International -- European Business: POLAND
IN ANY LANGUAGE, VALUE SELLS (int'l edition)
Western brands' cachet-and price-is wearing thin
Poles browsing their supermarket shelves have taken to a new line of "economy" cleaning products. It's Dosia, a laundry detergent that's surprisingly affordable, just 70 cents for a 450-gram box. That's a lot cheaper than the quality brand, Lanza, which goes for 60 cents more.
What the Poles don't know is that Dosia is put out by the same company that makes Lanza--Benckiser, the big German household-goods marketer. It might seem odd that after pouring big bucks into launching a quality product, Benckiser would turn around and come up with a low-cost alternative for consumers. But the ploy is a clever response to a stubborn problem. Poles are proving much more elusive and shrewd as consumers than any of the big Western companies ever imagined.
Executives from Benckiser to Procter & Gamble and Unilever won't give exact numbers, but they generally confirm that the sales of their premium shampoos, soaps, hair sprays, and toothpaste in Poland have plummeted in recent years. That's contrary to expectations of a market that would grow briskly well into the next century. It's also a disappointment after the heady days of 1990-91, when local consumers bought every Western-made packaged product they could. After two years of trying goods denied them in the past, "a lot went back to traditional Polish brands," says Benckiser General Manager Robert Schnurr.
One reason for the move back to homegrown products is that new managers have improved the quality and learned how to package and market them better. Meanwhile, even though Polish salaries have risen from the $40 a month under state socialism, today's $330 average wage still doesn't go very far.
SPECIAL EVENTS. So Poles are using the Western products sparingly, breaking out the nice shampoo for dates, birthdays, or holidays. "Consumers talked about how for special garments they would use a Western higher-priced detergent and a `normal' Polish detergent for everyday wash," says David Williams, general manager at Bates-Saatchi & Saatchi. He notes that consumers are able to choose among 50 shampoos today. They may credit a Western brand with having real benefits, "but they also realized that Polish products were adequate for their daily needs."
As a result, some communist-era brands still sell well. A longtime detergent brand under state socialism, E, made by Pollena Wroclaw, went from 2% to 12% of the market after a British company, Cussons, repackaged and repositioned it. E and other brands cost 74 cents, compared with $1.74 for Palmolive. As one multinational executive here says: "The Poles are making very savvy, very conscious choices based on what's out there and what they can afford."
Cussons and Benckiser are among the multinationals competing by introducing a new "value-for-money" concept into Poland's soap and detergent market. Dosia now has 8.4% of the detergent market, three times that of Lanza. Benckiser's "piglet" icon is on all of its products, and the pig stars in television ads. "The pig stands for savings--the piggy bank. And the pig is a very well-liked animal in Poland," says Schnurr. The ads convinced Kamila Kujawska, 21, a Warsaw University sociology student. She and her mother had used the Heckel-owned Orion, which costs $2.07 for 1 kilogram, but last week they bought two large Dosia boxes at a French-owned hypermart.
While pushing their own wares, Westerners have to be careful not to imply that Polish-made products are inferior, a move that could inflame patriotic feelings. As some of the homegrown producers begin launching their own advertising campaigns, foreigners are eager to counteract any nationalism in consumer buying. Companies such as Cussons and Benckiser are stressing that their products are "wholly Polish," Cussons Country Director Peter Welch says.
Western companies are hoping that new, cheaper brands will reignite the sales growth they want from the Polish market. But Marek Janicki, manager of the Warsaw office of McCann-Erickson Worldwide, sounds a cautionary note. It's not easy, he says, to erase habits adopted during state socialism. He says that even when Poles have the money to buy the better products, they may be reluctant. That's especially true since many are still scrimping to buy higher-ticket consumer goods ranging from VCRs to autos.
It may take time and more persuasion before Western marketers get ready access to Central European purses.By Peggy Simpson in Warsaw