Emerald Emerging Markets Case Studies

Morocco's Novatis Group: diaper manufacturing in a developing country

Shahram Taj Souheil Badaa Sarena Garcia-DeLeone Beena George
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 Morocco’s Novatis Group: diaper
manufacturing in a developing country
Shahram Taj, Souheil Badaa, Sarena Garcia-DeLeone and Beena George
Shahram Taj,
Souheil Badaa,
Sarena Garcia-DeLeone
and Beena George are all
based at Cameron School
Downloaded by Monash University At 23:45 11 June 2016 (PT)
of Business, University of
St Thomas, Houston, Texas,
USA.
Disclaimer. This case is written
solely for educational purposes
and is not intended to represent
successful or unsuccessful
managerial decision making.
The authors may have
disguised names; financial and
other recognizable information
to protect confidentiality.
DOI 10.1108/20450621211295569
Introduction
Novatis Group entered the disposable baby diaper market in Morocco in 2003. Battling with
established global brands for market share, the company today has captured a robust lead
in the Moroccan market with its ‘‘Dalaa’’ brand. The company offers different brands of
diapers to the market through Novatis, its baby diaper division; Novatis competes in different
segments of the diaper industry in Morocco. As the company continues to grow, the
management of the Novatis Group debates strategies to direct growth and the positioning of
its different diaper brands as well as the possibility of offering related products to the
Moroccan market.
Company history and background
The President and CEO of Novatis Group started his career off modestly. Originally from
Meknes, Morocco, he earned a degree in Economics in college. During his college years as
well as after graduation, he worked as a purchasing manager for a plastic and textile
manufacturing company. In 1989, he started a polymers raw material and chemical
import/export company called Eureka Trading, marking the start of a long and successful
entrepreneurial career.
While traveling through Europe in 2002, he was offered a trade deal at a bargain price; this
deal included a couple of baby diaper shipping containers. Considering the opportunity was
too good to ignore, he concluded the deal and brought the diapers back to Morocco to sell.
Once the shipment arrived in Morocco, the diapers quickly sold out. Seeing the high
demand for diapers in Morocco, he set off to create a baby diaper manufacturing company
in Morocco that could prosper with the emerging presence of the middle class and
consequent increasing demand for diapers.
Multinational companies are starting to expand into Morocco. Renault, a global car
manufacturer, has a manufacturing facility near Tangier, where cars are produced and
shipped to other countries. Procter and Gamble also distributes and manufactures products
in Morocco. These multinational companies are not the only ones that have an opportunity to
tap into the Moroccan market. With the growing Moroccan economy and industry growth
rate of 4.4 percent (CIA, 2012), local entrepreneurs are making considerable investments in
the country. Novatis Group is one such local company, producing disposable baby diapers
that are sold solely in Morocco. While Novatis Group’s planned marketing efforts targets the
middle class consumers living in the urban areas, the company also reaches the
economically disadvantaged groups living in smaller cities and distant rural areas through
retailers and small traditional marketplaces.
The baby diaper manufacturing arm of the Novatis Group has operated for almost ten years
as a Moroccan company, servicing the country’s diaper needs. Though there is a fierce
VOL. 2 NO. 8 2012, pp. 1-11, Q Emerald Group Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1
 competition with global brands, such as Pampers and Huggies, Novatis Group has
experienced more demand for their products than what they can supply. The company has
plans to increase the production capacity, yet other factors must be considered with the
increase in production. The objective of this case is to examine the current market
opportunities in Morocco, the company’s brands, production, and distribution in order to
create a strategy for the future direction of the company.

Manufacturing a diaper
The history of diapers
The use of diapers dates back further than one would probably imagine. An examination
of history reveals that diapers made of milkweed leaves, animal skins, and swaddling
cloth were used during the ancient Egyptian, Aztec, and Roman periods (Richer, 2007a).
The year 1886, marks the beginning of the mass manufacturing of cloth diapers. 62 years
later, Johnson & Johnson brought disposable diapers to the USA in 1948. In the early
1960s, Procter and Gamble began manufacturing their disposable diaper brand,
Pampers, which became a national product by 1969. Procter and Gamble’s main
competitor, Kimberly Clark, followed the diaper trend and broke into the national market
by 1977 (Richer, 2007b).
According to Richer (2005), the most critical events, that shaped the present diaper industry
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include:

1970 – introduction of the fastening system integrated with the diaper.

