Americans' new fondness for frugality prompts P&G to cut prices
Consumer-products giant Procter & Gamble has taken note of Americans' newfound fondness for frugality and is doing a little cutting back of its own -- on prices, that is.
Unwilling to bet the bank that consumers will pick up their spendthrift ways once the recession ends, P&G said Thursday it's cutting prices on about 10% of its global product lines.
Rather than leading consumers by the nose, P&G instead is opting to follow their lead. Given the current state of consumer spending, which emphasizes price and value, it is a decision the Cincinnati-based company had to make, said Robert Passikoff, president of Brand Keys Inc., a customer research marketing firm.
"We've seen this shift coming even before the economy went to hell," Passikoff said. "With the economic downturn, more attention has been called to it."
P&G isn't only resorting to cutting prices to stem a months-long slide in sales of its products. It's ramping up promotions that emphasize value and introducing new products, such as a lower cost version of its Tide brand of laundry detergent, the market leader and a perennial winner in Consumer Reports tests.
A cheaper Tide is just one move among several P&G is planning for its laundry detergent lines. The company is also cutting the price of Cheer by 13% and will begin promoting it as a bargain brand.
The economic downturn has helped P&G in one area -- cheaper advertising rates. That means it can buy more ad time to promote its products, a strategy that has already helped to boost sales of Tide, Charmin toilet paper and Bounty paper towels.
For consumers, who are likely spending more hours in front of the TV rather than dining out or taking in a movie, that likely means they'll be seeing many more P&G commercials pitching products.
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