Package Goods

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Package-goods marketers in 2002 stand to reap the rewards of stable sales along with recession-induced declines in raw material and media costs to relieve financial pressures.

"We are taking a posture of aggressive investment to build market share and we're enjoying the reduced rates to buy more [media]," said Carol Hamilton, general manager and senior VP-marketing at L'Oreal. "We want to gain share of voice so we can gain market share."

After increasing ad spending in 2001, Kimberly-Clark Corp. plans to bump it up again in 2002. Kimberly-Clark is budgeted "to spend probably more next year on advertising," said Wayne Sanders, chairman-CEO. "With what we've got in the [new product] pipeline, if media rates drop off, we'll just increase the weights."

Like many of their peers, Ms. Hamilton and Mr. Sanders expect recovery by midyear. But they say the recession hasn't been severe enough to significantly affect their consumer product sales anyway.

Unilever was pressured by a 20% fourth-quarter decline in prestige fragrance sales, and used savings from media rates and buying efficiencies to help meet earnings forecasts for the third and fourth quarter. But the company remains committed to increasing marketing spending as a percent of sales through 2004, and plans increased marketing support in 2002 for such brands as Dove, Suave, Thermasilk, and Rave, the latter of which will see a restage and price hike.

HOW TO THRIVE IN BAD TIMES

Charles Strauss, president of Unilever Home and Personal Care U.S., offered two measures of how strong brands can thrive in bad times. He recently pushed through a 5% price hike on Dove, and, when one of his top 10 retail customers recently fell behind on payments, he got them paid up by threatening to halt shipments. "Not everyone in the industry could do that," he said. "It shows the power of brands like Dove."

How companies choose to use savings on media could ultimately make strong brands stronger and weak ones weaker. "If a brand is healthy and has good advertising, I think marketers will want to stretch" by using lower rates to increase media weight, said Rich Wilson, former VP-media at Procter & Gamble Co. and now a media consultant. "If a brand is having profit problems, you can count on the manager taking the [savings] to profit."

Recession or no, some premium-price rollouts will continue. Larry Peiros, group VP of Clorox Co., sees no signs of recovery but still thinks consumers will shell out for the premium-priced Clorox ReadyMop bucketless floor cleaner in 2002. "The good news is that we're half the price of the competition [P&G's Swiffer WetJet]," he said. "You struggle with a $24.99 price point in good economy or a bad. It's more of an issue in a bad economy, but we've tested it in that environment."

Bill Schultz, president of the Dixie business for Georgia-Pacific Co., sees continued "private-labelization of the industry" this year, but not because of the economy. Retailers are boosting private labels to differentiate themselves. And more manufacturers, including even P&G, are starting to make private-label products to align themselves better with key retailers, he said.

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