Simply great or Simply crazy? Wednesday 5th August 2009

The rise of the discounters over the past year has been well documented and whilst the big 4 supermarket retailers themselves have been fighting back with their own promotional campaigns, now it appears that FMCG manufacturers can have a new strategy.

As highlighted in Marketing online on the 28th July, Proctor and Gamble has targeted the value sector with the launch of a lower-priced range of nappies as part of the Pampers brand. This seems to dually aim to tackle both own label and attempt to win new customers.

With the worst recession for decades consumers have become increasingly price conscious, switching to both discount supermarkets whilst also trading down brands. Talking Retail recently estimated that 35% of customers in the last year have switched supermarkets for a significant portion of their food shopping.

The big 4 have all responded with increased promotional activity almost certainly attributing to boosting sales whilst tackling the threat of discounters. The latest TNS data shows that whilst Aldi and Lidl sales on 3 months to 12th July were 8.3% and 6.8% respectively Asda was up 8.1% and Waitrose 8.2%.

All these factors are enabling customers to now be more selective than ever in their shopping habits through taking advantage of discounters, less premium brands, own label products and price promotions. So have Proctor and Gamble identified a new strategy for other FMCG manufacturers to follow?

By moving away from price promotions or promoting ‘value’ Proctor and Gamble are tackling the discount stores and promotional activity head on.

It will be interesting to see how customers will react to the Proctor and Gamble offering. The product is almost half the price of premium nappies and with a bold orange pack design will certainly have a strong shelf presence. It would also be interesting to hear how retailers have reacted to a product that clearly challenges its own label range!

The risk to Proctor and Gamble of cannibalising their own brands will have been assessed as well as identifying the brands long term value. However it is a clear attempt to reach new untapped sectors of a market where price conscious shoppers may well be tempted to trade down whilst retaining a brand loyalty. Anybody who has spent years buying nappies will know that costs do add up!

Watching how Proctor and Gamble’s approach pays off will be very interesting over the coming months: will they launch additional products in the future and will other manufacturers follow their lead?

For NPD and Shopper research expertise, contact The Oxford Research Agency via Andrew Tharme (andrew.tharme@tora.co.uk or call 01865 728272 / 07970 962091).