Disposable Diaper and Pampers :Role
of Innovation Strategy and Ecosystem
Management in making these two
items synonymous
The Disposable Diaper - a quintessential and ubiquitous
product - has had a tremendous ride along the innovation
ecosystem so far. This document evaluates this product’s
ecosystem evolution over three distinct eras – inception,
growth and competition, and future development from the
perspective of Procter & Gamble, which pioneered this
innovation. In all three eras, it highlights how it was critical
for all pieces of the ecosystem to align to bring this product
to the market successfully. It focuses on how managing this
ecosystem with a tight grip allowed one company – P&G
and one brand, Pampers to emerge as a the clear winner.
Kellie Ciafolo
Swetha Spicka
Shavonnne Howard
Ankur Desai
Saurabh Sharma
Macarena Harrera
Disposable Diapers and Pampers 2011
“No one likes change except babies in diapers.” - Barbara Johnson
“A human being should be able to change a diaper, plan an invasion, butcher a hog,
conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone,
comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a
new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die
gallantly. But definitely be able to change a diaper.” – Robert Heinlein, Science fiction writer
“Diaper backward spells repaid. Think about it.”- Marshall McMuhan, Canadian
communications theorist Educator, Writer and Social Reformer
“You have to change those diapers every day, I mean literally. When those directions on
the side of the Pampers box say, 'holds 6-12 pounds' they're not kidding!”- Comedian Jeff
Foxworthy commenting on the absorption capabilities of today’s diapers
Introduction
The use of some form of diaper to wrap children is as old as human history. Other than
food, water and clothing, it fulfills a fundamental need of human beings that is surpassed by
few other products. Does a need so universal mean that all you need to do is develop the
product and it will be an instant success? It would appear so but it is certainly not the case. The
disposable diaper – a quintessential innovation that is the solution to an age-old problem has
had a tremendous ride along the innovation ecosystem over its evolution in over 80 years.
Many players have tried to put the pieces together in this ecosystem and capture the enormous
market potential but only a couple of frontrunners have emerged and one has come out as the
winner – Procter & Gamble with its Pampers line of diapers. How did Procter & Gamble achieve
this competitive edge to become the dominant player, especially with a consumer/commodity
level product such as a diaper? The answer is hidden in how P&G managed the ecosystem
better than anyone else and how it has done so in a sustainable fashion that will perpetuate
into the future. These secrets behind P&G’s success are exposed through this analysis of the
evolution of the disposable diaper and Pampers ecosystem below.
History
As early as 1887, mothers began experimenting with different materials to create
diapers that are comfortable for their babies and prevent untimely leaks. Cotton was the
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Disposable Diapers and Pampers 2011
material of choice as it was readily available and was known to absorb better than other fabrics.
It was also the material of choice because it was easy to wash and durable. Soon mothers and
doctors began using Turkish toweling with an inner soft muslin layer. Also, the wide spread
commercialization of the safety pin that had been invented in 1849 lent ease of use for the
cloth diaper and added to its viability.
However, cloth diapers meant lack of air circulation, roughness when wet, transfer of
bleach from laundry to baby’s skin etc. that led to diaper rash and other infections. These
problems were hard to mitigate and hence difficult to commercialize with no added value when
compared to diapers that mothers could make on their own at home.
Throughout the early 1900’s, various inventions led to continued improvements. The
idea of using paper was first suggested in the 1940’s when Hugo Drangel of a Swedish paper
company suggested the idea of placing sheets of paper tissue inside the cloth diaper. This led
Valerie Hunter Gordon in the UK to develop the first 2-part system diaper – cellulose wadding
covered with cotton wool and outer plastic. This diaper called the “Paddi” had an adjustable
garment with press-stubs/snaps.
However, Valerie Hunter with her Paddi and similar efforts by other inventors including
Marion Donovan in the US and Hugo Drangel’s daughter in Sweden faced resistance from big
manufacturers as purchasing managers were mostly male. Many of them declared they would
never allow their “wives” to put paper on their children. Although the Paddi went on to be a
successful product for retailer, Robinsons of Chesterfield, for many years, its use did not spread
widely.
Only due to changes in socio economic structure of the 1950’s with more mothers
entering the work force as a result of the Second World War did the demand for disposable
diapers rise. This fundamental change in mothers wanting more freedom to enter the
workforce and travel caused the advent of big players such as Johnson and Johnson, Playtex,
and Parke Davis into the disposable diaper market. Not until 1956 did P&G make its arrival.
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The disposable diaper ecosystem evolution and P&G’s dominance
The story once P&G began researching the disposable diaper and how this company
developed its stronghold can be examined by dividing up the analysis into three distinct eras on
the time chart – Inception, Growth and Competition, and Future Development. In each of the
eras or stages, P&G faced challenging and transforming execution and adoption risks that
needed to be addressed. Below, these risks are elucidated and P&G’s efforts in mitigating these
risks by carefully leveraging co-innovations and developing an innovation strategy governed by
informed expectations are presented.
