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0 Executive Summary The diaper and training pants market in the United States is a stable market so that manufacturers of diaper brands and training pants can continue to thrive in this market. Drypers Corporation is one of the manufacturers that offer good quality products that are low in price compared to competitors. But one issue that exists is the national branding that this manufacturer still lacks. National TV advertisement is one of the promotional activities that the manufacturer seeks to evaluate in 1998. 2.0 Situation Analysis Drypers Corporation founded as Veragon Corporation has been in the disposable and training pants market since its inception in 1987 thereby thriving in this market for a few decades already.1 The company has since heavily relied on print advertising as well as promotions such as couponing and solid merchandising arrangements with long-time retailers in order to promote the flagship brand, Drypers, in the United States. Towards the end of 1997, Drypers Corporation
management felt it inevitable to actually see how the consumers will respond to national television advertising that would actually promote the brand. This is noting, of course, that national television advertising is more costly than the existing promotional activities done in the U.S. for Drypers and that it is the first time for the corporation to embark on the said promotional strategy. In fact, the $10 million expected spending for the TV advertising is already a big leap in terms of budget
The Gale Group, Inc. 2006. Drypers Corporation. Accessed 15 July 2009 http://www.fundinguniverse.com/company-histories/Drypers-Corporation-Company-History.html
however. the 1997 percentage share of grocery stores to total retail sales has declined by about 9% while for drugstores. Sales from mass merchants. drugstores as well as mass merchants.2 39.0 10.2 because it is 33% higher than even the combined budget for advertising and promotion. Retail Sales of U. This market can be characterized as being composed of infants and children 4 years old and below and their mothers aged 18 to 49 years who are the main decision maker in purchasing diapers and training pants.4% in 2007 from the 30% share in 2004. Table 1.2%.9 billion combined sales from drugstores and mass merchants in the same year.1 Market Summary Drypers Corporation is generally thriving and competing into the disposable and training pants market. . significantly increased by 9.S.0 1997 Share of Total Retail Sales (%) 51.9 1994 Share of Total Retail Sales (%) 60. Compared to 1994.0 1. share has also slid down to 9. on the other hand.0 30.4 Table 1 show that majority of the retail sales come from grocery stores with $2 billion sales in 2007 and $1.2 9. Disposable and Training Pants by Distribution Channels Distribution Channel Grocery stores Drugstores Mass merchants 1997 Retail Sales (in billion USD) 2. The primary channels of distribution of disposable diapers and training pants are grocery stores. 2.
Huggies and Pampers. 2. thereby using the knowledge to understand the market better and hence come up with effective marketing strategies that will appeal to the target market. respectively.3 With regards to the flagship brands in this market. Kimberly-Clark and Procter & Gamble are generally considered to be the leading manufacturers of their own brands.1 Market Demographics . Not only are the mothers the main decision makers and purchasers of these products. With the planned national television advertising by the Drypers Corporation.2 Target Markets The target markets for disposable diapers and training pants are still the infants (babies below one year of age) and children aged 1 to 4 years old. Moreover.3.3 Market Analysis An analysis of what constitute the disposable diaper and training pants market is imperative to be able to understand the needs of the target market. another target market are mothers with age ranging from 18 to 49 years old. 2. 2. the more that the mothers become an important niche in the market that the corporation should penetrate. since the babies and the infants are not the ones who purchase diapers and training pants for themselves but their parents. they are actually the ones who will be targeted by the advertisement because they have the capability to understand the message of the advertisement.
