Consumer-packaged-goods (CPG) is one of the toughest categories for marketers. It’s crowded with a many similar products, the products tend to be in the mature stage of the product life cycle, and companies spend tens of millions of dollars on marketing campaigns each year! This translates to the need to keep products innovative, fresh, valuable, and memorable. Or, as least as memorable as products such as shampoo, toothpaste, and detergent can be.
However, with the launch last year of Tide Pods, detergent has recently emerged as a very memorable product. In the first year of sales for Tide Pods, the product has reached roughly $500 million in revenue. This is quite a feat given that of the 1,500 new consumer-packaged-goods launched last year, only 21% reached first year sales of even $50 million.
Tide Pods did not have a smooth market entry; the product was launched six months later than scheduled and, because of supply shortages, did not have retail promotions. Even today, supply problems have caused the Pods to be excluded from coupon offers. Despite these problems, Pods have earned the lion’s share of the market. Why? One reason is that Pods provide consumers with a new value and offering a unit-dose product (this means consumers can’t put more detergent than is needed into the washer; over-dosing is a common way manufacturers increase sales). Pods also appeal to specific market segments such as urbanites, apartment dwellers, and college students.
Group Activities and Discussion Questions:
- First, discuss the four main market strategies: market penetration, market development, product development, and diversification. Which strategy did Tide Pods choose?
- View several of the Tide Pods commercials: http://youtu.be/GNz4A1rMTnA and http://youtu.be/W_3SMf2tyck
- Poll students: What laundry detergent do they use, and why?
- Next, discuss the product life cycle stages. Where are most CPG products? Where is detergent?
- How has Tide Pods changed its position in the PLC?
- Divide students into teams. Select a common CPG category (i.e., toothpaste, shampoo, soap).
- Have students select a market strategy to pursue (i.e., product development, etc.), then have them develop a marketing plan for that strategy.
Source: Ad Age Daily, Brandchannel.com, other news sources