Inception (1960 to 1980)
●
●
●
"This one will fly.” - Victor
Mills on P-57, precursor
diaper to Pampers brand
●
●
●
After three years of research, Victor Mills, a chemical
engineer at P & G and his team conceptualized the disposable
diaper in 1959, which went on to become Pampers at launch in
1961. Although similar product research was occurring at Playtex,
Johnson and Johnson and other companies, P&G and Pampers
came out as the winner with over 80% market share within a decade of launch. Below is the
analysis of how P&G achieved this incredibly successful launch.
Execution Risk
In the early days of research and development of the disposable diaper and the launch
of Pampers, P&G faced challenging execution risks. But throughout this process the innovation
strategy was not driven by the need to ‘enter the market first’ but by the goal to bring a
product that will enjoy widespread popularity and adoption. These execution risks can be
grouped into product risks and manufacturing risks.
Product risks:
The development of the disposable diaper was not without risks for P&G. On one hand
it had considerable R&D budget and talented individuals to drive the innovation efforts. But on
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Disposable Diapers and Pampers 2011
the other hand, the end customers were highly demanding mothers who can be unyielding in
comfort and safety expectations for their children. Plus, all this had to be achieved while
keeping the price low for this consumer product to allow widespread adoption.
Faced by all these challenges, P&G managed this risk in two ways. First and foremost, it
listened to its end customers relentlessly. After experimenting and developing the product inhouse for five years, it finally presented its 3-layer (Exhibit 1) diaper to mothers in Peoria,
Illinois. But, mothers did not like the price tag of 10 cents apiece, when diaper services prices
ranged from 2 to 5 cents per unit, and laundering cloth diapers had a cost of 1-2 cents. Also,
offering the diapers at 10 cents per unit would only reinforce the idea that disposable diapers
were specialty items for high income customers, which was prevalent at the time. This was
against the goals set by P&G to make the disposable diaper a true consumer product. P&G had
to develop a product of high quality at a much lower cost and they went back to the drawing
board.
After 5 more years of diligence, P&G’s engineers developed a sophisticated machine
that took rayon, wadding, polyethylene and other materials to cut, shred and fold the materials
into finished Pampers at incredible rate of productivity – 400 diapers per minute! At that
production rate, P&G was able to offer the disposable diaper at a much lower price of 5.5 cents
per unit. Customer testing after 10 years of development was done in California to very positive
reviews. By the end of 1969, the product was available throughout the United States of
America.
Instead of being holed up in R&D centers in Cincinnati and wasting effort in making a
product that would not meet customer demands in the end, P&G engineers worked closely
with the end customer throughout the development process to ensure customer demands
drove the direction of the product. This helped mitigate information gaps that can be critical to
successful execution of any innovation effort.
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Disposable Diapers and Pampers 2011
Manufacturing Risks:
With a goal to sell the Pampers product nationwide and establish it as the leader in the
market place, P&G had to ensure that it maintained its cost advantages while manufacturing
the product in large volumes. Also, these economies of scale had to be attained immediately,
not over time as is generally the case.
The strategic acquisition of Charmin Paper Company in 1957 set up P&G with incredible
advantages on this front. By utilizing existing Charmin factories and a workforce already skilled
in handling similar materials to make Pampers in large volumes alongside tissue paper at the
Charmin mill in Mehoopany, PA, P&G was able to put in place a manufacturing process that
would lend economies of scale that this product launch demanded.
Hence, they were able to offer a superior product at an affordable price for its
customers.
Co-innovation in parallel with other industries
Throughout the research and development that went into designing the diaper, P&G
engineers worked closely with mothers to ensure satisfaction. When a test group in Dallas
complained that the babies were uncomfortable in 90 degree weather, the engineers went
back to design a diaper with better features such as zee pleats, superior containment,
hydrophobic top sheet and a plastic back sheet. At the time of launch, the Pampers diaper was
made of three parts: an inner liner of smooth nonwoven rayon that’s designed to enable
moisture flow one way, a middle pad of fibers, and an outer water proof sheet of Polyethylene.
Fluff pulp, Rayon and Polyethylene:
Each of these materials was adopted ingeniously from innovations in other industries.
P&G engineers replaced paper with fluff pulp in the middle pad to improve the performance
tremendously. Fluff pulp originated in the paper industry when the Kraft process was invented
in the advent of the 20th century to process wood pulp. Consisting of long cellulose fibers that
provide a strong capillary effect, Fluff pulp draws in the liquid and the surface tension binds the
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Disposable Diapers and Pampers 2011
water once it has been absorbed. Most importantly, it could absorb liquid up to 20 times its
weight increasing the capacity of the diaper, from 100 ml up to 400 ml. This represents a big
leap ahead for the disposable diaper, from being a one-time use product to a product that
could now perform for more than 3 hours at a time.
