 Wright evaluates ways to increase the volume of P n Gs Light-Duty Liquid (LDL) detergents.

Currently they have 3 brands

1) Joy, in 1949, was the 1st brand. Since 1970, it was positioned as a performance, and deliver
beautiful dishes that get noticed and appreciated. Lemon-based formula. Market share
12.1%. Expected growth 1% per year for next 5 years

2) Ivory Liquid in 1957. Mildness (hand care) positioning. Market share of 15.5% (leading
brand). Slightly declining over the past 5 years. Expected to remain same for the next 5
years. Stressed on ivory washing more dishes than other LDLs.

3) Dawn, in 1976, is a performance brand. Within 2 years it rose to no.2 in LDL category.
Current market share is 14.1%. Projected to increase to 16.5% over the next 5 years. It
captured 70% of customers from non-P&G and 30% from P&Gs other 2 brands (15 each
from joy n ivory). It had a patented formula which cut grease better than any other LDL.

Currently P&G hold a 42% market share (24.78mn cases) by weight (industry $850mn sales, 59mn
cases)

Competitors: Colgate-Palmolive 24%, Lever brothers 7%, remaining 27% generic and private label
brands.

History:

 Founded in 1837
 Introduced Joy in 1949 as mild, light-duty liquid.
 General consumption pattern: 1.5LDL brands at 1 time, used 0.6 ounces per sinkful of
dishes, and washed 12 sinkfuls per week.
 Purchase cycle was 3-4 weeks.
 Available in 4 different SKU (48oz, 32oz, 22oz and 12oz) 22 and 32 were most preferred
(popular).
 Increasing consumption of LDL (population growth) was offset by increasing automatic
dishwashers (ADW), as they needed ½ of the LDL as compared to non ADWs.
 Based on trends, growth was expected to be 1% per year for next 5 years.

LDL types (Exhibit 6)

1) Performance segment (35% by volume) … provides a cleaning benefit

2) Mildness segment (37% by volume) …. gentle to hands
3) Price segment (28% by volume) …. Low cost

Performance segment had the biggest growth in the last 10 years. Some brand mangers
believed that it would eat up the share of mildness.

Price segment was expected not to grow….as it used much more volume (2 to 3 times)
Options available:

 Introduction of new brand (4th one after the existing 3)

 Product improvement in the existing brands
 Increasing the marketing expenditure on the existing brands.

Analysis:

 Optn 1:
o New brand can be introduced in all 3 segments. Well positioned new brand was
expected to capture 60% of its share from competitors.
o Con: It requires $20mn as capital investment for production stuff. Also, it needs
$60mn for first-year introductory marketing expenses…. costly.
o In performance segment: H-80, new formula
o In Mildness segment: further differentiation, as most customers preferred milder to
hands more than any other benefit…. but the segment is in decline.
o In Price segment: No presence in the fragmented market. Profit margins falls from
32% to 14% as it is low price… reducing margins… can they?
o Time required: 2years, Plus a year in test market.
 Optn 2:
o Less investment than new brand intro. $20mn capital costs remain. But marketing
costs only $10mn as it is an existing brand (Dawn or joy… preferably dawn)
o Can use H-80 formula here as well!
o Joy also had “no spot” formula. It reduced COGS of joy by $3mn per year. No capital
investment required but relaunch would require $10mn marketing expense.
o Time required: 1year, worst case (test market) 2 years.
 Optn 3:
o Low growth potential in LDL category. Should he avoid any capital investments?
o Focus only on marketing to increase volume sales.
o Limited funds, Ivory requested $4mn additional funds to support extra advertising
and promotions.
o Time required: immediate approval possible, worst case (Test market needed) 6-
12mnths