The multi-billion dollar home goods company Procter & Gamble produces hundreds of items, but the iconic business owes much of its success to just one brand. More than 135 years ago, James Norris Gamble led a team that created a vegetable oil-based soap with a distinctly white hue. The color presented the company with the perfect brand name, Ivory, while the item’s ability to float provided a unique selling point. What’s more, Gamble advertised the bar of soap as being “99.44 percent pure,” a famous factoid that added to Ivory’s mystique.
For years Ivory was a staple in American homes, with sales accounting for 20 percent of the soap market in the late 1970s. Today, though, growing demand for body washes and liquid hand soaps has scrubbed away much of Ivory’s dominance. The soap’s market share has dwindled to 3.4 percent, down from 4.2 percent 10 years ago. The brand rakes in $112 million for P&G annually, but that’s just a fraction of the conglomerate’s $83 billion in total sales. As a result, Ivory is one of as many as 100 brands that could get cut from the P&G family of products.
The Cincinnati-based company doesn’t lose a ton of money on these underperforming brands, but their presence alone holds the business back in their competitive industry. After all, P&G has so many brands that oftentimes their products compete against one another. For instance, its flagship detergent, Tide, shares shelf space with other P&G brands like Gain, Cheer and Era. This causes the company to focus time and money on promoting successful brands like Tide while items like Cheer and Era get pushed to the wayside. So rather than spend any more money supporting these lower-performing brands, P&G may simply sell them in order to focus on 70 to 80 core brands. Although sales of Ivory soap have certainly declined, the brand is so intimately weaved into P&G’s history that it would be tough for the company to part ways with the iconic soap entirely. On the other hand, businesses don’t stay on top by looking back too fondly on the past. What do you think?
Questions:
- Is it time to either drop the Ivory soap brand or sell it to another company?
- Should P&G thin out the number of brands in other product categories?
Source: Serena Ng, “Floating an Idea: Would P&G Sell Ivory Soap,” The Wall Street Journal, August 17, 2014. Photo by Liza Lagman Sperl.