Kimberly Clark Proctor Gamble Diaper Wars
Strategic Audit of Kimberly-Clark Competition in the diaper industry raged on as Kimberly-Clark (KC) strived to stay ahead of its main competitor, Proctor and Gamble (P&G). By the end of 1989, KC’s Huggies controlled 32% of the market share—the highest of any single product competing in the diaper market. Now facing significant financial constraints, the leader in personal care products endeavored to create product improvements that would hold market share and outperform Proctor and Gamble’s Pampers.
External Analysis One political force affecting KC and the diaper industry is Congress and eleven states introducing legislation taxing, regulating or banning the sale of disposable diapers. Because disposable diapers were not biodegradable, environmentalists were concerned about millions of diapers saturating landfills and possibly contaminating groundwater. Environmentalists lobbied for diapers to be taxed or banned to prevent further environmental degradation. If laws were passed taxing or banning disposable diapers, consumers would stop buying Huggies and resort back to cloth. Possible legal restrictions severely threatened the future of the disposable diaper. A second political factor affecting Kimberly-Clark and the diaper industry is ease of entry to European and Japanese markets. Neither Japan nor European countries imposed political sanctions and foreign regulations preventing KC from entering their markets. A final example of political/legal forces affecting the diaper industry and KC is P&G unlawfully monopolizing the diaper market and violating anti-trust laws. In 1989, Pampers (Proctor and Gamble’s premium diaper line) and Luv’s (Proctor and Gamble’s mid-price diapers) together controlled 49% of the diaper market. P&G’s violation of anti-trust laws could prevent KC from having an equal opportunity to gain market share and every percentage of market share lost would cost KC $6-10 million in profit. Because diapers accounted
External Analysis One political force affecting KC and the diaper industry is Congress and eleven states introducing legislation taxing, regulating or banning the sale of disposable diapers. Because disposable diapers were not biodegradable, environmentalists were concerned about millions of diapers saturating landfills and possibly contaminating groundwater. Environmentalists lobbied for diapers to be taxed or banned to prevent further environmental degradation. If laws were passed taxing or banning disposable diapers, consumers would stop buying Huggies and resort back to cloth. Possible legal restrictions severely threatened the future of the disposable diaper. A second political factor affecting Kimberly-Clark and the diaper industry is ease of entry to European and Japanese markets. Neither Japan nor European countries imposed political sanctions and foreign regulations preventing KC from entering their markets. A final example of political/legal forces affecting the diaper industry and KC is P&G unlawfully monopolizing the diaper market and violating anti-trust laws. In 1989, Pampers (Proctor and Gamble’s premium diaper line) and Luv’s (Proctor and Gamble’s mid-price diapers) together controlled 49% of the diaper market. P&G’s violation of anti-trust laws could prevent KC from having an equal opportunity to gain market share and every percentage of market share lost would cost KC $6-10 million in profit. Because diapers accounted