Tablet niche probed for mass-market potential

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Detergent marketers , which spawned TV soap operas in the '50s, have been acting out one of their own in the past year: "As the CEO Turns."

Procter & Gamble Co. Chairman-CEO Durk Jager left under a cloud in June. Among his alleged faults was paying too much attention to new brands and neglecting such core brands as Tide.

DIAL EXEC GONE

Dial Corp. ousted Chairman-CEO Mal Jozoff two months later after three quarters of earnings disappointments, caused in part by a troubled partnership with German consumer and chemical products company Henkel. Their joint venture produced Purex Advanced, a thus-far-unsuccessful assault by Dial's value brand on the premium segment dominated by Tide.

Now, as P&G and Dial try to remove those unsightly stains from their books, the drama returns to the endless saga of enticing consumers to spend more on washing clothes. P&G will join Unilever, and possibly Dial, in launching premium-price laundry tablets in the U.S., after Unilever scored big on its global rival in Europe.

P&G rolled Tide Rapid Action Tablets into stores this month , priced at a 30% premium per use to Tide powder and backed by what P&G has told retailers will be a $50 million marketing push, including TV and print advertising. The total marketing push is similar in size to recent P&G launches for Febreze, Swiffer and Dryel, and the premium offer was copied from its European marketing efforts.

Unilever, which beat P&G by a year with its launch of Persil, Skip and Omo tabs in Europe, isn't expected to introduce its first tablet, Wisk Double Action Tablets, until November, with TV, print and interactive ads to break early next year. P&G got the head start because it beat Unilever in reformulating the product for hard water.

EYES YOUNG FAMILIES

Though viewed by some retailers as a niche product for upscale urban apartment dwellers (tabs come two to a package), experience from Europe shows tabs can have broader appeal, says Sebastian Munden, North American laundry projects director for Unilever. He brings five years of experience in developing and launching tabs in Europe.

"Our experience everywhere without exception is that this is a mass segment," Mr. Munden says. "At the core are younger families with children." Tablets have attained market shares as high as 28% in Ireland. In the U.S., he says, "I can't see any reason why tablets won't be huge. I would expect the tablet segment to be over 10% (of total market) in the second year and 20% a year or so later."

Convenience of measured doses is the key selling point, Mr. Munden says. In a testimonial for Persil tablets in the U.K., an interviewer asks a consumer if she'd go back to powder and she responds: "Would you go back to an outdoor toilet?"

On the other hand, P&G sees the tablet market as appealing more narrowly to "time-starved 18-to-30-year-olds," Chief Financial Officer Clayton Daley said at a consumer products conference hosted by Prudential Securities in September.

When Tide tablets launched in Canada in July, TV spots featured fast-paced music and copy designed to appeal to that segment, Mr. Daley said. "We've seen the future of clean, and it's square," is a tagline for the ads, which contrast the square shape of Tide's tabs to Unilever's round tablets, marketed under the Sunlight brand in Canada.

P&G President-CEO A.G. Lafley, who built his career overseeing the successful launches of liquid Tide and Ultra Tide in the 1980s and '90s, sees tablets as part of his plan to focus more on core brands in the U.S.

DEEP CLEAN BREAKTHROUGH

"We're back on offense in laundry," he told analysts recently. "We will lead the introduction of tablets in North America. And we've just launched (this spring) liquid Tide Deep Clean, the biggest breakthrough in product performance since we launched liquid Tide in the mid-'80s."

Will Dial join the tablet wars? Though the company's Dial/Henkel venture has tested tabs in Europe, a U.S. rollout could be on hold pending a review by Mr. Baum, who believes pricing of Purex Advanced, which has been on par with such brands as Tide and Wisk, may be out of line given the core Purex brand's value pricing as much as $2 to $3 less per package at retail.

A superpremium spinoff of a value brand is unprecedented in package-goods, says PaineWebber analyst James Dormer. Result have been mixed.

The laundry detergent category grew 3.2% in sales in the 52 weeks ended Aug. 13, according to Information Resources, while Dial shot up 10% thanks largely to the advent of Purex Advanced. But the company and analysts feel results should have been better because of the estimated $20 million spent in marketing Purex Advanced.

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