P&G denies everyday low pricing move

Procter & Gamble head of cor-porate communications Dick John-son says the company is not in- troducing everyday low pricing to the UK, after the revelation of a 7p cut in the price of Fairy last week.

Procter & Gamble head of cor-porate communications Dick John-son says the company is not in- troducing everyday low pricing to the UK, after the revelation of a 7p cut in the price of Fairy last week.

He says the strategy of pulling out of promotional battles to stabilise prices was introduced to the UK in the summer of 1994, when it stopped sales promotions of household cleaner brand Flash and cut its price. “The move is not across the board,” he says. “Every brand we have introduced it to, such as Flash, Pampers and Fairy, have been involved in heavy promotional activity.”

He dismisses the notion that this represents a move to everyday low pricing – where money from advertising and sales promotion is cut to fund price cuts.

“We have introduced a value-for-money strategy on selected brands where promotional warfare has created confusion in the market place,” he says. “We are trying to get some sanity back into the market.”

The P&G strategy is to phase out promotional give-aways and channel spend into lower prices, innovation and advertising.

In the US, which is believed to be the test market for value pricing, the top eight P&G brands have increased advertising and market share.

Johnson says claims that the value-pricing policy will lead to cuts in advertising and pro-motional spend are erroneous. “We will match last year’s spend on Fairy, we won’t be cutting back.”

He would not say whether P&G’s other heavily promoted market leading laundry detergent brand, Ariel, would also follow suit. Ariel has come under particular pressure from supermarket own- label brands such as Sainsbury’s Novon, which is understood to have a 35 per cent share of the laundry detergent market in Sainsbury’s.

However, P&G may run the risk of inviting parallel trading if it cuts laundry detergent prices. “UK laundry detergents are already cheaper than their continental counterparts, if P&G cut prices further, continental retailers would simply import them to under-cut their continental equivalents,” says one source.