P&G Case Study

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In this case of Procter and Gamble (P&G) and Wal-Mart’s partnership, the main issue seemed to be caused by a third-part company’s collaboration with Wal-Mart which interfered the healthy partnership between P&G and Wal-Mart, also threatened P&G’s leading position in the diaper market. P&G’s diaper brand – Pampers has been the industrial leader in the relevant segment for years. P&G has been developing a long-established partnership with Wal-Mart based on a just-in-time ordering and delivery system for disposable diapers featured with the electronic-data-interchange system linking Wal-Mart vendors with P&G factories. The result of this collaboration created a win-win situation which let Wal-Mart reduced both stock-outs and inventory levels and P&G gained the status of a preferred supplier with greater shelf space. But now another well-known diaper manufacturer Kimberly-Clark Corporation, which had around 20 percent of the diaper market share, has decided to supply Wal-Mart’s private-label brand – the Great Value. This interfering of Kimberly-Clark’s collaboration with Wal-Mart would cause low priced diaper products swarm into the market which will have a strong impact on the sales of P&G’s product in this segment. And whatever P&G was going to do to save its market share from this impact would certainly affect the partnership between Wal-Mart and itself. Before raising any assumptions to solve this crisis, let’s first take a look at the market situation back in 1993. Wal-Mart was one of the first world-wide supermarket retailers who started its own private-label brand. At the time, the general population didn’t really have a clear idea of what private-label brand was, especially when they’re displayed on the same shelves beside those “name” brands. Consumers probably didn’t even know there was such thing called private-label, no need to mention that they couldn’t possibly distinguish the difference between these brands. So the...
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