Polyethylene, a product of the chemical industry and widely used in consumer product
industry was a natural choice for the back sheet. Elasticized fabric, adopted from the rubber
and tire industry, was used in single and double gussets around the leg and waist areas that
aided in fitting and in containing urine or stool which has not been absorbed.
What also really set apart the Pampers diaper from any other diaper ever before was
the use of another innovation from the field of non-woven material science - Rayon. Rayon was
widely used in the textile industry as it was able to imitate the feel and texture of silk, wool,
cotton and linen despite being a semi-synthetic material. Rayon fabrics were soft, smooth, cool,
comfortable, and highly absorbent, but they did not insulate body heat, making them ideal for
use in hot and humid climates. By carrying over this innovative product from the textile industry
and employing it in the inner liner which is closest to the baby’s skin, P&G was able to give
Pampers a soft feel that was unexpected from a disposable diaper.
Other co-innovation needs
Apart from ensuring that the disposable diaper innovation went hand in hand with
advances in material and non-woven science and other industries, P&G’s pampers required
parallel co-innovation in a couple of other areas but the risks were not too high. Waste
management was an area where co-innovation could have been necessary. If proper disposal
channels were not available, the disposable diaper would never have been used widely.
Disposal had to be seamless and hassle free for mothers to switch over from cloth. P&G worked
closely with government and regulatory organizations to make its case that the disposable
diaper fell into the category of Municipal Solid Waste (MSW), as they are a household waste
product that doesn't have special regulations (they are not hazardous). Since most household
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Disposable Diapers and Pampers 2011
waste ended up in the incinerator, which was suitable for the disposable diaper and no further
co-innovation was required. This ensured that mothers could dispose the diaper just as any
other garbage and did not need to make any other special arrangements.
Adoption Risk
The initial adoption of the Pampers diaper was also wrought with challenges. This risk
was mainly on two fronts – customers and channel. P&G conquered both these risks because
they anticipated these risks, realized the importance of mitigating these risks quickly and
decisively, and believed in the quality of their product to bring them through.
Customers:
Disposable diapers were a completely different approach in serving the needs of
mothers and their babies. Establishing disposable diapers as the “new” solution for those needs
required a huge change in consumer understanding of the value, if any, that the disposable
diaper offers. It was up to P&G to change the prevailing perception at the time that diapers
were ‘for travel’ and that traditional laundering services were still the right approach when you
are not traveling.
P&G’s marketing machine went into a full gear onslaught on cloth diapers,
concentrating its energies in highlighting benefits of the disposable diapers such as convenience
and added health benefits such as eliminating sanitary problems associated with using and reusing cloth diapers, diaper rash etc. All means of communication with women was used to
educate women on these benefits.
In another ingenious move, P&G marketed to product with an aim to bring women from
all walks of life on board, not just working women. While working women would become early
adopters, the goal was to ensure widespread adoption. It distributed free samples to women in
children’s playgrounds, demonstrated the product in supermarkets and went door to door in
suburban America.
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Disposable Diapers and Pampers 2011
All this helped quick adoption and for habits to be formed before even marginal
negative reviews could discourage the highly sensitive customer segment of mothers.
Channel:
Both P&G and industry observers had high expectations for Pampers’ success given the
competitive pricing enabled by diaper production innovation discussed above. To ensure quick
and widespread adoption, its diapers had to be first and foremost available to customers
nationwide in a hassle free manner.
However, the low margins on diapers like other consumer packaged goods caused
retailers to be concerned with the risk of low inventory turnover. Also, Pampers was a bulky
product which would require considerable shelf space, space that retailers are very nitpicky
about. Many retailers did not know which product category to place Pampers in and it
sometimes even ended up in the drug aisle.
P&G relied on its well established retail relationships and customer research to convince
the channel to carry its diapers. Data from Pampers’ first test market in Peoria, Illinois
combined with the sheer potential size of the disposable diaper market helped ease retailers’
concerns. P&G further responded to this adoption chain risk with discounts to retailers to
incentivize extensive stocking of pampers. At the same time, it invested heavily in advertising
campaigns, coupons, and promotions to further develop the market and ensure high inventory
turnover.
In case of both the adoption risks, it can be inferred that P&G knew that these risks
existed but also that it had the ability to mitigate these risks. Both these factors were important
to ensure a successful launch.
Informed Expectations driving innovation strategy
In-spite of all the right steps that P&G adopted in conducting the innovation of the
disposable diaper and eliminating the execution, adoption and co-innovation risks, none of this
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Disposable Diapers and Pampers 2011
would have proven to be fruitful had this strategy not been backed by clear expectations of and
from the product.
