AssP&GW1
revised Aug 31, 1999
Babson College
F.W. Olin Graduate School of
Management
MARKETS & MARKETING
MICROECONOMICS and MARKETING SYSTEMS STREAMS
Topic: Markets, Competition and Marketing Strategy
Case: P&G: The WalMart Partnership
RE-Reading: HBR Porter: What is Strategy?
This case describes the evolution of competition in the diaper industry
-- particularly the private label portion of the industry -- and focuses
on the process of P&G interacting with the price and service demands
of Wal*Mart -- a major customer that understands and uses its market power
to seek concessions. In the case -- which consists entirely of public information
-- the moves and counter-moves of P&G and WalMart are described. In
the case we see the unfolding of several rounds of product, price, and
promotion strategy.
As you prepare this case, please be aware of the development of this
situation and how P&G and WalMart should deal with it. Please also
consider these issues:
-
What are the advantages to WalMart of following an EDLP strategy? What
is the relationship between EDLP and Wal-Mart's private label strategy?
-
What does WalMart mean by "You (P&G)save money by not doing promotion,
and you should share that saving with us."?
-
Many observers argue that channel power has shifted from P&G to Wal-Mart.
Do you agree with this assessment? Why? Why not?
-
Evaluate P&G's recent performance. Why has P&G experienced so much
difficulty in the disposable-diaper market?
-
How has the product changed over time? Use the attribute model to describe
the diaper market.
-
How should P&G respond to the introduction of Huggies Supreme?
What should P&G do with Luvs?
-
How should P&G respond to the Wal-Mart's decision to sell private-label
diapers manufactured by Kimberly-Clark?
-
Should P&G employ a premium or promotional pricing strategy?
What would be the sales and profit impacts?
-
What does WalMart mean by "You (P&G)save money by not doing promotion,
and you should share that saving with us."
One interesting aspect of the case is to compare P&G as it appears
in 1994 to the P&G we saw in the LDL case. What has changed? Why? What
does this tell us about the evolution of competition in the consumer packaged
good industry?
See e-campus for Discussion and Poll.