December 22, 2009
Procter & Gamble Co. isn’t taking increased store brand market penetration lightly. In fact, it is launching a direct attack on store brands by creating more value-tier versions of its mega brands.
Several months ago in the U.S., P&G rolled out Tide Basic and apparently is expanding the concept to other brands and expanding other lower-cost brands, according to a report in the Financial Times.
“We don’t think there is any reason any consumer should have to use a private label. We should be able to innovate at multiple price points to delight all consumers,” CEO Bob McDonald told The Financial Times.
The strategy includes expanding its offerings of value tier versions to 75 percent of its product categories by June 2011 up from the current 50 percent. “There is renewed commitment that this is very strategic, and we need to get it done more quickly than ever before,” McDonald said.
Charmin toilet paper and Bounty paper towels “basic” brand rollouts preceded Tide Basic before the recession, according to the report. In addition to “basic” in the U.S, P&G, introduced the lower-cost Simply Dry version of its Pampers in Europe.
Right before the recession hit, P&G instituted a price increase, which seriously hampered its ability to compete against store brands, according to the report. "In October through December, things fell apart and they fell apart relatively rapidly," McDonald told the Financial Times. "It was clear to us . . . that we had to take dramatic steps quickly to restore the financial structure of our business."