Co-Opetition - Adam M. Brandenburger [122]
After Taylor had repeated his success in test markets with a strong national rollout of Softsoap, the majors felt it was time to do their own tests. That was when they discovered the shortage of pumps. Remember: Taylor had bought 100 million pumps, locking up a year’s supply.
Once the majors were over this hurdle, they found themselves facing a hard decision: should they use their bar-soap brands on the new liquid-soap products? For example, should P&G launch a liquid-soap product under its flagship Ivory brand or under some new name? The Ivory name would significantly increase the chances of success, but it would also create a closer link between the liquid-soap and bar-soap games. If P&G’s liquid-soap product failed, its immensely profitable bar-soap business would be damaged.
Procter & Gamble had several good reasons to be nervous about creating a closer link between the two games. First, liquid soap wasn’t really a “soap” at all. It was a detergent-based product—an entirely different chemical formulation. Consumers had a very conservative attitude toward soap and, historically, had resisted detergent-based cleansing bars.13 Second, liquid soap had traditionally been used only in institutional settings, where it was essential for reasons of hygiene. Could liquid soap develop a different, more upscale image for the home? If consumers disliked Ivory’s liquid-soap formulation, or if they associated it with grimy institutional settings, P&G’s valuable Ivory brand name would be sullied.
The uncertainties surrounding liquid soap temporarily neutralized the major players’ advantages. Because they didn’t want to jeopardize the large added values of their brand names, the majors decided to play the liquid-soap game independently of the bar-soap game. They entered the liquid-soap category without using their bar-soap brand names. Procter & Gamble test-marketed a liquid soap named Rejoice. The test was a failure, and Procter & Gamble again delayed. Armour-Dial, too, decided not to risk its Dial brand name on its liquid-soap product. Its entry, Liqua 4, which sounded more like a drain opener than a soap, also failed in the marketplace. No doubt the Dial brand name would have worked a lot better. After three years, Procter & Gamble finally rolled out Ivory brand liquid soap, with extremely aggressive pricing, trade promotion, couponing, and advertising, in addition to the trusted brand name. Liquid Ivory was a success, capturing 30 percent of the market.
With all the delays by the majors, Taylor had a sufficient window of opportunity to establish some permanent brand loyalty for Softsoap. Even after the arrival of Liquid Ivory, Softsoap maintained its lead position.
The Softsoap story shows that, perhaps paradoxically, you can do better if your product has some chance of failing. With a lot to lose from jumping full force into a new product that could fail, established players are likely to hold back. Failure damages the added value of their other products, especially if the new product is clearly identified in any way with their existing ones. For that reason, they may avoid using existing brand names. They’re not going to want to link the proven and unproven games too closely, so until the new product is proven successful, they’ll remain cautious. All of this uncertainty neutralizes what would otherwise be a major advantage to the established players.
Uncertainty can be the challenger’s friend. Not too much uncertainty, of course, but not too little, either. The trick is to have a moderate level of uncertainty, enough to induce incumbents to hold back, play cautiously, and