http://www.slideshare.net/JiahaoYang2/pampers-marketing-plan

Introduction and History of Pampers in China

In 1998, P&G entered the diaper market of China. During that time, most parents in China were not accustomed to use diaper for their babies. Instead they tended to use split pants, which is a kind of pants with a crack at the part of hip. Plastic and paper diaper was rare in that period.

In order to develop a disposable diaper market in China, P&G decided to introduce a kind of diaper which is of cheaper price with an inferior quality of their origin product. They innocently regarded Chinese consumers as bargainers with all their purchases. This wrong position of the diaper made the first step of Pampers in China a really tough step. To most of the parents in China, the cloth and split pants which has been used for hundreds of years seems still worked well in 20th century. It is unnecessary to change it into a diaper. As for the emerging middle-class parents, they tended to make their purchase decisions based on what it best for their only child rather than what is cheaper. They wer premium quality seeker. It was clear Pampers diapers did not satisfied their needs. Pamper was just some irritating plastic in their eyes. Although the usage of diaper kept growing slowly, the huge market is still a sleeping market.

In 2006, Pampers product quality was revised and they came up with softer and more absorbent diapers by developing more efficient technology platforms and even moved manufacturing operations to China in order to eliminate shipping costs. At that period the diaper market was still a little market compared to the huge population of China.

In 2007, Pampers tries again. But this time, they started by following the basics principles of a marketing strategy: Research and (only then) Development.

They realized that if they wanted to convince the Chinese consumer to buy Pampers diapers rather than to continue using spilt pants, they had to find what else Chinese parents needed.

P&G launched an in-depth research on the Chinese consumers, it turned out that their need was pretty simple: More Sleep. A universal need that any mother long for during the first years of having a baby, and an even more interesting fact came out of this in-depth research:  Mothers concern about the quality of their baby’s sleep and its impact on their future cognitive development, because of the one-child policy the parents are concerned with their child academic achievement as the Chinese society became more and more competitive.

After commissioning the Beijing Children’s Sleep Research Center for a study on how Pampers helped babies sleep better, they came out with the results that baby’s wearing Pampers diapers can fall asleep 30 percent faster, sleep an extra 30 minutes, and have 50 percent less sleep disruption through the night.

Pampers then rethought its whole communication strategy and launched its “Golden Sleep” campaign.

The aim of the “Golden Sleep” campaign was to frame Pampers as a product to improve the quality sleep of babies by communicating the “scientific” data results from the Sleep Research Center.

The campaign on Pampers Chinese web site focused on encouraging mothers to see by themselves the positive effect Pampers diapers had on their babies sleep by launching a Sleep Tracker that allowed parents to monitor their baby's’ sleeping patterns and then asked them to post pictures of their sleeping baby on the website that would be incorporated later on into the largest photomontage ever-made and the goal was to make it into the Guinness World Record.

This time, Pampers got a glorious victory. Instead of offering convenience and affordable product, Pampers successfully met a deeper need and educated Chinese mothers about the benefits of longer uninterrupted sleep for their baby’s cognitive development. P&G also take care and involved babies’ mothers in the product experience. This helped pampers walk through the barrier of tradition.

Pampers’ sale boomed 50 percent in the first year of the campaign. The diaper market in China also suffered a boom. Till 2010, P&G took up 42.7% percent of the 3 billion diaper market in China.

However, in 2010, Pampers began to meet the tough challenge from competitors. This time, the wind comes from the east. In Japan, Kao’s product Merries holds a reputation as being especially gentle on babies’ skin. This helped it take a large part of Japanese market. This time the quality conquered the Chinese customers again. From 2010 till now Kao’s sale go up like a rocket. Its market share triple from 2010 to 2015, and trend seems will not stop in a while.

Another Japanese Producer Unicharm, which is the leading diaper producer in Japan also have a steady growth another important fact is that Unicharm have owned distributors in more than 1500 cities in China the number was less than 500 in 2010.

Another interesting fact is the loss of sales of Pampers is not only from the Diaper produced in China. In fact the diaper import from Japan to China is growing crazily. This even causes a shortage of diaper in Japan of special brand. In fact, the sale of Merries also improves greatly in Japan. However most of the sales growth attributed to the customers in China.

Pampers is suffering a hard time with constant sales loss.  From the peak(near 45 percent) to now about 36 percent of market share. Especially in the area of high end-diaper which is taking a bigger and bigger market share. Pampers has a weak performance with its Japanese Competitors.

