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DRYPERS MARKETING PLAN

1.0 Executive Summary

The diaper and training pants market in the United States is a stable market so

that manufacturers of diaper brands and training pants can continue to thrive in this

market. Drypers Corporation is one of the manufacturers that offer good quality

products that are low in price compared to competitors. But one issue that exists is

the national branding that this manufacturer still lacks. National TV advertisement is

one of the promotional activities that the manufacturer seeks to evaluate in 1998.

2.0 Situation Analysis

Drypers Corporation founded as Veragon Corporation has been in the

disposable and training pants market since its inception in 1987 thereby thriving in

this market for a few decades already.1 The company has since heavily relied on

print advertising as well as promotions such as couponing and solid merchandising

arrangements with long-time retailers in order to promote the flagship brand,

Drypers, in the United States. Towards the end of 1997, Drypers Corporation

management felt it inevitable to actually see how the consumers will respond to

national television advertising that would actually promote the brand. This is noting,

of course, that national television advertising is more costly than the existing

promotional activities done in the U.S. for Drypers and that it is the first time for the

corporation to embark on the said promotional strategy. In fact, the $10 million

expected spending for the TV advertising is already a big leap in terms of budget

1
The Gale Group, Inc. 2006. Drypers Corporation. Accessed 15 July 2009 from
http://www.fundinguniverse.com/company-histories/Drypers-Corporation-Company-History.html
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because it is 33% higher than even the combined budget for advertising and

promotion.

2.1 Market Summary

Drypers Corporation is generally thriving and competing into the disposable

and training pants market. This market can be characterized as being composed

of infants and children 4 years old and below and their mothers aged 18 to 49

years who are the main decision maker in purchasing diapers and training pants.

The primary channels of distribution of disposable diapers and training pants are

grocery stores, drugstores as well as mass merchants.

Table 1. Retail Sales of U.S. Disposable and Training Pants by Distribution

Channels

1994 Share 1997 Share

Distribution 1997 Retail Sales
of Total Retail of Total Retail
Channel (in billion USD)
Sales (%) Sales (%)
Grocery stores 2.0 60.0 51.2
Drugstores 10.0 9.2
1.9
Mass merchants 30.0 39.4

Table 1 show that majority of the retail sales come from grocery stores with

$2 billion sales in 2007 and $1.9 billion combined sales from drugstores and

mass merchants in the same year. Compared to 1994, however, the 1997

percentage share of grocery stores to total retail sales has declined by about 9%

while for drugstores; share has also slid down to 9.2%. Sales from mass

merchants, on the other hand, significantly increased by 9.4% in 2007 from the

30% share in 2004.

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With regards to the flagship brands in this market, Kimberly-Clark and Procter

& Gamble are generally considered to be the leading manufacturers of their own

brands, Huggies and Pampers, respectively.

2.2 Target Markets

The target markets for disposable diapers and training pants are still the

infants (babies below one year of age) and children aged 1 to 4 years old.

Moreover, since the babies and the infants are not the ones who purchase

diapers and training pants for themselves but their parents, another target market

are mothers with age ranging from 18 to 49 years old. With the planned national

television advertising by the Drypers Corporation, the more that the mothers

become an important niche in the market that the corporation should penetrate.

Not only are the mothers the main decision makers and purchasers of these

products, they are actually the ones who will be targeted by the advertisement

because they have the capability to understand the message of the

advertisement.

2.3 Market Analysis

An analysis of what constitute the disposable diaper and training pants

market is imperative to be able to understand the needs of the target market,

thereby using the knowledge to understand the market better and hence come

up with effective marketing strategies that will appeal to the target market.

2.3.1 Market Demographics

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The profile of Drypers Corporation’s target consumers can be completely

explained in terms of geographic, demographics and behavior factor as will be

shown in the succeeding discussions.2

Geographics

Initially, the geographic area of concentration for the national television

advertising campaign that will be shown is the entire United States. After some

time, the same strategy may be put into test to other countries where Drypers

Corporation is actively promoting Drypers or the brand name that is being used in

specific countries such as Mexico, Brazil, Mexico, Puerto Rico and Argentina.

