P&G’s Pampers brand being ahead of its competitors already applied the changing trends in its Pampers Easy Up Pants. Due to its aggressive product innovation and differentiation, Pampers ranked as the number one brand in the survey in every Asian market except Thailand.
1.1.4 Market Growth
According to the figures obtained from Department of Statistics Malaysia; 13,900 babies were born in 2005, 13,500 in 2006 and 17,600 in 2007.
Size of diaper market in Malaysia can be measures as below:
Market Size = TB X ADPD X Duration
Where;
TB = Total number of babies
ADPD = Number of average diapers used per day
Duration = Duration of use during life as babies
Study shows that in Malaysia, a baby on average uses 8 diapers per day on average for the first 2 years, which comes up to a total of 5,840 diapers per baby. Therefore, the estimated diapers market size in 2007 was roughly as below:
Market Size = 17600 babies X 5,840 diapers per baby
= 102,784,000 diapers
The calculation shows that in 2007, an estimated 102 million diapers were used in Malaysia. The disposable diapers market in Malaysia has been experiencing steady growth throughout the years as the demand for disposable diapers increase. P&G’s annual report 2007 shows a sales growth of 5.2% in Malaysia.
1.2 SWOT Analysis
Procter & Gamble’s strengths, weaknesses, opportunities and threats are analysed below:
- Strengths
- In-depth industry experience and insights.
P&G is the global leader in all its four core categories including its baby care. Its products are sold in over 160 countries worldwide including Malaysia. It derives substantial economies from its scale of operations in finance, logistics, marketing, research, new product development, innovation, technology and other functions. P&G has been in Malaysia for the past 21 years. The level of knowledge and experience gained from being in the industry for such a long time gives P&G significant competitive advantage against the smaller, unorganized players in the Malaysian markets.
P&G is one of the world's most successful brand creation and brand building companies. The company participates in more than 40 product categories with 300 brands in roughly 60 markets. Pampers is among of its well-known brand worldwide and has been the heritage brand of disposable diapers in the Malaysian market since 1987. P&G continuous involvement in consumer research helps it understand anticipate and respond to consumer needs and wants and hence create marketing and advertising innovations more effectively and efficiently than many other companies.
P&G invests heavily in Innovation, technology and R&D to produce new; improved quality products including its disposable diapers brand Pampers. The company creates more new brands and categories than any other consumer goods company.
P&G's technology in the diaper industry has proven to provide more than just convenience and comfort for parents and children. It has provided health benefits to children who use Pampers and has become a major contributor to P&G's worldwide profits
- Strong performance in core categories
On a worldwide basis, fabric & home care, beauty care, and baby & family care products are Procter & Gamble’s largest businesses, contributing a total of roughly 80% of sales. The net sales from the baby and family care division grew 11% to
$11.9 billion in 2005. Strong performance by its core business groups is one of the prime reasons contributing to the company’s above industry average revenue growth rates, and has significantly helped the company to grow to a stage where it is virtually hedged against threat from smaller new entrants.
- Weaknesses
The company’s operations are heavily concentrated among its top customers. P&G’s largest customer in Malaysia, Giant, accounted for 20% (2007), 18% (2006) and 17% (2005) of sales. P&G’s top 10 customers account for 35% of its sales. A financial hardship experienced any of these customers; or a substantial decrease in sales to any one of the top customers could materially affect revenues and profitability of the company.
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- Opportunities
The diaper industry in Malaysia is growing steadily. There are only a few large manufactures that control the diaper market. The consumer products business in developing markets is expected to be a significant opportunity for FMCG majors globally. This is primarily due to the fact that these markets are witnessing growth across three basic demographic factors: population growth, household formation and household income growth. These factors have driven developed market growth for decades and are now driving strong growth in many developing markets. Malaysia, for example, is now considered one of the most lucrative markets by FMCG companies, which could be further explored by the company.
- Threats
- The rise in commodity prices
The company is witnessing a significant increase in its raw material prices due to the 41% increase of oil prices in 2008. Due to this P&G is facing higher commodities costs, which is expected to have a negative impact on the profit margins. P&G can offsets these costs by increasing the prices of its products but the result of a price hike in the Pampers brand in the Malaysian market could drive customers to choose cheaper or local brand disposable diapers.
- The high possibility of recession in the near future
In the case recession occurs, sales in the Pampers brand diapers might suffer as customers opt cheaper or local made disposable diapers. This will affect P&G’s overall net sales and profit margin.
1.3 Competition
Pampers biggest rival in the Malaysian market is Huggies brand from Kimberly Clark corporation, followed by Drypers and Mamy Poko. Other disposable diapers brands in the market are PetPet, Pureen, Hey Baby, Baby Like, Fitti and Drypex. P&G’s new innovation of Pampers and its targeted niche market helps maintain the company’s competitive edge over all the other competitors in the market.
1.4 Product Offering
Pampers brand disposable diapers offered on the shelves in the market today are as such:
- Pampers CottonCare for newborns
Cotton like quilted sheets with excellent breathability is used to help keep newborn’s skin smooth and comfortable.
- Pampers Fit & Dry for crawlers
Specially designed for babies who are crawling and just started walking with natural leg fit to help babies move around freely.
- Pampers EasyUp pants for walkers
Specially designed for walkers with its improved super absorbent core that absorbs up to 10 hours of wetting.
Pampers latest innovation:
“Premium Pampers Hygiene”
The targeted market for Premium Pampers Hygiene is the nouveau rich families in Malaysia. The technology in designing Premium Pampers Hygiene concentrates on germ control healthy baby skin. Premium Pampers Hygiene is made using a higher concentration of superabsorbent polymer (SAP) and absorbent gel material (AGM). This protects baby skin from germs and reduces nappy rash.
