After plying slow-growth cleaning categories for decades, package-goods makers of all sizes now are eyeing the power appliance section at the far end of the supercenter.
The result is a surge of systems wedding liquid cleaners, air fresheners and other package goods with new high-tech and high-priced gadgets. Package-goods players have long worked on joint promotion and technical issues with appliance makers, but working jointly far upstream to develop and launch products is new. Procter & Gamble Co. alone has participated in four such power launches or tests in the past year and is joined on the power trip by Reckitt Benckiser, Dial Corp., Unilever and others lurking in the shadow of secret projects.
The purpose isn't higher margins. Instead, package goods players are wrapping their brands around appliances as a means to follow consumers where they want to go-and expand their business in the process. "It's a commitment to the future of the industry," said Phil Mazzini, global category director for cleaners at Reckitt Benckiser.
As Sanyo's recent launch of a washing machine with a detergent-free cycle in Japan shows (see sidebar), not being involved with appliances can be dangerous for package-goods players as the two industries increasingly converge. "If you define your business as just selling a cleaning liquid in a bottle, you're defining it more narrowly than the consumer," said Robert McDonald, president of P&G's global fabric and home care business. "As you redefine categories, the boundaries and the potentials get bigger."
To date, the most visible result of the trend is a burgeoning category of floor cleaners designed to bring the same performance and convenience to washing hard-surface floors that vacuum cleaners long ago brought to carpets. P&G's battery-operated Swiffer WetJet, a $40 system launched last September, already faces competition on the low end from the $25 manual-pump-operated Clorox ReadyMop and on the high end from Maytag Corp.'s Hoover Floor Mate, a $200 system co-branded with Reckitt Benckiser's Lysol and Old English brands. Floor Mate sweeps and washes floors, then sucks away the dirty water.
Despite the prices, analysts say profit margins are lower for WetJet and ReadyMop than for package-goods companies' core businesses, which involve selling relatively cheap chemicals in pretty packages at steep markups. The strategy is to hook consumers on systems so they'll buy replacement cleaning solutions and pads for years. "I wouldn't say our standards for profitability for these products are any different," Mr. McDonald said. "It's just coming in different ways."
But with aging baby boomers seeking ways to get more cleaning out of less elbow grease and all consumers seeking easier ways to clean, the systems also aim to expand categories. "There's an inflection point where things are moving toward more convenient devices," said Reckitt Benckiser's Mr. Mazzini. Ultimately, he thinks power floor cleaners can have an impact similar to dishwashers.
Swiffer WetJet, ReadyMop and Floor Mate are likely to get combined marketing budgets of more than $100 million this year, but the timing and tactics are different than typical package-goods launches.
P&G started WetJet's U.S. rollout by selling it online via PG.com and on the QVC home shopping network before turning to a conventional store launch backed by TV ads from Bcom3 Group's D'Arcy Masius Benton & Bowles, New York. Clorox is backing ReadyMop with an appearance on "The View" on Walt Disney Co.'s ABC plus TV infomercial-style ads from Omnicom Group's DDB Worldwide, San Francisco.
Floor Mate started its launch exclusively on Amazon.com late last year, backed by infomercials from Hoover's shop, Interpublic Group of Cos.' Foote,Cone & Belding Worldwide, Chicago. Floor Mate hit Sears, Roebuck & Co. and some mass-merchandise stores last month. There are plans for a broader TV campaign later this year.
"There's an education process, so you start the buzz before you go with your full typical consumer investment," Mr. Mazzini said. "The curve is not the same as a typical product launch, because you have to have a base of Floor Mates out there before you can sell a lot of cleaning solution."
The action doesn't stop with the floor. In personal care, Beiersdorf's Nivea for Men brand has teamed with Norelco on a new electric shaver that dispenses skin cream. Dial Corp. is teaming with the Holmes Group this spring to market the Holmes Odor Grabber, an "odor filter" that fragrances air via Renuzit-branded gel cartridges. A yet-unnamed package-goods company is preparing to launch a product in the fourth quarter in partnership with small appliance maker Applica, according to Banc of America Securities analyst Bill Steele. And Unilever, as part of its Digital Futures Laboratory and alliance with AOL Time Warner, is working to develop a new generation of "smart appliances" that go online to send or receive data that can be used to keep homes well stocked with its wares.
P&G has the most power projects of any package-goods company, including a $20 Febreze Power Sprayer for its fabric deodorizer brand, now testing in Peoria, Ill., and on the PG.com Web site. In Indianapolis, P&G is testing, along with Whirlpool Corp., the Presiva "personal valet" system for dewrinkling and freshening clothes with misting "juice" supplied by P&G. Whirlpool now is pitching Presiva to home builders, hoping the $700 price will fit inconspicuously into the price of a new home.
P&G's Mr. McDonald said P&G is in regular talks with virtually all appliance makers about new ventures or making its brands work better with existing products.
One manufacturer he wishes he'd talked to sooner is Sanyo. Predictably, the U.S. and Japanese Soap and Detergent Associations criticize Sanyo's machine as performing poorly. But the groups also point to a recent report from the independent Japan National Consumer Affairs Center, finding the no-detergent cycle underperforms detergents in odor and stain removal for underwear and increases damage to clothes, though it outperforms detergents in removing food stains.
"When I first heard about the Sanyo machine," Mr. McDonald said, "I was [stationed in Japan as head of P&G's North Asian business] and I was disappointed that we weren't in with them far enough upstream to point out the issues with their machine, and when we did point it out, they didn't listen."
He expects Sanyo won't be the last company to try a detergent-free machine, as cutting costs is a recurrent theme for appliance makers. But P&G has never taken the threat of obsolescence lightly. When futurists in the 1960s predicted disposable clothes would become commonplace, P&G responded by getting into the paper business, ultimately creating a business that rivals its home and fabric care unit.