 Marketing Plan

The whole plan is divided into 4 parts and in every part, it will make an analysis of its point based on the traditional 4P’s theory, and then transfer it to our recommendation which is based on the new 4C’s theory

Part 1: Product vs Customer

The biggest mistake that P&G made is that it targeted the wrong consumer group. The old Pampers were made in China, had good but not top quality, and targeted on moms in general. They thought that all moms would buy Pampers for their children because it’s a big brand and they made good products. However, they were stuck in between the middle-class and lower-class market. The middle-class consumers want to get the best for their children. They want the top quality product and they deeply aware that the “made in China” label equals inferior goods. So they turn to the import diapers like Kao’s from Japan. Old Pampers clearly didn’t match their needs. Also, the lower-class consumers are mostly price-sensitive people, price is their first concern. In this market, there are already many local Chinese Brands there. The diapers they produce seems no difference to P&G and other big brands’ diapers in the lower-class’s eyes. So they went for the cheap Chinese diapers, P&G failed to grab this market as well. It turn out that it got stuck in between the middle-class and lower-class. So now, our suggestion for the new premium diaper’s positioning is that it should focus on the new middle-class ladies, who are willing to pay for their children,to get the best for them and favor foreign brands. First because of the popularity of diapers usage differs a lot from middle-class family to lower-class family. Among middle-class families who live in the big cities in China, statistics shows that more than 80% of them would buy diapers for their children. However, as for the lower-class people who live in rural areas of China, the diaper usage rate is lower than 15%. Despite as many as 78% of the total population in China are lower-class while about 20% are middle-class, the diaper market in lower-class is still really small. Moreover the lower-class consumers are the consumer group with the least purchase power. With all the cheap local Chinese brands competing there, that is really a small but fierce market. The effort of striving into this market far outweigh the output it may get in the end. So for a international big brand like P&G, with its new premium diapers, should totally focus on the middle-class market. As for the lower-class people, a small group of them may turn into middle-class in the future. Although now they are not so important, for the long term benefit of the company, we should still advertise on them so that P&G pampers diaper would become their first choice when they become middle-class. Here the emphasis should be put on the P&G brand instead of just the product itself. Because when they start to change the level of everything they buy, what goes in their mind first would be a big brand of many products instead of single dispersed products. Brand strategy is much better than product promotion here in order to get in their mind.

Part 2: Price vs Cost

Although we used to think that the customers of China more concerned about price, however as the economic developed and the income grows, we find that when it comes to children,the parents seems like does not mind the price, instead what they actually mind is the cost. That’s to say, they want to the product worth the price.

As you can see from the chart, the sales of diapers grows as the captia GDP grows and the speed is much faster than the capita gross domestic production, especially in 2013 and 2014.

Actually,from 2009 to 2014, the sales of diapers in China grew from 10 billion to 30 billion, that’s nearly tripled, while the captia GDP grew from 30000 yuan to about 40000 yuan, also much more faster than the income. In this way it shows that the parents is willing  to invest and pay more on their kids.

Also, we think that the social structure of modern China have influence on this. Due to the family planning and the fertility desire decline,there are fewer number of child for per family; thus the average resource of per kids have increase.That enables them to invest and pay more on their children. In this way, the parents are more willing to buy something with higher quality; they not only concentrate on the price but also the cost.

As all we was concerned above, we suggest that the Pampers may focus on the the middle-high level market. The middle-high level markets focus on those customers who want their babies live in high quality, just like Japanese brand Kao which grew rapidly and become one of the Pampers’ competitors  in recent year. To achieve this, the Pampers may need to emphasize the new products and its quality such as 100% chemical additive free and can prevent skin disease like miliaria in the advertisements. And the price should be higher than the average 1.5 yuan per piece and be located at around 2 yuan per piece; higher than the locally produce Kao, but lower than the Japanese Kao which is around 3 Yuan.

Part 3: Promotion vs Communication

Official website’s slogan: Care, Sleep well, Play freely. We care mothers from pregnant to raising children.

Creativity (some attributes different from other brand)

1, Ultrathin, dry and comfortable.

2, Cartoon sponsor “little elephant named pamper” which makes the diaper more cute.

3, Babies can wear the diaper all the night and mothers don’t need to change another diaper for babies.

4, Create a growth club for new babies’ mother to join in. And to provide specialist to answer questions about children’s care.

Marketing activities in China

1, In June 10th 2007, the carnival “growth journey of Pampers” was launched. This activity mainly conveyed the awareness of better infant care to mothers’ group.

