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No package-goods category has been more fiercely contested in recent years than diapers.

In 1994 and 1995, when Procter & Gamble Co. was being routed by arch-rival Kimberly-Clark Corp., P&G President Durk Jager identified fixing the diaper business as his top priority. He even began making personal calls on key retail accounts.

While diapers are important to P&G, they're a matter of life and death to K-C. That may explain why, despite P&G's best efforts, K-C has opened a lead of more than 4 share points in the $3.6 billion diaper and training pants category.

"Because disposable diapers really is the company for Kimberly-Clark, there's an enhanced commitment to category innovation," says Burt Flickinger, partner in consultancy Reach Marketing. "Also, in terms of direct and database marketing, Kimberly-Clark has been in it longer than Procter, and that has a tendency to plus-up share."


K-C's Huggies brand had a 41.6% dollar share for the 52 weeks ending July 27, according to Information Resources Inc. P&G had a combined share of 37.3% for Pampers and Luvs.

K-C's lead is bigger than it was two years ago, but it doesn't appear to be as big a concern for P&G now, says Mr. Flickinger.

P&G's continued dominance over K-C in bath tissue and paper towels, which combined make up a larger business than diapers, "helps soften the blow" in diapers, Mr. Flickinger says, noting that with Pampers being the first truly global brand, Procter is realizing tremendous business gains around the world.

A P&G spokesman points to the up side in the company's diaper numbers-growth from a 38.3% unit share in second quarter 1994 to 39.2% in second quarter 1997-and dismisses a low point of 37.3% last winter as a result of "unprecedented quarterly promotional spending" by K-C. P&G also notes Pampers Premium has moved into "a virtual tie" with Huggies Supreme in the superpremium segment and that its value-priced Luvs is P&G's fastest-growing mature brand.

K-C's long-term strategy to segment and conquer with new products has worked well. Huggies Pull-Ups Training Pants, launched in 1989, now represent roughly 10% of category sales and more than account for K-C's lead over P&G. K-C has followed with a series of other segment and niche products, including Huggies Supreme, Huggies Overnites for nighttime use, and Huggies Pull-Ups Goodnites for older children who wet the bed. Next in line appears to be Huggies Little Swimmers Swimpants now in test in five cities.

While leakage protection has long been the No. 1 consumer concern in the category, improvements in leakage protection for value brands-particularly concerning skincare-appear to have shifted the battle.


In category management sessions with retailers, K-C representatives have been identifying skin care as primary consumer concern. But P&G has attempted to grab the spotlight in skincare positioning by adding a Gentle Touch Liner with aloe and other skin-soothing chemicals to its Pampers Premium product this summer, with an estimated $8 million ad campaign.

Ken Harris, partner in consultancy Cannondale Associates, expects K-C to counter with its own skincare innovation sometime next year. Innovation is rarely unique for long in the category.

No. 3 marketer Drypers Corp. also has gone for skincare positioning with its improved diaper with aloe, launched in May.

The value-priced diapers, which are bolstered by Sesame Street characters and most features found in competitors' premium offerings, are helping Drypers win

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