The integration of new products into new markets under the umbrella of a family brand is un-doubtedly a risky task. Not every extension fits to the brand concept or lives up to expectations. An even higher amount of finesse is demanded when a new product is introduced into the core market of the umbrella brand. This difficult question arose when market research surveys showed that a substantial consumer segment desired a skin cream which could be more easily spread on and absorbed by the skin than NIVEA Cream.
Beiersdorf´s R&D department therefore developed a new cream with a softer consistency, which was named NIVEA Soft. However, before NIVEA Soft could be successfully implemented, traditional management needed to be to be convinced. With a NIVEA market share in Germany of about 45% there were substantial fears of product cannibalisation. These fears were initially providing more weight than the hopes for a further extension of the universal skin care market leadership position. On the other hand it was considered that introductions should not be stopped by potentially unfounded fears. Beiersdorf therefore decided to conduct another fundamental NIVEA brand extension study in Italy and Germany.
Key results of the survey were: NIVEA Cream showed a small residual growth potential. However, the exploitation of these last few percentage points would have been a rather costly affair. – However, NIVEA Soft achieved a promising potential of 22% in Italy and of 23% in Germany. (n.b.: Experience has taught that it is rather coincidental that a brand has almost the same growth potential in two markets.) NIVEA Soft convinced – as intended – a new and different target group than NIVEA Cream. The product cannibalisation rate was therefore relatively small. – These predictions were proven to be reliable by subsequent market performances.
The (nowadays former) Beiersdorf-Manager C. von Dassel and K. M. Wecker (Head of Market Research Beiersdorf cosmed from 1971 – 2002) have written in that respect: “Beiersdorf has used numerous test market simulation methods in order to support successful brand extensions of NIVEA. The method used in this case yielded one of the best fits ever observed between forecasted and real market values. The deviation in the predicted market share were only 0,2 percent points in Italy as well as 0,4% in Germany. Therefore the method (which is currently named “$ales Effect Market Simulation”) achieved high forecast reliability in both countries.” The international study also provided sound advice in other marketing decisions. In spite of high claimed attractiveness of the NIVEA Soft concept, the existence of a high trial purchase barrier was identified: The majority of consumers hesitated to believe before product trial that NIVEA Soft could be more easily spread on and absorbed by the skin than NIVEA Cream. This barrier was overcome by intensive sampling activities. In addition the relevant target group of brand switchers in favour of NIVEA Soft could be reached via the most effective TV-environments and magazines due to product specific media placement research insights. This enabled NIVEA Soft to conquer the number two slot behind NIVEA Cream in a short time period.
The case of NIVEA Soft proves again that reliable strategic market research provides the essential basis for strategic brand success even against competitors which are significantly larger and have access to bigger financial resources than Beiersdorf.
Methods used: Qualitative methods, market simulation, media placement research
