How Category Captains Can Avoid Commoditisation

How Category Captains Can Avoid Commoditisation

Should a category captain that ignores the signs of trouble go down with the ship?

Category captains play an important role in supporting category growth and meeting retailers’ targets. Planogram, price, pack size and packaging strategies are all driven by the category captain’s objective analysis of store displays and consumer data.

In Australia, the category captain for dishwasher tablets is Finish, a power brand of Reckitt Benckiser. The second-largest brand is Fairy, owned by Procter & Gamble.

Finish is the category captain with 80% of the total share of shelf.

These successful brands dominate the Australian dishwasher tablet category with their extensive product portfolio, various price options, pack sizes, promotions and dominant share of shelf in Woolworths and Coles. 

But we think the same powerful brands are transforming the category into a commodity by perpetually reducing the price on the shelf.

Aglo has been monitoring the category over the last few months and we’ve noticed a long period of price reduction by Fairy and Finish. 

For example, Finish has been offering half price for more than 4 months in a row.

Constant price reduction is the first sign of category commoditisation, where goods in a category lose their differentiating characteristics and become virtually indistinguishable. 

As a category captain, Finish must make changes to avoid commoditisation and promote category growth.

This is not a simple task, since dishwasher tablets are so closely tied to dishwasher use. If dishwasher use remains steady, the tablets will also remain flat. In which case, Finish and Fairy will intensify their price competition, fighting for every consumer in the market.

To avoid this scenario, Finish has to find a way to create value for the tablets, moving away from price competition and product performance strategies only. One of the best ways to achieve this is to create a purpose for the category.

When you create a brand with purpose, shoppers see it as a necessity and will be willing to pay for that product even if it’s not the cheapest option. The dishwasher tablet brands must identify what category purpose matches the needs and values of their shoppers.

An example of a brand with a purpose is OMO from Unilever. Their approach is to encourage people to embrace getting dirty for the sake of their children, who need active outdoor play for their health and development. 

Even Omo's packaging is family-oriented.

Finish or Fairy could adopt a similar purpose, one that resonates with consumers.

Dishwasher tablets aren’t the only category under commoditisation. In a previous post, we observed that vitamins are also being heavily commoditised, in part because of Amazon’s competitive prices.

Notice the yellow discount tags that completely cover the category.

In another post, we discussed the seasonal challenges facing sunscreen brands. After taking a closer look at the pricing data we extracted from the photos, we saw a similar trend of category commoditisation starting to take place.

We talked to Thibaut Mortier from Maxiblock sunscreen about other strategies for dealing with the worst effects of commoditisation. He said:

‘The main strategy we’re using is to geo-target the locations of our customers (independent store owners part of the Metcash/IGA processes and pharmacies) for the delivery of our digital marketing campaign’.

Maxiblock’s other strategy is to ‘adhere to an “everyday fair price” principle, and avoid high/low promotional mechanisms as they destroy loyalty’.

If you want to see how your brand or category is performing on the shelf, sign up to Aglo Community Galleries and check out what’s happening on Australian shelves in real time. There are more than 100 categories with thousands of photos available for analysis.

Aglo Community Galleries

Community Galleries is an industry database containing thousands of photos of in-store photos captured in retailers across Australia. 

  • Australia’s largest repository of store photos
  • Crowdsourced & updated daily by shoppers
  • Search/Filter by region & store easily

Use the store photos to see how your product is presented.

 

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