Drypers Case Analysis

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After analyzing Drypers Corporation Year End and Quarterly Financial Data, our group has come to the decision that although the company had an increase in brand awareness and net sales, Drypers should lessen the amount spent on advertising overall.

Advertising was successful in two of its goals. Drypers had gained greater distribution coverage in grocery stores, increasing from 66% to 71%. They were also able to make significant moves towards obtaining distribution through mass merchants. Both K-mart and Wal-Mart agreed to initiate distribution trends. However, growth in sales and the loss in income do not justify the 222.6% increase in advertising spending. Whether this loss in income was due the detergent failure overseas or the $1.2 million loss in continuing the product, the company should return advertising spending to its 1997 levels in order to increase revenue. Brand image will still remain present in international countries and with the new strategy to discontinue detergent and focus on Drypers baby products, the company may be able to increase net income and better brand image worldwide.

66%-71% distribution coverage of grocery market
Moving towards obtaining distribution through mass merchants Wal-Mart and K-Mart agreed to initiate distribution tests.

1996-1997: 38.6% increase in Net Sales
1997-1998: 15.9% increase in Net Sales

1996-1997: 6.75% increase in Domestic Sales
1997-1998: 11.7% increase in Domestic Sales

1996-1997: 244.2% increase in International Sales
1997-1998: 24.2% increase in International Sales

Operating Income:
1997: $21.5 million
1998: $11.9 million

Net Income:
1997: $1,675,000
1998: -$8,125,000
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