1972 – the use of fluff instead of creped tissue.

1986 – the use of super absorbent polymer.

1987 – the use of frontal tape and hook and loop systems.

1989 – the addition of leg cuffs anti-leak barriers.

1994 – the introduction of cloth-like back sheets.

1994 – the training pant diaper for larger babies.

Other innovations in the history of diapers include:

1978 – Kimberly Clark introduces a contoured shape diaper.

1992 – Kimberly Clark introduces elastic legbands.

1993 – Kimberly Clark introduces Velcro tab fasterner.

1994 – Procter and Gamble introduces stretch panels to the diapers.

1996 – Drypers introduces diapers with baking soda.

1997 – Drypers creates diapers with added aloe vera lotion.

1997 – Kimberly Clark introduces little swimmers.

1999 – Procter and Gamble create rash guard diapers with added petrolatum and stearate.
Source: Parry and Jones (2001), Pampers: Disposable Diaper War (A).
Diaper usage has expanded globally with current market saturation in developed countries,
and planned expansion into developing countries. Countries with the highest market
penetration for baby diapers includes the USA, Mexico, Japan, Brazil, Germany, France,
UK, Philippines, South Korea, and China (Richer, 2005). Richer (2005) also notes that the
largest future growth areas for diaper market penetration will include developing nations

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PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012
 such as Uganda, Yemen, Afghanistan, Congo, Mali, Nigeria, Madagascar, Burkina Faso,
Niger, Malawi, and Angola. Some countries will experience a reduction in the volume of
diapers needed due to lower birth rates within the next 25 years.

Diaper market in Morocco

In Morocco’s developing economy, washable cloth diapers was the product of choice for
most families because of the high costs of diapers. In addition, the availability of packaged
diapers was limited in the rural areas, with most diaper companies focusing on the higher
income groups. In the early 2000s, market penetration (defined as number of consumers
that have used a baby diaper at least once in six months) was around 30 percent nationally.
Typically, the customers of the packaged diapers belonged to the higher income groups
who had access to the retail outlets where these products were sold.
Before Novatis entered the market, the baby diaper market was composed of only a very few
brands, with Pampers capturing 80 percent of the market. The rest was fragmented between
small players such as the brand ‘‘Babidou’’, and illegally smuggled diapers including
Kimberly Clark’s ‘‘Huggies’’, from the Moroccan-inland Spanish city of Ceuta. Today, market
penetration is about 72 percent, with Novatis’ brand ‘‘Dalaa’’ holding over 56 percent,
Pampers 28 percent, and the rest split among small brands holding about 1-2 percent
market share each; there is still a significant volume of illegally smuggled Huggies diapers
(Source: Nielsen data).
Table I shows the positioning, distribution channels, market share, and price points of baby
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diapers in Morocco. It should be noted that the profit margin is very slim in this market and
companies rely heavily on volume.

Manufacturing diapers
One diaper can contain up to 13 different components: a polyethylene or polypropylene
back sheet, tissue paper, hot melts to glue the pad/elastics/other diaper parts, hydrophobic
non-woven materials for the leg cuffs, hydrophilic non-woven top sheet, elastic cuffs made
from polyurethane, polyester foam, synthetic rubber, or Spandex, polypropylene and Velcro
adhesive tapes to fasten the diaper, polypropylene film used for the frontal tapes, a pad for
absorption made from cellulose, the acquisition and distribution layer (ADL), which is
located between the top sheet and the absorbent core, sodium polyacrylate (SAP) in the
form of fine granules that allows for retention in the diaper, additional top sheet surface
materials such as lotions to differentiate the diaper products, and decorated films or wetness
indicators that also allow for differentiation. See Figure 1 for an illustration of a diaper and
components.
The manufacturing process is made efficient through the use of technologically advanced
machinery to combine the materials, cut the different layers into the appropriate shape and
size, sort and package the diapers. With this sophisticated machinery, up to 330 diapers can

Table I Baby diaper market in Morocco (2012 est.)

