NIVEA: MANAGING A MULTI-CATEGORY BRAND1 BACKGROUND As 2005 drew to a close, executives at Beiersdorf’s (BDF) Cosmed division reflected on the growth of their Nivea brand over the last decade and a half. Nivea, the largest cosmetics brand in the world, had successfully defended its position during intense competition in its major European markets. Additionally, the company had expanded into many new markets in South and Latin America, Eastern Europe, and Asia. Nivea had created a number of new sub-brands that broadened the company’s product offerings, including the 1997 launch of a decorative cosmetics line, Nivea Beauté, and the aggressive expansion of Nivea for Men. Nivea also introduced a major scientific breakthrough—an anti-aging coenzyme called Q10—that became an unqualified success and was included in a number of sub-brand products. Nivea’s growth during this time was reflected by its net sales. Sales in Beiersdorf’s Cosmed division, primarily driven by Nivea, grew from €1.4 million billion in 1995 to €3.8 billion in 2005 (see Exhibit 1). In addition, Beiersdorf’s share price grew from €25.69 in 1995 to €85.6 in 2004 after peaking at €127.50 in 2001. As Nivea’s product portfolio expanded, the company faced a new challenge: maintaining growth while preserving the established brand equity. During the 1970s and 1980s, BDF’s Cosmed Division had successfully extended the Nivea brand from a limited range of products—Nivea Crème, Milk, Soap, and Sun—to a full range of skin care and personal care products. Over time, these different product lines had established their own identities as “sub-brands,” independent of and yet still connected to the Nivea Crème core brand. Given the breadth of products sold under the Nivea name, however, there had been debates in the 1990s as to how to achieve the proper synergy between the Nivea Crème core brand and the sub-brands from other product classes. In planning new product developments, Cosmed management sought to ensure that the Nivea brand met the market needs while also remaining true to the heritage of Nivea, as exemplified by flagship moisturizer product Nivea Crème. Nivea’s marketing program in the 1990s and 2000s followed a “sub-brand strategy” where individual sub-brands received budget allocations for independent marketing communications activities, rather than an “umbrella brand” strategy where the Nivea corporate brand was promoted first and foremost. Internally, however, executives debated whether the Nivea Crème brand should continue to receive significant marketing dollars. Some felt that Nivea Crème was the core brand in the Nivea brand franchise and therefore played 1 of 22 | P a g e
the most valuable role. Others worried about how the traditional Nivea Crème image could be maintained if the company also needed to innovate and modernize it. Now that the company had a broad spectrum of successful sub-brands, the big question going forward was how the company could best manage its brand hierarchy. Additionally, management wondered from where the next surge of growth would come and whether it would be crossing Nivea’s brand “boundaries.” DEVELOPMENT OF THE NIVEA BRAND: 1912–1970 Nivea Crème was first introduced into the German market in 1912. In the early 1900s, industrialization led to the emergence of mass markets and branded articles. Society—women in particular—began to appreciate to a greater degree physical appearance and look for products to both care for and beautify the skin. Nivea Crème’s unique water-in-oil emulsion was the first crème to offer both skin care and protection at a reasonable price. The Nivea name came from the Latin word, nives, meaning “snow”—reflecting the snow white color of Nivea Crème. As the world’s first multi-purpose, “universal” skin crème, Nivea Crème was quickly adopted for use by the entire family. Nivea Crème was introduced throughout Europe in 1912; in the United States in 1922; and in South America and other parts of the world in...
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