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May 26, 2009 | Comments


Interesting fact: Tide has 40% market share (i.e., 40% of Americans buy Tide). Though I find the stat mind-boggling, that 120 million Americans will pay more (70% more) for soap, here’s a more impressive fact: Tide had 31% market share in 1952.

Much like Coca-cola, Tide has dominated for many decades. Which leads to the question (first posed by Marginal Revolution a while back): why is Tide so widely popular?

I’m no detergent expert, but here’s what I’ve dug up:

1. People are Lazy, and Tide just works

  • Detergent is one of those categories where only basic needs must be met (i.e., clean my clothes). Once it works, there’s little reason to switch (compare this to buying a car or computer).
  • Switching is risky. When I pick an airline, for example, a poor choice will have limited consequences. Picking a generic detergent brand that destroys your wardrobe, however, is a nightmare.
  • Tide dominates on “basic needs” (I know it works) and is often a safe first-choice. Academics/consultants like to call this “brand equity,” where Tide, at minimum, will perform at or above my expectations.

2. The price premium, 20%-100%, is not a deterrent.

  • Detergent is cheap, so a 20% price premium of $3 doesn’t make a difference for a purchase that will last several months. Even extremely price-conscious consumers, who only buy generics, will shell out a couple extra bucks for Tide or Crest (refer to brand equity).

3. “My Mother used tide” (i.e., heritage/legacy)

  • Because of Tide’s legacy (recall their 30% market share in the 50s), the brand’s awareness and past-trial is extremely high. Faced with uncertainty in the detergent aisle, Tide, again, is a safe, familiar choice.

4. P&G (owner of Tide) spends a shit load to maintain market share

  • P&G spends $100 million a year (about 5% of the $1.8 billion of Tide sales) on every form of advertising imaginable: TV, billboards, buses, subways, online banners, and micro-sites.
  • Sponsorships of NASCAR, soccer leagues, and charity events.

5. Relentless product development (i.e., create 50 versions of Tide)

  • Tide’s $2 billion/yr R&D creates numerous product lines for Tide (much like Pepsi developing every imaginable flavor of cola)
  • These fancy new technologies only marginally improve Tide’s cleaning ability. In reality, beholding 10 variations of Tide on the shelf creates an illusion that Tide is an innovative and tech-forward brand (and a safe, leading choice).

6. Shelf Space

  • The sea of orange in the picture above is a familiar sight. P&G battles with other brands to capture shelf space, and if there’s a wall of orange in front of the consumer, the more likely they will buy Tide.
  • P&Gs market dominance (i.e., their 40% market share) allows the company to negotiate more shelf space relative to competitors.

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