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Making a new product takes lots of time, money

By Mae Anderson

Associated Press

Published: Sunday, March 4 2012 7:25 a.m. MST

FOR RELEASE AT 3:01 A.M EST FRIDAY, MARCH 2, 2012. THIS PHOTO MAY NOT BE PUBLISHED IN PRINT, ONLINE OR FOR BROADCAST UNTIL 3:01 A.M. EST. - This product image provided by Procter & Gamble Co., shows Tide Pods, three-chamber liquid unit dose pods.

Procter & Gamble Co., Associated Press

NEW YORK — It took eight years, 450 product sketches, 6,000 consumer tests and hundreds of millions of dollars for Procter & Gamble to create something that it hopes will be destroyed in the wash.

Tide Pods are palm-size, liquid detergent-filled tablets that are designed to be tossed in the washer to take the measuring cups — and messiness — out of laundry. P&G says the product, which hit store shelves last month, is its biggest innovation in laundry in about a quarter of a century.

Tide Pods aren't the sexiest of inventions, but they illustrate how mature companies that are looking for growth often have to tweak things as mundane as soap and detergent. The story behind Tide Pods provides a window into the time, money and brainpower that goes into doing that.

P&G, the maker of everything from Pampers diapers to Pantene shampoo, has built its 175-year history on creating things people need and then improving them. (Think: Ivory soap in 1879; Swiffer Sweeper in 1999.) Each year, the maker of everything from Pampers diapers to Pantene shampoo spends $2 billion on research and development. The company also rolls out 27 products annually, or more than two a month, worldwide.

The focus on innovation has paid off. P&G says 98 percent of American households have at least one of its products in cupboards, broom closets or bathrooms.

And while about 15 to 20 percent of all new products succeed, P&G has claimed a 50 percent success rate. Four of the top 10 new consumer products in 2010 were made by P&G, according to research firm SymphonyIRI.

"What they've gotten very good at is being able to understand consumer expectations," says Robert Passikoff, president of Brand Keys Inc., a New York customer research firm.

But improving things like window cleaner and toilet paper can take years. It also can cost hundreds of millions of dollars — or up to 100 percent of first-year sales — to develop, make and market them. And even then, new products are a tough sale to consumers.

"You have to develop a product that is meaningfully better than the ones out there, which is tough because generally speaking consumer products work pretty well," says Ali Dibadj, an analyst at Bernstein Research who follows P&G. "You then have to convince the consumer to try the product ... and then get that consumer to break their old habit to make a new one."

FIRST LOAD: A PRODUCT IS BORN

The $6.5 billion laundry detergent sector has been ripe for a new product. With the exception of fruity scents and suds that work in cold water, detergent hasn't changed much since P&G rolled out Liquid Tide in 1984.

Liquid Tide, which costs about $15 for 32 loads, is the best-selling detergent, according to SymphonyIRI, the research firm. But cheaper rivals have been gaining: For instance, the number of units sold of Church & Dwight's Arm & Hammer Oxi-Clean Laundry, the No. 2 detergent brand that costs $8 for 35 loads, rose 13 percent in the past year. Unit sales of Liquid Tide were flat.

In 2004, P&G decided to try to freshen up the category. Surveys and observations of 6,000 consumers found that more than a third dreaded doing laundry. A big reason: nearly a quarter said their laundry was in the basement, requiring apartment dwellers to lug a seven-pound detergent bottle up and down stairs.

Researchers also found that people rewashed loads about 20 percent of the time because they thought detergent didn't get their laundry clean enough.

And many were confused about which detergent to use when they wash in different ways: In regular washers and high-efficiency machines; big loads and small ones; and in hot and cold water.

"We knew people felt laundry was complicated," says Alex Keith, vice president of P&G's unit that makes laundry detergents and fabric softeners.

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