After some time. 33% are aged 1 to 2 years and 51% are 3 to 5 years old.S.pdf . 16% are under 1 year of age. old and new married couples have a choice with regards to birth-giving and childrenrearing.4 The profile of Drypers Corporation’s target consumers can be completely explained in terms of geographic. Medical Billing Service Marketing Plan. Accessed 15 July 2009 from http://www. This totals to 5. Census Bureau.S. Mexico.2 Geographics Initially. Inc.475 diapers for the 30-month period. babies use five diapers in a day for two-and-a-half years or basically 30 months.3 Demographics Of the 24 million estimated users of disposable diapers and training pants. Brazil. Accessed 15 July 2009 from http://www. Behavior Factors With increased information in reproductive health and family planning. 2008. In terms of diaper usage. there is a tendency that the number of infants 30 months old and 2 Palo Alto Software.scribd. The total targeted population however is the population of infants and babies who are actually using disposable diapers and training pants which is approximately 24 million as estimated by the U.com/doc/4869611/Medical-billing-service-marketing-plan 3 U. 2008. Current Population Reports: Marital Status and Living Arrangements (P20).gov/prod/99pubs/p20-514u. Hence. Census Bureau in 1998. Puerto Rico and Argentina.census. on the average. the geographic area of concentration for the national television advertising campaign that will be shown is the entire United States. the same strategy may be put into test to other countries where Drypers Corporation is actively promoting Drypers or the brand name that is being used in specific countries such as Mexico. demographics and behavior factor as will be shown in the succeeding discussions.
It has competed head-on with premium-priced brands such as Huggies and Pampers which have also gained following because of the quality of the products that they sell to the market. Drypers Corporation is known for product innovation and pricing.2 1995 9.8 17.S. 2. This therefore affects the demand for disposable diapers and training pants in the market. Drypers.3 1997 9.3. disposable diaper and training pants market from 1994 to 1997 is showcased in the table below. Trends in the U.5 .2 1996 9. Disposable Diaper and Training Pants Market 1994 Infants (millions): birth to 30 months Diapers sold (billions of units) 10. on the other hand.5 below seems to grow modestly. the innovations and improvements effected on diapers in the aspects of absorbency and leakage control also result to fewer demands for the use of disposable diapers and training pants.0 17.7 17.3 Market Trends The trend in the U. retained its strategy of providing consumers with disposable diapers and training pants with quality that is at par with its direct competitors but with prices that are relatively low compared to leading brands.S.2 Market Needs The target consumers are in a constant look for disposable and training pants brands that are of high quality but still provide a good value for money. Table 2. 2.7 17.3. Moreover.
A compounded annual .0 $540.0 Table 2 above is adapted from the case study “Drypers Corporation” discussed in Chapter 6 (Integrated Marketing Communication Strategy and Management) of the book ________________.0 $3.0 26.0 26. diaper sales in units and in dollars are still on an increasing trend posting 17.1 970.0 $485. Despite the decline in infant births. 1994 data was used as base. 2. sales in units and in dollars show increasing trend as well ending 2007 with 1.825. and as seen in Table 2.070.0 $595.5 billion units sold corresponding to $3. Infant birth is seen in a declining trend with at most 0.410.0 $3.6 Diaper retail dollar sales (millions) Children (millions): 18 months to 8 years Training and youth pants sold (millions of units) Training and youth pants retail dollar sales (millions) $3.0 $510. The statistics of children 18 months to 8 years of age from 1994 to 1997 is in almost stable trend. There are really no significant changes for the period indicated in Table 2. This table shows how the sales in million units and million dollars sold have evolved from 1994 to 1997.4 Market Forecast To forecast the 1998 sales in units and dollars of the disposable diaper and training pants market as well as the infant birth and the number of children 18 months to 8 years old.880.0 $3.4 billion units sold and $595 million retail sales.3.2 1.250.855.0 26.3 1.9 billion retail sales in 1997. Children of this age range are the primary users of training and youth pants.930.0 26.2 million decline from 1994.3 1.
