1. Pampers China Cross the Rubicon

2. In 1998, P&G launched its Pampers product line in China
In 1998, P&G launched its Pampers product line in China.  The version, by P&G’s own admission, was a cheap version of what they had successfully been selling in the United States.  The CBS article I linked to earlier quotes Bruce Brown, then head of P&G’s “$2 billion R&D budget” as saying that their efforts “just didn’t work.”  Why?  First, and most obviously, Chinese families don’t have a history of using disposable diapers. 

3. Chinese families use either cloth diapers that can be washed and re-used, or they have what are called kaidangku, essentially open bottoms in a toddler’s clothing where the child can go to the bathroom “unimpeded” shall we say.  Odd to the western eyes, but one has to admit, quite affordable!  One other consequence of this practice is that Chinese children tend to begin potty training around 6 months of age versus between months for children in the West.

4. kaidangku

5. P&G’s initial efforts to take Pampers into China were a total disaster
P&G’s initial efforts to take Pampers into China were a total disaster.  The cheap plastic diaper addressed issues with hygiene, which was something the new Chinese middle class cared about.  It also provided for a solution to something (public defecating) that this same group was a bit ashamed to see happening around them.  Both of these are powerful social drivers that should have opened the market for P&G, yet they did not.  P&G’s experiences have a lot of light to shed on what can be learned by companies eager to sell into emerging economies.

6. First, P&G stepped back and acknowledged that they did not understand what would motivate a Chinese consumer to buy a disposable diaper in the first place. 
Consequently, they commissioned a study with the Beijing Children’s Hospital and their Sleep Research Center specifically.  Their research showed that children who had a disposable diaper would “fall asleep 30% faster” and that the child would “sleep with 50% less disruptions.” 

7. They also found that this improved sleep pattern could potentially help their child’s “cognitive development”.  With this information in tow, P&G launched their “Golden Sleep” campaign, which leveraged P&G’s marketing resources in a way that allowed it to project these findings across the country.
Second, in conjunction with P&G’s research at Beijing Children’s Hospital, they were also studying what parent’s wanted from the product itself. 

8. The surprising take-away was that in P&G’s efforts to sell a low-cost version of the product, they ad inadvertently positioned the Pampers product line as not only low-cost, but much more importantly, low quality.  New Chinese parents, who wanted something much softer next to their new baby’s skin, rejected the plastic “feel”. 

9. P&G initially thought they were rejected for cultural and cost reasons, but they were actually rejected because they did not make enough of an effort to build the narrative around how their product would benefit the child and parents (who both benefit if the baby sleeps more soundly), and because they assumed cost was the primary driver when softness actually was.

10. P&G remedied this error and now has what is estimated at 30% market share in China, with over $500m in sales.  Not too shabby considering where they were in the early 2000’s.  What should we take from P&G’s experience? 

11. Three things:  first, you will never regret investing up-front in the market research necessary to explore what your target market actually values.  This research will shape your marketing strategy and product design efforts in ways that are invaluable.  Whatever up-front cost you pay now will easily be recovered based on your ability to move more nimbly and sell more aggressively once this research has been internalized. 

12. Second, remember that your product needs a narrative to fit into
Second, remember that your product needs a narrative to fit into.  Sometimes this is the “aspirational” marketing strategy we have discussed before.  Sometimes it is the quality marketing strategy that FMCG and healthcare companies in particular have been successful with in emerging economies.  The point is to make sure you have a narrative and that it fits into your target market in a compelling way. 

13. The third lesson is that with your market research and narrative in hand, you do have to localize your offering.  What exactly this will mean is something you have to be open to, be flexible about, and acknowledge might be a bit uncomfortable.  Uncomfortable in the sense that some of what your market might value might seem inconsistent with what you know has built your success in your domestic market. 

14. The point is not to abandon these historical insights, but to view them as longer-term value points that your emerging market consumers are likely to converge onto, but not yet.  Cumulatively, P&G’s experience taking Pampers into China is an impressive observation into the sorts of oversights that even the most successful and strategically minded FMCG (Fast Moving Consumer Goods) companies can make.

15. Questions
1) What obstacles to acceptance of diapers in China did P&G encounter in 1998?
2) Summarize P&G’s strategies to conquer the obstacles?
3) Compare Pampers’ marketing mix in china & in your home country, and explain the differences.