Wednesday, March 23, 2011

Bleach innovation and "red" oceans

I read with some amusement today the good article by Michael Schrage entitled Lafley's Ambiguous Gift of Innovation Failure.  If you haven't read it yet, please do so then return here.  I'll wait.

Interesting, don't you think?  P&G wanted to enter the bleach market, spent months if not years preparing a product, a branding campaign and a test market, and Clorox stole a march on P&G and disrupted their test market, sending P&G a "signal" to stay out of bleach.  Much of the Twitter traffic about this story concerns whether or not what Clorox did was "ethical".  I'll leave that for you to decide, because there are far more important issues embedded in this story.

One of the first issues that simply screams to be acknowledged is the fact that P&G waded into a completely "red" ocean.  I was a bit tongue in cheek earlier when I described P&G spending months developing a new bleach product.  Bleach is a commodity, available at any grocery store in a store brand for pennies on the gallon.  P&G didn't spend a lot of money on new product development, they simply decided they could muscle in on either Clorox's share of the market or the off-brand share of the market because of their branding capability.  Here, P&G is arguing that it will take pennies from others because of its marketing might, not because it is introducing anything new to the market.  This is a classic example of what Kim and Mabourge called a red ocean in their book Blue Ocean Strategy.  Did no one at P&G read that book, and understand the consequences?

Another issue:  Did P&G think Clorox would stand idly by while one of the largest marketing behemoths in the world pushed into its bread and butter product?  After all, if your brand name becomes synonymous with your product (Clorox for bleach, Kleenex for tissues) then you will defend your home turf mightily.  Why all this talk about "ethical" behavior?  P&G attacked another firm in a red ocean at the heart of its product line.  The gloves will definitely come off, baby.

Third, what is Lafley thinking, labeling this as "innovation"?  There's no innovation in P&G developing a new brand name and delivering bleach to grocery store shelves!  That may be a "new" product for P&G, but in the hierarchy of 1) new to the world 2) new to the market or 3) new to us, it barely meets the third criteria for P&G, and certainly doesn't achieve the other goals for consumers.  Was there a secret unmet need for bleach in the consumer space?  If so, P&G's actions don't demonstrate that.  They folded their tents and left as soon as it was clear that Clorox intended to defend the space. 

Finally, what does this episode tell us about P&G and it's commitment to new products and services?  No new introduction will receive immediate acclamation and consumer acquisition.  Most beachheads are defended and new products - even new to the world products that meet previously unmet needs - will face some resistance, even if just from consumer inertia.  P&G took one look at the competition from Clorox and decided to fight another battle.  Shouldn't that decision have been taken far before the development of the product?  Perhaps an established market seemed more reasonable and easier to develop than creating a completely new product in a new market space.  I have to believe that P&G drew other lessons from this exercise, including the risks of attacking a red ocean with a "me too" product and the need for establishing whether or not their product created any resonant new benefits for the consumers, hopefully before creating the brand name and defining the launch, which is where all the real costs of this development were for P&G.

No, this isn't a lesson about competition, it's a lesson about the difference between placing a "me too" product in a highly competitive space and assuming some of that market share belongs to P&G because of its marketing might, rather than its ability to create a valuable new product.  Every product introduction will face some resistance, but what I hope P&G learned has more to do with what it claims to be good at - discovering and filling unmet needs - rather than pushing into highly competitive markets and calling it innovation.
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posted by Jeffrey Phillips at 5:36 AM


Anonymous Trademark Litigation said...

Here is a similar story

As informative as Karen Dillon's 'I Think of My Failures as a Gift' interview with Procter & Gamble's A.G. Lafley was, my jaw still dropped reading the retired CEO's description of one of his favorite 'gifts.'

As Lafley recalled, P&G had planned to quietly test market Vibrant — their bleach offering to rival Clorox — in out-of-the-way Portland, Maine. Bad move. Clorox found out.

'Do you know what Clorox did? They gave every household in Portland, Maine, a free gallon of Clorox bleach — delivered to the front door. Game, set, match to Clorox. We'd already bought all the advertising. We'd spent most of the launch money on sampling and couponing.

2:41 AM  
Anonymous Craig said...

The folks at P&G just might not have read about Blue Ocean strategy because the failed launch of their bleach product took place in the 1980's, so maybe 20 years or so before the book was written.

1:35 PM  
Anonymous Anonymous said...

This article is tremendously naive!
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4:33 AM  
Anonymous Anonymous said...

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9:36 AM  

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