The U.S. Household Liquid Non-Disinfectant Cleaner Market: A Competitive Profile

This is the nineteenth paper—and twentieth study--that follows the footsteps of nineteen studies that have tried to analyze the competitive profiles of U.S. consumer markets: Men’s Shaving Cream, Beer, Shampoo, Shredded/Grated Cheese, Refrigerated Orange Juice, Men’s Razor-Blades, Women’s Razor-Blades, Toothpaste, Canned Soup, Coffee, Potato Chips, Alkaline AA Battery, Facial Tissue, Toilet Paper, Paper Towel, Disposable Diapers, Sanitary Pads, Automatic-Dishwasher Detergent, and Hand-Dishwashing Detergent. Michael Porter associates high market share with cost leadership strategy, which is based on the idea of competing on a price that is lower than that of the competition.However, customer-perceived quality—not low cost—should be the underpinning of competitive strategy, because it is far more vital to long-term competitive position and profitability than any other factor. So, a superior alternative is to offer better quality vs. the competition.In most consumer markets, a business seeking market share leadership should try to serve the middle class by competing in the mid-price segment; and offering quality better than that of the competition: at a price somewhat higher to signify an image of quality, and to ensure that the strategy is both profitable and sustainable in the long run. The middle class is the socio-economic segment that represents about 40% of households in America.Quality, however, is a complex concept, consumers generally find difficult to understand. So, they often use relative price, and a brand’s reputation, as a symbol of quality.The U.S. Household Liquid Non-Disinfectant Cleaner market had retail sales of $381 million in 2008. It was by far the largest segment of the eleven-segment Household Cleaners market, which had 2008 retail sales of $1,747 million. We have focused our attention on the 24-40 Oz size because it was the most popular, constituting 46% sales of the former market.The Household Liquid Non-Disinfectant Cleaner market was highly competitive, with no dominant player. In 2008 it had 24 brands each with sales over $ 1 million.Using Hierarchical Cluster Analysis, we tested two hypotheses: (I) That the market leader is likely to compete in the mid-price segment, and that (II) Its unit price is likely to be higher than that of the nearest competition.For 2008--and 2007--the data supported both Hypothesis I and II, because the market leader, Formula 409, was a member of the mid-price segment, and its unit price was higher that of the runner-up, Fantastic, also a member of the same segment. We found that relative price was a strategic variable, as we have hypothesized.We also discovered four strategic groups in this market.A pattern is emerging in price-quality segmentation analysis. In thirteen studies—that exclude Men’s Razor-Blades, Women’s Razor-Blades, Coffee, Toilet Paper, Paper Towels, Disposable Diapers, and Sanitary Pads—the market leader was found to be a member of the mid-price segment, as we have hypothesized.Also, results in ten markets supported Hypothesis II.