Customer development is one of the three critical capabilities touching the customer, shopper and user that are at the heart of Kimberly-Clark's execution of its Global Business Plan.

Together with innovation and enhancing marketing capability, strengthening relationships with key customers is essential to the company's growth plans.

K-C has a history of deep, mutually beneficial relationships with its customers and has significantly increased emphasis in this area over the past three years, focusing on becoming an "indispensable partner." The approach involves sharing information and best practices as well as collaborating with customers on new product concepts and innovations upstream in the development process.

Virtual Innovation Tools

One strong example is K-C's recently opened Innovation Design Studio in Neenah, Wisconsin. The center uses a proprietary virtual reality system to help K-C and its retail partners identify innovations and gain critical learning. At its core is a state-of-the-art visualization room with advanced virtual reality technologies and equipment, including a high-tech kiosk that simulates a person's shopping experience.

Consumers "walk the aisles" of 3-D, interactive store models, shopping via a touch screen panel and reacting to virtual displays and in-store promotions. Sophisticated eye-tracking technology measures the level of engagement to determine how different shopping environments may influence purchase decisions. Through this system, K-C and its customers can explore hypothetical in-store design and merchandising concepts without the time and cost of physically constructing mock-ups or having to move a single package of product.

"We are one of only a few companies in the world to have an innovation design studio with an integrated virtual reality system," said Ramin Eivaz, vice president of North Atlantic Insight, Strategy and Growth. "We believe ours may well be the most technologically advanced system anywhere."

Retail customers experiencing K-C's virtual reality capabilities in the Innovation Design Studio have responded positively, recognizing the system's ability to capture the essence of their stores and bring consumer shopping behavior insights to life.

Leading grocery retailer Safeway, for example, teamed with K-C to create a new format for the supermarket's baby care aisle based on insights gleaned from the virtual store environment. Safeway tested the reformatted baby aisles at actual stores and saw increased category sales for diapers, training pants, baby wipes and toiletries. Safeway plans to leverage the learning and benefits in additional stores in the future.

Customer Innovation Summits

The Innovation Design Studio's capabilities have enhanced the mutual benefit of another of K-C's key customer development initiatives: an ongoing series of "innovation summits" with major retailers in North America and Europe. K-C hosted 19 of these top-to-top meetings in 2006, fostering more open collaboration and helping obtain insights and early support for a variety of initiatives.

Ongoing dialog has helped guide the company and its customers in making a number of important product and merchandising decisions. For example, K-C's 2007 introduction of HUGGIES® LITTLE SWIMMERS® sun care products was prompted by a key customer who wanted a sun care solution that would make the retailer's baby aisle a one-stop shop for moms. The input helped convince K-C to accelerate its launch of the sun care product line.

Enhancing Capabilities in D&E Markets and Non-Consumer Businesses

K-C has taken a comprehensive, balanced approach to building and leveraging customer relationships in developing and emerging markets, beginning in Latin America. The strategy here focuses on enhancing the capability to understand and meet the needs of both the growing modern trade, including major retailers, and the traditional trade—the variety of smaller customers who represent a significant part of K-C's business in the region.

The initiative, currently in place in 20 countries, has contributed substantially to strong double-digit Latin American sales growth in 2006 and year-to-date in 2007. K-C is in the process of introducing this successful program to countries in Asia and Eastern Europe.

Developing further capabilities in non-consumer businesses is also a priority. Both K-C's health care business and Kimberly-Clark Professional (KCP) are implementing a customer touch management process and system to positively impact sales force effectiveness. Moreover, KCP is leveraging advantaged and differentiated global capabilities and programs to drive increased growth and profitability for both customers and K-C. The effort has helped KCP win several supplier/vendor awards over the last several years.

Tangible Results

K-C's efforts to become an indispensable partner have improved the company's standing among its customers. In the most recent annual Cannondale PoweRanking Survey, U.S. retailers for the first time ranked Kimberly-Clark among the top 10 consumer packaged goods companies. The company's Rite Aid team was recently awarded a 2007 "Vendor of the Year" honor, making Kimberly-Clark the only manufacturer to win the award twice in the past five years. Other accolades for K-C include being named "2006 Supplier of the Year" by Safeway and CVS and, in the baby category, by Wal-Mart.

Moreover, sales growth with K-C's top 10 customers in 2006 was more than twice that of the company's overall sales growth.

"The awards we have won and achievements such as the Cannondale PoweRanking recognition clearly validate that we are on the right path to becoming an indispensable partner to our strategic customers," said Don Quigley, president of Consumer Sales and Customer Development, North America. "K-C is deeply committed to delivering insight-based solutions that benefit our retail partners, consumers and Kimberly-Clark."