Market Price per unit
Product Manufacture Positioning Distribution channela share (%) (Moroccan Derham)

Dalaa Novatis Price, middle to lower income, Multi-tiered and streamlined 56 1.5
Tier 2 (straight to retailer)
Câlinb Novatis Distribution channel Streamlined (straight to retailer)
Winny Novatis Quality, higher income, Tier 2 Streamlined (straight to retailer) 1 1.8
Pampers Procter & Gamble Tier 2 28 2
Huggies Kimberly Clark Tier 1 Streamlined (straight to retailer) 6 3.3
Others Tier 3 Multi-tiered 9 1.5 or less

Notes: aDistribution channels are further discussed in the section on the operations of Novatis; bNovatis stopped producing and
marketing Calin in 2010
Source: http://novatis-group.com/index.php?option¼ com_content&view¼article&id¼57&Itemid¼ 81&lang¼en

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VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3
 Figure 1 Diaper components

POLYPROPYLENE

COMPOSITE FIBER
POLYETHYLENE
POLYCRYLATE

Source: Richer Investment Diaper Consulting Services (2007)

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be produced per minute; the machinery can be sourced from vendors in the USA, Europe,
and Asian markets (Richer, 2007c).

Novatis Group
Novatis Group was created in February 2003 and is comprised of seven companies:
Novatis, Norsudex, Food & Goods Distribution (FGD), Brands Communication, Eureka
Trading, Nawroz, and Jeesr Industries. The company’s offices and two production sites of
the group, Novatis and Norsudex, are located at the heart of Berrechid’s industrial zone, in a
strategic area between the kingdom’s economic capital and the rest of the country. The
following statements are from the Novatis Group web site about their mission and values
(Novatis Group web site, 2012).
Novatis Group corporate mission is ‘‘Personal hygiene and health’’. The group develops a
corporate culture with which every employee can identify. This culture relies on three
fundamental values: quality, proximity and citizenship:

Highest quality guarantee. The quality of our products is guaranteed by our choice of raw
materials, high-performance production equipment as well as the high-technical skills of our
managers.

Close proximity to the consumers. Thanks to a distribution network that covers the whole of
Morocco, Novatis remains as close as possible to the consumers’ expectations.

Taking part in the kingdom’s development. By stimulating employment and being socially
committed, Novatis contributes to our country’s development and dynamism. Novatis is also
a socially responsible player who is committed to responsible initiatives. By supporting
orphan charities, the group contributes to better living conditions for these children.

Novatis
Novatis is the diaper division of the group, and markets two brand of baby diapers: Dalaa
and Winny. Novatis serves the growing urban markets and has opportunities to service the
rural areas where there is a growing awareness of diaper use, although there are limited
disposal options. Market positioning information for these two brands is presented in Table I.

