P&G works hard on the soft sell of nappies

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br papmpers Bloomberg Procter & Gamble wants to protect its Pampers brand and maintain a technological edge over its rivals. Photo: Bloomberg

Lauren Coleman-Lochner in New York - The cheerful room packed with babies and watchful grown-ups could be a day-care centre anywhere in the US, except for the lab-coated researchers sticking plastic tubes into toddlers’ nappies.

This is the baby-care research centre north of the headquarters of Procter & Gamble (P&G) in Cincinnati. Here researchers are pushing the boundaries of disposable nappy science and style.

The research is designed to protect the Pampers brand, P&G’s biggest, and maintain a technological edge over generic nappy makers and Kimberly-Clark’s Huggies. P&G is constantly seeking new ways to extend a brand that generated more than $10 billion (R108bn) in sales last fiscal year, or about 12 percent of revenue.

The disposable nappy has come a long way since 1961, when it was created by a P&G engineer tired of cleaning his grandson’s cloth nappies. The company replaced pins with tape fasteners in the 1970s and added absorbent gel in 1986.

In 2010, P&G introduced Dry Max Pampers, dubbed the biggest nappy innovation in 25 years because they were 20 percent thinner and twice as absorbent as before.

For all of P&G’s advances, generics have gained ground. Although its share has declined, Huggies has been the leading brand in North America over the past decade, followed by Pampers. P&G has the largest market share if its Pampers and Luvs brands are combined.

The Pampers brand was critical for P&G because it connected the larger company to mothers, the “core consumer”, said Virginia Morris of Daymon Worldwide, a product development and brand consultancy. If mothers were happy with their babies’ nappies, the halo effect might benefit P&G’s other products, she said.

P&G’s operating profit margin for baby and family care was 20.9 percent last year, compared with 17.6 percent for fabric and home care.

So P&G is constantly enhancing nappies to persuade parents to pay up. Since the recession, P&G has managed to hold on to its 35 percent global market share and raise prices.

Its breadth of products and categories gives it an advantage over rivals because divisions borrow technology from each other. Pampers use mesh found in feminine-care products, while the disposable absorbent fabric found in Pampers is also used in P&G’s Swiffer line of mops.

“If they don’t stay ahead, they’re going to become commoditised,” Morris said.

P&G and Kimberly-Clark continued to lead the industry in the US, Morris said, because many parents would rather pay a premium than take a chance on generics. – Bloomberg


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