This fall, Unilever will downsize package sizes of All, Surf and Wisk 20% while cutting the brands' retail prices 10%-a move, retailers said, that emphasizes everyday low prices rather than price promotion. The company is not expected to slash detergent advertising, though trade-promotion expenditures are likely to be cut.
A Unilever spokeswoman said the company remains "committed to growing both the top and bottom lines" on laundry in the U.S., but retail executives said the company is cutting trade-promotion spending while downsizing products and price points to improve profit with less concern about share.
"We have given up some share but significantly stepped up profitability [in the U.S.]," said Howard Green, Unilever's head of investor relations, in a recent conference call with analysts. He added, "In the rest of the world, where we lead the market, the emphasis has been on improving profitability as we continue to move share forward."
"I think it reflects a level of business maturity," said Michael Hoye, president of consulting firm Hoye & Partners, Danbury, Conn. "I don't know that managing for share was ever terribly successful [for Unilever]." Unilever's detergent market share was 17% for the 52 weeks ended April 21, according to Information Resources Inc. (excluding Wal-Mart, dollar and club stores) compared to P&G's 57%.
Unilever remains committed to media support for Wisk and All; new ads for All broke in late March and for Wisk this fall, both from Interpublic Group of Cos.' Lowe. But its sharper focus on margins and value pricing raises questions about whether laundry detergent, once a king category in package-goods marketing, will see media support erode now that it's more of a pawn in the global chess match. Colgate-Palmolive Co.'s shift to manage for margin over share in U.S. laundry detergents in the 1990s ultimately meant pulling the plug on almost all media, and value brands of Dial Corp. and Church & Dwight likewise see little or no media advertising.
Wisk and All are strong enough brands to warrant media support even under more profit-minded management, though likely "at more realistic levels," Mr. Hoye said. Wisk received nearly all Unilever's measured spending last year, with $23 million in support, according to Competitive Media Reporting (see chart below).
A strong, profitable brand like P&G's Tide, even in a less competitive category, is likely to continue getting strong media backing, he added. Tide's measured media outlay was $67 million last year, and a spokeswoman said, "We definitely will continue to support our brands with a wide range of marketing support."
Although Unilever is vastly outspent in the category by P&G-the latter with a total of $129 million in ad spending last year-outlays by both players fell sharply in the first two months of 2002. That's likely because both had media plans scheduled to kick in later this year to support launches including P&G's "Clean Breeze" scent extension for Tide and Downy.
An improved grease-fighting formula and new clear Wisk package is also imminent and will be backed by $30 million in TV and print ads from Lowe.
Interestingly, retailers say Unilever is following moves last year by Dial Corp.'s Purex brand to spend less on promotion in favor of everyday low prices, while P&G, long the champion of EDLP, has been increasing its use of once-shunned off-invoice allowances in the past year. The latter could change, now that P&G wants to make permanent price cuts for Cheer while downsizing liquid and powder packages 20% to 25%.
The P&G spokeswoman would not confirm the downsizing but said Cheer will stick with its fabric- and color-care positioning.