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PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012
 Besides baby diapers, Novatis’ product line consists of adult diapers, baby wipes, and
tissues; these products constitute only a minor share of the revenue for Novatis. Novatis
markets adult diapers under the brand names Prima, Nova, and Harmonia. There are no
market share data available for this segment; however, company reports indicate that Nova
is clearly the market leader in this category through volume share.
Competition and marketing strategies. Dalaa, meaning ‘‘to pamper,’’ is Novatis largest
selling baby diaper brand and is broadly distributed across all market segments while Winny
acts as the premier brand and is distributed only to the large retail outlets targeting higher
income groups. In 2010, Novatis discontinued the production of a baby diaper that was
marketed under the brand name ‘‘Calin’’. This decision led from an ongoing examination of
the market segmentation approaches of Novatis. In the initial years, segmentation decisions
were more distribution channel-oriented than customer-focused; the company has shifted to
a more careful consideration of segmentation and market positioning for its products.
Dalaa and Winny face fierce import competitors including Procter and Gamble’s Pampers
and Kimberly Clark’s Huggies. The Moroccan Government wants to encourage the national
industry and has increased tariffs on bulk imported diapers, resulting in a decrease of
imported diapers by 5 percent.
Novatis Group combats the competition by using their limited budget to create and launch
advertising campaigns during the holy month of Ramadan. See Figure 2 containing the web
links for the different commercials that have been created.
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Distribution channels. Of the two baby diaper brands produced by Novatis, Dalaa is
considered a better value proposition; the brand is targeted towards the middle to lower
income consumers. Novatis uses two distribution channels for the diapers: the multi-tiered
distribution channel and the streamlined (straight to retailer) channel. See Figure 3 for an
illustration of the two distribution channels. The traditional multi-tiered channel places the
product in small- to mid-sized shops and retail outlets, where the traditional custom of
negotiation takes place between the seller and buyer and personal relationships are highly
valued. In order to distribute through the multi-tiered channels, the diapers must travel from
Novatis Group on Dalaa branded trucks to wholesalers; the diapers move down the chain
from distributors to semi-wholesalers to retailers. The Dalaa brand diapers are distributed to
the small and mid-sized outlets through this channel. Small stores and retail outlets tend to
sell diapers individually, since many mothers can only afford to purchase one to two diapers
per day. The downside to selling diapers individually is that it creates a perception of low
quality amongst the middle and upper middle class consumers (Novatis Group, 2011).
Overall, Novatis Group has maintained very good relationships with the wholesalers that they
serve, with the President maintaining a personal relationship with each one.
As a result of the improving economic conditions and rising standards for quality of life, large
retailers have recently started doing business in Morocco. These retailers include Marjane,
Acima (Auchan in France), and Carrefour. The diapers travel straight from the Novatis’
manufacturing facility to the large retail store locations in the Dalaa trucks. Both Winny
and Dalaa brands are distributed through this channel. While the product passes through
fewer intermediaries in this channel, all vendors struggle in this market for the limited
shelf space and settle for lower profit margins. Novatis distributes to 101 supermarkets out of
200 existing supermarkets, which can be viewed as the modern market in Morocco. With no
exclusive agreements, Novatis brands compete for shelf space at these stores with major
brands such as Pampers and Huggies. Overall, Novatis distributes 85 percent of the diapers
to the traditional small- to mid-sized retail outlets and 15 percent to the large retail outlets
(Novatis Group, 2011).
Manufacturing operations. Novatis Group has an advantage from their continuous presence
in Morocco and close relationships with the distributors, allowing the company to have a
deeper understanding of the market. Novatis Group has always had a physical presence in
the country, while Kimberly Clark does not officially exist in Morocco. Procter and Gamble
has a diaper manufacturing facility in Mohammedia, Morocco, about ten miles north of
Casablanca. However, the facility was closed from 2009 to 2011. In November 2011, the

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VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5
 Figure 2 Advertising

Description and Link Commercial Image

Dalaa commercial during Ramadan using humor

http://www.youtube.com/watch?v=G57V3ESgkes

Dalaa commercial during Ramadan using sentimentality

http://youtu.be/uCGTxzNcJe8
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Dalaa commercial showing Traditional Market

http://www.youtube.com/watch?v=ixeI_uQMZ-w

Source: Youtube.com

facility was re-opened after the company scrapped the lines and completely rebuilt (Novatis
Group, 2011). While the company may be perceived as a follower compared to Procter and
Gamble and Kimberly Clark in the diaper business, Novatis Group strives to achieve quality
control in manufacturing, and quickly adopts product and technological innovations. For
instance, Dalaa uses plastic backsheet on the diapers, allowing for a 2 percent reduction in
the per unit price compared to Pampers and Huggies who use a non-woven plastic
backsheet.

The manufacturing facilities are currently running full speed with their production lines,
using Italian made machinery. The company has 200 employees in both locations together.
A total of 2,000 diapers are produced per minute, with three shifts running each 24-hour
period. With a reputation for producing quality products, the company has captured a
considerable part of the baby diaper market share in Morocco, as shown in Table I. Novatis
sells to 450 wholesalers, 3,000 retailers, and has 100 key accounts. Overall, 60 million
diapers are produced and sold each month. Production currently meets market demand,
and there is no excess finished product for holding in inventory. A three month raw material

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PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012
 Figure 3 Dalaa distribution channel
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supply is held in inventory, due to the long lead times for supplies sourced from countries
world-wide including the USA, Canada, France, Spain, Italy, Germany, Japan, and Saudi
Arabia. The raw materials are subject to price changes; however, with no local sources for
the materials and the bulkiness of the materials limiting amount of inventory that can be held,
Novatis is dependent on these global sources for timely supplies.

