Detergent battle in India
Facing mature markets in the industrialized world, oligopolies fight more and more for the relatively small markets in emerging companies. Big companies are finding that growth in product sales is costly in the richest nations, so they are exporting consumer culture to poorer countries, in the hope of further maximizing, bit by bit, their brands and distribution savvy.
A recent Wall Street Journal article ("Unilever, P & G Wage Price War For Edge In India", 8/11/204) illustrates this principle at work. The story uses as an illustration Procter & Gamble's push to sell detergent in India, where it has the challenge of selling in small packets one at a time through small grocery stores. They've cut the price to encourage more sales and to build market share against well-established rival Unilever (Hindustan Lever).
The Indian soap war hints at a bigger trend. The developing world is looking more attractive than t has in years to the world's leading purveyors of food, shampoo and laundry detergent. While growth is stagnant in North America and Europe, the market for consumer goods elsewhere, is expanding fast, in stride with growing local incomes and populations.
So while Unilever has had a dominant position in the India personal products industry, thanks to its long Anglo-Indian history, P & G is making a strong attempt to gain a foothold. This is a change for P & G, which has focused on First World countries with large portions and large prices. Unilever has always had a strong international focus, but P&G wants to challenge that, in India as in South America.
While Unilever is perfectly capable of fighting back with price reductions and marketing blitzes, the real losers are likely to be smaller, localized companies. While Indian consumers will benefit in the short run from the competition, the domination of the emerging consumer economy by local branches of far distant companies has far-reaching effects. Another factor is the desire to make sure a strong Indian consumer products rival doesn't emerge, to challenge the oligopoly club in the way that (in other areas) Japanese, Korean, and now Chinese firms are doing.
