Wednesday, November 6, 2013

Kimberly-Clark: Our Presence in Emerging Markets

Kimberly-Clark (KMB), an American personal care consumer packaged goods company, has a history of adapting to the times. In the 1950’s in began a “decade of major international expansion.”[1] In the 2000’s it launched its “Not on My Watch” campaign to prevent Healthcare related infections[2]. Today, it is making another strategic decision- this time to focus efforts on emerging economies. KMB saw a strategic opening in these countries because of their rapidly growing populations, an ever expanding disposable income base, and a raised awareness of the importance of sanitation. In our first lecture we talked about how developing something new and innovative is not the only way to enter a market. Sometimes it is about launching the right product at the right time. Kimberly-Clark is doing just that. “Our focus moving forward is to increase our understanding of social and sustainability needs in emerging markets and provide our innovated products to meet those needs.”[3] This quote, taken from Kimberly-Clark’s Emerging Markets’ Sustainability Report encapsulates their strategic shift.

One of our readings for this week, “The decade ahead: Trends that will shape the consumer goods industry,” discussed the five forces that will shape the CPG industry’s future: 1) new customers in emerging markets; 2) the rise of the digital consumer; 3) the shift to value; 4) the impact of demographic shifts; and 5) increasing supply chain volatility. Those five forces – maybe with the exception of the rise of the digital consumer – concern KMB’s operations in profound ways. Their strategic shift to international emerging markets obviously underscores KMB’s understanding of the first force. What is unclear, however, is if it has taken into account any of the others.

In a 2011 article that compares P&G to KMB, the authors talk about KMB’s lack of a “recession strategy.”[4] It states that in order for KMB to be a successful competitor, it needs to not only increase its presence in emerging markets, but also focus on value products. In times of economic decline “KMB… continues to focus on building the brand”[5] instead of focusing on value. Not only would focusing on “value proposition to the customers”[6] enable  KMB to better compete with private labels that provide value products, but it would also enhance its position in the emerging markets arena.

KBM has made it clear that they are planning to increase their focus and efforts on the emerging markets arena, however they have not yet made clear how they plan to cope with a consumer base that is trending towards value. For now, KBM (the blue line) seems to be doing relatively fine compared to P&G. But is this a bubble that is about to burst? For a company that has historically been good at changing with the times, this gives rise to the question of whether or not KMB will include value-products in its next strategy and whether or not it will be too late?

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