The total targeted population however is the population of infants and babies who

are actually using disposable diapers and training pants which is approximately

24 million as estimated by the U.S. Census Bureau in 1998.3

Demographics

Of the 24 million estimated users of disposable diapers and training pants, 16%

are under 1 year of age, 33% are aged 1 to 2 years and 51% are 3 to 5 years

old. In terms of diaper usage, babies use five diapers in a day for two-and-a-half

years or basically 30 months, on the average. This totals to 5,475 diapers for the

30-month period.

Behavior Factors

With increased information in reproductive health and family planning, old and

new married couples have a choice with regards to birth-giving and children-

rearing. Hence, there is a tendency that the number of infants 30 months old and
2
Palo Alto Software, Inc. 2008. Medical Billing Service Marketing Plan. Accessed 15 July 2009 from
http://www.scribd.com/doc/4869611/Medical-billing-service-marketing-plan
3
U.S. Census Bureau. 2008. Current Population Reports: Marital Status and Living Arrangements (P20).
Accessed 15 July 2009 from http://www.census.gov/prod/99pubs/p20-514u.pdf
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below seems to grow modestly. This therefore affects the demand for disposable

diapers and training pants in the market. Moreover, the innovations and

improvements effected on diapers in the aspects of absorbency and leakage

control also result to fewer demands for the use of disposable diapers and

training pants.

2.3.2 Market Needs

The target consumers are in a constant look for disposable and training

pants brands that are of high quality but still provide a good value for money.

Drypers Corporation is known for product innovation and pricing. It has

competed head-on with premium-priced brands such as Huggies and Pampers

which have also gained following because of the quality of the products that they

sell to the market. Drypers, on the other hand, retained its strategy of providing

consumers with disposable diapers and training pants with quality that is at par

with its direct competitors but with prices that are relatively low compared to

leading brands.

2.3.3 Market Trends

The trend in the U.S. disposable diaper and training pants market from 1994

to 1997 is showcased in the table below.

Table 2. Trends in the U.S. Disposable Diaper and Training Pants Market

1994 1995 1996 1997

Infants (millions): birth to 30 months 10.0 9.8 9.7 9.7

Diapers sold (billions of units) 17.2 17.2 17.3 17.5

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Diaper retail dollar sales (millions) $3,880.0 $3,825.0 $3,855.0 $3,930.0

Children (millions): 18 months to 8 years 26.1 26.3 26.3 26.2

Training and youth pants sold

970.0 1,070.0 1,250.0 1,410.0
(millions of units)
Training and youth pants retail dollar sales
$485.0 $510.0 $540.0 $595.0
(millions)

Table 2 above is adapted from the case study “Drypers Corporation”

discussed in Chapter 6 (Integrated Marketing Communication Strategy and

Management) of the book ________________. This table shows how the sales

in million units and million dollars sold have evolved from 1994 to 1997. Infant

birth is seen in a declining trend with at most 0.2 million decline from 1994.

Despite the decline in infant births, diaper sales in units and in dollars are still on

an increasing trend posting 17.5 billion units sold corresponding to $3.9 billion

retail sales in 1997.

The statistics of children 18 months to 8 years of age from 1994 to 1997 is

in almost stable trend. There are really no significant changes for the period

indicated in Table 2. Children of this age range are the primary users of training

and youth pants, and as seen in Table 2, sales in units and in dollars show

increasing trend as well ending 2007 with 1.4 billion units sold and $595 million

retail sales.

2.3.4 Market Forecast

To forecast the 1998 sales in units and dollars of the disposable diaper and

training pants market as well as the infant birth and the number of children 18

months to 8 years old, 1994 data was used as base. A compounded annual
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growth rate (CAGR) was computed first over a 3-year period. The compounded

annual growth rate is a year-on-year estimate of the growth of an entity or an

investment over a specified period of time.4 Forecasting 1998 market sales using

CAGR meant considering not only the growth of the most recent year which is

1997 but also taking into account the growth trend that existed from 1994 to

1997. This may be considered a more encompassing forecast of 1998 market

sales. The 1998 forecast, on the other hand, is obtained by multiplying the

CAGR with the 1997 value and adding the 1997 value to the resulting product.

