Kimberly-Clark Going Green

Kimberly-Clark Corp. (KMB - Analyst Report) faces many challenges in the attempt to balance growth and profitability. Specifically in the diaper business, the company faces a significant competitive threat from Procter & Gamble (PG - Analyst Report). Procter spends heavily on its Pampers line and appears to have an edge over Kimberly-Clark in terms of cost structure and marketing acumen. As part of the competitive battle, Kimberly-Clark develops innovative new products to both hold and garner market share.

Kimberly-Clark has announced the launch of a new super premium and environmentally friendly diaper: Huggies Pure & Natural diapers, which are made from natural, organic materials, and ingredients. The new Huggies Pure & Natural diaper is hypoallergenic, latex and fragrance free. The outer cover includes organic cotton, and the liner has natural Aloe and Vitamin E. The product's packaging contains at least 20% recycled materials.

Management expects the Huggies Pure & Natural diapers to address the needs of the 'green' consumer, especially moms who are interested in products made of natural and organic materials that do not sacrifice any comfort and protection for their babies.

Preliminary response from retail stores has been positive. Most of the company's retail customers have already submitted orders for Huggies Pure & Natural diapers and will be giving shelf space to the new product. Pure & Natural diapers will be offered in 6 sizes (from newborn through size 5). The brand will be widely available in North American retail stores in late April.

Kimberly-Clark will support the launch of Huggies Pure & Natural diapers with an integrated marketing campaign, including print and online advertising, websites, coupons, and in-store promotions. Also, the new diaper will be featured in the company’s brand recruitment program for moms, which includes childbirth education, sampling, in-hospital TV programming, and direct mail.

Product innovation is a key to revenue growth and margin improvement for consumer companies. New and improved brands, along with innovative value-added products, enable consumer companies to command premium pricing. When supported by extensive and aggressive marketing campaigns, new products not only stimulate sales growth but also enhance margins. In addition, these innovative and highly competitive products usually have unique attributes that enable consumer companies to gain market share.