Tupperware: Confronting Changing Demand Condition

As refrigerators replaced iceboxes as the primary method of cold-food storage in the United States during the 1920s and 1930s, consumers encountered a new problemrefrigeration caused food to wilt and lose its flavor. Although paper packaging and wrapping could help deal with this problem, paper could leak or tear. In the 1940s, a Massachusetts inventor named Earl Tupper began making lightweight, unbreakable plastic bowls with airtight lids to solve this problem.

Although the product was unique, housewives did not immediately adopt this innovation. They were wary of plastic (still considered a mysterious substance) and saw Tupperware as an expensive, nontraditional solution to food storage problems. Finally, Tupperware distributors thought up the device of home parties to sell the product. A group of women gathered in the home of a friend for lunch or dessert, conversation and games, and a demonstration by a Tupperware salesperson. The hostess received a gift, and the salesperson made some sales.

Throughout the 1950s, 1960s, and 1970s, sales of Tupperware (by then a subsidiary of Dart Industries) grew rapidlyfast enough to entice Rubbermaid to enter the market using the same basic sales approach. But by 1980 there was a noticeable decline in married couples with children, there were Fewer children per family, and labor-force participation by women with children was growing rapidly. Although working women have more money to spend, they have less time for parties and are often less concerned about storing leftovers.

Recognizing the significance of this trend, Rubbermaid dropped the home party approach in favor of distribution through grocery stores. Additionally, a number of smaller rivals entered the market, low-quality, low-priced bowls through drugstores and other retail outlets. By 1992, Tupperware's market share had declined from 60 percent to about 40 to 45 percent while Rubbermaid's share had risen to an estimated 30 to 40 percent. Rubbermaid had been very innovative during this period. For example, in 1983 they designed a seven-piece space saving set of bowls designed for use in microwave ovens. In the meantime, other competitors challenged

Tupperware, mainly on price. As industry observers have noted, it doesn't take a tremendous amount of quality to keep leftover peas fresh in the refrigerator for 5 days.

Back in 1992 Tupperware decided to battle back. They unveiled a new line of "TupperWave" microwavable plastic that is stackable to allow simultaneous cooking of three dishes. They chose to stick with the party sales approach but also began to experiment with catalog sales. Tupperware experienced a loss of $22 million in 1992 but recovered strongly in 1993 showing a profit of $15.5 million. In 1995 Tupperware was considered a good investment by Wall Street analyststhe earnings were increasing and the stock market price rising. Tupperware was facing stiff competition in the United States from discount imitations. However, Tupperware was strong in internasional markets where good-quality discount imitations were hard to find. In 1995, 80 percent of Tupperware's sales were from international markets.