Norsudex
In October 2006, Novatis Group acquired Norsudex, a company that had been in the diaper
industry for 20 years. With some modifications, Novatis Group changed Norsudex to an
adult diaper production facility producing 120 diapers per minute. By 2012, Norsudex will
include an additional line for baby diapers, as well as a line for sanitary napkins.

Food & Goods Distribution

FGD was founded in May 2007, and is responsible for coordinating all of the product
distribution for the Novatis Group. FGD operates its own logistics centre, including
50 branded trucks and cars, 300 non-branded trucks, and a storage area of 3,800 square
meters. This operation allows for secure availability of merchandise, lower transportation
costs, and shorter delivery distances. According to Novatis Group (2011), FGD has had an
incredibly positive impact on the company with an overall better understanding of the
Moroccan market, a closer relationship with the customers, and a 36 percent increase in
sales. Novatis Group is at the center of the market, with the competitive advantage of having
potential distribution systems that could reach the rural areas of the country.

Brands Communication
The new addition of Brands Communication serves to provide marketing and
communication services for all companies within Novatis Group. This company has
15 years of experience in the communication and advertising business.

Eureka Trading
Eureka Trading was the first company, founded in 1989 by the current President and CEO of
Novatis Group. The company started with the import of raw material plastics and chemical
products, and has now become a diversified trader, dealing with products ranging from
baby strollers to polyethylene.

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VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7
 Jeesr Industries
Jeesr Industries was founded in June 2010 in order to meet the demand for hygienic
paper products; the company’s manufacturing facilities include a paper mill plant and a
converting plant. The capacity for the paper mill is 100 tons per day and for the converting
plant it is 30 tons per day. The goal for this company is to become the leader in tissue
paper products.

Morocco’s economic condition

Morocco is located in Northern Africa, bordering and connecting the North Atlantic Ocean
and the Mediterranean Sea with the strategic Strait of Gibraltar in south of Spain. Its
neighbours are Algeria and Western Sahara. With a total area of 446,550 square kilometres,
it is a little larger than the state of California. Morocco is governed by a constitutional
monarchy. In 2011, a constitutional reform was passed by popular referendum that gives
more powers to parliament and the prime minister.
Morocco is experiencing a high level of economic stability and growth. Government
policies and initiatives like ‘‘Credit the Young Promoters’’ that encourage self-employment
and business growth have contributed to this advancement. These developmental
policies are supported with investments in infrastructure like the construction of the
new Tangier Port-Med; such progress has resulted in the emergence and growth of a
middle class.
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Economy
The Moroccan economy benefits from low labor costs as well as its close proximity to
Europe. The country has developed a diverse and market-oriented economy since 1980s.
King Mohammed VI has contributed to creating stability through lowering inflation,
improving the overall financial performance of the country, and advancing the development
of the service and industrial sectors since he became king in 1999 (CIA, 2012). The recently
constructed port (Tangier-Med) and the free trade zone near Tangier have had a favourable
economic effect on Morocco with an increase of jobs and increased foreign investment
(Kingdom of Morocco, 2010). This has encouraged foreign companies to invest in Morocco;
for example, Renault, which has had a sales presence in Morocco for the past 80 years,
recently built an industrial complex near the Tangier-Med Port. Renault manufactures cars
in Morocco, taking advantage of the lower wages and free trade agreements, and ships
the cars out to the European countries for sale (Renault, 2010). Morocco is the only
African country that has a bilateral Free Trade Agreement with the USA. In 2008, Morocco
entered into an Advanced Status Agreement with the European Union (CIA, 2012). Key
sectors of the economy include agriculture, tourism, phosphates, textiles, apparel, and
subcomponents.
Table II provides a quick snapshot of some of the key economic issues including
unemployment rate, poverty, and household income or consumption rate among the top
and the bottom ten percent in Morocco.

