Procter & Gamble finally has begun rolling out to Walmart stores one of its biggest product introductions in recent history: Tide Pods. But delays in getting this innovation to market, along with headwinds from the general economy, have caught the CPG giant in the twin pincers of cost pressures and greater competition.
P&G CEO Bob McDonald recently explained the company's predicament to investors. "It was later than we hoped, but Pods is a game-changing innovation and with it came manufacturing challenges that set us back but have been overcome," he said. "To our knowledge, there will be nothing on store shelves that looks or performs like Pods, and if the demand we are seeing right now is any indication of success, we are confident that Pods will delive ron its promise to change the way people think about laundry."
Pods — similar but more complex than the single-chamber liquid-filled laundry tabs P&G sells in Europe — were supposed to become widely available last September, promising to become a multibillion-dollar new-product proposition in a highly mature category where it takes a mammoth innovation to move the needle on shares and, especially sales. Among other problems, the delay, in part because of evidence of greater demand than P&G initially had anticipated, allowed rivals such as Arm & Hammer to gear up their own single-use detergent packs in what is expected to be a $300-million new segment.
More broadly, P&G also has had to raise prices recently to offset rising commodities costs and is coping with consumers in the United States and Europe trading down from P&G brands to others, or private labels, in part as a reaction to higher prices and financial fallout from the recession. So P&G has had to announce the elimination of 1,600 non-manufacturing jobs — read, "lots of marketing people" as the company embraces "cheaper" social and digital marketing — by June as part of an early-retirement initiative even though it has boosted ad spending $1.8 billion, to a total of $9.3 billion, during the past two years.
There will be more trimming ahead: The company last fall said that it will take a pre-tax charge of up to $1 billion for its downsizing program. The single area that P&G for sure plans to expand is digital marketing. And McDonald now has to figure out what to do with Pringles, as it now looks unlikely that the sale of the brand to Diamond will go through.
All of which makes Pods especially important. P&G is a master at new-product execution, and it'll have to be at the top of its game to ride the coming tide (and Tide) of change.
Below, Tide explains the benefit of Pods in a trio of videos aimed at the household CMO: Moms.