Drypers Case Analysis

Drypers Case Analysis 1. Evaluate the impact of the $10m national advertising campaign undertaken in 1998. The $10 million advertising campaign is likely to produce a positive effect for Drypers Corporation. However it is impossible to state whether it will be as successful as it is anticipated to be. In other words, the company has never invested in the TV advertising campaign and it has always heavily relied on the other sources of promotion (newspapers, word of the moth, etc), therefore it has less expertise in this area. To continue, as Procter & Gamble along with Kimberly Clark started occupying considerable shares of the market, Drypers realized it had to change its strategy not to be outplayed by these rivals. The top management of the corporation strongly believes that the investment in a national television campaign to build brand awareness is key to achieving full product distribution and higher overall sales. Yet establishing a widely recognized brand name can only be done by offering special features to the customers, the characteristics, which the competitors do not have. Speaking about the overall effectiveness of the TV advertising campaign, it has to be noted that Drypers may have run into a potential problem, which can only become evident a few months after the campaign begins. The Drypers’ management emphasized the point of quality and exclusivity rather than money spending as the main drivers of success for the Drypers. P&G along with KC have more resources and can easily outplay Drypers if the competition is based on the amount of money spent on advertising and marketing. Even though Drypers acknowledges this fact, it still entered into the money-fuelled race with these companies. In other words, there is no guarantee that P&G will not set-up a counter-advertising campaign to decrease the positive effect of Drypers’ brand name building (it may begin a similar campaign with the sole aim of discrediting Drypers rather than increasing its own sales, it is known as brand wars). If such situation takes place, Drypers will loose, because it has less money. At the same time, TV advertising campaign is likely to bring more benefits than losses to the corporation. 2. What additional information would you find useful? Why? In order to adequately access to performance of a company and effectiveness of the particular advertising campaign, it is essential to know how the sales increased after or during the campaign. What return the company anticipated the campaign to bring and what actual return the campaign generated. Furthermore, the annual statements (Balance sheet, income statement, and cash flow statement) are needed to evaluate the overall performance of the company. For instance, the information on the company contains its EBITDA values, but this sum doesn’t’ indicate anything on its own. We have to know EBITDA margin, which is EBITDA divided by Net Sales, Net Profit Margin, etc to determine how profitable the company is. ROI and ROE are two of the most popular measures of the company’s profitability level. Apart from the financial statements, one has to know the company’s overall goals and hidden strategies to be able to assess its work properly. For instance, the company may desire to indirectly target a certain segment of the population by its campaign. If a person is not aware of the hidden goals of a particular campaign, he or she may consider the current strategy to be shallow or superficial. Yet, once the real goals behind promotion are known, the person understands the true value of the campaign. 3. Would you recommend that Drypers spend $l0m in national advertising next year (1999)? It is difficult to state whether 1999 TV campaign is recommended because the definite outcomes of the 1998 campaign are not available. Two issues have to be discussed here: Ad recognition and effectiveness of the Ad. Without a doubt, TV ads have higher percentage of recognition than paper ads do. However if the ad is designed incorrectly, the campaign will target the wrong audience and the ad, though widely recognized, will have little effect on the sales increase. It is in cases where recognition turns out to be low that this measure is especially helpful for diagnosis. If people don't recognize the ad after a few weeks on air, the advertiser can be certain there is something very wrong-because it is such an 'easy' test. In reality you will find that low recognition figures and 'wallpaper' ads like this are rare--for TV at least. Most often, 70 to 90 per cent of people who have been exposed to an ad a number of times in a TV campaign do recognize they have seen it--unless there is something very wrong with the ad. A high figure shows that the ad is capturing enough attention to get noticed and may give the advertiser warm feelings--but keep it in perspective. It is important to emphasize that this reveals nothing about the strength of any mental connections that have been established. This is because ad recognition is, in a sense, an 'easy' test, merely testing that a connection is there. It confirms that the ad execution does have some representation in consumers' memory networks. It has been seen. Establishing this is one thing. Measuring the strength of the mental connections within the network is another. At the same time it is not clear how successful the 1998 campaign was and therefore it is unclear what recommendations to provide for the 1999’s one. The rule is: if 1998 campaign proves to be successful, the 1999 one should be organized as well.