Demographics
Morocco is a predominantly Arab-Berber country with 99.1 percent of the population
Arab-Berber. Arabic, Berber, and French are spoken in Morocco, with the use of the French
language seen as prestigious and the preferred language for business, government,
and diplomatic communications. Of the total population, 58 percent is located in urban
areas, with an urbanization rate of 2.1 percent (see Table III for population data). The
average woman has two children, and in 2011, there were approximately 1.8 million babies’
ages zero to three (CIA, 2012). Families traditionally had four to five children, but the current
trend has moved towards having two to three children, with most women having children
during their mid to late 20s and delivered mostly in hospitals. In terms of diaper usage, the
urban residents use approximately two to three diapers per day, while rural residents use
one to two diapers per week.

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PAGE 8 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012
 Table II Morocco economic data

2011 2010 2009 2008

GDP purchasing power parity (USD) 164.7 billion 157.9 billion 152.3 billion 139.9 billion
GDP – real growth rate (%) 4.3 3.7 4.9 5.6
GDP – per capita (PPP) in USD $5,100 $5,000 $4,800 $4,500
Unemployment rate 8.90% 9.10%
Inflation rate (consumer prices) 1.4% 1%
GDP – composition by sector (2011 est.)
Agriculture 16.60%
Industry 32.20%
Services 51.20%
Population below poverty line 15%
Household income or consumption by percentage share
Lowest 10% 2.7%
Highest 10% 33.2%
Morocco exports and imports
Exports $20.99 billion $17.58 billion $14.05 billion
Imports $40.39 billion $32.65 billion $30.41 billion
Industrial production growth rate (2010 est.) 4.4%

Source: www.cia.gov/library/publications/the-world-factbook/geos/mo.html
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Table III Morocco population data (July 2012)

Population 32,309,239
Age structure 0-14 years 15-64 years 65þ
Total (%) 28 66 6
Male 4,500,299 10,493,176 899,693
Female 4,366,656 10,954,845 1,094,570
Median age total 27 years
Male 27 years
Female 28 years
Population growth rate 1.05%
Birth rate 190 births/10,000 population
Death rate 48 deaths/10,000 population
Net migration rate 237 migrants/10,000 population
Infant mortality rate 265 deaths/100,000 live births
Life expectancy at birth 76 years
Total fertility rate Two children born/woman
Urbanization and city population (2010 est.)
Urban population 58%
Rate of urbanization (2010-2015 est.) 2.10%
Major cities – population (2009)
Casablanca 3.245 million
Rabat 1.77 million
Fes 1.044 million
Marrakech 909,000
Tangier 768,000

Source: www.cia.gov/library/publications/the-world-factbook/geos/mo.html

Many opportunities have opened up to Moroccan women in recent years. This progress has
been bolstered by changes in the Family Code and the Code of Nationality (Ministry of
Justice, 2004 and 2007) to promote equality between men and women; this has also resulted
in the adoption of a new family law that includes a number of measures to advance women’s
rights. The government has also made women’s health and safe motherhood a priority and
has financed several programs to reduce maternal mortality, increase accessibility of family
planning services, upgrading of maternal health care, and provide guaranteed access to
obstetrical care (Scommegna, 2012; Semlali, 2010).

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VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 9
 Through the combined efforts of the Moroccan Government and international organizations,
programs that support the entry of women into the workforce and develop the careers of
business women have been implemented. These initiatives include programs to develop
projects led by women entrepreneurs and the allocation of funding to support
income-generating projects for rural women. These policies for economic integration of
Moroccan women are intended to fight poverty and enhance the development of women’s
potential. New legal regulations have also provided the woman the right to equal access to
commercial activity (Women Political Participation Organization, 2009).

Media
Two local television networks and a foreign broadcast available by satellite dish ensure access
to television programming for a majority of the population. The two local networks include
radio-television Marocaine, a privately owned company, and another network which is partially
owned by the state. Residents in rural areas also have access to television network
programming. In 2011, Novatis Group spent $2.0 million in television advertising including
Ramadan, according to Novatis Group private communication, allowing for brand equity
building in the rural areas and among those who are illiterate. Table IV shows communication
data in 2009. There are over 13 million internet users in 2009. It is expected that the number of
internet users will increase as literacy rates rise (See Table V for literacy and education data).