As discussed above, at every step P&G ensured that it was aware of the customers pulse
and that its innovation was responding to their demands. But more importantly, P&G invested
in over ten years of R&D in the product because it was first and foremost clear that there was
tremendous potential from this product in the market place. With over 9 million babies in
diapers in the 1950’s, each getting his diaper changed 8 times a day, 56 times a week, this
translated into roughly 25 billion diaper changes a year. At a cost of 6 cents a year, this bill
comes to $1.5 billion a year. Plus the second wave of women’s liberation movements was
trending across the United States and more and more women were joining the work force.
Backed by this knowledge, P&G set its expectations of the disposable diaper and then aligned
these expectations with executing an innovation strategy that would bring the right product
into the hands of the customer at the right time as described above.
Exhibits 2 and 3 present diagrammatic representation of the above ecosystem
innovation analysis and the ecosystem map that prevailed during this era.
Growth and competition (1980 to 2000)
The explosion of demand in the 70’s for the disposable diaper continued into the 80’s.
But, the nature of the game had changed for P&G, from R&D of a brand new innovation to
constant improvements needed to both meet rising customer expectations as well as maintain
competitive edge.
Execution Risk
P&G’s success hadn’t gone unnoticed. Competition rose to unprecedented levels with
Kimberly Clark emerging as a clear threat out of over 20 companies that ventured into
disposable diapers at this time. Kimberly Clark developed its own disposable diaper using
different materials and absorbent technology. ‘Kimbies’ boasted of better shape and premium
quality and attracted customers with a higher willingness to pay. Scott was the first company to
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Disposable Diapers and Pampers 2011
introduce snaps instead of pins. Innovations ranged from elastic leg bands to reusable tabs,
softer touch, better fit, using baking soda to improve absorbency and so on. P&G’s greatest
challenge was to continue to maintain its leadership and innovate without losing market share
against this competitive barrage.
At this time, P&G uncharacteristically stumbled. It failed to understand that the
willingness to pay was increasing amongst the baby boomer population and that customers
were migrating to the premium end, where Kimberly Clark was positioning itself with its
Huggies brand. Instead of focusing on this migration, P&G introduced a two-brand strategy –
Luvs as the higher priced premium diaper, and Pampers as the lower priced diaper. P&G’s
brand managers did not realize that “premium” features were in fact becoming generic.
Huggies contained all the best features and was priced to compete with Pampers making it an
easy choice for parents. Huggies had replaced Pampers as America’s leading disposable diaper.
In order to recover, P&G came through with some revolutionary innovations. It quickly
restructured its innovation and product strategy on informed expectations of the customers. In
other words, it went back to its roots embodied in its slogan “Inspired by babies”. Capacity and
dryness were the top requirements and P&G focused its efforts on improving these features.
They achieved these qualities through a well-managed co-innovation strategy.
Co-innovation strategy
P&G embraced thoroughly the importance of innovation that was occurring in parallel
industries such as non-woven material science, petrochemical industry and even the agriculture
industry. Their ingenuity was not in organic research and development of every material that
goes into the diaper but more in bringing together the right components based on progress in
other industries. The innovation of the diaper proceeded along with inventions of new
materials and progress in parallel industries such as feminine hygiene products.
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Disposable Diapers and Pampers 2011
Super Absorbent Polymers (SAP):
Pampers introduced the first thin diaper made with absorbent gelling material. Crystals
of polyacrylate (also called Waterlock) were dispersed in the absorbent pad made of fluff pulp.
This polyacrylate, with large number of polymeric chains cross linked within, provided water
absorption greater than 400 times its weight. Also, most importantly, the material did not
release liquid water the way that fiber based absorbents do. Instead, the water gets trapped in
the fluff pulp and does not escape from the matrix when the baby sits down or moves around
causing shear on the diaper.
The SAP (super absorbent polymer) came into a Pampers diaper through an unusual
path. The origins of super absorbent polymer chemistry trace back to the early 1960s when the
U.S. Department of Agriculture started conducting work on materials to improve water
conservation in soils. P&G acquired this technical know-how from the USDA to further develop
the basic technology and incorporate it into its 3–layer diaper. Even before soil amendment
applications came into market as was the intention behind the polymer, the Pampers diaper,
added the material to the absorbent core.
Adopting the SAP material required further refinement. Many different schemes for
mixing fluff and superabsorbent polymer were investigated in order to find optimum diaper
performance. Methods to delay superabsorbent swelling in the core of the diaper were
developed so that this delayed wetting will provide more time to distribute liquid through the
diaper. Premium diapers with leakage below 2% became a reality at last. The average weight of
a typical medium size diaper was reduced by 50%.
Now with SAP, a new generation of high performance diapers was possible. As mothers
continued to adopt the disposable diaper and its usage penetration increased for 25% in the
1970’s to 77% in the 1990’s, P&G was ready to meet their new demands. Mothers wanted
diapers to hold liquid longer while keeping the baby’s bottom dry. The Pampers brand was
rejuvenated by the introduction of the Pampers Ultra in 1986.
