The U.S. Heavy-Duty Liquid Laundry Detergent Market: A Competitive Profile

This is the twentieth paper—and the 21st study--that follows the footsteps of twenty studies that have tried to analyze the competitive profiles of U.S. consumer markets: Men’s Shaving Cream, Beer, Shampoo, Shredded/Grated Cheese, Refrigerated Orange Juice, Men’s Razor-Blades, Women’s Razor-Blades, Toothpaste, Canned Soup, Coffee, Potato Chips, Alkaline AA Battery, Facial Tissue, Toilet Paper, Paper Towel, Disposable Diapers, Sanitary Pads, Automatic-Dishwasher Detergent, Hand-Dishwashing Detergent, and Household Liquid Non-Disinfectant Cleaner. Michael Porter associates high market share with cost leadership strategy, which is based on the idea of competing on a price that is lower than that of the competition.However, customer-perceived quality—not low cost—should be the underpinning of competitive strategy, because it is far more vital to long-term competitive position and profitability than any other factor. So, a superior alternative is to offer better quality vs. the competition.In most consumer markets, a business seeking market share leadership should try to serve the middle class by competing in the mid-price segment; and offering quality better than that of the competition: at a price somewhat higher to signify an image of quality, and to ensure that the strategy is both profitable and sustainable in the long run. The middle class is the socio-economic segment that represents about 40% of households in America.Quality, however, is a complex concept, consumers generally find difficult to understand. So, they often use relative price, and a brand’s reputation, as a symbol of quality.The U.S. Heavy-Duty Liquid Laundry Detergent Market had retail sales of $3,034 million in 2008. We have focused our attention on the 100-128 Oz size because it was by far the most popular, with sales of 1,158 million, constituting 38.2% sales of that market.By far the most dominant player in this market was the mega multi-brand Tide with an overall brand market share of 45.2%. Yet, the market was highly competitive with 39 brands: each with 2008 brand sales over $1 million.Using Hierarchical Cluster Analysis, we tested two hypotheses: (I) That the market leader is likely to compete in the mid-price segment, and that (II) Its unit price is likely to be higher than that of the nearest competition.For 2008—and 2007--the data did not support Hypothesis I, because Tide (100 Oz), the market leader, was a member of the premium segment.Yet, for 2008, the data did support Hypothesis II because, Gain (100 Oz), the runner-up, was a member of the mid-price segment, with a unit price lower than that of Tide (100 Oz), the market leader.For 2007, technically, the runner-up was Purex (100 Oz.) with sales of $169 million in the 100-128 size. However, the real runner-up was Gain which had 100-128 Oz 2007 sales of $153 million—not very far from Purex. But this distinction appears to be random, and not long-term. This is because the sales of Purex dived precipitously in 2008, from $169 million in 2007, to $53 million in 2008, compared to Gain’s 2008 sales of $137 million.So, based on the above argument, we have determined that—for all practical purposes--Gain was the runner-up in 2007 as well. We found that relative price was a strategic variable, as we have hypothesized.We also discovered three strategic groups in this market.A pattern is emerging in price-quality segmentation analysis. In thirteen of twenty-one studies—that exclude Men’s Razor-Blades, Women’s Razor-Blades, Coffee, Toilet Paper, Paper Towels, Disposable Diapers, Sanitary Pads, and Liquid Heavy-Duty Laundry Detergent—the market leader was found to be a member of the mid-price segment, as we have hypothesized.Also, results in ten markets supported Hypothesis II.