Mar 4, 2010|
HUL: Washing dirty linen in public
The gauntlet has been thrown and the challenger has been challenged. Market leader in detergents, HUL has taken the battle to the doorsteps of the challenger P&G. The point in contention being the recent advertisement campaign by HUL, openly pointing out that Rin washing power is superior in quality to P&G's Tide Naturals. While we have seen such campaigns in the past, what makes this one unique is that in this advertisement the comparison has been made directly with 'Tide Naturals'. The brand name has not been blurred out as traditionally done by advertisers while taking pot shots at competitors. Now it may be recalled that when P&G entered the Indian market, the company grabbed market share by under cutting HUL's products. What is interesting about this advertisement being aired is that HUL has brought to the notice of consumers that the packet of Rin washing powder is more expensive than a comparable pack of Tide Naturals but the quality of wash is much better.
While P&G has approached the court against this advertisement, HUL claims that it has aired this commercial only after testing the products in third party independent international laboratories. Furthermore, the company is airing this advertisement to educate consumer that the claims made by P&G are not correct.
While P&G plans to pay back HUL a similar coin, it has been revealed that Tide Naturals is infact devoid of natural contents. This has prompted the courts to direct P&G to modify the advertisement it is airing for Tide Natural.
What we believe
HUL has recently been facing intense competition with the loss of market share and margins in key categories. As a result we are seeing such aggressive advertisement campaigns by the company. While advertisements are supposed to inform consumers about the products, maligning competitors openly has never resulted in successful campaigns. This is because consumers do not take kindly to washing dirty linen in public. Furthermore, advertisement expense of this kind goes not towards developing and expanding the market but in fighting for the competitor's loyal customers. This can result in expensive incremental growth in market share. We believe that such a campaign can harm both the companies as it ends up showing both HUL and P&G in a negative light.
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