product, P&G is currently sponsoring a game show on Zee TV for Tide.

While media buyers say the game show is connecting with Tide's audience, the market dynamics pose a different challenge. Even as HLL and P&G are trying to pump up volumes by slashing prices, growth has been static as consumers continue to downtrade to low-priced options.

Tide's unique pricing could act as an advantage because it is a convenient price point for a premium, "international" brand in order to enable customers to downgrade from costlier brands. But what if Tide washes away Ariel's franchise?