NEW YORK -- For Georgia-Pacific, the changing structure of the $2.8 billion bathroom tissue category has made close working ties with the retail trade a competitive necessity.
"In what is basically a commodity industry, trade support is critical, because features and displays must generate the sizable incremental sales needed by all of us," said Thomas Shufelt, director of marketing at the consumer product division of Georgia-Pacific Corp., Atlanta.
Speaking at a conference here on "Brand Leveraging," sponsored by Executive Enterprises and Gerstmann & Myers Inc., both here, Shufelt discussed how his company has met the needs of consumers and the trade and kept its Angel Soft brand among the sales leaders.
Over the past decade, he said, "a whole new pattern of business cycle has emerged." This has presented Georgia-Pacific with rare opportunities to leverage its brand strength.
In the bathroom tissue category, the average consumer purchase transaction size has been increasing and purchase occasions have declined, due to "the barrage of new larger pack sizes and sheet count changes," he said.
"This is directly tied to the emergence of the warehouse club stores and the highly aggressive merchandising of large size packs by powerful mass merchandisers," he said.
Shufelt said that four-roll bathroom tissue packages -- once the dominant product size by far -- have been reduced to a 47% share of the category, about half of what they were a decade earlier.
Larger sizes have allowed better retail margins, he said. "In the old days of four-pack dominance, margins were barely there. Trading up the consumer to larger packs garnered tremendous retail support."
By offering six-roll, 12-roll, 24-roll and 48-roll packages, the Angel Soft brand generated $80 million in revenues for Georgia-Pacific from 4 million cases of incremental volume last year, he said.
With trade support so important, Georgia-Pacific has begun practicing co-marketing with its key accounts, beginning with sharing scanner panel and consumer information from its category marketing research.
Said Shufelt, "Our research group is equipped with the most advanced hardware and software available. Their expertise with both syndicated and custom data enables Georgia-Pacific to analyze, interpret and make sound prudent recommendations to our valued customers."
Also under the co-marketing heading, he said, is "mutual marketing," which results in customized joint advertising for key accounts. "Mutual marketing combines brand image advertising with custom-produced retail advertising. It is not a tag, not a doughnut -- but a custom production."
Shufelt said that the restructuring of the bathroom tissue category stemmed in part from the economic downturns of the 1980s, which led to disinflation in some consumer goods categories.
This was compounded when a market test by competitor Scott Paper in 1985 proved that lower shelf prices combined with above-average trade support produced tremendous profitable share gains, he said. Within a year, the industry experienced three list price declines, he said.
With margins pressured, brand marketers and retailers shifted their focus to cost control and the various disciplines that came to be called category management emerged and rose in importance.
"We saw the change coming because our customers told us and our sales organization told us. We capitalized on it and we leveraged it," Shufelt said.
"The category management process has become incredibly sophisticated. It is going to continue in its growing complexity as scanner technology measures every cause and effect, every facet of product performance, with chilling, frightening scrutiny."