Kimberly Clark Proctor Gamble Diaper Wars

Topics: Diaper, Huggies, Diapers Pages: 16 (4805 words) Published: June 23, 2013
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 for 37% of Kimberly-Clark’s net income, P&G’s monopolization could significantly impact KC’s future.

An economic factor affecting Kimberly-Clark and the diaper industry is the increase in disposable income by women working outside their homes. The increase in disposable income allows KC and its competitors to successfully sell disposable diapers at premium prices.

There are several social/cultural forces affecting KC and the diaper industry, as previously mentioned, there was an increase in consumer activism. Environmentalists and environmentally concerned customers expressed concerns over disposable diapers’ potential health risks for sanitation workers and groundwater pollutants. Also, disposable diapers received harsh criticism for not being biodegradable. Landfills contained approximately 4-5.5 billion pounds of discarded diapers—nearly five percent of total volume. Environmentalists were determined to stop further pollution, which seemed inevitably detrimental to KC and other diaper manufacturers.

Another social/cultural force was an aging population. Fortunately for KC, there is a positive relationship between the number of elderly persons and the need for incontinence products. According to statisticians, 31 million North Americans were over age 65 and 10% had incontinence issues. Because Kimberly-Clark has extensive knowledge in producing diapers, feminine products, toilet paper and other paper products, they could easily create diapers for adults. A third social/cultural force is the extended amount of time children spent in diapers. The diaper extension led KC to introduce Pull-Ups, which targeted toddlers being potty-trained. Other social/cultural forces include a decrease in family size and more mothers working outside the home (mentioned above).

A technological force affecting Kimberly-Clark and the diaper industry was the introduction of super-thin technology. Super-thin technology was created by using polyacrylate, a...
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