Date:03/03/2004 URL: http://www.thehindubusinessline.com/2004/03/03/stories/2004030300690600.htm

Back P&G drops prices of detergent brands Ariel, Tide

Our Bureau

Mr Rahul Malhotra, Country Marketing Manager, P&G India, at a press conference in Mumbai on Tuesday. — Paul Noronha

Mumbai , March 2

TRYING to get further volumes in its detergent business, Procter & Gamble Home Products Ltd has decided to reduce prices of its Tide and Ariel brands by 20-50 per cent. Having reduced prices of the sachets by 50 per cent last year, the extra volumes generated by the company have led it to adopt a similar reduction for its detergent bags as well.

At a press conference, Mr Rahul Malhotra, Country Marketing Manager, P&G India Ltd, said, "It was our sachet experience which gave us the confidence to drop prices for the detergent bags as well. Although we do not expect volumes to explode as in the case of sachets, the purpose is to get the masses to experience our products."

The price of the one kg pack of Ariel will now be reduced from Rs 135 to Rs 99, while the Tide price has been slashed from Rs 85 to Rs 46 for 1 kg. The prices of the 200 and 500 gm packs have also been reduced to Rs 22 for Ariel and Rs 10 for Tide (earlier Rs 30 and Rs 20 respectively) and Rs 50 for Ariel and Rs 23 for Tide (earlier Rs 70 and Rs 43 respectively).

Improving upon the internal efficiencies within the company in areas such as distribution, manufacturing and cost of raw material, the company claims that it is now in a position to pass on these benefits to the consumer.

However, the company is unable to comment on how this exercise will shift paradigms in the declining detergent category. Says Mr Malhotra: "We have to wait and see how competition reacts to our move." The Rs 5,000-crore detergent category has been stagnant for the past few years with high saturation levels in the category, which is already well penetrated."

"The market is big but people need to wash more often and move to better quality detergents. Hopefully, then, there will be some value growth in the category," he observes. Expecting to upgrade consumers from using bars to detergents and then to more premium detergents, P&G is hoping its price cuts will accelerate this change. To convince the masses to use its products, P&G has roped in well-known faces such as Ms Smriti Irani and Ms Aparna Mehta from the popular soap opera Kyunki Saas Bhi Kabhi Bahu Thi, to endorse its brands. Besides, it will be unleashing new commercials for its brands and there will be significant jumps in its ad budgets.

Without disclosing figures for the projected growth rates for its brands, Mr Malhotra says, "We expect volumes to go higher than the price reductions. So if Tide is being reduced by 50 per cent, we expect its volumes to more than double."