Table 3. 1998 Market Forecast of the Disposable Diaper and Training Pants
Market

3-Year CAGR 1998

1994 1997
(%) Forecast

Infants (millions): birth to 30 months 10.0 9.7 -1.01 9.6

Diapers sold (billions of units) 17.2 17.5 0.58 17.6

Diaper retail dollar sales (millions) $3,880.0 $3,930.0 0.43 $3,946.8

Children (millions): 18 months to 8

26.1 26.2 0.13 26.2
years
Training and youth pants sold
970.0 1,410.0 13.28 1597.2
(millions of units)
Training and youth pants retail dollar
$485.0 $595.0 7.05 $637.0
sales (millions)

Table 3 above shows the computed CAGR over a 3-year period with 1994

as the base. The forecasted value for 1998 show that infant birth will decline by

4
Investopedia. 2009. Compound Annual Growth Rate – CAGR. Accessed 15 July 2009 from
http://www.investopedia.com/terms/c/cagr.asp
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0.1 million while children aged 18 months to 8 years will be stable, as in 1997.

The predicted diaper sales in 1998 will be 17.6 million units corresponding to

$3,946.8 million. This is still an increase from 1997 sales of $3,930. As for the

training and youth pants unit sales, CAGR is high at 13.28%. This impacted an

increase in the 1998 forecast sales of about 1,597 million units.

Correspondingly, retail dollar sales of training and youth pants will be at $637

million following a compounded growth of 7% over a 3-year period. Sales in

million units and in million dollars of both diapers and training and youth pants

are forecasted to still increase in 1998 because of the positive growth that has

been achieved from 1994 to 1997.

2.3.5 Market Growth

Table 4. Market Growth of the Disposable Diaper and Training Pants Market

%
% %
Growth
Growth Growth
1994 1995 1996 1997
(1994- (1995-
(1996-
1995) 1996)
1997)
Infants (millions): birth to 30
10.0 9.8 -2.00 9.7 -1.02 9.7 0.00
months
Diapers sold (billions of
17.2 17.2 0.00 17.3 0.58 17.5 1.16
units)
Diaper retail dollar sales
$3,880.0 $3,825.0 -1.42 $3,855.0 0.78 $3,930.0 1.95
(millions)
Children (millions): 18
26.1 26.3 0.77 26.3 0.00 26.2 -0.38
months to 8 years
Training and youth pants
970.0 1,070.0 10.31 1,250.0 16.82 1,410.0 12.80
sold (millions of units)
Training and youth pants
$485.0 $510.0 5.15 $540.0 5.88 $595.0 10.19
retail dollar sales (millions)
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Annual growth is computed from 1994 to 1997 and these are highlighted in

blue in Table 4 above. For diapers, market growth in units sold as well as dollars

sold is positive and the trend is increasing. Market growth in 1997 is 1.16% for

diapers sold in million units and 1.95% for diapers sold in million dollars.

Regarding the training and youth pants growth from 1994 to 1997, growth of units

sold in 1997 is 12.8% while for dollars sold, 10.19%. Growth of units sold

suddenly fell by about 4% in 1997 but growth of dollars sold increased by

approximately 4%. Nevertheless, these are still double-digit growths compared

to those of diaper pants.

2.3.6 Target Market Growth

Table 5. 1998 Target Market Growth of the Disposable Diaper and Training Pants
Market

1997 Growth 3-Year CAGR

(%) (%)

Infants (millions): birth to 30 months 0.00 -1.01

Diapers sold (billions of units) 1.16 0.58

Diaper retail dollar sales (millions) 1.95 0.43

Children (millions): 18 months to 8 years -0.38 0.13

Training and youth pants sold

12.80 13.28
(millions of units)
Training and youth pants retail dollar sales
10.19 7.05
(millions)

A seemingly logical target growth for the disposable diaper and training pants

market is the compounded annual growth rate (CAGR) as shown in Table 5

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above. The reason for this is that the computation of CAGR possesses that

characteristic of taking into account the year-on-year growth rates from 1994 to

1997, as if arriving considering all movements in unit and dollar sales that have

happened in the past 3 years. Hence, 1998 target growth for diapers will be

0.58% for units sold and 0.43% for dollars sold. As for the training and youth

pants, target market growth is set at 13.28% for units sold and 7.05% for dollars

sold. These targets seem to be realistic for 1998 considering the events the

sales trend of disposable diapers and training pants from 1994 to 1997.

