Procter & Gamble, Private-Label Brands, and the Wal-Mart Partnership (a)

Abstract

This case is a condensed version of UVA-M-0452. The case describes Procter & Gamble's adoption of value pricing, Wal-Mart's introduction of premium store brands, and the evolution of Wal-Mart's relations with its major vendors. In early 1994, Kimberly-Clark agreed to manufacture private-label training pants for Wal-Mart. Students must decide how Procter & Gamble should respond to Wal-Mart's decision to sell private-label diapers manufactured by Kimberly-Clark.

Excerpt

UVA-M-0654

Rev. May 21, 2018

Procter & Gamble, Private-Label Brands, and The Wal-Mart Partnership (A)

In 1992, Procter and Gamble's (P&G's) largest and most profitable category was disposable diapers, which accounted for 16% of the company's worldwide revenues and over 20% of its profits. However, between 1988 and 1993, P&G's share of the $ 4 billion US disposable-diaper market dropped from over 50% to 38%, due in part to a rise in market share of private-label brands with favorable retailer margins.,

In early 1994, Kimberly-Clark (K-C) began to manufacture private-label training pants for Wal-Mart that appeared comparable to its own Huggies Pull-Ups, but would be priced 20% lower.

Procter & Gamble: The Smale Era

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Keywords: marketing strategy, pricing