If you want to understand how incoming Clorox (CLX) CEO Benno Dorer plans to tackle the job of restoring some of the market share the company’s big brands have lost, look no further than the cat fight over kitty litter.
Clorox, which makes a whole lot more than bleach, including the Fresh Step and Scoop Away cat litter brands, is trying to fight back against Church & Dwight (CHD) and Nestlé. Those two have been stealing market share through more aggressive promotions, intense advertising and new features in their own brands. And so Clorox has responded in kind, with more to-the-point ads and packaging that spell out Fresh Step’s attributes and promotions and a money back guarantee.
“There’s a real theme emerging of increased brand investment, and more hard-hitting and direct advertising,” Dorer, currently Clorox’s operations chief, told Coins2Day in an interview. “That’s how we will turn around the cat litter business, and that’s also been the recipe of what we’ve done in bleach and disinfecting wipes.”
Indeed, Clorox has been advertising its namesake brand of bleach more aggressively and added messaging on the packaging of its disinfecting wipes, extolling the products’ efficiency. Dorer, who joined Clorox from Procter & Gamble (PG) in 2005 as general manager for the Glad garbage bag division, said those tactics are working at this early stage.
The efforts are a playbook for Clorox at a time its sales growth has cooled somewhat amid stepped-up competition as Clorox tries to re-energize its business in the United States, where it gets 79% of its sales. Sales growth has been flat of late and Dorer wants sales to grow 3-5% a year moving forward.
Clorox announced on Monday it was leaving Venezuela after 24 years, evidently fed up with the currency devaluations and controls that have made it hard to make money there. The move is consistent with Dorer’s stated strategy of focusing on the markets with the highest profit potential.
Here are some excerpts from Coins2Day‘s interview with Dorer, who will oversee a company with brands that also include everything from Burt’s Bees lip balm to Brita water filtering systems.
Why the focus on the United States, rather than emerging markets
“We’ll continue to focus on the U.S. Business. That’s our home base, and we think there are plenty of opportunities to grow here in the U.S. Both in retail and our professional business (hospitals). That’ll be the first priority.”
“A lot of our peers and competitors for years were very focused on developing markets but now the shine on those markets has come off a little bit, and they are realizing that it’s very important to build the business in the big home markets in the U.S.”
Goals for international growth (international sales are now 21%-Dorer sees that going to 24% but no more by 2018)
“We are going to be focused on our growing international business 5-7% a year and do that more profitably the way we are going to do it is to focus on our existing markets — we have plenty of opportunities in markets we have a strong foot hold in to grow those.”
“We will do it profitably- that’s really our priority for international.”
(This likely explains the Venezuela exit- Clorox in a filing said the price increases approved by the Venezuela government to counter the devaluations “were nowhere near sufficient and would have caused Clorox Venezuela to continue operating at a significant loss.”)
Why the need for such intense advertising in the U.S and the state of the consumer there
“The consumer is in a pretty fragile state in the U.S., and what we’re seeing is an increased level of competition.”
“We just think the defining issue for the industry and for Clorox right now is how to grow, and how to grow profitably.”
“The way to get our categories and our market share to grow is hard hitting, more value focused communication, through an increase in brand investment and through more investment.”
Pricing power with retailers
“More than 80% of our portfolio brands are No. 1 and No. 2, and that gives us pricing power. The brands that are going to struggle in this certainly more difficult retail environment where all retailers are competing for share in the pie that’s not growing are the No. 3, No. 4, No. 5 brands.”
