A great article from today’s Wall Street Journal detailing the, at times, exruciating decisions that have been made by management at Procter & Gamble about how to position and price their Tide laundry detergent as consumers are switching to cheaper alternatives.  In the case of Tide, hey felt that the price communicated something about the product quality and many were very reluctant to even consider releasing a down-scale version.

The decision to develop Tide Basic didn’t come easily. For decades, P&G had held fast to a strategy of promoting new features to convince shoppers to pay a premium for detergent, shampoo and other household staples. Then, as cheaper store brands gained traction in the aisles, P&G began offering lower-priced versions of some products — Charmin toilet paper, Bounty paper towels — to suit leaner budgets.

P&G agonized over whether to go down a similar path with Tide, its top-selling brand in the U.S. A more “basic” version would balance Tide’s premium prices. It could also help expand its market share, which while dominant, has been slipping. For the four weeks ended July 12, Tide held 41.4% of the liquid laundry-detergent category and 44% of the powder detergent category, both down from a year ago, according to estimates by Information Resources Inc. Figures don’t include data from Wal-Mart Stores Inc.

This article proves that pricing isn’t as simple as “cost-plus” or “market-based” philosophies that we have discussed in class.  It can go deeper into marketing and even emotional aspects of the purchasing decisions.  A lot of the article, for example, focuses on what to name the new, cheaper product and whether the packaging should display the “Tide orange” colors.  They eventually settled on a largely yellow color scheme as a differentiation strategy mainly because few other detergents use yellow and they are hoping that people that normally buy the more expensive Tide products will be discouraged from trying the new product.

The group considered yellow and blue, the other colors of Tide’s famous bull’s eye. A handful of other laundry brands used blue but few had yellow. “People kept insisting, ‘Tide isn’t yellow,’” says Mr. Tosolini. “But then we thought maybe it could discourage current Tide users, which is what we wanted.”

Tide Turns ‘Basic’ For P&G in Slump. Ellen Byron. Wall Street Journal. (Eastern edition). New York, N.Y.: Aug 6, 2009. pg. A.1