case study: managing product portfolios- nappies
Falling birth rates are putting pressure on nappy brands - how can brand manufacturers respond?
Introduction
Pampers and Huggies - the two biggest brands in the UK nappy market - are trying to increase sales at a time when the UK's birth rate is declining.
The demand for nappies is a "derived demand" - it derives from the needs of parents with children aged from birth up to three. A changes in the number of children requiring nappies is, therefore, potentially significant.
Pampers (owned by Proctor and Gamble “P&G”) and Huggies (owned by Kimberley-Clark) dominate the UK nappy market.
According to Mintel, Pampers and Huggies together accounted for 90 per cent of the UK market by value in 2001.
Falling birth rates
The number of children aged four and under in the UK fell by 5.1 per cent between 1997 and 2001. Over the same period, sales of disposable nappy sales fell by 19 per cent, from £457m to £370m.
The UK birth rate is predicted to fall by a further 3.5 per cent in 2002, meaning that 23,000 fewer babies are expected to be born in 2002 than in 2001. What effect does this have on the product strategy for these two market leaders?
Brands respond with product innovation and brand extensions
One response to falling demand has been a significant amount of new product innovation and product re-launches.
The Pampers and Huggies brands are also being extended
beyond nappies into all aspects of baby care.
P&G recently announced a re-launch of its Pampers Baby Dry range. The
re-launch was backed by a £5m advertising and marketing campaign in
an effort to put pressure on Huggies' Freedoms nappy range. This initiative
was announced just a month after the £6.8m re-launch of Huggies' parent
and baby club.
In August 2002, P&G launched a Pampers baby wipes range, called Kandoo. This is marketed as a transitional tool for three-to-five year olds as they progress from nappies to the toilet.
The Pampers brand has also been extended into:
• Disposable bibs called Bibsters
• Packaged face-and-hand wipes called Wipesters, and
• Sunscreen lotions on a wipe – called Sunnies
P&G has also agreed a licensing deal to make Pampers Clean 'n' Play, a cleaning fluid that can be sprayed and has licensed the Pampers brand to a clothing company to make baby pyjamas and blankets.
How successful is this brand extension strategy with customers? Do product re-launches and extensions mean anything to customers? Are they confused by the proliferation of products carrying a familiar brand name so strongly associated with one product – disposable nappies?
One baby product buyer at a leading supermarket chain dismisses the Pampers Baby Dry re-launch, questioning how adding "new" in front of the brand name will drive sales. He says:
"With increasing competition, manufacturers are tweaking their existing products to create some sort of interest, in a market that is falling in both value and volume. Such revamps mean little to shoppers and only end up confusing them."
Advertising executives feel that nappy brands may expose themselves to ridicule if they are over-extended:
"The fear is that Pampers and Huggies could soon become commoditised and hence devalued. Consumers today can see when manufacturers are trying to milk brands, and they could lose their credibility. There is only so much that you can do with a nappy brand - you can improve on the absorbency, breathability, feel and fit. I cannot see any nappy brand being extended into baby food. Even extending it into clothing may not work, because clothes are all about aspirations."
Brands must also be careful not to extend into products that have the potential to seriously damage brand value.
One example is the launch in 1999 of Pampers Care Mats.
The Care Mats were disposable mats on which infants could be placed while
changing their nappies or to protect toddlers against bed-wetting.
Less than six months after the launch, P&G was forced to label the mats
with a safety warning after fears were raised that they could suffocate young
babies.
Skeptics feel that new product and variant launches in the nappy sector are often simply a means for companies to gain a temporary edge over rivals.
Whether all the new product development and brand re-launching will help to expand the sector in the long term is open to question.
Web links:
Pampers UK Product
Information:
Teacher Subject Newsletters | Teacher Forums | Online Store | tutor2u News tutor2u on Twitter: Subject Blogs: About tutor2u | Copyright | Privacy | Terms of Use | Contact tutor2u Our Development Partners: |
