Tide laundry detergent, not Ivory soap, is heralded as the brand that essentially made the company into the global, multidivisional giant that it is today and it is all because executives knew about cannibalism of the company’s brands and chose to let it happen. Cannibalism is a touchy subject in marketing and, as the name implies in other arenas, can be a negative. In general, market cannibalism is defined as a “situation where sales of a new or differently branded product eat into the sales of other products within the same line. If the total sales revenue of that (the new) product line increases, then the line extension is justifiable. However the danger of weakening the main brand remains.”[1] Such is the story with Tide.
As a project that was almost cancelled, Tide was a revolutionary product. Born out of rigorous lab testing, the product could not be referred to as the traditional laundry soap, but rather a synthetic laundry detergent. The brand name arose from this period of experimentation when as one of the developers would always comment on the “oceans of suds” the product generated. At the time, Procter & Gamble had successful laundry soaps by the name of Oxydol and Dash, but those products fell short by sometimes leaving residue on clothes after washing or failing to generate any cleaning power in hard water. Not only did Tide not leave any residue, but it exhibited superior cleaning power even in hard water. With the advent of the automatic washing machine in the post-war era, the two were destined as a marriage in laundry heaven.
Tide forced the hands of P&G executives to abandon their traditional methods of rolling out a product (i.e., rigorous blind and market testing). They knew they had something special in the product and a fast rollout would give them an advantage over their closest competitors, namely Colgate and Lever. This posed a huge gamble for the company, whose reputation revolved around methodology and precision. Tide would be first introduced in 1946 and was an unbelievable success from the start. Grocers had difficulty keeping the product on shelves and the company was stretched to its limits keeping up with demand. By the time Colgate launched its competing brand Fab in April of 1948 and Lever launched Surf in July of 1948, Tide was well on its way to capturing 30% of the laundry soap/detergent market – an unheard of share in the industry.
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With the competition clearly in the rearview mirror, Proctor & Gamble’s major challenge with the introduction and aggressive marketing of Tide was the cannibalization of its own brands. The new synthetic detergent was rendering obsolete “massive investments in manufacturing and was destroying decades worth of hard-earned brand equity” per one P&G historian. It was at this point the decision makers at Procter & Gamble had to establish their interpretation of brand management. Brands had either to live or die in the marketplace, even if the death is a result of your own success. P&G never looked back from their commitment to the Tide brand and haven’t since. From the period 1950-2002, the Tide brand has enjoyed a steady 20-30% market share. Colgate and Lever reportedly lost money trying to compete in this category while P&G excelled.
So why was the cannibalism of P&G’s brands a positive for the company? Tide was such an overwhelming success in its initial years following introduction that it actually buoyed the company. From here executives could conceivably take on long-term, capital-intensive investments in new ventures (Charmin toilet tissue and Crest toothpaste come to mind) and even consider expanding into new countries.
The company learned four important lessons from Tide. Some of which could be adopted by any consumer products manufacturer in any era:
1. P&G must remain a technology company (w/intensive R&D). They will move forward through innovation and experimentation.
2. Do not be afraid to move fast into a market if you know the advantage you could gain. This takes a decisive executive.
3. P&G showed the customer that it was in charge by allowing some of its own brands in the same product line as Tide to fail. Sometimes this doesn’t work, but in P&G’s case it kept the company from destabilizing.
4. There is power in grabbing a big share of the market. As with lessons #2 & #3 the concept of being decisive without fear is reiterated here. By grabbing a big share of the market with Tide, the doors were wide open for P&G to expand in other categories, countries, and markets while all competitors could do is try to catch up.
Resource:
Dyer, Davis, et al. Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble (Harvard Business School Press: Boston, Massachusetts) 67-84.
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