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Spandex and Polypropylene:
This co-innovation strategy continued to work as P&G adopted Lycra® (also known with
the generic name Spandex) into making the cuffs for the waist and the legs, the lateral side
panels and in tape construction. Spandex could stretch as much as 400% of its original length
before it breaks and was the perfect material to adopt for the new thin diaper. With new
generations of softer and stronger elastic materials continuously being developed by the
Elastomeric industry led by 3M and Lycra, P&G could continue to benefit by adopting this
material.
P&G brought in Polypropylene to replace Polyethylene for the back sheet from the
chemical industry. Two American chemists working for Phillips Petroleum of the Netherlands,
Paul Hogan and Robert Banks, invented the material in 1950’s. Polypropylene is similar to its
ancestor, polyethylene, and shares polyethylene's low cost, but it is much more robust and can
be blow molded. More importantly, it provides a cloth like look and a softer and natural feel
that mothers demanded. It provided the aesthetic look to alleviate mother’s fears of nonnatural materials coming in touch with their babies.
Overall, Pampers made tremendous leaps ahead of the market through this coinnovation strategy. The quality was so remarkable that even NASA turned to this technology in
developing the Maximum Absorbency Garment used by astronauts during long space walks!
Adoption Risk
Pampers grew to become P&G’s biggest global brand, with products serving consumers
in 98 countries. But this growth stage presented P&G other new challenges to overcome to
achieve the widespread adoption.
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Resistance from doctors:
Before the advent of SAP material into diapers, doctors became wary of the bulk of the
absorbent diaper and its effects on the babies developing bones. To mitigate the risk of parents
abandoning its diapers due to this concern, P&G came out with the Luvs brand in 1975,
modifying the old ‘rectangular shape’ to a more modern ‘hourglass shape’. Kimberly Clark
launched Huggies in 1976 in response with the same hour glass shape. This assuaged the
doctors regarding diapers causing any adverse effects.
Doctors continued to debate about how disposable diapers are delaying toilet training
for young children. Family psychologist John Rosemond claimed that it was a "slap to the
intelligence of a human being that one would allow baby to continue soiling and wetting
himself past age two. Pediatrician T. Berry Brazelton, countered saying that ‘toilet training is the
child's choice”. P&G took its step in this debate by designing “training pants” which bridge the
gap between bay diapers and normal underwear during the toilet training process. It enlisted
Dr. Braselton to appear in various commercials for Pampers Size 6, a diaper for older children,
where he announced that enforced toilet training can cause serious long term problems, and
that it is the child's decision when to stop wearing diapers, not the parents.
At the same time, P&G and Pampers have long engaged with parents on best practices
to toilet train a child and provided many resources to parents to encourage early training. This
has only helped to establish Pampers as a caring brand while allowing for incredible carryover
products as seen below.
Channel problems:
As competition in the diaper market grew, promotional activities and retailer incentive
programs increased in intensity to drive short-term sales gains. The promotional activity was so
aggressive that P&G estimated that only 50% of their promotional spending reached customers
to the benefit of retailers. By the end of the 1980s, promotional spending had reached $1.6
billion for P&G with the cost of trade promotions exceeding customer promotions. In the early
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1990’s, P&G noticed that varying prices from store to store because of special and varying
promotions to retailers was causing customers to either pay an inflated price or to hunt around
for a shop where the product was on special offer. P&G felt that it was eroding customer brand
loyalties and decided to replace its fluctuations with everyday low prices upsetting many
retailers who went towards generic brands.
To improve channel relationships and reduce costs along the value chain P&G
introduced CRP (continuous replenishment) in 1988. CRP allowed P&G to offer retailers
reduced inventory, fewer stockouts, increased sales, and saved labor costs. Importantly, the
promise of improved inventory management opened retailers to consider carrying additional
P&G SKUs. By 1994, 26% of P&G sales volume from 47 channel customers was ordered through
CRP. This allowed P&G to continue to offer consistent prices for customers.
Exhibits 4 and 5 present diagrammatic representation of the above ecosystem
innovation analysis and the ecosystem map that prevailed during this era.
Innovation strategy that led to incredible carryover
Throughout this growth period P&G continued to capture
the pulse of its core customers, mothers. Funneling this deep
understanding into its innovation strategy, P&G was able to
generate incredible carryover products that brought customers
from one product to another without customers having to spend
valuable time searching for options as their babies grew. The
●
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“I didn't want to be
so shortsighted as to be
worrying about diaper rash,
and not taking care of
bigger things, like nuclear
war.” Barbara Donachy
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●
power of this carryover is another critical element that sustained P&G’s leadership throughout
the years and established is as a natural choice for mothers all around the world. Here is a look
at carryover potential of the Pampers diaper.
