Last month, Procter & Gamble (P&G) announced that they are test marketing a new product called Tide Basic. The new detergent costs 20% less than regular Tide, has fewer extra features (e.g. no anti-pilling or color preservation technologies), and is only available in powder form.Interesting product for the times that we are in, but is Tide Basic a disruptive innovation?
On the face of it, some would argue yes. The target consumer is a non-user of Tide. The performance of Tide Basic on typical detergent features has been reduced. A different lever of performance--value--is increased. And the product price is significantly lower.
But here’s the key problem: disruptive innovations are intended to create new markets, and Tide Basic is not doing that. There has always been a vibrant low-end market for detergent; Tide is finally entering that market now simply because the economic downturn has led to "trading down" behavior by consumers, and as a result, significant market share decline for Tide.
Will P&G be successful with this product anyways? Hard to say. Certainly, many companies put out good-better-best versions of their products (e.g. Exxon-Mobil gas, HP laptops, Kraft Mac N Cheese) with great success. On the other hand, sales cannibalization of regular Tide is a key issue, as is the potential of diluting Tide’s premium-oriented brand with a low price product.
And as far as disruptive innovation is concerned, Tide Basic... basically does not meet the standard.
1 comments:
I will be interested to see how this turns out! Personally, I don't use Tide at all because it's too strong for my skin. It seems to me that Tide did not build anything, other than a lower price, into the benefit of purchasing this product. And as you said, they are not even creating a new market.
Could they be doing this? Could they be trying to capture the "lower end spender" with the brand name of "Tide", so feel better about yourself because now you can have Tide, albeit, not as good, because, afterall, you're a low end spender? Uh, that's pretty convoluted, huh?
Sort of like Sauve products. No, they're not Toni & Guy, but they're not at the Dollar Store either.
Great post, as usual.
(aww, cute pic!)
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