By Sarah Ellison.Wall Street Journal.(Eastern edition).New York, N.Y.:Jun 17, 2003.pg.B.1
Subjects: / Litigation,Advertising
Classification Codes / 8642,8620
Companies: / Procter & Gamble Co(Ticker:PG,NAICS:325611,325612,325620,322291,325412,311919,Duns:00-131-6827 )
Author(s): / By Sarah Ellison
Article types: / News
Publication title: / Wall Street Journal.(Eastern edition).New York, N.Y.:Jun 17, 2003.pg.B.1
Source Type: / Newspaper
ISSN/ISBN: / 00999660
ProQuest document ID: / 348014651
Text Word Count / 929
Article URL: / http://gateway.proquest.com/openurl?ctx_ver=z39.88-2003&res_ id=xri:pqd&rft_val_fmt=ori:fmt:kev:mtx:journal&genre=article &rft_id=xri:pqd:did=000000348014651&svc_dat=xri:pqil:fmt=tex t&req_dat=xri:pqil:pq_clntid=15094
Abstract (Article Summary)
Kimberly-Clark was already smarting from a price war with its larger rival. It has long dominated the diaper market, but P&G started to throw its weight around last year when it relaunched its Pampers brand. In October, P&G started to offer heavy promotions on Pampers. The diaper price war forced Thomas J. Falk, Kimberly-Clark's chief executive, to slash the company's earnings outlook for 2003, as he complained of "unprecedented" and "unthinkable" promotional activity from P&G. "This is not our vision of how we would manage the category, but you have to stay competitive," says David Deising, marketing director for Huggies diapers, in an interview earlier this year.
That decision came within weeks of two rulings from the National Advertising Division of the Council of Better Business Bureaus, a self-regulatory body that serves as an ad-industry watchdog. The group told P&G to modify its Crest Whitestrips ads, which poke fun at Colgate's brush-on tooth-whitening product. P&G said the ads were scheduled to end anyway and it would consider the group's suggestions when devising future ads. The group also determined that certain elements of P&G's Thermacare heat-wrap ads could mislead consumers. P&G responded that it would modify parts of the campaign. Since the beginning of the year, the watchdog has suggested P&G modify its ads three times. That compares with three such decisions in 1999, 2000 and 2001 combined, according to the industry watchdog.
Full Text(929 words)
Copyright Dow Jones & Company Inc Jun 17, 2003
AFTER GETTING knocked around on store shelves, Procter & Gamble Co.'s rivals think they know where they can push back: in court.
The consumer-products company has been on a tear lately, stealing share from many of its toughest competitors and posting stellar earnings, reversing a trend in which Playtex Products Inc. and Kimberly-Clark Corp. were making inroads. Much of P&G's recent success has to do with Chief Executive A.G. Lafley's focus on the company's biggest brands and the power of being No. 1 in today's economy, where distribution muscle and the power to absorb low margins count for more.
The company's new attitude is also showing up in advertising that aggressively targets competitors' products. While Brand X advertising, which directly compares competing products,has been a P&G hallmark, this is Brand X with bite. "P&G has migrated from the traditional slice-of-life advertising and has had edgier commercials break through," says Burt Flickinger III, a former P&G executive and a managing partner at Strategic Resource Group, a marketing consultancy.
One such commercial moved Kimberly-Clark to file suit against P&G last month, saying "false and disparaging claims" had been made against its Huggies Pull-Ups training pants. In U.S. District Court in Green Bay, Wis., a judge issued a temporary restraining order against P&G's ad.
But P&G, rather than wait for its day in court, rejiggered the voice-over for the ad and started airing it again. Not satisfied, Kimberly-Clark went back to court yesterday to try to block the new version. The judge said there was insufficient evidence to stop P&G from running the revised ad. Kimberly-Clark plans to pursue the matter at a hearing in August or September.
Kimberly-Clark isn't the only company to go up against P&G on these grounds. Playtex recently won a permanent injunction -- and a $2.96 million award -- against P&G because of what the court ruled were false advertising claims about the superiority of its Tampax Pearl product over Playtex's tampons. P&G plans to appeal the decision.
That decision came within weeks of two rulings from the National Advertising Division of the Council of Better Business Bureaus, a self-regulatory body that serves as an ad-industry watchdog. The group told P&G to modify its Crest Whitestrips ads, which poke fun at Colgate's brush-on tooth-whitening product. P&G said the ads were scheduled to end anyway and it would consider the group's suggestions when devising future ads. The group also determined that certain elements of P&G's Thermacare heat-wrap ads could mislead consumers. P&G responded that it would modify parts of the campaign. Since the beginning of the year, the watchdog has suggested P&G modify its ads three times. That compares with three such decisions in 1999, 2000 and 2001 combined, according to the industry watchdog.
At issue in the Kimberly-Clark case is an ad for P&G's Easy Ups training pants, a diaperlike product for toddlers. The spot opens at a cocktail party. A toddler runs through, clothed in only a T-shirt and socks, with his training pants in his hand. "You are two years old and it's not that you're a showoff," said the original voice-over. "It's just those Pull-Ups pull apart like diapers." The ad then shows a product demonstration in which a toddler pulls off Pull-Ups training pants. "You want Pampers Easy Ups," continues the voice-over. "They go on easy and stay on, like real underwear."
A Kimberly-Clark employee saw the ad and alerted Robert Thibault, president of Kimberly-Clark's child-care sector. The company had recently introduced new "easy-open" sides on its training pants. "This is the most heavily researched innovation in the 14 years of Pull-Ups history," says Mr. Thibault. "We were very disappointed by the ad." A week later, Kimberly-Clark filed its complaint, saying that P&G's claims were false and its demonstration was staged: "In the `demonstration,' the side has already been partially opened before the child begins to tear open the seam," Kimberly-Clark says in the complaint. P&G says the side of the product was fully closed and the company stands by its ad.
To defend itself against P&G's comparative claims, Kimberly-Clark cited studies involving more than 2,000 babies who had participated in 26,000 product-performance tests for Pull-Ups. In the tests, Kimberly-Clark found that the todders opened the Pull-Ups on their own only 0.03% of the time. In the same tests, parents reported that in only 0.25% of cases had Pull-Ups "popped open on their own," according to Kimberly-Clark's complaint.
"Our brands are winning in a very competitve market place," a P&G spokeswoman says, "and the challenges we have seen are a reflection of competition reacting to our in-market success."
Kimberly-Clark was already smarting from a price war with its larger rival. It has long dominated the diaper market, but P&G started to throw its weight around last year when it relaunched its Pampers brand. In October, P&G started to offer heavy promotions on Pampers. The diaper price war forced Thomas J. Falk, Kimberly-Clark's chief executive, to slash the company's earnings outlook for 2003, as he complained of "unprecedented" and "unthinkable" promotional activity from P&G. "This is not our vision of how we would manage the category, but you have to stay competitive," says David Deising, marketing director for Huggies diapers, in an interview earlier this year.
Meanwhile, P&G weathered the storm unscathed. It has won a nearly 20% share of the training-pant market, up from zero in February 2002. Those gains seem to have come largely at Kimberly-Clark's expense. The company has lost more than 10 percentage points of market share for training pants in the same period, winnowing its share down to 43%.
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