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Carryover based on size:
The ingenuity lies in the evolution of the Pampers product line. From the original launch
of Pampers which was a basic diaper that came in two sizes, the Pampers product line grew to
be multifarious. As more and more mothers adopted the disposable diaper, Pampers expanded
its products in multiple directions.
The number one carryover has come through size. Pampers introduced the Swaddlers
diaper specifically focusing on new born babies. At a higher price apiece, the Swaddler presents
superior comfort, uses gentle and hypoallergenic materials with a touch of aloe, adds
breathability and comes with a color-changing wetness indicator. What really differentiated the
product was the umbilical cord notch that helped mothers to protect the baby’s umbilical cord
area without the diaper rubbing on the area. Pampers also introduced the Premie diaper for
the comfort of premature babies. So, now mothers were introduced to the Swaddler brand
from day one. By ensuring incredible product performance in the first ten to twelve days of a
newborns life, P&G won over mother’s loyalty towards Pampers presumably forever.
Now, all that was needed was to facilitate right size diapers with good quality as the
baby grows to ensure that customers carried over throughout the years when they made diaper
purchases. Pampers offered 7 different sizes depending on the weight of the baby and the
activities it was capable of at each stage. After Swaddlers for newborns, moms could carry over
to Swaddlers up to size 2 or up to 4 months of infant life. Mothers could then switch to Cruisers
from size 3 to 6, which enabled the baby to move around without discomfort as its mobility
increased. A size 7 was available in the cruiser line for more cherubic babies. Once the baby was
ready for toilet training, mothers could now carryover to the training pants line under the name
Easy-ups. Easy ups could be used until the child was toilet trained. For children who were prone
to bedwetting, Pampers offered Underjams for night use.
Through all the sizes, P&G ensured that it was well informed of the expectations that
each stage brought with it. Features such as hypoallergenic material for Swaddlers, active fit for
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cruisers, flexible pleats for pull-ups ensured customer satisfaction to carryover through the
stages. There was no reason for customers to spend valuable time considering switching to a
different brand and instead focus their time elsewhere.
Carryover through ancillary products:
Apart from diapers, another natural yet ingenious move was into the ancillary products.
When P&G noticed that mothers were increasingly worried about how to clean the babies
during diaper changes, it introduced the baby wipes which went on to become a big revenue
generator for P&G. They also introduced disposable swim pants sold under the brand name
Splashers.
The carryover effect as explained above built incredible brand loyalty amongst mothers
for Pampers. It enabled highly successful marketing efforts and campaigns. Pampers diapers
were introduced to women as early as during college days and free samples were given out in
hospitals during prenatal visits and women’s health resource centers during labor and birthing
classes. The strategy to hook the parent early and successfully carryover the customer
throughout the lifecycle of diaper use is the masterstroke that has sustained P&G’s leadership
and dominance in this highly competitive growth stage.
Future Development (2000 onward)
Pampers entered the 21st century as the most successful P&G brand of all time with 4 B
dollars in revenue. The early years saw introductions such as Pampers Premium segments and
softer baby wipes. But, macroeconomic changes around the world during these years have
been and will continue to be the defining elements in this innovation ecosystem. Here we
analyze how P&G has faced these challenges in a new era and what it can do to continue to
maintain its dominance.
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Execution Risks
The turn of the century was marked by two factors that affected the disposable diaper –
globalization and heightened environmental consciousness.
Product and marketing risks driven by globalization
●
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“Our cheaper diaper had a more
plasticky feel. It took us awhile to
figure out that softness was just as
important to moms in a developing
market.” - Kelly Anchrum, Director of
global baby care, external relations,
and sustainability at P&G
●
●
●
As free trade across the world grew and
countries in the emerging markets began to benefit
through their comparative advantages in skilled labor,
manufacturing abilities, natural resources etc., per
capita
income
and
living
standards
of
huge
populations increased tremendously. This increased
affordability meant that parents could now invest
more in ensuring comfort for their children and
convenience for themselves. The potential for disposable diapers was not lost on companies
like P&G.
But, entry into these unknown areas carried unexpected marketing risks. P&G did not
have to persuade parents that its diapers were the best; instead it had to persuade them that
they needed diapers at all. The disposable diaper, a commodity in the west, was just not part of
the cultural norm in emerging markets such as India, China, Brazil etc. Parents felt that it was
not right to use the disposable diaper just for their own convenience. To mitigate this risk, P&G
used its marketing clout and budget to educate consumers that using diapers was not about
parent’s convenience but about the baby’s cognitive development through its ability to
concentrate and get a restful sleep.
In terms of product risk in these markets, when P&G first launched Pampers in China in
1998, the effort flopped. Instead of developing a unique product for the market, P&G made a
lower-quality version of U.S. and European diapers, wrongly assuming that parents would buy
them if they were cheap enough.