2.4 SWOT Analysis

The SWOT analysis for Drypers Corporation will showcase the strengths and

weakness of the company as well as the opportunities and threats that it may

face along the way.

Strengths

• Manufactures diapers and training pants with quality that is at par with

competitors

• Good quality diapers and training pants are not premium-priced unlike its

competitors.

• The company leads the market in terms of product innovations.

• There is a strong relationship with retailers as a result of the cooperative

merchandising arrangements that have been done in the past as part of its

promotions.

Weaknesses
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• There is no national brand that has been established in the United States

because of the type of promotion established in the past.

• There is less extensive production and distribution on the national level

that will supply large merchant and chain of drugstores.

Opportunities

• The planned television advertising will provide an opportunity for the

company to be known nationally and therefore establish its name as a

national brand.

• Long-term relationships with retailers will provide stable sales grocery

stores as a strong distribution channel.

• Continued product innovation will differentiate the brand from its

competitors.

Threats

• Failure of the national television advertising to establish a national brand

for the company and intensify sales is a threat to the company.

• The lack of extensive research and development will in the long-run affect

the company especially with the planned launch of the national TV

advertisement. Research will be needed to eventually evaluate the

effectiveness of the advertisement.

2.5 Competition

Kimberly-Clark and Procter & Gamble are the leading manufacturers of

premium-priced brands such as Huggies and Pampers, respectively. These two

manufacturers invest heavily in research and development and have spent large
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sum of money for media advertising, particularly focusing on TV advertising. In

1997 alone, Kimberly-Clark spent $57.2 million in television advertisements while

Procter & Gamble spent $52.8 million.

40.4 41.2
39.6
37.6 37.4 37.3 37.7
36.6

25
23.8
22.3
21.1

1994 1995 1996 1997

Kimberly-Clark Procter & Gamble Others

Figure 1. Combined Percent Dollar Market Share of Disposable Diapers
and Training Pants for Different Manufacturers, 1994-1997

Figure 1 shows that Kimberly-Clark consistently leads the market from 1994

to 1997 with increasing market share from 1994 to 1997 and ending 1997 with

41.2%. Drypers Corporation and other manufacturers, combined, registered

21.1% in total market share in 1997.

2.6 Product Offering

Drypers Corporation is the company behind Drypers. The company is

involved in both manufacturing and marketing Drypers in the United States and other
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brand names outside U.S. Drypers Corporation boasts of diaper and training pants

that are premium in quality but low in price relative to its competitors. Drypers

Corporation also manufacturers Comfees in the United States, another brand of

disposable diapers as well as other private-label diapers and training pants. In

terms of ranking, Drypers diapers are 4th in the market while for training pants, it

ranks 2nd in the market in 1997 among grocery stores in the U.S.

2.7 Keys to Success

For the corporation, continuing manufacturing and marketing brands of high

quality but are sold at lower price is one key to overcome the fierce competition of

the diaper and training pants market. Product innovation is also another key to the

corporation’s success. It may not able to compete with leading brands in terms of

pricing but the innovations that are being done on its flagship brand has proven to be

working for the corporation. National media advertisement such as TV advertising is

also one of the ways by which the Drypers brand will be established nationwide and

will be known by most Americans.

2.8 Critical Issues

One critical issue in the company is the success of the national TV

advertisement that it plans to do for 1998. The stakes may be high for the company

as expenditure for promotions in the United States is up at $10 million, the most that

the company might be spending for promotions. If this will work successfully, then

the company will be able to establish one brand in the U.S., hence increasing

demand for the product and therefore increasing sales and revenue. Extensive
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research and development is also another critical issue especially since a TV

advertisement will be effected in 1998.

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3.0 Marketing Strategy

Drypers Corporation’s marketing strategy will be comprised of the following

aspects as it faces a new and challenging event in the promotion of its flagship

brand, Drypers, in the United States.

3.1 Mission

Drypers Corporation is a manufacturer of diapers and training pants that is

known for premium-quality brands but which have value for money. It is the

corporation’s mission to be able to establish one brand for the diaper market that will

be known nationally and worldwide and to rise up in the ranks and challenge leading

competitors.

3.2 Marketing Objectives

The following are the objectives of the corporation in terms of its marketing

aspects:

• Reduce dependence of the corporation to direct promotional spending.

