Case Study Drypers

I. Factual Summary:

1. The market for disposable diapers and training pants is infants and children, below the age of four. A baby uses five diapers a day for 30 months, for a total of 4,500 diapers.

2. Disposable diapers and training pants are distributed principally through grocery stores, drugstores, and mass merchants. Drypers Corporation typically markets their products through grocery stores due to their general lack of national brand-name recognition and less extensive national production and distribution capabilities.

3. Drypers is a producer of premium-quality, value-priced diapers and training pants. Drypers is the world’s sixth largest producer of disposable baby diapers and the third largest marketer of brand-name diapers in the United States. In 1997, the Drypers brand was the fourth largest selling diaper brand in the U.S.

4. Drypers Corporation has demonstrated their ability to change diaper marketing through product innovation. The company was the first to introduce diapers that focused on skin care, using baking soda for odor control and aloe vera as a skin-soothing treatment. These new products were responsible for increased grocery store channel penetration between 1995 and 1997 and earned them an award for the most innovative children’s product in 1997.

5. Drypers Corporation has relied heavily on print advertising in parent-oriented magazines and they regularly place coupons in daily newspaper food sections. They also ship thousands of diaper samples to pediatricians annually, along with coupons.

6. The business plan in 1998, after a record year of sales in 1997, focused on six key elements:

1. Continue product innovation to differentiate the Drypers brand.

2. Offer “Everyday Value” branded products to consumers.

3. Continue to pursue international expansion opportunities.

4. Expand product lines to include additional consumer products.

5. Provide higher-margin products for retailers.

6. Increase brand awareness and retail penetration.

II. Problem/Opportunity

Should Drypers Corporation spend 10 million dollars on national television advertising for its Drypers brand disposable diapers to increase their brand awareness, create value, and increase market share?

This problem is significant for two reasons. First, the company had not used television advertising in its 10-year history. Second, a 10 million dollar expenditure represented a 33 percent increase in the company’s combined advertising and promotion budget.

SWOT Analysis

Strengths:

• Drypers brand was the fourth largest selling diaper brand in the U.S.

• They focus on product innovation and product diversity.

• Their prices are lower than their major competitors.

• They boast a strong and increasing sales growth.

Weaknesses:

• Drypers has a lack of national brand name recognition.

• They have less extensive national production distribution capabilities.

• They have a lower advertising budget than their competitors.

• They have no dedicated sales force in the U.S.

• They are not present in mass-merchant distribution areas.

Opportunities:

• Drypers could increase brand awareness through television advertising.

• They could increase market share by gaining a presence in mass-merchandisers.

• They could pursue more international expansion opportunities.

• They could expand their product line to include additional consumer products.

Threats:

• There is a threat of continual growth of the market share by Procter and Gamble and Kimberly-Clarke.

• There is a threat of minimal response to television advertising.

• There is a threat of a decline in grocery store sales on diapers.

III. Alternative Solutions

Alternative