2, In August 2007, Pampers support a disaster area to reconstruct its living area and devoted 114 thousand dollars to them.

3, In April 2010, Pampers broke a Guinness Record. The officials of Pampers collected 105196 pieces of baby’s sleeping photos. Then they combined these photos to create a worlds’ biggest mosaic picture which was 33 meters long and 20 meters wide.

Pampers use activities to appeal to customers’ eyes to bring the awareness to customers. So what about other company like KAO.

What’s KAO had done that’s different from Pampers? In other words, in terms of selling what’s the biggest characteristic of KAO?

Actually, KAO did little in advertisements and promotions. KAO concentrates in improving the quality of the diaper. In 2014, in terms of one piece of diaper, the price of KAO is 30% higher than Pampers.

Secondly, there are two kinds of KAO’s diaper in Chinese market. The first one is the diaper invented in China by Chinese local factory. The second one is invented by Japanese local factory. However, the quality of the former one is no worse than the latter one. But the customers did many to distinguish two products. Because Japanese factory is well-known for its precision and high quality.

One thing KAO did was to corporate with the biggest Chinese E-commerce online shop-TMALL. In Oct 13th 2015, KAO signed an agreement with TMALL. In this agreement, KAO admitted to sell its diapers which were invented by Japanese local factory. This activity was highly welcomed by many Chinese mothers’ group. Because they won’t worry about buying the fake product.

This case indicates the importance of selling channel. The appropriate selling channel can truly decrease the customers’ cost of buying the fake products and also increase sales.

What to do to react to market share lost and sales lost in the aspect of promotion and communication.

As indicated in the former part of this marketing plan, Pampers also build its own Japanese local factory. After pampers released a new Japanese brand diaper, Pampers also did some promotion activities to advertise its new product and new factory.

Pampers’ factory in Japan invited a well-known star who is also a new baby’s mother to visit its factory. They experienced the quality and technology of new pampers’ products. After that the star said “I have never thought that a simple diaper is produced by a so high-precise machine.” And they also did some experiments to test the quality of the diaper.

This case tells us that Pamper wants to communicate with mothers’ group and want to show that Pampers also has the ability to produce the high quality product like KAO. The workers, machines and philosophy of high quality can also be used by Pampers.

Suggestions are as followed:

1. Improving the policy of returning goods.

Especially in China, P&G hold a narrow and strict policy to customers in returning goods. Companies like Apple and Samsung, scandals about unfair policy both broke out in Chinese market. Then the scandals were widely propagated by official press which hurt the companies greatly. P&G also hold the same policy to treat Chinese consumers. This is why? Firstly, the education level of Chinese customers is not so high. That is to say, if Pampers hold the same policy of returning goods as in America, Pampers would suffer a lot by vexatious customers. Secondly, the regulation and law in Chinese market is not so perfect, so some well-meaning policies has the opposite effects.

So what could Pampers do after improving the policy of returning goods. As was indicated in the former part of the marketing plan, new Pampers targets in middle and higher social class population. So if Pampers targets the right group, there will be less case about abusing the well-meaning policy. Secondly, Pampers could apply the improved policy of returning goods in official stores which are built in big cities where the education level of people is higher. Also this is somewhat like policy discrimination, but this is more suitable for improved policy of returning goods.

The improved policy of returning goods could be like…If customers don’t satisfy with the products after using it. Customers can return the rest of the products and get the whole money back. Plus customers who do so should write the complaint in a paper. This can give more ideas to Pampers to improve.

2. Giving out free products for customers to try.

Customers can try the products first and then decide whether to buy it. For example, customers who have bought the products online might have traces and information on the internet. Pampers can collect the information and then use expressage to give free diapers for customers to try. So customers who have tried it will have more chances to buy it again. Higher consumption means higher sales (Gourville and Soman).

There are many potential customers in China. Most of them even don’t know the brand Pampers. So if they can get the free high quality diapers, they will pay more attention to this brand in the stores and then buy it again.

Especially in big cities, middle class people don’t have time for searching information about this kind of product. The cost of time is even more important than money for middle and higher class people. So Pampers can do the rest of thing. Pamper can let you try and teach you how to care babies. This can really satisfy this group of people.

Part 4: Place vs Convenience

Now that we have declared our plan about product’s price, target and promotion, and next, let’s see the channel that P&G should choose for its new product. How should the new pampers diaper be sold?

