By Patrick Barwise and Seán Meehan, Authors, “Beyond the Familiar: Long-Term Growth through Customer Focus and Innovation“
Editor’s note: The initial launch of Tide, the first heavy-duty synthetic laundry detergent, in 1946 was a textbook breakthrough technical innovation. But the reason why Tide became a long-term money machine is six and a half decades of relentless, consumer-focused incremental innovation, say the authors in this case study …
Even as it was launching Tide, P&G was working on process innovations to expand capacity and reduce costs and product innovations to ensure that it consistently delivered its core promise – cleaning power – better than rivals Lever and Colgate.
Importantly, however, Tide’s product innovations have increasingly gone beyond raw cleaning power. Examples include major brand extensions such as Liquid Tide (1984) and Tide with Bleach (1988) as well as numerous smaller extensions. For instance, Tide Ultra Concentrate (1992) provided benefits to consumers, retailers and P&G by reducing packaging, manufacturing and distribution costs.
In 2001, however, Tide was under pressure in the US market. With a 50 per cent price premium in an increasingly competitive market, it faced a weakening value perception. Consumers were saying, “Yes, Tide is better — but is it that much better?”. Many were using cheaper products for everyday purposes while keeping Tide for occasional use with tougher loads of laundry.
P&G set up a multifunctional team to screen ideas and test them with consumer research. The result was a series of new sub-brands such as Tide with a Touch of Downy (improved fabric softening), Tide with Febreze (improved deodorising/freshness) and Tide Coldwater (improved, energy-saving, cold-water cleaning performance). By 2005, these incremental innovations had boosted Tide’s market share to a commanding 43.2 per cent by value, an increase of 5.8 market share points in just four years. The main source of this renewed growth was P&G’s re-emphasis on market-driving incremental innovation.
In February 2012 P&G launched Tide Pods, a premium-priced brand extension that it claims delivers the core benefit – cleaning power – more conveniently than ever. Despite some initial controversy – mainly about children mistaking the pods for candies – the product has helped Tide increase its market share by three points since launch.
Consumer insights for continuing relevance
Part of P&G’s winning formula is its rigorous use of market research to ensure that product improvements are always relevant to consumers. Like other packaged goods companies, it has long had access to a wide range of quantitative data on how consumers buy and use its products, and an increasing range of ways collect and analyze these data.
Since 2000, it has increasingly supplemented these ‘high-tech’ techniques with more ‘high-touch’ approaches. As well as traditional qualitative research methods such as consumer testing centers and home visits, P&G now uses newer, more powerful techniques such as online advisory consumer panels and metaphor elicitation in one-to-one depth interviews, instead of traditional focus groups. The aim is to understand the ‘whole’ consumer — who she is and her individual aspirations, needs and wants – as well as her shopping and product usage.
Lessons from Tide
Tide’s challenge now is to maintain momentum in a more cost-conscious market without further increasing the complexity of the product line. That will likely involve some consolidation of sub-brands and variants, while continuing to introduce new and better products under the umbrella brand. In recent years, it has also included strong value for money messages that explain why Tide is worth its price premium.
For most companies, these would be nice problems to have. So what can your company learn from Tide’s 66-year success?
- First, you need to develop and communicate (internally as well as externally) a clear, customer-relevant brand promise.
- Second, build trust by relentlessly delivering on that promise.
- Third, long-term success also requires relentless incremental innovation, continuously evolving and improving the brand promise while still reliably delivering it.
- Finally, to ensure that the brand promise is always relevant (and that management knows about any failure to deliver it), you need a wide range of sources of customer insights, and you need to ensure that these reach those at the top and are acted on. Don’t underestimate the challenge of translating insight to action – a topic we return to in a forthcoming article.
Patrick Barwise (firstname.lastname@example.org ) is Emeritus Professor of Management and Marketing at London Business School. Seán Meehan (email@example.com) is the Martin Hilti Professor of Marketing and Change Management at IMD. Their book Beyond the Familiar: Long-Term Growth through Customer Focus and Innovation (www.beyond-the-familiar.com) is published by Jossey-Bass.