P&G cut the cost of its brand leader Fairy by 10 per cent to 72p last week. The move means the price difference between Fairy and the Tesco and Sainsbury own-labels is now just 3p.
Lever Brothers has responded by dropping its Persil liquid 10p to 69p. Asda has also reacted by cutting its own-label liquid from 63p to 59p.
Own-label goods account for 25 per cent of the washing-up liquids market. A spokeswoman for Lever Brothers said: "Lever Brothers brands have always been competitive in the market place and we always give excellent value for money." She refused to rule out further price cuts.
Procter and Gamble first introduced price-cutting of brand leaders - the "every day low pricing" (EDLP) strategy - in the United States.
"They found shopping had become so promotion focused that people were no longer focusing on quality," said Susannah Hart, director of Interbrand UK, an international consultancy. "By dropping the price it brought people's attention back on to the the brand."
Such cuts were introduced gradually across the board in America and, according to Marketing magazine, P&G is also planning to cut prices on detergents, fabric conditioners and household cleaners. The company believes that consumer loyalty will be strengthened by permanently cutting prices.
The washing-up liquid war follows a battle for nappy sales sparked when P&G cut the price of Pampers from pounds 6.45 to pounds 5.99. Kimberly-Clark followed suit with Huggies, and Tesco cut its own-label Advances from pounds 5.89 to pounds 5.39.
The supermarkets said they welcomed the price cut as it gave more choice to customers, but refused to be drawn on whether they would follow suit. A spokesman for Tesco said: "We would always want to be competitive and indicate the correct value of our products by pricing."Reuse content