• Increase brand awareness of Drypers nationally and eventually,

worldwide.

• Increase distribution of Drypers not only in grocery stores but more so in

mass merchants and chains of drugstores.

3.3 Financial Objectives

The following is the company’s financial objective:

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• As a result of the national TV advertisement that will be done in the U.S., it

is the objective of the company for sales to increase thereby increase

revenue and profit.

3.4 Target Markets

Drypers Corporation targets mothers aged 18 to 49 years old who have

babies aged 4 years and below because they are the main consumers of diapers

and training pants in the United States.

3.5 Positioning

Drypers Corporation will continue to provide premium-quality diapers and

training pants at lower prices at the same continuing to be the first in the market in

terms of product innovation and pricing.

3.6 Strategies

The corporation will work on the following strategies to attain its objectives:

• Continue doing product innovations so that Drypers brand will be

differentiated from the rest

• Offer branded products to consumers which the corporation regards as

“Everyday Value”

• Continue in its pursuit to expand globally in the market

• Add up to the existing products lines that will include additional consumer

products

• Provide products to retailers that are considered to have higher margin.

• Increase awareness of Drypers brand and its penetration in the retail

market.
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3.7 Marketing Mix

The company will employ the following marketing mix:

• Pricing of Drypers will provide value for money since the corporation will

continue to effect prices that are at most 40% lower than the competitors.

• Distribution among mass merchants and drugstore chains will be

increased and distribution among grocery stores will be maintained.

• Advertising and promotion will be gradually changed shifting from direct

promotions to retailers to national TV advertisement to establish Dryper as

the brand name.

• Customer Service will provide venue for continuous assistance to

consumers as well as evaluation of the brands.

3.8 Marketing Research

One of the qualitative research methodologies that can be done initially is the

conduct of focus group discussions (FGDs) to evaluate the TV advertisements. The

FGDs will provide the company insights regarding the perception of viewers of the

advertisement especially if it is effective or not in terms of establishing the brand

name Dryper. Succeeding surveys may also be done on a quarterly or semestral

basis to gain insights as to the effectiveness of the advertisement from a larger

number of people.

4.0 Financials

4.1 Break-even Analysis

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The company will still be generating income in 1998 because there is an

allotted spending of $49 million and sales that will be generated in 1998 is $38

million.

4.2 Sales Forecast

The CAGR over a two-year period of 1995 to 1997 is 32.3%. Using this to

compute for the sales forecast, 1998 sales forecast is $38 million.

4.3 Expense Forecast

The company’s working capital in 1997 stood at about $49 million and may

be used as an amount for 1998 spending.

5.0 Controls

5.1 Implementation

To implement the strategies that have been outlined by the corporation, there

will be introduction of Drypers Supreme with Germ Guard Liner in September of

1998, the only diaper in the market that has an antibacterial treatment. Expansion

will also be done in countries where there is still low consumer penetration such as

Latin America, the Pacific Rim and Eastern Europe. National TV advertising will

push through to establish brand name for the corporation. Additional product lines

will be introduced by 1998 year end.

5.2 Marketing Organization

A person must be elected to be in-charge of the marketing activities that will

be done in 1998 especially careful monitoring of sales after the TV advertisement

has been introduced. A return of investment analysis should also be done.

5.3 Contingency Planning

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There must be other plans that will serve as a fall back if the TV

advertisement will not prove to be beneficial to the product. There should be

continued building of relationships to retailers as they were one of the reasons of the

success of the brands.

REFERENCES

The Gale Group, Inc. 2006. Drypers Corporation. Accessed 15 July 2009 from

http://www.fundinguniverse.com/company-histories/Drypers-Corporation-

Company-History.html

Palo Alto Software, Inc. 2008. Medical Billing Service Marketing Plan. Accessed

15 July 2009 from http://www.scribd.com/doc/4869611/Medical-billing-service-

marketing-plan

U.S. Census Bureau. 2008. Current Population Reports: Marital Status and

Living Arrangements (P20). Accessed 15 July 2009 from

http://www.census.gov/prod/99pubs/p20-514u.pdf

Investopedia. 2009. Compound Annual Growth Rate – CAGR. Accessed 15 July

2009 from http://www.investopedia.com/terms/c/cagr.asp