How P&G Brought the Diaper Revolution to China Essay Example for Free

How PG Brought the Diaper Revolution to chinaware EssayWhen Procter Gamble set step up to sell Pampers in mainland China more(prenominal)(prenominal) than a decade ago, it approach a daunting marketing challenge PG didnt just have to influence parents that its diapers were the best. It had to persuade many of them that they needed diapers at all. The disposable diaper a throwaway commodity in the West just wasnt part of the ethnic norm in the Chinese nursery. Babies wore cloth diapers, or in many cases, no diaper at all. And that, says Bruce Brown, whos in charge of PGs $2 million RD budget, is why China presented and compose presents such a huge opportunity.Today, after years of exhaustive research and plenty of missteps, Pampers is the No. 1-selling diaper in China and the confederation, in many ways, is just getting started there. The diaper market in China is booming. It stands at $1. 4 billion roughly a keister the size of the U. S. market and is projected to grow 40 percent everyplace the next few years, according to research firm Datamonitor. PGs success in China has helped CEO Bob McDonald set some bold goals. Last October, he laid out a plan to add one billion customers over the next five years by promoting PG brands throughout some of the poorest corners of the world.How will PG go about doing that? To get a sense, just look at the way it cracked and to a large degree created the market for disposable diapers in China. Learning From Failure When PG first launched Pampers in China in 1998, the elbow grease flopped. Instead of developing a unique product for the market, PG made a lower-quality version of U. S. and European diapers, wrongly assuming that parents would buy them if they were cheap enough. It just didnt work, Brown says. Chinese split-pants, or kaidangku. Photo by The Wus Photo Land on Flickr It didnt help that Chinese families had always gotten along just exquisitely without disposable diapers.There, potty train ing often begins as early as six months, and children wear whats called kaidangku colorful open-crotch pants that let them squat and beg off themselves in open areas. Pampers pitch wasnt compelling people to try something new and neither was the product itself. We scrimped on the softness in the earlier versions, says Kelly Anchrum, conductor of orbiculate baby care, external relations, and sustainability. It had a more plasticky feel. It took us awhile to figure out that softness was just as important to moms in a developing market. PG had tried a similarly watered-down approach earlier in the decade, when it launched laundry and hair-care brands in several emerging markets. Those products also failed, Brown says. After these experiences, the company in 2001 came up with a new approach to product development Delight, dont dilute. In other words, the diaper needed to be cheap, quiet it also had to do what other cheap diapers didnt keep a baby dry for 10 hours and be as comfo rtable as cloth. So PG added softness, dialed down the plastic feel, and increased the absorption capability of the diaper.To bring down the cost, the company developed more efficient technology platforms and moved manufacturing operations to China to eliminate shipping costs. The revamped diaper, Pampers Cloth Like Dry, hit retail shelves in Chinas largest cities in 2006, selling for the equivalent of 10 cents in topical anesthetic currency, less than half the cost of a Pampers diaper in the United States. The Universal Pitch PG had the right diaper and the right price point. Now it faced the bigger challenge. You have to convince someone that they need this thing, says Ali Dibadj, an analyst who covers PG at Sanford C.Bernstein Co. For Frances Roberts, global brand franchise leader for Pampers, every trip to China was (and still is) an opportunity to learn more about Chinese nursery habits. Its part of the PG ethos that brand leaders visit consumers in their own homes somethin g Roberts has done in dozens of countries, including Germany, Russia, and Jakarta. The goal is to uncover the nuances of each market, and early on in its diaper research PG discovered a universal need. Moms say the same things over and over, Roberts says. Their cry We want more stop.With the help of the Beijing Childrens Hospitals Sleep Research Center, PG researchers conducted two exhaustive studies between 2005 and 2006, involving 6,800 home visits, and more than 1,000 babies throughout eight cities in China. Instead of cloth, the research subjects were tucked into bed with Pampers. The results PG reported that the babies who wore the disposables fell asleep 30 percent faster and slept an extra 30 minutes every night. The study even linked the extra sleep to improved cognitive development, a compelling point in a confederation obsessed with academic achievement.PG then put its marketing machine into motion. Pampers launched the Golden Sleep campaign in 2007, which included mass carnivals and in-store campaigns in Chinas biggest urban areas. A viral campaign on the Pampers Chinese web site asked parents to upload photos of their sleeping babies to drive home the studys sleep message. The response was impressive 200,000 photos, which PG used to create a 660-square-meter photomontage at a retail store in Shanghai. The ad campaign boasted scientific results, such as Baby Sleeps with 50% Less Disruption and Baby Falls Asleep 30% Faster.No diaper brand, not even rival Kimberly-Clark, maker of Huggies, has semen close to spending as much on advertising in China, according to CTR Market Research, the China-based division of American media researcher TNS Media Intelligence. Since 2006, Pampers measured media spend surpass 3. 2 billion yuan, or about $476 million more than three times as much as any other brand. In 2009 alone, PG fatigued $69 million, compared to Kimberly-Clarks $12 million spend for Huggies. Ruling the Nursery in China and Around the WorldToda y, Pampers is the top-selling brand in China, a farming where about a decade ago the disposable diaper category hardly existed. PG does not release sales figures for specific countries, but Datamonitor estimates that the company has captured more than 30 percent of the $1. 4 billion market. Karl Gerth, an Oxford professor who researches the spread of consumerism in China, says PGs marketing campaigns strike the right tone. You dont want to occur off as paternalistic, says Gerth, who wrote the book China Made Consumer Culture and the Creation of the Nation. The idea that Pampers brings a scientific backing and gives children an edge in their environment thats a brilliant way to stand out from the competition. You could argue that its easy being No. 1 when the market is still small. But PG still has a lot of work to do. The company faces challenges from private-label and domestic brands, including the No. 2 market leader, Hengan International Group, which has steadily grown its mar ket share to 20 percent. topical anaesthetic brands, meantime, are catching up with better products, marketing, and distribution. Chinese consumers are going to want to root for the home team, Gerth says. And theres still the challenge of qualification disposables a habit. On average, diaper use still amounts to less than one a day.Weve only just begun to scratch the surface in China, Dimitri Panayotopoulos, vice chairman of global household care, told investors in a 2008 analyst meeting. Theres even bigger potential in India, where the birth rate is almost double that of China but the diaper market remains tiny at about $43. 4 million. (Pampers is the top-selling brand there, too. So now, PG plans to take the sleep argument throughout rude and poor areas in India and elsewhere. The company also makes its case by positioning itself as a baby-care educator. Pampers sponsors healthcare-outreach architectural plans such as a rural immunization program in China and mobile medical-ca re vans in Pakistan and Morocco. In India, theres a door-to-door program that offers baby-care tips and diaper samples for moms. Of course, PG tweaks the sales pitch to fit assorted markets thats what the company is known for.In India, for instance, the convenience of disposable diapers doesnt resonate with parents. The companys consumer research found that many Indian mothers regard that only lazy moms put their babies in disposable diapers that last a full night. As Pampers brand manager Vidya Ramachandran reported in an internal exposure shown to employees, We really had to change that mindset and educate mothers that using a diaper is not about convenience for you its about your babys development.