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Management Side
P&G wins first round in ad dispute with Kimberly-Clark

CINCINNATI, Ohio (From news reports) -- Procter & Gamble Co. prevailed in the first round of an advertising dispute with rival Kimberly-Clark Corp. over a claim that Huggies diapers is the "fastest growing brand in hospitals."

The Cincinnati-based maker of Pampers diapers argued that Kimberly-Clark's television, print and online ads were misleading.

P&G also challenged the Kimberly-Clark claim that more hospitals than ever are choosing Huggies, which was based on Kimberly-Clark's internal sales data rather than information corroborated by a third party.

The Pampers brand has been the No. 1 choice of U.S. hospitals since the disposable diapers were introduced to the hospital market in 1971, P&G stated in complaining to the National Advertising Division of the Council for Better Business Bureaus.

In addition, despite the ad claims of Texas-based Kimberly-Clark (NYSE: KMB), the Huggies brand has experienced flat or declining share growth over much of the past year with a significant share disadvantage versus Pampers, P&G stated.

The NAD, which is designed to settle disputes over ads while avoiding the expense of lawsuits, reported that it had recommended Kimberly-Clark modify or discontinue claims that Huggies is the fastest-growing brand in hospitals.

However, Kimberly-Clark said it will appeal the finding regarding the fastest-growing claim to the National Advertising Review Board.

The NAD noted that Kimberly-Clark's claim that Huggies is the fastest-growing brand in hospitals based on volume share growth was directed at impressionable new parents.

The two companies account for 99.5 percent of the hospital market share with the remaining share held by niche brands designed for micro-preemies. P&G sells more than double the number of diapers to hospitals as Kimberly-Clark.

However, Kimberly-Clark claimed that it is selling more diapers to hospitals than in the past. Kimberly-Clark argued that because it and P&G are the only two players worthy of consideration in the hospital diaper market, growth for Huggies indicates a decline for Pampers.

However, P&G stated that Pampers' share had been either flat or increasing over the time period cited by Kimberly-Clark.

Until recently P&G and Kimberly-Clark had relied on a third-party database operated by Global Healthcare Exchange to compare sales and market share data for hospital products. P&G argued that Kimberly-Clark's reliance on its own product shipment data in support of the "fastest growing" claim was fatally flawed.

Competitors such as P&G have no way to verify such a claim, and Kimberly-Clark has no way to accurately measure the sales of competitors because it is no longer relying on external sales data for such an ad claim.

P&G also noted that a significant number of hospitals buy diapers from more than one source, so sales of Pampers could be rising along with those of Huggies.

Kimberly-Clark has experienced a substantial increase in the number of hospitals purchasing Huggies since 2013, the NAD determined. Based on numbers provided to the NAD on a confidential basis, 2017 saw more than 4.5 times the number of hospitals purchasing Huggies than in 2013.

However, the NAD determined that Kimberly-Clark's internal sales data and its arguments regarding P&G's sales of Pampers were "based on assumptions and do not meet the evidentiary standard of providing a reasonable basis for the claim, 'fastest growing brand in hospitals.' "

"It is well-established that an advertiser is responsible for all reasonable interpretations of its claims, not simply the messages it intended to convey," the NAD noted. "Even if a claim is literally true, the context in which it is presented may still cause it to convey a message that is false or misleading to consumers."

The NAD also recommended that Kimberly-Clark discontinue the claim "more hospitals are choosing Huggies." That claim implied more hospitals are selecting Huggies over Pampers, which wasn't supported by the evidence, according to the NAD.

Kimberly-Clark disagreed with the NAD's determination on the claim "more hospitals are choosing Huggies," but the company said it wouldn't appeal and would comply with the recommendation the claim be modified or discontinued.

Pampers is P&G's No. 1 brand, accounting for about $10 billion in sales annually.

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