Drypers Case Analysis

I. Background Statement

Drypers Corporation is a producer and marketer of premium-quality; value-priced disposable baby diapers and training pants sold under the Drypers brand name. The company is the world’s sixth largest producer of disposable baby diapers and the third largest marketer of brand-name disposable diapers in the U.S.

II. Major Issue/ Problem

Should Drypers Corporation spend 10 million dollars on national television advertising for its Drypers brand disposable diapers?

III. Alternative Courses of Action

A. Rejecting the 10 million dollar budget:

1. Advantages:

a. Don’t take the risk of not recovering the 10 million dollar expense.

b. Had never used T.V. advertising, so there is a chance that they can do it incorrectly.

2. Disadvantages:

a. Continue to reach only 33.8% of the Market.

b. Staying in a market that has been declining over time.

3. Quantitative Implications:

An increase of 10 million dollars in their advertising budget will require Drypers to have an increase of sales of 17.7 %( Table 1). This seems like a tall order due to the fact that Kimberly-Clark and Procter and Gamble have a Television budget six times of what Drypers is proposing.

B. Accepting the 10 million dollar advertising budget.

1. Advantages

a. Should improve Drypers brand awareness.

b. Will increase distribution coverage.

c. Facilitate entrance into Mass Merchandise and Drugstore Markets.

2. Disadvantages

a. Risk of sales not increasing enough to cover the 10 million dollar expense.

b. Tripling the current advertising expenditures.

3. Quantitative Implications:

As of 1997 Drypers has only 3.1% of the total dollar market. This seems to suggest that Procter has a good opportunity for market expansion. Drypers Corporation’s 66% distribution coverage in grocery stores, which account for 51.2% of total U.S. diaper and training pant