From idea to store shelf: A new product is born

AP Business Writer

NEW YORK (AP) – It took eight years, 450 product sketches, 6,000 consumer tests and hundreds of millions of dollars for Procter & Gamble to create something that it hopes will be destroyed in the wash.

Tide Pods are palm-size, liquid detergent-filled tablets that are designed to be tossed in the washer to take the measuring cups _ and messiness _ out of laundry. P&G says the product, which hit store shelves last month, is its biggest innovation in laundry in about a quarter of a century.

Tide Pods aren’t the sexiest of inventions, but they illustrate how mature companies that are looking for growth often have to tweak things as mundane as soap and detergent. The story behind Tide Pods provides a window into the time, money and brainpower that goes into doing that.

P&G, the maker of everything from Pampers diapers to Pantene shampoo, has built its 175-year history on creating things people need and then improving them. (Think: Ivory soap in 1879; Swiffer Sweeper in 1999.) Each year, the maker of everything from Pampers diapers to Pantene shampoo spends $2 billion on research and development. The company also rolls out 27 products annually, or more than two a month, worldwide.

The focus on innovation has paid off. P&G says 98 percent of American households have at least one of its products in cupboards, broom closets or bathrooms.

And while about 15 to 20 percent of all new products succeed, P&G has claimed a 50 percent success rate. Four of the top 10 new consumer products in 2010 were made by P&G, according to research firm SymphonyIRI.

“What they’ve gotten very good at is being able to understand consumer expectations,” says Robert Passikoff, president of Brand Keys Inc., a New York customer research firm.

But improving things like window cleaner and toilet paper can take years. It also can cost hundreds of millions of dollars _ or up to 100 percent of first-year sales _ to develop, make and market them. And even then, new products are a tough sell to consumers.

“You have to develop a product that is meaningfully better than the ones out there, which is tough because generally speaking consumer products work pretty well,” says Ali Dibadj, an analyst at Bernstein Research who follows P&G. “You then have to convince the consumer to try the product … and then get that consumer to break their old habit to make a new one.”

FIRST LOAD: A PRODUCT IS BORN

The $6.5 billion laundry detergent sector has been ripe for a new product. With the exception of fruity scents and suds that work in cold water, detergent hasn’t changed much since P&G rolled out Liquid Tide in 1984.

Liquid Tide, which costs about $15 for 32 loads, is the best-selling detergent, according to SymphonyIRI, the research firm. But cheaper rivals have been gaining: For instance, the number of units sold of Church & Dwight’s Arm & Hammer Oxi-Clean Laundry, the No. 2 detergent brand that costs $8 for 35 loads, rose 13 percent in the past year. Unit sales of Liquid Tide were flat.

In 2004, P&G decided to try to freshen up the category. Surveys and observations of 6,000 consumers found that more than a third dreaded doing laundry. A big reason: nearly a quarter said their laundry was in the basement, requiring apartment dwellers to lug a seven-pound detergent bottle up and down stairs.

Researchers also found that people rewashed loads about 20 percent of the time because they thought detergent didn’t get their laundry clean enough.

And many were confused about which detergent to use when they wash in different ways: In regular washers and high-efficiency machines; big loads and small ones; and in hot and cold water.

“We knew people felt laundry was complicated,” says Alex Keith, vice president of P&G’s unit that makes laundry detergents and fabric softeners.

So P&G set about to create a product that weighed less, cleaned better and could be used with any washing machine, any size load and in water at any temperature.

Pod-like products had been on the market before. P&G introduced tablets filled with powder detergent in 2000, but yanked them from stores shelves two years later. The problem was that powder tablets didn’t always dissolve completely, leading to messiness. They also only worked in hot water.

To make sure Tide Pods would dissolve in hot and cold water, P&G turned to MonoSol, a company that makes water soluble films. The firm developed a polyvinyl alcohol film that not only dissolves in any temperature water, but even in sweaty palms. The film also is strong _ it won’t break even when stretched over the top of a can of marbles and shaken _ but soft to the touch.

