1. 1 Procter & Gamble Plaza Cincinnati, OH 45202 United States

3. ECONOMIC Early disposable diapers were expensive and so used primarily for travel Advancement in technology and growing penetration countered the lack of economic stimulus

4. SOCIAL Decline in births was offset by no. of women of child bearing age, resulting in increased penetration. Also, increase in no. of working mothers meant additional income which translated to discretionary expenses like disposable vs. cloth diapers (despite being expensive). Mothers were increasingly older and better educated. Families had become more affluent and mobile during this time.

11. Source: U.S Census Bureau Industry Statistics Sampler Industry NAICS Codes for Sanitary Paper Product Manufacturing 31-33 Manufacturing 322 Paper Manufacturing 3222 Converted Paper Product Manufacturing 322291 Sanitary Paper Product Manufacturing

12. Detail Value Chain Manufacturing 50% of sale price Transportation 10% of sale price R&D Test Market Distribution Supermarkets (7%)‏ Mass Merchants (4%)‏ Fluff pulp Cover Sheet Backing sheet Customer Sampling Coupons

15. INDUSTRY GROWTH

16. P & G Vs. K-C Vs. Industry Performance Through Out 1967-1973

18. Competitive Analysis Market Share of Leading Competitors (1973)‏ Market Share of Leading Competitors (1971-1973)‏ Year 1971 1972 1973 Procter & Gamble 85% 80% 69% Kimberly-Clark 3% 7% 17% Jonson & Johnson Brand - - 2% Other Brands 10% 4% 3% Private Label 3% 9% 9%

20. High Price Low Price Low Quality High Quality *Size of Bubble is Proportional to Market Share **Price is adjusted to price per 100 Medium Size diapers purchased in lots of 24 to 48 P&G $5.97 92% market share J&J $7.17 Kimberly Clark $5.97 JC Penny $8.43 Kendall $7.04 Sears Prefolded $5.13 Monty-Ward $3.70 Baby Scott $5.30 Parke Davis $8.25 Sears Regular $4.16

21. Competitive Perceptual Map Test National Market Product Performance High Low Key Notes: 1) Parents expressing the highest overall preference for Pampers in the 1974 Consumer Reports was critical for P&G, as parents’ choice in the disposable diaper market was highly performance-sensitive, and a diaper that performed poorly soon lost market position. 2) Pampers, Kimbies (K-C), Johnson’s, and Curity (C-P) were all priced relatively similarly, with Kimbies lowest at $.056 per diaper and Pampers highest at $.06 per diaper in 1974.

22. Perceptual Map High Price Low Price High Quality Low Quality IPCO Kendall / Colgate

25. Diaper Manufacturer Distributor Consumer Raw Material Supplier Diaper Industry Supply Chain

26. Disposable Diaper Manufacturing Process

27. Incumbency advantages accrue at every stage in the value chain R&D Manf Distribution Retailers Consumers

31. Distribution and Marketing

35. Incumbency advantage Quantified

36. VALUE CREATING ACTIVITIES

37. ACTIVITY SYSTEM MAP

38. How economies of scale create a barrier to entry Source; http://www.wikinvest.com/images/d/d5/CYCLEOFFIXEDCOSTS.jpg

39. Scale +learning+loyalty + switching cost advantages Learning economies Brand Loyalty advantages Switching cost Can result in formidable incumbency advantages

41. Kimberly Clark - Value Chain Manufacturing 50% of sale price Transportation 10% of sale price R&D Test Market Distribution Supermarkets (7%)‏ Mass Merchants (4%)‏ Fluff pulp Cover Sheet Backing sheet Customer Sampling Coupons 33% Market Share Ahead Of Schedule Strong Sales force Unique ∆ Shape Own Liner