01 0.4 Forecasting 1998 market sales using CAGR meant considering not only the growth of the most recent year which is 1997 but also taking into account the growth trend that existed from 1994 to 1997.0 Table 3 above shows the computed CAGR over a 3-year period with 1994 as the base.investopedia.0 17. The compounded annual growth rate is a year-on-year estimate of the growth of an entity or an investment over a specified period of time.com/terms/c/cagr.7 17.930. This may be considered a more encompassing forecast of 1998 market sales.0 3-Year CAGR (%) -1.58 0.2 1.0 $595. 1998 Market Forecast of the Disposable Diaper and Training Pants Market 1994 Infants (millions): birth to 30 months Diapers sold (billions of units) Diaper retail dollar sales (millions) Children (millions): 18 months to 8 years Training and youth pants sold (millions of units) Training and youth pants retail dollar sales (millions) 10.2 $637. The 1998 forecast.6 17.asp . Table 3.410.6 $3.880.2 $3.8 26.5 $3. The forecasted value for 1998 show that infant birth will decline by 4 Investopedia.05 1998 Forecast 9.0 26.28 7.43 0. 2009.0 1997 9.1 970.0 26. is obtained by multiplying the CAGR with the 1997 value and adding the 1997 value to the resulting product.7 growth rate (CAGR) was computed first over a 3-year period.13 13.2 1597.0 $485. on the other hand. Accessed 15 July 2009 from http://www. Compound Annual Growth Rate – CAGR.946.
930.825.597 million units.82 5.31 5.1 970.0 9.28%.0 $485.42 0.3 1.3 1.880.5 Market Growth Table 4.95 -0.38 12.2 $3.6 million units corresponding to $3. This is still an increase from 1997 sales of $3.070.0 .88 % Growth 1997 (19961997) 9.0 26. Correspondingly.0 17.7 17.00 -1.0 26. 2.00 0.02 0.58 0.930.855.8 0.00 1. retail dollar sales of training and youth pants will be at $637 million following a compounded growth of 7% over a 3-year period.7 17.410.5 $3.0 $595.1 million while children aged 18 months to 8 years will be stable. Market Growth of the Disposable Diaper and Training Pants Market % Growth (19941995) -2.16 1. As for the training and youth pants unit sales.0 $510.15 % Growth (19951996) -1.78 0.19 1994 1995 1996 Infants (millions): birth to 30 months Diapers sold (billions of units) Diaper retail dollar sales (millions) Children (millions): 18 months to 8 years Training and youth pants sold (millions of units) Training and youth pants retail dollar sales (millions) 10.0 9. as in 1997.0 26.0 26.3 $3.0 $540. Sales in million units and in million dollars of both diapers and training and youth pants are forecasted to still increase in 1998 because of the positive growth that has been achieved from 1994 to 1997. The predicted diaper sales in 1998 will be 17.00 16.250.3. This impacted an increase in the 1998 forecast sales of about 1.0 0.77 10.2 $3. CAGR is high at 13.2 1.946.80 10.8 17.8 million.
8% while for dollars sold.80 10.28 7. 10.19%.43 0.58 0. market growth in units sold as well as dollars sold is positive and the trend is increasing.9 Annual growth is computed from 1994 to 1997 and these are highlighted in blue in Table 4 above. growth of units sold in 1997 is 12.3.95% for diapers sold in million dollars. 2. Nevertheless.00 1.16% for diapers sold in million units and 1. Regarding the training and youth pants growth from 1994 to 1997.16 1.95 -0. these are still double-digit growths compared to those of diaper pants. Growth of units sold suddenly fell by about 4% in 1997 but growth of dollars sold increased by approximately 4%.13 13.19 3-Year CAGR (%) -1.6 Target Market Growth Table 5.05 A seemingly logical target growth for the disposable diaper and training pants market is the compounded annual growth rate (CAGR) as shown in Table 5 . Market growth in 1997 is 1.38 12. For diapers.01 0. 1998 Target Market Growth of the Disposable Diaper and Training Pants Market 1997 Growth (%) Infants (millions): birth to 30 months Diapers sold (billions of units) Diaper retail dollar sales (millions) Children (millions): 18 months to 8 years Training and youth pants sold (millions of units) Training and youth pants retail dollar sales (millions) 0.
• • The company leads the market in terms of product innovations.10 above.4 SWOT Analysis The SWOT analysis for Drypers Corporation will showcase the strengths and weakness of the company as well as the opportunities and threats that it may face along the way.05% for dollars sold. Strengths • Manufactures diapers and training pants with quality that is at par with competitors • Good quality diapers and training pants are not premium-priced unlike its competitors. Weaknesses . Hence. target market growth is set at 13. 2.58% for units sold and 0. The reason for this is that the computation of CAGR possesses that characteristic of taking into account the year-on-year growth rates from 1994 to 1997. There is a strong relationship with retailers as a result of the cooperative merchandising arrangements that have been done in the past as part of its promotions.43% for dollars sold. As for the training and youth pants. 1998 target growth for diapers will be 0. as if arriving considering all movements in unit and dollar sales that have happened in the past 3 years.28% for units sold and 7. These targets seem to be realistic for 1998 considering the events the sales trend of disposable diapers and training pants from 1994 to 1997.
