LoginPage 3: Beiersdorf's growth strategies
i. Market penetration
Selling more products involves either growing the market as a whole or taking market share from competitors.
NIVEA increases its sales by adjusting the marketing mix:
- Product - reformulating products to make them more effective e.g. better at moisturising.
- Price -reflecting good value but at a premium to retailers' own or private labels to represent quality.
- Place - finding new outlets through which to sell the products.
- Promotion - finding more effective ways of reaching the target market, e.g. samples on beauty magazines.
NIVEA Lip Care is a good example of the way in which NIVEA is building an existing product in an existing market, i.e. market penetration. Despite the seasonal nature of demand for lip care products and their relatively low selling price. NIVEA lipcare has developed the brand through monitoring trends in the market and matching these with its existing core competencies in skin care. The core products of this range are 'Essential', 'Repair', 'Rose' and 'Sun'. However, NIVEA has extended the product range with:
- (2000) Strawberry and Cherry
- (2002) Pearl & Shine
- (2003) Gold & Shine and CareGloss & Shine.
The launch of new products, which combine cosmetic trends with NIVEA's traditional skincare expertise, has been very successful. The brand which has around 90% brand awareness, is well recognised by the consumers, whilst the new launches reinforce and reflect known standards. By Christmas 2003, Pearl & Shine had become the market's best selling product.
ii. New product development
Beiersdorf's investment across a broad range of existing products illustrates its commitment to new product development. NIVEA is the master brand that drives the success of the whole NIVEA portfolio of sub-brands. It is the No. 1 skincare brand worldwide. Beiersdorf continually strives to strengthen this position through research in products and markets.
A further example of new product development was the launch of NIVEA Visage Soft Facial Cleansing Wipes in 1999. Market research at the time showed only 66% of UK women used a facial cleanser, whilst only 27% has a face care regime (cleanse, tone, moisturise). Women were looking for an easy, convenient, face care routine. NIVEA's Soft Facial Cleansing Wipes remove eye make-up and cleanse and tone in one simple step thus meeting customers' known requirements. This is the basis of the product's success. Not surprisingly, NIVEA rapidly became the No.1 brand.
iii. Market development
The UK launch of NIVEA deodorant is a good example of market development within the NIVEA range. This is Europe's No. 1 brand. The chart shows 2004 figures for selected countries in Western Europe. It indicates the growth potential for NIVEA deodorant in the UK.
The UK deodorant market is currently worth £300m annually. It is a highly competitive market, dominated by one major manufacturer, Unilever, who account for over 60% of all sales. NIVEA believes its traditional skincare expertise will help to bring new UK consumers into the brand. Currently, 5 million UK consumers buy into the NIVEA brand, all of whom are potential NIVEA deodorant users. By capitalising on this potential Beiersdorf intends to maintain its rapid and consistent growth.
Launching the product in the UK required careful product and market research. Recognising Unilever's dominance of the market, through pre-launch research, NIVEA identified a strong match between traditional NIVEA brand values and those required in a skincaring deodorant, i.e.:
- protection
- suitable for my skin
- mild/skin friendly
- pleasant fragrance
- reliable brand
- high quality.
This allowed NIVEA to enter the market in the more specialist skincaring deodorant segment, away from the bigger, high-performance focused brands, with which the NIVEA brand image had fewer synergies. This market segment gives greater scope for expansion than the entire deodorant market. NIVEA aims to become the number 1 skincaring deodorant in the market, and to control this area, rather than to control the market as a whole. Given the size of the UK deodorant market, dominating the skincaring segment, which accounts for nearly 20% of the market, can be as rewarding as being the leading brand in a smaller market.
iv. Diversification
Beiersdorf has a history of being an innovative company. It has always been prepared to develop new products for new markets. This is well illustrated by the development of the NIVEA FOR MEN range.
This development results from several trends. These include:
- The softening and blurring of "male" and "female" gender roles
- Increased spending on lifestyles with more people attending gyms and caring about their appearance
- New media developments, e.g. the revolution in men's magazines provide direct contact with men through advertising.
NIVEA was the first mass-market brand to set out to develop male facial care/moisturising. The NIVEA FOR MEN range provides straightforward practical solutions to men's skincare needs. It targets men who value their appearance and who see it as a key contributor to self-confidence i.e. NIVEA has diversified into the male sector of the market.
The NIVEA FOR MEN range built on the NIVEA brand heritage. At its launch in the late 1990s, the product range included:
- shaving foam
- shaving gel
- aftershave balm
- sensitive aftershave balm
- moisturising lotion
- intensive cream.
The emphasis was on encouraging men to consider using face care products as a route to building a good self image and self confidence.
