“Innovation is the way that we touch and improve people’s lives,” explained Bob McDonald, company CEO. “Pods are one of the biggest innovations in many, many years.”
The multibillion dollar US laundry detergent category is certainly in need of some innovation. In recent years, sales have slipped as much as 5% a year, as consumers opt for cheaper detergents or wash their clothes less frequently.
After several stops and starts during the past few months, Tide Pods debuted in retail stores last month. The product comes with a higher price than regular detergents. For example, a 35-count fishbowl container of Tide Pods will retail for $9.99, the 57-count will retail for $14.99 and the 90-count is $21.49. Higher price points, yes, but they are inline with other premium laundry products such as Tide with a Touch of Downy or Tide with Febreze Freshness, say company executives. Most importantly, P&G researchers are confident that consumers are willing to pay more for the novel Pods concept.
Tide Pods are said to be a revolutionary idea that will shake up the US laundry category.
Laundry? It’s Complicated
“People have told us that laundry is complicated,” explained Keith, who noted that consumers must consider more than 900 different load combinations—such as detergent, fabric softener, pre-treater, soil load and wash temperature—when doing the laundry. What’s worse, P&G found that only 68% of consumers are satisfied with the amount of time and effort the laundry process requires to achieve excellent results. After using Tide Pods, 97% of consumers were satisfied with the time, effort and results, according to P&G execs, who say over the course of a year, consumers save about an hour that they normally spend on pouring and measuring laundry liquid or powder.
Since it’s debut in 1946, Tide has had more than its share of innovations; but none bigger than Pods, insist P&G executives.
With Tide Pods, there’s no need to measure, let alone pretreat loads.
“We promise a delightful experience,” insisted White Hall.
That’s because Tide Pods’ unique chemistry makes it easier than ever to complete the mundane laundry task. To deliver a small liquid unit dose, a new formula was created that is HE compatible and twice as compacted as current 2x Tide Liquid. According to Shellie Porter, product research section head, North America, Tide franchise, R&D, Tide Pods contain 90% active ingredients, such as surfactants and enzymes, compared to 50% actives for Tide Liquid and 10% for the leading value detergent. The unique, three-chamber unit dose enables the chemistry to work synergistically in the wash for excellent results, according to P&G researchers.
“We used computer modeling to get incredibly efficient. The multi-chamber design separates the unstable ingredients,” explained Dawn French, director, North American fabric care.
The three-chamber unit dose packaging, made from polyvinyl alcohol, helped make it possible to combine disparate ingredients such as hard water modifiers, enzymes, perfume and whiteners into each pod. The ingredients remain separate, and therefore stable, until they hit the wash water. Tide Pods dissolve in cold water, a prerequisite for P&G researchers who were determined to develop chemistry that would work in cold water, to improve the product’s energy efficiency profile. In addition, the concentrated formula will enable P&G and its retail partners save energy costs because less water is shipped from factory to retail.
“The eco-benefit appeals to the Tide and the non-Tide user,” insisted Porter. “As soon as you try it, you’re sold.”
The novel chemistry not only cleans clothes better and is better for the environment, it provides a bit of a lift to consumers too. In its research, P&G learned that 22% of US laundry rooms are in the basement. Couple that with the fact that the typical detergent bottle weighs up to 7lbs and the typical laundry load weighs 7lbs and it all adds up to quite a workout. But with a flip of the wrist, the consumer can toss in detergent, brighteners and stain removers into the laundry.
To back the launch, P&G is rolling out a multi-media campaign that is a marked departure from traditional laundry detergent advertising, according to Sundar G. Raman, marketing director, North American fabric care.
“Laundry marketing is pretty predictable; dirty shirts and clean shirts. Dirty kids and happy moms,” he observed. “(We wanted something) more colorful, light-hearted. People are not so serious when they come into contact with pods.”
To get a look at some of the commercials for Tide Pods, which were created by Saatchi and Saatchi, visit www.Happi.com.
Innovations at the BRIC
At the BRIC, P&G works with retail partners and non-competitors to get a better understanding of how and why people buy. The site houses a typical, upper middle income home where P&G invites thousands of consumers in each year to see how they wash clothes, clean counters and perform a variety of household tasks. The BRIC also includes 3D technology that enables retailers to see how P&G products will look on their store shelves as well as a full-size grocery store to demonstrate just how P&G products stack up to competitors’ brands on-shelf.
P&G’s BRIC has all the comforts, and then some, of home.
While awards are nice and more than 40,000 patents are even better, the real purpose of this R&D might is understanding just how the consumer interacts with P&G products.
For example, Keith recalled that one focus group member explained she couldn’t hold her infant son and do the laundry at the same time using a conventional laundry detergent that required measuring and pouring. The new product form freed her up to hold her son and toss in a Tide Pod at the same time.
“We’ve surprised and delighted consumers and revolutionized the laundry process,” insisted Keith.
Deep Cuts Ahead
Now, if P&G can just find a way to surprise and delight its investors, too. Last month, the company unveiled a plan that will reduce costs by $10 billion by the end of fiscal 2016. But to get there, P&G will shed 5,700 non-manufacturing jobs—10% of its non-manufacturing workforce—by the end of fiscal 2013, which begins in July. P&G’s total workforce is about 129,000. At a recent Consumer Analyst Group of New York (CAGNY) conference, company executives explained P&G will save $800 million from the job cuts. The company also expects to save $1 billion in marketing costs and $3 billion in overhead costs. To achieve those goals, P&G will implement a range of cost-cutting initiatives, including using less-expensive packaging, eliminating duplicate work, working on innovations with outside companies and virtual technology, and advertising for a variety of brands at once.
The Beckett Ridge Innovation Center pays homage to P&G’s soap-and-candle roots.
Still, observers say that as P&G gains more flexibility there could be repercussions for competitors, many of whom already went through recent restructuring, job cuts and cost cutting and now have less wiggle room to respond to a leaner, tougher P&G. In recent years, smaller competitors such as Church & Dwight have insisted that their size enables them to outmaneuver P&G. But at CAGNY, P&G threw a punch of its own.
“Over (the past) nine quarters, we’ve organically added $7 billion to company sales. This is roughly equivalent to growing one Energizer and one Church & Dwight in a little over two years,” chief financial officer Jon Moeller said near the beginning of his presentation.
Even bigger competitors such as Reckitt Benckiser and Unilever could be hurt by P&G’s aggressiveness. In fact, some have suggested that the move by P&G represents a giant leap forward just as Unilever was about to catch up to P&G.
And now, with Tide Pods, P&G researchers are convinced that its competitors around the world are about to embark on a new game of follow the leader.