Responds to Kimberly-Clark With New Products, Lawsuit : P&G; Fights Back in ‘Diaper War’
A prime-time TV commercial aired during the weekend showed mothers talking in glowing terms about a new--but unidentified--product for their babies. The babies, in turn, cavorted around a package hidden under a veil, which, a voice promised, would be lifted Monday from the mysterious package.
With little more fanfare--somewhat surprising for a marketing wizard like Procter & Gamble--the consumer products company Monday introduced a “new version” of its Pampers disposable diapers to the Southern California market.
It is the latest salvo by the Cincinnati-based consumer products manufacturer in the increasingly heated battle to recoup its once dominant position in the $2.7-billion disposable diaper market. Since last January, Procter & Gamble has rolled out three new versions of Pampers in different markets across the country as part of its $500-million effort to improve the product.
New Version in 50% of Nation
Today, Procter & Gamble distributes new Pampers in about 50% of the country and hopes to have nationwide distribution by the end of the year, according to George Adler, an analyst at the brokerage firm of Smith Barney, Harris Upham & Co. in New York. “It’s probably too early to tell how the new Pampers are being received,” he said.
Procter & Gamble, as usual, is not commenting on market results. A company spokeswoman said only that recent consumer tests show that “our new Pampers are preferred four to one over the major competition.”
But P&G; has much to overcome when it comes to the competition. The company, which virtually created the disposable diaper market with Pampers 19 years ago, held 55% of it as recently as 1980, according to one industry estimate. But more recently, P&G;, which also produces the premium-priced Luvs diapers, has seen both brands lose ground steadily to Kimberly-Clark’s Huggies. Battered by premium-priced Huggies on one side and cheaper store brands on the other, Pampers’ market share has shrunk this year to about 31% of the disposable diaper market from 33.5% last year.
Kimberly-Clark, in contrast, now garners about 31% of the market, up from 22.5% last year, while Luvs holds a 17% market share, down from 19% last year.
Market Expected to Grow
The disposable diaper market overall is expected to grow as the current baby “boomlet” continues, bringing in numbers of working parents who aren’t inclined to wash diapers. P&G;’s decline in market share is particularly troubling since disposables account for about 17% of the company’s total profits. The company, which also makes Tide detergent, Crest toothpaste and Zest soap, also is experiencing increased competition in its diaper market overseas. The company recently reported a 29% drop in fiscal 1985 profits--its first annual earnings decline since 1952, attributed in part to the cost of introducing the new Pampers.
P&G; is also taking its diaper fray into the courts: Two weeks ago, it sued Neenah, Wis.-based Kimberly-Clark, alleging that the firm infringed on a P&G; patent for a material used to form the elasticized waistband in P&G;’s Luvs diapers. Kimberly-Clark says the claims are invalid.
In its attempt to revive Pampers, P&G; is simultaneously marketing three versions of the new diaper. Asked whether all three were being test marketed, the P&G; spokeswoman answered only, “We are getting marketplace experience with each version.”
All three new Pampers, she said, are newly shaped for better baby fit, more absorbent, have “consumer preferred, one-step refastenable tape,” double-elastic leg bands and have a waist shield to reduce leakage.
That’s the version of Pampers being introduced to Southern California and that is available in 16 other major markets, including New York, Atlanta, Chicago and Dallas. Added to that model are “breathable leg gathers” for the Florida and southern Georgia market, and an extra-thin version for the Wichita, Kan., area.
Not sitting idly by, Kimberly-Clark has already been testing a more absorbent version of Huggies in the Florida and Georgia markets, said Adler of Smith Barney. “Don’t think that Kimberly-Clark will wait and let P&G; regain market share,” he cautioned. “They’re going to fight, but the critical question is what is going to happen.”
THE CHANGING DISPOSABLE DIAPER MARKET
1984 1985 Other 25% 21% Luvs 19% 17% Huggies 22.5% 31% Pampers 33.5% 31%