The film created another problem, though. Detergents, which mostly consist of water, would cause the pod to melt before it even gets into the wash. So P&G made a detergent that is 10 percent water _ compared with Liquid Tide, which is 50 percent water.

Next, scientists had to figure out how to combine cleansers, brighteners and fabric softeners into one product, while keeping them separate until the pod dissolves in the wash. Doing so would ensure each liquid would work better. After 450 product sketches, P&G developed a proprietary technology that sections the pod into three chambers for all three liquids.

The result? A soft ball with three separate bubbles filled with liquids in Tide’s trademark white, blue and orange colors.

INNOVATE, RINSE, REPEAT

Making the product was half the battle. Consumer testing is at the heart of product development for P&G, which has more than 25 facilities across the globe where people can use the things it makes.

The Beckett Ridge Innovation Center, located about 30 minutes from P&G’s Cincinnati headquarters, is one of them. Inside, there’s a 3,000-square-foot grocery store packed with everything from Charmin diapers to Cascade dishwashing liquid. There’s also a 2,000-square-foot mock clapboard house where researchers analyze how people do laundry, wash dishes, take showers and change babies’ diapers.

About 50 P&G researchers work at the center, watching and videotaping about 20,000 shoppers each year in their “natural” environment. The testers are picked by third-party companies and paid based on the task they complete.

“When we watch consumers in action, we can see things they can’t otherwise explain or articulate,” says Jessica Hall White, director of P&G’s unit that makes fabric care brands like Tide, Gain and Downy.

When P&G researchers had consumers test Tide Pods at the center, they found that 97 percent were satisfied with their experience, compared with about 68 percent who felt that way beforehand while using regular detergent. People also liked how Tide Pods felt in their hands.

When it came to packaging, P&G took a more futuristic approach to testing. The company used three screens at the Innovation Center to project 3D images of a virtual grocery store. There, testers could see early designs of Tide Pod packaging on the virtual store shelves alongside regular detergents.

Researchers learned that people sometimes looked over the product. So P&G determined that in order to stand out, Tide Pods needed to have see-through packaging. The company developed a clear fishbowl-like container that shows the pods clearly.

The product was developed. The consumer tests were done. The packaging was complete. Next, it was time to get Tide Pods to market. P&G was poised to be the first to have its product priced at $20.89 for 57 pods in stores by September of last year.

But the company ran into problems making the pods, which require different manufacturing equipment than what’s used to make regular detergent. At the same time, P&G was flooded with orders from supermarkets and retailers.

P&G declined to give details on the manufacturing problems it had, but it says the issues forced it to push back the launch date of Tide Pods by five months to February. In the hyper-competitive world of consumer products, that might as well be an eternity.

Tide Pods entered a market that was already getting crowded. Henkel’s Purex UltraPacks and Sun Products’ All Mighty Pacs came out in February, too. And Church and Dwight plans to launch its Toss `N Done Power Packs_ made of crystals _ this month.

All of the products _ all more expensive than liquid or powder detergents _ are priced similarly. An analysis by research firm Janney Capital Markets found that Tide Pods’ average price per pod is 27 cents, compared with Church & Dwight’s and Sun Product’s at 25 cents and Henkel’s at 31 cents.

But P&G has a big advantage. The Tide brand is one of the most recognized in the world.

With pricing so close, P&G hopes to win over shoppers with performance and brand recognition. The company says it expects Tide Pods to ring up $300 million in sales during its first year.

San Marco, a Janney Capital analyst, says P&G is at a slight disadvantage because it wasn’t first to market its product. But he believes its Tide Pods product is likely to hit its first-year sales goal.

“It seems when Procter does anything in the laundry category it makes a huge wave,” he says.

Still, P&G isn’t taking chances. The company spent an estimated $150 million on a marketing campaign to roll out Tide Pods. The first commercial debuted during the Academy Awards, one of TV’s biggest events.

The tagline for the ad: “Pop In. Stand Out.”

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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