For now, P&G in China takes mainly three channels to sell its product. Firstly there are two traditional channels: distribution/wholesale and the retailer like Walmart and Carrefour to which P&G provide a direct supply. These two channels have served P&G for a long time, but we think they both are not good choice for the new product, and here are our analysis. Take distributors as an example, when P&G first entered Chinese market, it was viewed as a high-level brand, because it was an American brand. So many distributors loved to purchase its product and in some way, they help P&G to open the Chinese market. Nevertheless, after all these years, P&G has already lost its freshness, and distributors concerned more about their profit now. Unfortunately, P&G is quite strict with its price. For example, the price for one pack of diaper in the Chinese market usually is no more than 2 dollars, but the price P&G give to the distributors is 1.9 while other producer offer a 1.5. So it’s obvious that distributors would prefer to selling another brand’s product, but they have to sell Pampers diapers, because they have contract with P&G. So these distributors just put Pampers diaper on the shelf which is in the corner. This behavior caused a certain degree of decrease in Pampers diaper’s sale, and P&G is very annoyed with that, so, in the beginning of this year, P&G cut half of its distributors in China, which was viewed as a reform in its distribution system. And it would be very unwise to handle the new product to distributors at this time. As for its retailers like Walmart, unlike distributors, they still hold a good corporation relationship with P&G’s in China, however, considering the saturation in retail market these years, it’s hard for P&G to make any breakthrough. For the retailers it is getting hard to make money because in China, the amount of supermarket and big retailer is rising sharply. Just in one cross road there might be 4 to 5 big supermarkets. So it is also not proper to sell it through retailers.

Until now these two channels mentioned are based on the 4P’s theory how to transfer the product from producer to customers, but it seems not really effective now, so why not figure out just making it easier for customer to buy the product. There comes the third channel of P&G, e-commerce, through the online store. Now P&G does have its online store in Tmall, which is the biggest online shopping platform in China, so it’s not difficult for P&G to sell the new Pampers diapers through internet. However, after research, in order to make full use of the advantage of new product, it should only sell it online, which means customers cannot buy it in Walmart or other physical store. The reason for this decision is due to the Chinese’s character. In china, people who go to the supermarket are usually looking for a bargain, so even P&G also put the new product in traditional supermarket, the customers may still choose the cheaper type or other brand. And for people who go through Internet they are seeking for something different, so when customers find this product is only available online, they would think it may be really different from Pampers diapers before, let alone there is label like “made in Japan” in the product. No doubt this would attract their attention and they are the customer group that P&G should target now. Another fact that should be mentioned is that there is not really a huge difference in quality between Pampers and Kao in same level product, so the key point is to make customers believe that Papers has its high level diapers now.

Besides, selling through online store has another advantage. It can reduce the intermediate link, like when P&G negotiate with those distributors, the price for customers is higher than the price P&G offer, and for physical stores, usually they have to take expensive rent, especially in busy street. And they would rise up the price to balance the rent. But selling through Internet can eliminate these costs because the product was transferred from P&G factory to customers. This can give P&G the ability to lower its price for customers. Considering the similar quality of Pampers and Kao, still customers would prefer the lower price for their products, so it become P&G’s advantage to compete with Kao

In total, selling the new Pampers diaper through Internet give P&G the advantage that other two channels cannot, and it avoid some current problems P&G has in its traditional channels. So it would be wise to choose E-commerce for the new product.

Summary

Although Pampers diapers  in China still take the most market share which is more than as twice as Kao does, it should not ignore the dangerous signal that customers in China has changed. Besides company like Kao is grabbing the wealthy level customers from Pampers, there are also so many Chinese local diapers companies are trying to attract customers in rural area by their low price, thus, Pampers has to make some changes to earn its customers back. It’s wise to launch this new product with high quality and attractive label, however, Pampers(P&G) should also take method to improve its sales system. Firstly, Retarget its customers from most of them to the part that can bring the most profit, and at the same time, also not to forget to seize the customers it already had,like keeping improve the lower level product may enhance its competitiveness towards Chinese local companies; Secondly, realizing the customers’ idea is not only for the lower price, some of them just want to give their children a better diapers even it could be expensive, thus, combining with the first one, make a proper price is also important for its selling; Thirdly, Pampers(P&G) should also improve its promotion way, from the one-sides persuasion to communicating with its customer,by taking distribution of free sample and looser return system, the customers would feel more comfortable to buy the new product; Finally, using a popular online channel rather than traditional distribution can make customers have a clear perception of its new product, and then enhance their interests in it.

By taking this plan, we wish to help P&G enhance the competitiveness of Pampers and gain an increase in its profit, but for most of all, to restore the confidence of Pampers in Chinese market.