1.5 Keys to Success
Premium Pampers Hygiene’s key to success is to meet and satisfy its market niche segment needs. The success is behind the technology of minimizing skin infection and rashes in babies. Once Premium Pampers Hygiene obtains high level of customer satisfaction, the brand will yet again gain another competitive advantage over its competitors.
1.6 Critical Issues
Since Pampers Hygiene is targeted towards the wealth, successful and luxury living families in Malaysia, certain critical issue that can be foreseen are:
- Distribution limited to Malaysia’s mass merchants like Giant, Tesco and Carrefour.
- P&G will have to consistently monitor and ensure customer satisfaction from its niche market segment.
1.7 Marketing Strategy
The key here is to focus on premium quality, healthy and superior service. The strategy is focused stressing the features and uniqueness of Premium Pampers Hygiene compared to other disposable diapers.
1.8 Mission
Pampers mission is to gain customers loyalty through premium quality diapers and superior customer service.
1.9 Marketing Objectives
- To maintain strong growth in the Malaysian diapers market
- To introduce Premium Pampers Hygiene to the nouveau rich
- To obtain highest market share in Malaysia
2.0 Financial Objectives
- To enhance / helping to increase P&G’s sales of RM10 Million per annum
through differentiation and focus marketing.
- A double digit growth rate for the first three years.
- To contribute RM1 Million net earnings per annum.
2.1 Target Markets
Pampers targets the nouveau rich families in Malaysia for its latest innovation; Premium Pampers Hygiene for newborns, crawlers, toddlers and potty trainers.
The company (P&G) saw an opportunity to provide additional products to a niche market that had varying needs at different times.
Niche market is a simple concept that many people complicate. Now it's time to look at the products and services to determine additional niches that can be targeted.
2.2 Positioning Statement
The new Premium Pampers Hygiene focuses on the niche segment of nouveau rich families in Malaysia. This group takes up a very small percentage of the whole diapers market in the county. Pampers will strive to meet the needs of this niche segment by ensuring premium quality, germ-oriented advance technology as well as incorporating classy prints to Premium Pampers Hygiene. Superior customer service is also provided to gain customer satisfaction. The advanced germ-oriented technology will be a huge differentiation for Pampers providing the brand with a strong competitive edge over its competitors.
2.3 Strategies
In order to achieve the marketing positioning above, aggressive promotion of the new Premium Pampers Hygiene is to be carried out:
- Sales promotion can be done by introducing a trial pack of Premium Pampers Hygiene with every pack of Pampers diapers purchased by customers in mass merchants like Giant, Tesco or Carrefour.
- Media Advertisements through mainly through television, radio, bill boards and related magazines like Motherhood or Parenthood. This is to build awareness of the uniqueness and features of Premium Pampers Hygiene.
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2.4 Marketing Mix
Marketing mix comprises of 4Ps, which are pricing, distribution, promotion and customer service.
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Pricing: will be based on production cost, retails prices and Nouveau Rich
families’ premium price.
- Distribution: will use existing retailers’ distribution channels.
- Promotion: high end advertisement shall be considered.
- Customers’ service: highly emphasis on after sales services
2.5 Financials
a. P&G’s historical net earnings, operation income, expenditure and sales records (WORLD MARKET AS A WHOLE):
)
b. Break-even Analysis
# Therefore, break-even point = fixed cost / selling price – variable cost
= RM1MIL / RM1 – RM0.60
= RM2.5MIL. OR 2.5 MILLION PAMPERS
c. Sales Forecast (Summarize)
d. Expense Forecast (Summarize)
2.6 Implementation and Control
The main purpose of marketing plan is to guide the company in order to achieve targeted performance as:
- Revenue: monthly and annually
- Expenses: monthly and annually
- Customers’ satisfaction level
- Feasibility of product’s future development and achievement
- Implementation master program
2.7 Marketing Organization
The marketing organization / team will be formed strongly based on one of P&G’s Four pillars organizational structure; that is MDOs
- Market Development Organizations – (MDOs) build local understanding as a foundation for marketing campaigns.
P&G approaches business knowing that its need to Think Globally (GBUs) and Act Locally (MDOs). This approach is supported by our commitment to operate efficiently (GBS) and our constant striving to be the best at what we do (CFs). This streamlined structure allows us to get to market faster.
2.8 Contingency Planning
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Difficulties and risk – high expectation from Nouveau Rich families niche segment and marketability of the product.
- Worst case risk include – determine the maximum loss level, capital loss and liabilities.
2.9 Executive Summary
Pampers is a trademark of Procter & Gamble and the company's largest global brand and is the world's top-selling diaper brand. Procter & Gamble (P&G) was founded in the 19th Century (1837) and has emerged as one of the largest consumer goods manufacturing and marketing companies in the world. P&G penetrated the Malaysian market around 1987 through its acquisition with Richardson Vicks company. The disposable diaper brand Pampers was and still is among P&G’s famous brand names in Malaysia. Since the entry of P&G into our market, Pampers has been the heritage brand for disposable diapers in Malaysia throughout the years. Overall, the disposable diaper market focus in Malaysia has been on the mid-class income families. Pampers is to introduce a new advanced technology to the nouveau rich group in Malaysia. This will enhance its market share as well as market growth thus increase profit margin. The latest innovation will meet the needs of a niche segment in the market. Thus increase its market share and profit margin in Malaysia.
Reference:
- Marketing Management 12e , by Philip Kotler & Kevin Keller
- Contemporary Management 10e, by Boone & Kurtz
