Fast moving consumer goods major Procter & Gamble (P&G) is hopeful that its price reduction strategy will deliver results, similar to what it witnessed last September, when the company had announced price cuts on detergents. The company’s sachet volumes had nearly doubled after the prices were slashed in September. The price of Ariel sachet was reduced to Rs 1.50 and that on Tide was cut to Re 1.
According to P&G officials, the company has witnessed an initial positive response from the consumers on the latest round of price cuts. However, they admit that the results will be quantifiable only after a few weeks. “We have covered the entire network and the low-priced products are now available all across,” say the officials.
According to sources, P&G is eyeing the sachet market in particular to generate volume as there is ample scope for growth of sachets in detergents.
Unlike in other FMCG segments like shampoos, where sachets form 50 per cent of the total size, in detergents sachets form just about 10 per cent, while the balance 90 per cent comes from large packs. The company’s current sachet to large pack ratio is 40:60. With growth in sachets, it’s is also targeting to increase penetration to smaller towns and rural areas. Laundry business forms 30 per cent of P&G’s national sales of around Rs 1,000 crore.