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Disposable Diapers and Pampers 2011
To overcome this execution flaw, P&G used the concept of reverse engineering to relaunch the Pampers diaper in China. Instead of stripping down the diaper sold in the western
world to create a cheaper product, P&G concentrated on lower-price diaper line without all the
bells and whistles while preserving the core features of dryness and comfort. It also invested in
developing more efficient technology platforms and moved manufacturing operations to China
to eliminate shipping costs.
Through creatively managing the above execution risks, P&G was able to bring a
revamped diaper to the China market selling for the equivalent of 10 cents in local currency.
This helped P&G to become the number one brand in China and it continues to grow as
adoption of the product rises.
Adoption Risk
●
●
●
“The
difficulties
of
raising a baby are enough
without the added pressure of
being
told
you
are
environmentally unfriendly. We
just have to pick and choose
when and where to do our bit."
–
K.
Moore,
Parent,
Southampton, England
●
●
●
In the 21st century, P&G faces a new challenge as
people become more environmentally aware and realize
the amount of waste that is generated by disposable
diapers every year. 80% of diapering is done with
disposables in the US and western markets. That comes
to over 18 Billion diapers in a year adding up to 82,000
tons of plastic and 1.3 million tons of wood pulp.
Consequently, disposable diapers have been highly
criticized because of their negative environmental
impact and parents are being encouraged to return to reusable cloth diapers. Several states
have proposed taxing disposable diapers to limit their use. Manufacturers of cloth diapers are
gaining market share as the debate on green footprint of disposable vs. cloth diapers rages on.
P&G has invested hundreds of millions of dollars on advertising specifically to customers
that appreciate the convenience of disposable diapers. However, one of its greatest risks is
whether these consumers will continue to value the convenience of disposable diapers, or if
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Disposable Diapers and Pampers 2011
they will eventually be convinced that the damage to the environment is more important. Much
of P&G’s efforts in the recent years have focused on addressing this specific issue.
P&G turned to consulting and research firms to prove that disposable diapers were not
as evil compared to cloth diapers as they were made out to be. Research conducted by Arthur
D. Little, Inc. and commissioned by P&G concluded that laundering a cloth diaper over the
course of its lifetime consumes up to six times the water used to manufacture a single-use
diaper. That water consumption, P&G reiterated was comparable in impact to the waste
produced by disposables. While these research and marketing efforts did not negate the debate
entirely, it did manage to dissipate the major fears in the minds of parents regarding the
environmental impact of their choice to use a disposable diaper.
Channel:
The emergence of e-commerce only further stirred tensions between diaper
manufacturers and retailers. In 2000, Pampers launched the Pampers Institute, an online
community targeting mothers that offered coupons, free samples, and baby care tips. Most
importantly, the Pampers Institute represented the first time that P&G sold diapers directly to
consumers. P&G’s then chief executive Bob McDonald “I don’t feel the need to have every sale
go through a retailer…We want to maximize our sales through retailers but we also want to be
where the consumer wants to shop.” Pampers eStore offered P&G a new distribution channel
and gave them the opportunity received direct detailed information on customer buying habits
and trends.
Continued innovation and co-innovation
Driven by the above adoption risks, P&G has concentrated its innovation efforts on
reducing the green print of the disposable diaper. It has sought to use cellulose from wood
supplied from well-managed forests in North America. These trees are harvested as a crop, like
cotton, in accordance with local environmental and legislative requirements. Suppliers were
encouraged to eliminate the use of elemental chlorine-free processes that do not result in the
formation of any toxins.
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Disposable Diapers and Pampers 2011
Apart from the above, the Pampers diapers today use less material than those made 20
years ago. They have also reduced the packaging weight by two thirds. Through these efforts in
raw materials and product design, Pampers diapers claim significant reductions in energy use,
water use and emissions from manufacturing plants. Reusable containers for Pampers wipes
have also significantly reduced its footprint.
P&G continues to invest in leveraging progress in parallel industries and emerging
technologies to develop cutting edge materials that can improve its diapers. Through a
longstanding partnership with Los Alamos National Laboratory (LANL), P&G is collaborating to
incorporate computational fluid dynamics based technology to develop software tools that
simulate how to insert and layer materials to enhance the performance of diaper design and
the manufacturing process. It is also offering this technology to its small and mid-sized
suppliers so that they can be cost efficient and provide better products.
Exhibits 6 and 7 present diagrammatic representation of the above ecosystem
innovation analysis and the ecosystem map that prevailed during this era.
Potential Disruption and Future Strategy
●
●
●
Today,
"What will they think of next?" Well,
we're the ones thinking of that next
stuff. We've already made diapers
that breathe, yes breathe. And
Premium and Baby-Dry diapers that
have a protective layer of lotion that
helps keep little bottoms soft and
smooth. Grandpa Vic would be oh so
proud.” – Pampers Website
●
●
●
the
industry
is
mature
and
consolidated after growing consistently along the Scurve
(Exhibit
8).
Most
of
the
customer
requirements focused on improvement in baby skin
care, and making the diapers environment friendly.
