Kimberly-Clark’s price war with Procter & Gamble is taking its toll on the former’s ad budget.
KC – whose brands include Kleenex tissues and Huggies diapers – managed a 10.8% hike in earnings per share for the fourth quarter, but only because it slashed expenditure on marketing, research and general expenses by $35 million.
The group is seeking to cut down on advertising and promotions not linked to its strategy of slashing prices. These price cuts – about half of which were prompted by North American competition with P&G in the diaper market – kept sales flat at $3.3 billion in Q4 despite a 2% rise in unit volumes.
The retrenchment looks set to continue. In 2003, Kimberly-Clark is planning to slash between $175m and $200m from its expenses. Although most of this cash will come from the supply chain and capital expenditure, further savings in ad budgets have not been ruled out.
Agencies likely to be hit by these cuts include Ogilvy & Mather in New York and Chicago, incumbent on the Huggies and Kotex accounts, and J Walter Thompson in New York, which handles Kleenex, Scott and Cottonelle.
Data sourced from: AdAge.com; additional content by WARC staff