But the danger lurking in being in the middle of your market is not limited to high profile products such as the smartphone. Something similar is happening in the market for baby diapers (“nappies” to those of you on the eastern side of the Atlantic), a product close to this grandfather’s heart. According to a report last week in Reuters, “Diaper wars: Kimberly to take on P&G through innovation, higher ad spend”, Kimberly-Clark, the well-known US personal care products company (think Kleenex tissues), faces a similar problem as it competes in the diaper market with its even larger competitor, Procter and Gamble (“P&G”). The problem for Kimberly-Clark is that P&G has come to dominate both the premium and down-market segments of the diaper market, the former with its Pampers brand and the latter with its Luv brand. As a result, the market for diapers seems a lot like that for smartphones, at least for those in the middle.
True, the company may have has little choice (Kimberly-Clark saw at 6% drop in its shares last week). However, one wonders to what extent a company can simply decide that it needs to innovate more (and in a hurry) to better compete in the marketplace, and to make good on its strategy. One would have thought that innovation is an ongoing aspect of company life. Branding compounds the challenge: if Kimberly-Clark succeeds in coming up with “more for less” so it can compete at the low end, it will then need to reposition the Huggies brand accordingly. How exactly does one move a brand from the middle to a down-market segment? The alternative is to come up with a new brand identify for the down-market product, but that presents its own set of challenges. The same will hold true if Kimberly-Clark also seeks to launch an up-scale diaper product under a new brand name. The upshot is that while a commitment to R&D innovation and branding support both seem worthy goals, the likelihood of success is far, far from being assured.