Disruption at this stage can come in many veiled
forms. More than radical product inventions that
will eliminate the diaper, immediate threats to the
use of diaper come in the form of restrictions on its
use due to environmental factors. Especially as P&G targets over 3 Billion people in emerging
markets, disposal of diapers becomes less manageable than in the western world today. P&G
has countered all arguments against disposable diapers by reiterating over decades that diapers
20
Disposable Diapers and Pampers 2011
end up in the incinerator at municipal dumps just like all other household waste and that there
is minimum added impact of the disposable diaper on the waste management system today.
This above argument will fall short in emerging markets where disposal of waste is
largely unmanaged and unregulated. There is no way to ensure that a diaper that is sold will
end up in an incinerator. Most likely, it will end up strewn across outskirts of villages, towns and
cities where it can remain there for years to come.
Negative impact of such unregulated disposal can be very detrimental to the mass
appeal of the disposable diaper as well as P&G’s Pampers because of its widespread use and its
brand name displayed on each and every diaper. A single instance of a communicable disease
that is traced back to indiscriminate diaper disposal can be catastrophic to sales across the
world. A single story of how adverse effects of new materials used in the diapers threatened
the health of a child can also lead to mass emigration of consumers towards alternatives such
as cloth diapers. Parents are not known to take chances.
Also, possible government regulations against disposable diapers pose another major
threat. It will be hard for P&G to manage its ecosystem against regulations and directives from
governments encouraging parents to eschew disposable diapers and adopt reusable diapers.
Biodegradable diapers pose another threat that has so far been curtailed by P&G based
on the fact that biodegradable diapers are not truly environmentally friendly. Today’s
biodegradable diapers leave a large residue behind because they do not end up in the
incinerator. But innovation continues in this direction and once manufacturers figure out a low
food print biodegradable diaper, it will be hard for disposable diapers and hence P&G to
maintain its market share.
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Disposable Diapers and Pampers 2011
Conclusion
●
●
●
“Innovation is not the product of
logical thought, although the
result is tied to logical structure.”
– Albert Einstein
●
●
●
Success in the market for any innovation is not
through the shear genius of the innovation but through the
deep understanding, effective management and control of
the various risks in the innovation ecosystem and the
various players in the ecosystem. As seen above, disposable
diapers are a poster child for this mantra. Even after a late
entry, P&G was able to attain leadership through exercising
its power and skilled management of the ecosystem. Not through brute in-house research but
through clever management of co-innovations did P&G develop its Pampers brand to
incorporate groundbreaking performance features. Even against formidable competitors P&G
did not lose its grip over a long period of incessant innovation by consistently employing
customer research to develop informed expectations and drive its innovation strategy.
If P&G and Pampers will maintain its dominance on the disposable diaper market into
the future will be determined by how carefully and continuously it will manage the ever
changing ecosystem. This fascinating story is set for an exciting ride that is worth a watch for all
innovation aficionados.
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Disposable Diapers and Pampers 2011
Exhibit 1: 3-layer diaper components as designed by Victor Mills at P&G
23
Disposable Diapers and Pampers 2011
Exhibit 2: P&G’s management of Innovation Ecosystem during the Inception stage (1060-1980)
Exhibit 3: Ecosystem map showing important entities during inception stage (1960-1980)
24
Disposable Diapers and Pampers 2011
Exhibit 4: P&G’s management of Innovation Ecosystem during the Growth stage (1060-1980)
Exhibit 5: Ecosystem map showing important entities during inception stage (1960-1980)
25
Disposable Diapers and Pampers 2011
Exhibit 6: P&G’s management of Innovation Ecosystem for Future Development (2000 onward):
Exhibit 7: Ecosystem map showing important entities for Future Development (2000 onward)
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Disposable Diapers and Pampers 2011
Exhibit 8: Innovation and adoption path of Pampers described along the S-curve
P&G found a breakthrough for
mass production. Prices decreased
significantly. Disposable diapers
were adopted by masses. A series
of innovations followed for next 30
years
Technology
Customer
requirements
1935
1970
2000
Time
Industry reaches maturity.
Innovations focus on baby
skin care and making
disposable diapers
environment friendly
Initial stages – Technology
for mass production did not
exist. Disposable diapers
were not affordable to the
masses.
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Disposable Diapers and Pampers 2011
Exhibit 9: Various developments over the years for Pampers
Main Sources and References:
www.wikipedia.com
www.pg.com
www.pampers.com
http://www.ncbi.nlm.nih.gov/pubmed/1914346
www.thedisposablediaper.net
Case Study: HBS_Diaper industry 1974
Case Study: Darden_Pampers Disposable Diaper War
Case Study: HBS_Diaper industry 1994
Case Study: Pampers Brand History
Chemistry Encyclopedia
Society for Biomaterials
Non-woven material science
Feldberg Library Databases
28