Drypers Corporation Case Analysis
Background and Problem Definition: Drypers is manufacturer and marketer of premium and value priced disposable baby diapers. Drypers is contemplating invest an additional 10 million in advertising in order to increase their brand awareness, create value and increase market share. This 10 million is 33% increase in advertising and promotion budget of Drypers.
Market and Industry Analysis: Diapers market is worth $ 4.525 Billion. The user of these diapers is infants and children below age 4. Buyers are the parents. Market is saturated due to the trend of lower infants and diaper improvements. The grocery store accounted 51 % of the retail sales, the Drugstore accounted 9% of the retail sales and Mass merchants accounted 40% of the retail sales. The various market segments are Value price – 5%, Private label – 16%, Premium Price – 79%. Drypers is the 4th largest selling diapers brand. It is the second largest seller in grocery store. It is the exclusive private label supplier to Walmart. It has strong cash flow and sales growth. It has the prestigious licensing to use Sesame street characters. It lacks the national brand name recognition. It has less extensive national production and distribution capabilities. It doesn’t have any dedicated sales force in the US. It has low penetration in Mass Merchants and Drugstore distribution channel. It also got the “Gold Edision” award for being most innovative product. It also has the first movers advantage of germ – protection.
Evaluation of Alternative Courses of Action:
Alternative 1: Maintain the Current Position
Pros:
• Maintain the current market share
• Risk of $ 10 Million in advertising is avoided
• Expand distribution strength in grocery store by promotion driven sales
Cons:
• Does not solve the need of Drypers
• Not proactive
Alternative 2: Invest in 10 Millions National Television Advertising
Pros:
• Potential to reach wider audiences thereby increasing brand loyalty and awareness
• Brand
Market and Industry Analysis: Diapers market is worth $ 4.525 Billion. The user of these diapers is infants and children below age 4. Buyers are the parents. Market is saturated due to the trend of lower infants and diaper improvements. The grocery store accounted 51 % of the retail sales, the Drugstore accounted 9% of the retail sales and Mass merchants accounted 40% of the retail sales. The various market segments are Value price – 5%, Private label – 16%, Premium Price – 79%. Drypers is the 4th largest selling diapers brand. It is the second largest seller in grocery store. It is the exclusive private label supplier to Walmart. It has strong cash flow and sales growth. It has the prestigious licensing to use Sesame street characters. It lacks the national brand name recognition. It has less extensive national production and distribution capabilities. It doesn’t have any dedicated sales force in the US. It has low penetration in Mass Merchants and Drugstore distribution channel. It also got the “Gold Edision” award for being most innovative product. It also has the first movers advantage of germ – protection.
Evaluation of Alternative Courses of Action:
Alternative 1: Maintain the Current Position
Pros:
• Maintain the current market share
• Risk of $ 10 Million in advertising is avoided
• Expand distribution strength in grocery store by promotion driven sales
Cons:
• Does not solve the need of Drypers
• Not proactive
Alternative 2: Invest in 10 Millions National Television Advertising
Pros:
• Potential to reach wider audiences thereby increasing brand loyalty and awareness
• Brand