Innovation and Growth: Kimberly-Clark's Strategy for Market Domination
2023-07-25
The company held an earning call meeting to discuss its performance and outlook for the upcoming quarter. The meeting was attended by Michael Hsu and the Operator. During the call, the management highlighted several key points regarding the market outlook.
They acknowledged that competitors in Latin America have been slow in implementing price increases, but promotional activity has been prevalent. However, the company aims to focus on sustainable long-term growth rather than relying solely on promotions. They emphasized the importance of growing market share and have made investments in GMK capability and analytics for wise investments in promotions. Innovation, commercial programs, and engaging with consumers and customers were also highlighted.
The management expects an increase in gross margin of at least 230 basis points and aims to recover to pre-COVID levels and expand from there. However, they acknowledged the presence of cost pressures and productivity challenges that may impact gross margin improvement in the future.
The key drivers of the business discussed during the meeting included local market conditions, performance, volume trends, market share, pricing strategy, and supply challenges.
In terms of product/service expansion, the company plans to drive improved share through programming and innovation. They will focus on personal care and tissue markets, investing in advertising and product improvements in North America. Innovation was emphasized as a key driver of sales growth, and the company plans to expand its product lineup with new and exciting products. They also aim to bring innovative technologies to markets worldwide and be active in innovation in the coming years.
The competitive landscape in the company's industry is evolving with increased levels of spending and innovation from other manufacturers. The company acknowledged the need to compete with other active innovation pipelines and mentioned that shelf space is finite. However, they expressed confidence in their investment levels, particularly in advertising to support innovation. The company is focused on addressing big unmet needs or demand spaces in categories like diapers, adult care, skin health, comfort, fit, and breathability. They have shared their innovation plans with customers and have received strong customer support.
The company's outlook for the quarter/year is focused on regaining market share, implementing smart promotional strategies, and closing the price gap. They aim to grow market shares over the long term and sustain the business by investing in GMK capability and analytics. The company emphasizes innovation and commercial programs to drive growth and is committed to improving market share growth. They expect gross margin improvement of at least 230 basis points, with a goal of reaching pre-COVID levels of 35% and expanding from there. The company has seen strong gains in gross margin in the past two quarters and aims to continue the progress in the back half of the year.
During the meeting, the company also provided an update on its progress on strategic initiatives. They expressed confidence in their programming and innovation, which has had a positive impact on the marketplace. The recent softness in share performance was attributed to the faster pace of price advances in the previous year. In North America, the company faced tough comparisons to the previous year when personal care market shares were elevated due to supply constraints. However, the company is not satisfied with its share performance and aims to improve it. They are committed to investing in their brands, especially in North America, through advertising and product improvements. The company has seen strong sales growth contribution from innovation, with last year's contribution being among the highest in the industry. They are particularly excited about the technology and product innovation in premium diapers, especially in China, where organic growth has been strong. The company has also launched exciting products, such as a two-zone.
Overall, the company's earning call meeting provided insights into their market outlook, plans for product/service expansion, competitive landscape, and outlook for the quarter/year. With a focus on sustainable growth, innovation, and improving market share, the company aims to navigate the challenges and capitalize on opportunities in the industry.