DODOT Case

POLYTECHNIC UNIVERSITY
Euncet OF CATALONIA
Business BARCELONATECH
School
Members:
Ivan Rodríguez Ramírez
CASE:
DODOT,
THE INTRODUCTION OF A LINE OF COMMODITIES IN THE IBERIAN PENINSULA
SITUATION P&G and A&A:

• P&G was a world leader in infant care products, with Pampers as its main brand.
• Main competitor: Kimberly-Clark with its Huggies brand.
• It has the A&A line that works independently and markets the DODOT brand, the first
to launch a line of disposable diapers.
DODOT SITUATION:
• Dodot dominated market share in the diapers and diapers category for a long time, but
then fell in Spain and Portugal:
o Spain from 60% to 55%.
o Portugal from 75% to 70%.
• Mercadona, Carrefour and Pingo Doce gained consumers with economic versions.
DIAPER MARKET SITUATION:

• Portugal: 480 million diapers.
• Spain: 2030 million diapers.
• Price paid by consumers: between 15 and 27 euros for packages of between 60 and
160 units.
• Average annual growth rate per unit in the market: 2.1%.
Distribution:
• Supermarkets and Hypermarkets: 61%.

• Discount stores: 15% off
• Small commodity stores: 11
• Pharmacies and beauty stores: 7.5%.
• Other: 5.5% Other: 5.5% Other: 5.5% Other: 5.5% Other: 5.5% Other
In 2009 Dodot continued to be a leader in Spain and Portugal and was highly recognized.
Between 2008 and 2012, private label brands increased their sales by 9% in Spain and 20% in
Portugal.
PRICE FIXING
Four price levels in the market:
• Super deluxe: Dodot Activity and Huggies Super dry ultra

• Luxury: Dodot Estepas at 0.26 euros per unit (gross margin of 45%)
• Economy brands: Huggies Super Dry (15% below the previous category and with MB of
25%).
• Offer brands: Hipercor, Carrefour and Mercadona (costing 35% to 40% less than Dodot
Estepas).
Euncet OF CATALONIA
School
CONSUMER
• A family can spend up to 1,500 euros until the child is out of diapers: or 7
and 12 diapers a baby.
o 4 and 8 diapers one child
• Birth rate per thousand population (BPR) and Fertility Rate (FR):
• In general, supermarkets sold 1 to 2 packages, the second one at a discount

(+50%).
• The most sold sizes were: 3 to 5.
• Dodot spent 15 million euros on advertising and 3 million diapers on R&D.
• The differences in diapers were not clear to consumers; they bought according to
brand loyalty and economy, but if the crisis continued, they would choose more
frequently based on price.
• According to a study, 45% were loyal to Dodot and 15% bought on price.
NEW STRATEGY
Repositioning for 2010:
• New Dodot Activity : (iPañal) that replaces the old Dodot Activity. It will have a
retail price 25% higher than Dodot Estepas and 3% higher than the current price to
the channel.
• Dodot Estepas: standard diaper, it will continue to be the star product.
• Dodot basic: brand presence in the economic segment, selling price 25%.
less than Dodot Estepas. With little advertising support, distribution in
supermarkets and discount stores, in packs of more than 100 units, with best-
selling sizes (3-5) and no promotions.
PROBLEM:
• Dodot is a brand that sells diapers to the Iberian Peninsula and was very successful
in 2008. However, with the increasing incorporation of private label brands from
large supermarkets, it is losing market share in segments that buy on price.
• To address this, the company is considering a repositioning plan that includes
maintaining the super-luxury brand, enhancing the luxury brand that represents
the highest sales and launching an economy brand to compete with the new
market conditions.
• The case asks whether this strategy will help improve profits and market share.
ALTERNATIVES:
• If Dodot Básico is launched, the recognition and positioning achieved so far can be
lost and the recognition obtained can be maintained and sales can increase
Euncet OF CATALONIA
School
• By not launching Dodot Básico, we run the risk of supermarkets gaining market
share with their private labels and losing space in large retail outlets, and we
ensure that brand positioning is not jeopardized.
• To evaluate the alternatives, it is necessary to calculate the sales projection of the
new line and determine whether it will be profitable for the company and increase
market share.
RECOMMENDATION: SALES PROJECTION

•
BIRTH RATE 2010:
o Spain: 47,021,031 (population) x 10.10 (birth rate) / 1000 = 474,912
o Portugal: 10.572.721 (inhabitants) x 10,90 (birth rate) / 1000 = 115.243
•
DIAPER CONSUMPTION
o An infant consumes between 7 and 12 diapers per day, average: 9.5
o Consumption in 2010 in Spain: 474,912 x 9.5 = 4,511,664 p/day - 1,646,757,360
p/year
o Consumption in 2010 in Portugal: 115,243 x 9.5 = 1,094,808.5 p/day -
399,605,103 p/year
•
ONLY 15% BUY ON PRICE:
o In Spain: 247,013,604 diapers p/year
o In Portugal: 59,940,765.5 diapers p/year
o To solve the case it would be necessary to evaluate what market share the
company would reach with the economic diapers, knowing that the total are
the values expressed above.
o Once the market share is determined, the breakeven can be calculated and
profits estimated knowing that the selling price will be 0.165 euros in Portugal and
0.194 euros in Spain (25% below Dodot Estepas). In turn, we also know that the
gross margin on the brand is 45%. Therefore: ▪ Gross Margin in Spain: €0.146,
being variable costs: €0.179.
Gross margin in Portugal: 0.124 euros, variable costs: 0.151 euros.

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POLYTECHNIC UNIVERSITY

SITUATION P&G and A&A:

DIAPER MARKET SITUATION:

• Supermarkets and Hypermarkets: 61%.

Four price levels in the market:

• Super deluxe: Dodot Activity and Huggies Super dry ultra

• In general, supermarkets sold 1 to 2 packages, the second one at a discount

• Dodot Estepas: standard diaper, it will continue to be the star product.

RECOMMENDATION: SALES PROJECTION

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