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When Procter & Gamble set out to sell Pampers in China more than a decade ago, it faced a daunting marketing challenge: P&G didnt just have to persuade parents that its diapers were the best. It had to persuade many of them that they needed diapers at all. The disposable diaper a throwaway commodity in the West just wasnt part of the cultural norm in the Chinese nursery. Babies wore cloth diapers, or in many cases, no diaper at all. And that, says Bruce Brown, whos in charge of P&Gs $2 billion R&D budget, is why China presented and still presents such a huge opportunity. Today, after years of exhaustive research and plenty of missteps, Pampers is the No. 1-selling diaper in China and the company, in many ways, is just getting started there. The diaper market in China is booming. It stands at $1.4 billion roughly a quarter the size of the U.S. market and is projected to grow 40 percent over the next few years, according to research firm Datamonitor. P&Gs success in China has helped CEO Bob McDonald set some bold goals. Last October, he laid out a plan to add one billion customers over the next five years by promoting P&G brands throughout some of the poorest corners of the world. How will P&G go about doing that? To get a sense, just look at the way it cracked and to a large degree created the market for disposable diapers in China.
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Chinese split-pants, or kaidangku. Photo by The Wu's Photo Land on Flickr It didnt help that Chinese families had always gotten along just fine without disposable diapers. There, potty training often begins as early as six months, and children wear whats called kaidangku colorful open-crotch pants that let them squat and relieve themselves in open areas. Pampers pitch wasnt compelling people to try something new and neither was the product itself. We scrimped on the softness in the earlier versions, says Kelly Anchrum, director of global baby care, external relations, and sustainability. It had a more plasticky feel. It took us awhile to figure out that softness was just as important to moms in a developing market. P&G had tried a similarly watered-down approach earlier in the decade, when it launched laundry and hair-care brands in several emerging markets. Those products also failed, Brown says. After these experiences, the company in 2001 came up with a new approach to product development: Delight, dont dilute. In other words, the diaper needed to be cheap, but it also had to do what other cheap diapers didnt keep a baby dry for 10 hours and be as comfortable as cloth. So P&G added softness, dialed down the plastic feel, and increased the absorption capability of the diaper. To bring down the cost, the company developed more efficient technology platforms and moved manufacturing operations to China to eliminate shipping costs.
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The revamped diaper, Pampers Cloth Like & Dry, hit retail shelves in Chinas largest cities in 2006, selling for the equivalent of 10 cents in local currency, less than half the cost of a Pampers diaper in the United States.
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who wrote the book China Made: Consumer Culture and the Creation of the Nation. The idea that Pampers brings a scientific backing and gives children an edge in their environment thats a brilliant way to stand out from the competition. You could argue that its easy being No. 1 when the market is still small. But P&G still has a lot of work to do. The company faces challenges from private-label and domestic brands, including the No. 2 market leader, Hengan International Group, which has steadily grown its market share to 20 percent. Local brands, meantime, are catching up with better products, marketing, and distribution. Chinese consumers are going to want to root for the home team, Gerth says. And theres still the challenge of making disposables a habit. On average, diaper use still amounts to less than one a day. Weve only just begun to scratch the surface [in China], Dimitri Panayotopoulos, vice chairman of global household care, told investors in a 2008 analyst meeting. Theres even bigger potential in India, where the birth rate is almost double that of China but the diaper market remains tiny at about $43.4 million. (Pampers is the top-selling brand there, too.) So now, P&G plans to take the sleep argument throughout rural and poor areas in India and elsewhere. The company also makes its case by positioning itself as a baby-care educator. Pampers sponsors healthcare-outreach programs such as a rural immunization program in China and mobile medical-care vans in Pakistan and Morocco. In India, theres a door-to-door program that offers baby-care tips and diaper samples for moms. Of course, P&G tweaks the sales pitch to fit different markets; thats what the company is known for. In India, for instance, the convenience of disposable diapers doesnt resonate with parents. The companys consumer research found that many Indian mothers think that only lazy moms put their babies in disposable diapers that last a full night. As Pampers brand manager Vidya Ramachandran reported in an internal video shown to employees, We really had to change that mindset and educate [mothers] that using a diaper is not about convenience for you its about your babys development. More on BNET: 7 Rules for Closing a Deal in China P&Gs Secret Weapon The U.S. Business Skill That China Doesnt Have
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