Starting from February 1, P&G China's range of everyday laundry products have been steadily disappearing from the TV media. The reduced advertising effort deviates from the company's previous strategy in which P&G's global CEO AG Lafley declared that the company would concentrate on the robust family daily care products and cosmetics range, and phase out the less profitable food business.
In fact, the collection of brands under the P&G China label has failed to secure growth in the country; indeed their existing market share is being nibbled away by emerging domestic brands.
Market share nibbled in Shanghai
In the company's 2008-2009 fiscal year, market share targets for shampoo products in the Greater China region were 50 percent in terms of both gross and net market value. However, according to AC Nielsen's statistics at the end of last year, P&G's share of the vital shampoo market has dropped to 45.5 percent from 50 percent at its peak in 2006.
"Sooner or later the crushing dominance of foreign brands in China will come to an end, particularly when our domestic brands start to focus more attention on their marketing efforts. Hence P&G's market share in China will be further squeezed," a senior official in the business told China Business News.
Business data shows some P&G products are suffering a decline in Shanghai market: market share for antidandruff shampoo Head & Shoulders, dropped 1 percent from 2006-2007 to 21 percent, with a further decline to 19.7 percent by the end of last year, while Rejoice suffered a drop from 27 percent to 18 percent over the same period.
The emerging brands
P&G's lost market share has been quickly gobbled up by its competitors: Bawang Shampoo has registered a steady climb since 2006, with its market share growing from 3.5 percent to 7.8 percent by the end of 2008. In the Shanghai market, Head & Shoulder's major competitor Clear Shampoo raised its market share to 9.7 percent in October 2008, only 18 months after its debut in March 2007.
For Chinese manufacturers like Bawang, and several other brands from south China, the global financial crisis starting from last year is seen as a heaven-sent opportunity to snatch market share from the international brands.
"The sales of fast-moving consumer products are affected by three factors, namely visibility, availability, and productivity. Visibility refers to advertising and other marketing efforts, availability stands for the product's coverage in the market, and productivity is then directly related to the manufacturer's output," explained the above-mentioned senior insider. "Regular Chinese consumers don't have a strong sense of brand loyalty, and they are very susceptible to influence from advertisements."
Data from an independent advertisement monitoring agency indicates that P&G China is reducing its presence in the Shanghai TV advertising market. The agency reveals that this reduction also extends to the company's marketing investment in the city.
(China.org.cn by Maverick Chen, February 25, 2009)