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Procter & Gamble Co. is making a comeback in the $4 billion disposable diaper category after taking a beating from Kimberly-Clark Corp. and private-label brands.

Two national product initiatives this spring and favorable results from new Pampers Ultra Dry Thins are reasons enough for P&G executives to give a collective sigh of relief.

After all, diapers, accounting for 16% of the company's $30 billion in worldwide revenues, represent its single largest and most profitable category.

The company's combined market share for the Luvs and Pampers brands last year came in at around 38%, compared with more than 50% in 1988.

P&G this month starts national shipments of Luvs Ultra Leakguards, a 50% thinner diaper than regular Luvs that uses a patented curly fiber technology. This upgrade gives Luvs dryness and leakage protection benefits first used on sister brand Pampers last fall.

The company also will introduce nationally Pampers Trainers, disposable training pants that will play catch up with Kimberly-Clark's Huggies Pull-Ups. Ad support will be from Pampers' agency, D'Arcy Masius Benton & Bowles, New York.

P&G clearly hopes that the thin technology will give Luvs, a distant No. 3 brand behind Huggies and Pampers, an edge. The company last spring restaged Luvs as a lower-price national brand to compete against private-label alternatives.

The move to position secondary brands in the value segment is emerging as an effective P&G strategy-used also in the laundry detergent and dishwashing liquid categories (see story on Page 46).

So far, the most encouraging news for P&G is the early results from September's national introduction of Pampers Ultra Dry Thins. The rollout-more than a year behind Huggies Ultra Trim thin diaper-helped push Pampers' share of the $4 billion market from 23.5% in September to 24.9% in November and to 26.3% in January, according to Information Resources Inc. That's an impressive gain given the category's cutthroat competition and the brand's belated entry in the segment.

Luvs' restaging involved a 16% price cut from its premium pricing where it competed with sister brand Pampers and Kimberly-Clark's Huggies. The move has stemmed the brand's share losses to the point where unit sales have stabilized at a 12.8% share for the 52 weeks ended Jan. 2, IRI. reported.

"There's no doubt at this stage that if P&G was ever happy that it had Luvs, it's now," commented Andrew Shore, analyst at PaineWebber. "They've correctly positioned it as a price value brand for defensive purposes."

Leo Burnett USA, Chicago, will provide ad support for new Luvs Ultra Leakguards-with a TV campaign set for April or May.

In the meantime, Kimberly-Clark has a few tricks of its own.

Staying one step ahead of P&G, Kimberly-Clark on April 1 will begin shipping Pull-Ups GoodNites, disposable underpants for nighttime protection for older children.

Kimberly-Clark estimates that the new segment aimed at bed-wetting children will bring in incremental annual sales between $75 million and $100 million, according to trade materials. TV advertising, via Ogilvy & Mather, New York, will begin May 30. Also supporting are direct mail with a $1.50-off coupon; a June free-standing insert with a $1-off coupon; and magazine ads in June and July issues of women's and parenting magazines.

In what is perhaps the most surprising strategic move, Kimberly-Clark has begun to supply private label training pants to Wal-Mart Stores under the Atta-Boy! and Atta-Girl! labels.

The products are priced about 20% below Kimberly-Clark's own Huggies Pull-Ups with little apparent difference between them.

"This is very gutsy and pre-emptive of Kimberly-Clark," said one industry executive, who said she believes Kimberly-Clark does not want to lose share to other private label manufacturers and P&G-even at the risk of cannibalizing Pull-Ups.

The most heated battle however is expected in the growing ultra thin segment that now accounts for only 33.6% of the total diaper market.

Besides Luvs' thin diaper, a thin private label product from Paragon Trade Brands will begin shipping late in the second quarter. Rollout will be from the West Coast gradually to the East Coast, giving consumers a lower cost alternative.

"The diaper category is in a bit of a shake-up and confusion with so many choices," said one marketer. "Consumers are starting to complain about the confusion.... They're just howling."

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