11 • There is no national brand that has been established in the United States because of the type of promotion established in the past. respectively. • The lack of extensive research and development will in the long-run affect the company especially with the planned launch of the national TV advertisement. • There is less extensive production and distribution on the national level that will supply large merchant and chain of drugstores. Threats • Failure of the national television advertising to establish a national brand for the company and intensify sales is a threat to the company. These two manufacturers invest heavily in research and development and have spent large . • Continued product innovation will differentiate the brand from its competitors. 2. Opportunities • The planned television advertising will provide an opportunity for the company to be known nationally and therefore establish its name as a national brand. Research will be needed to eventually evaluate the effectiveness of the advertisement.5 Competition Kimberly-Clark and Procter & Gamble are the leading manufacturers of premium-priced brands such as Huggies and Pampers. • Long-term relationships with retailers will provide stable sales grocery stores as a strong distribution channel.
3 41. The company is involved in both manufacturing and marketing Drypers in the United States and other . 2.12 sum of money for media advertising.6 39.4 36.7 25 23.4 37.6 Product Offering Drypers Corporation is the company behind Drypers. In 1997 alone.6 40. particularly focusing on TV advertising. Drypers Corporation and other manufacturers.8 million. 1994-1997 Figure 1 shows that Kimberly-Clark consistently leads the market from 1994 to 1997 with increasing market share from 1994 to 1997 and ending 1997 with 41.2 37. Combined Percent Dollar Market Share of Disposable Diapers and Training Pants for Different Manufacturers.1 1994 1995 1996 1997 Kimberly-Clark Procter & Gamble Others Figure 1. registered 21. Kimberly-Clark spent $57.2%. 37.1% in total market share in 1997.6 37.8 22. combined.2 million in television advertisements while Procter & Gamble spent $52.3 21.
Product innovation is also another key to the corporation’s success. hence increasing demand for the product and therefore increasing sales and revenue.S. then the company will be able to establish one brand in the U. continuing manufacturing and marketing brands of high quality but are sold at lower price is one key to overcome the fierce competition of the diaper and training pants market.S. It may not able to compete with leading brands in terms of pricing but the innovations that are being done on its flagship brand has proven to be working for the corporation. Drypers Corporation boasts of diaper and training pants that are premium in quality but low in price relative to its competitors. Drypers diapers are 4th in the market while for training pants. In terms of ranking. National media advertisement such as TV advertising is also one of the ways by which the Drypers brand will be established nationwide and will be known by most Americans. The stakes may be high for the company as expenditure for promotions in the United States is up at $10 million. another brand of disposable diapers as well as other private-label diapers and training pants.8 Critical Issues One critical issue in the company is the success of the national TV advertisement that it plans to do for 1998. the most that the company might be spending for promotions.13 brand names outside U. Drypers Corporation also manufacturers Comfees in the United States.7 Keys to Success For the corporation. 2.S. it ranks 2nd in the market in 1997 among grocery stores in the U. If this will work successfully. Extensive . 2..
.14 research and development is also another critical issue especially since a TV advertisement will be effected in 1998.
• Increase distribution of Drypers not only in grocery stores but more so in mass merchants and chains of drugstores. It is the corporation’s mission to be able to establish one brand for the diaper market that will be known nationally and worldwide and to rise up in the ranks and challenge leading competitors. Drypers. Increase brand awareness of Drypers nationally and eventually.1 Mission Drypers Corporation is a manufacturer of diapers and training pants that is known for premium-quality brands but which have value for money. in the United States. 3.2 Marketing Objectives The following are the objectives of the corporation in terms of its marketing aspects: • • Reduce dependence of the corporation to direct promotional spending. worldwide.15 3.3 Financial Objectives The following is the company’s financial objective: .0 Marketing Strategy Drypers Corporation’s marketing strategy will be comprised of the following aspects as it faces a new and challenging event in the promotion of its flagship brand. 3. 3.