Novatis Group’s future plans

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Novatis has reached the maximum production capacity with the baby diaper line and the
company is selling every produced item. An additional production line is in the plans; each
machine costs anywhere between $4 and $7 million per line and the cost of upgrades surpass
the cost of the actual line. It can take nine to ten months to install the line. While the plans to add
an additional line are in place, the company is also concerned with their marketing efforts in
Keywords:
order to be certain that increased production will be met with enough demand.
Developing countries,
Manufacturing, Now, Novatis needs to plan for the increased production of baby diapers in terms of capacity
Diaper, management and devise a marketing strategy to ensure that the demand will continue to rise.
Distribution, The development of new brands and the positioning of all brands must also be addressed. The
Advertising, company could expand further into rural markets; another option is expansion into neighbouring
Bottom of the pyramid, areas in that region of the world. These decisions have to be balanced with the strengths and
Manufacturing systems, growth opportunities for the group as a whole. The leadership of the Novatis Group is facing
Morocco challenging questions that must be addressed to continue on this growth trajectory.

Table IV Morocco communication data (2009)

Telephones – main lines in use 3.749 million
Telephones – mobile cellular 31.928 million
Internet hosts 277,793
Internet users 13.213 million

Source: www.cia.gov/library/publications/the-world-factbook/geos/mo.html

Table V Morocco literacy and education data (2009)

Literacy (age 15 þ can read and write)
Total 56.1%
Male 68.9%
Female 43.9%
School life expectancy
Total 10 years
Male 11 years
Female 10 years

Source: www.cia.gov/library/publications/the-world-factbook/geos/mo.html

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 References
CIA (2012), The World Factbook, Central Intelligence Agency, Washington, DC.
Kingdom of Morocco (2010), Tanger Mediterranean Special Agency, available at: www.tmsa.ma/
?lang¼ en&id¼ 27 (accessed 23 March 2012).
Novatis Group (2011), Novatis Group Presentation, Novatis Group, Berrechid.
Parry, M.E. and Jones, M. (2001), Pampers: The Disposable Diaper War (A), Darden Business
Publishing, Charlottesville, VA.
Renault (2010), Renault Au Maroc, available at: www.renault.ma/decouvrez-renault/renault-maroc/
industrie/ (accessed 7 March 2012).
Richer, C. (2005), The Diaper Industry in the Next 25 Years, Diaper Consulting Services, Minneapolis, MN.

Richer, C. (2007a), Diaper Evolution Time Line, Diaper Consulting Services, Minneapolis, MN.
Richer, C. (2007b), Disposable Diaper History, Diaper Consulting Services, Minneapolis, MN.
Richer, C. (2007c), The Disposable Diaper Industry Source, available at: www.disposablediaper.net/
content.asp?6 (accessed 13 October 2011).
Scommegna, P. (2012), In Morocco, More Modern Contraceptive Use Plays Key Rule in Decreasing
Maternal Deaths, available at: www.prb.org/Articles/2012/morocco-maternal-deaths.aspx?p¼1
(accessed 23 October 2012).
Semlali, H. (2010), The Morocco Country Case Study: Health Care Environments in Morocco, Positive
Downloaded by Monash University At 23:45 11 June 2016 (PT)

Practice Environments, available at: www.who.int/workforcealliance/knowledge/PPE_Morocco_

CaseStudy.pdf (accessed 23 October 2012).

Further reading
Novatis Group (2012), available at: http://novatis-group.com/ (accessed 17 October 2012).
Participation des Femmes à la vie économique (2009), Participation des femmes à la vie économique et
insertion dans le processus de decision, available at: www.womenpoliticalparticipation.org/upload/
publication/publication17.pdf (accessed 23 October 2012).

Corresponding authors
Shahram Taj can be contacted at: Tajs@stthom.edu and Beena George can be contacted at:
GeorgeB@stthom.edu

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