Can P&G Redeem Itself?

What does a company do when its biggest brand falls prey to poor product development strategy? The only solution is to safeguard its market share and win back customers with improved products and better value.

This is exactly what mammoth Procter & Gamble (NYS: PG) did for Pampers, its most important brand. Pampers' annual sales total around $9 billion, and it has contributed approximately 11% of P&G's sales from the last couple of years.

The goof-up
P&G introduced the new Pampers Dry Max diapers in March with a view to boosting its market share in this category. The product was launched to compete with low-priced store-brand diapers and was touted to be one of the company's most significant innovations in the last 25 years. But it turned out to be a big marketing disaster, just like Coca Cola's New Coke, and P&G ended up losing 3% of the diaper market share to archrival Kimberly-Clark (NYS: KMB) .

Not only did P&G lose market share, it got slapped with lawsuits. Parents complained that the diapers caused rashes to the tiny tots, and some were so dissatisfied with the new product that they sought legal action.

The fix-up
With the damage being done, it was time for some mending. P&G revised the marketing strategy for Pampers with a heightened advertising pitch. The company also worked on parents' suggestions for bettering the product and introduced the improved Pampers Cruisers with 3-Way Fit diapers, with a softer, quilted back-sheet, a 20% longer absorbent area, and new Sesame Street designs. The look is also a debut for Oscar the Grouch, featured for the first time on its diapers. The new product is expected to help P&G regain its lost market share.

Foe turns friend
P&G showed great marketing acumen by utilizing Facebook to address parents' concerns being vented on the social-networking site and to launch a promotion deal to create brand awareness and attract new customers for the new and improved Pampers. P&G introduced a "30 Days of Play & Giveaways" promotion campaign on Facebook, encouraging participation from parents with a chance to win prizes. This was a masterstroke to use the broad reach of social media and improve sales.

Foolish bottom line
I feel P&G will be able to redeem itself through its fresh marketing initiatives. It cannot afford to lose any ground as far as Pampers is concerned; after all, it is its biggest draw. The new look and feel of Pampers Cruisers should add to the company's top line.

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At the time thisarticle was published Fool contributor Amitabha Chakraborty does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of Coca-Cola. Motley Fool newsletter services have recommended buying shares of Kimberly-Clark, Procter & Gamble, and Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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