Increase awareness of Drypers brand and its penetration in the retail market.S. 3..5 Positioning Drypers Corporation will continue to provide premium-quality diapers and training pants at lower prices at the same continuing to be the first in the market in terms of product innovation and pricing.4 Target Markets Drypers Corporation targets mothers aged 18 to 49 years old who have babies aged 4 years and below because they are the main consumers of diapers and training pants in the United States. . 3.16 • As a result of the national TV advertisement that will be done in the U. it is the objective of the company for sales to increase thereby increase revenue and profit. 3.6 Strategies The corporation will work on the following strategies to attain its objectives: • Continue doing product innovations so that Drypers brand will be differentiated from the rest • Offer branded products to consumers which the corporation regards as “Everyday Value” • • Continue in its pursuit to expand globally in the market Add up to the existing products lines that will include additional consumer products • • Provide products to retailers that are considered to have higher margin.
• Advertising and promotion will be gradually changed shifting from direct promotions to retailers to national TV advertisement to establish Dryper as the brand name. Succeeding surveys may also be done on a quarterly or semestral basis to gain insights as to the effectiveness of the advertisement from a larger number of people. • Distribution among mass merchants and drugstore chains will be increased and distribution among grocery stores will be maintained.0 Financials 4.7 Marketing Mix The company will employ the following marketing mix: • Pricing of Drypers will provide value for money since the corporation will continue to effect prices that are at most 40% lower than the competitors.17 3. • Customer Service will provide venue for continuous assistance to consumers as well as evaluation of the brands.8 Marketing Research One of the qualitative research methodologies that can be done initially is the conduct of focus group discussions (FGDs) to evaluate the TV advertisements. The FGDs will provide the company insights regarding the perception of viewers of the advertisement especially if it is effective or not in terms of establishing the brand name Dryper.1 Break-even Analysis . 4. 3.
3%. National TV advertising will push through to establish brand name for the corporation.3 Expense Forecast The company’s working capital in 1997 stood at about $49 million and may be used as an amount for 1998 spending. there will be introduction of Drypers Supreme with Germ Guard Liner in September of 1998. 5. the only diaper in the market that has an antibacterial treatment.0 Controls 5. Expansion will also be done in countries where there is still low consumer penetration such as Latin America. 5.2 Sales Forecast The CAGR over a two-year period of 1995 to 1997 is 32. the Pacific Rim and Eastern Europe. 1998 sales forecast is $38 million. A return of investment analysis should also be done.1 Implementation To implement the strategies that have been outlined by the corporation.2 Marketing Organization A person must be elected to be in-charge of the marketing activities that will be done in 1998 especially careful monitoring of sales after the TV advertisement has been introduced. 4. Additional product lines will be introduced by 1998 year end.3 Contingency Planning .18 The company will still be generating income in 1998 because there is an allotted spending of $49 million and sales that will be generated in 1998 is $38 million. 4. 5. Using this to compute for the sales forecast.
Accessed 15 July 2009 from http://www.census. REFERENCES The Gale Group.pdf Investopedia.asp . Inc. 2008. Inc. Compound Annual Growth Rate – CAGR.html Palo Alto Software. Census Bureau.19 There must be other plans that will serve as a fall back if the TV advertisement will not prove to be beneficial to the product. Current Population Reports: Marital Status and Living Arrangements (P20).com/company-histories/Drypers-CorporationCompany-History.fundinguniverse. Accessed 15 July 2009 from http://www. Drypers Corporation. Medical Billing Service Marketing Plan. 2009.gov/prod/99pubs/p20-514u. Accessed 15 July 2009 from http://www.com/doc/4869611/Medical-billing-servicemarketing-plan U. 2006. There should be continued building of relationships to retailers as they were one of the reasons of the success of the brands. 2008.scribd. Accessed 15 July 2009 from http://www.investopedia.S.com/terms/c/cagr.
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