3) CASE STUDY- NIVEA VISAGE Young Read the case below carefully and then answer the questions that follow it: NIVEA is an established name in high quality skin and beauty care products. It is part of a range of brands produced and sold by Beiersdorf. Beiersdorf, founded in 1882, has grown to be a global company specializing in skin and beauty care. In the UK, Beiersdorf's continuing goal is to have its products as close as possible to its consumers, regardless of where they live. Its aims are to understand its consumers in its many different markets and delight them with innovative products for their skin and beauty care needs. This strengthens the trust and appeal of Beiersdorf brands. The business prides itself on being consumer-led and this focus has helped it to grow NIVEA into one of the largest skin care brands in the world. Beiersdorf's continuing programme of market research showed a gap in the UK market. This led to the launch of NIVEA VISAGE Young in 2005 as part of the NIVEA VISAGE range offering a comprehensive selection of products aimed at young women. It carries the strength of the NIVEA brand image to the target market of girls aged 13-19. NIVEA VISAGE Young helps girls to develop a proper skin care routine to help keep their skin looking healthy and beautiful. Beiersdorf's market research identified that younger consumers wanted more specialized face care aimed at their own age group that offered a 'beautifying' benefit, rather than a solution to skin problems. NIVEA VISAGE Young is a skin care range targeted at girls who do not want medicated products but want a regime for their normal skin. Competitor products tend to be problem focused and offer medicated solutions. This gives NIVEA competitive advantage. NIVEA VISAGE Young provides a unique bridge between the teenage market and the adult market. The company improved the product to make it more effective and more consumer-friendly. Beiersdorf tested the improved products on a sample group from its target audience before finalizing the range for re-launch. This testing resulted in a number of changes to existing products. Improvements included: Changing the formula of some products. For example, it removed alcohol from one product and used natural sea salts and minerals in others. Introducing two completely new products. A new modern pack design with a flower pattern and softer colors to appeal to younger women. Changing product descriptions and introducing larger pack sizes. Each of these changes helped to strengthen the product range, to better meet the needs of the market. On re-launch the price for NIVEA VISAGE Young was slightly higher than previously. This reflected its new formulations, packaging and extended product range. However, the company also had to take into account that the target market was both teenage girls and mums buying the product for their daughters. This meant that the price had to offer value for money or it would be out of reach of its target market. As NIVEA VISAGE Young is one of the leading skin care ranges meeting the beautifying needs of this market segment in UK market, it is effectively the price leader. This means that it sets the price level that competitors will follow or undercut. NIVEA needs to regularly review prices should a competitor enter the market at the market growth' point of the product life cycle to ensure that its pricing remains competitive. NIVEA VISAGE Young aims to use as many relevant distribution channels as possible to ensure the widest reach of its products to its target market. The main channels for the product are retail outlets where consumers expect to find skin care ranges. Market research shows that around 20% of this younger target market buys products for themselves in the high street stores when shopping with friends. Research also shows that the majority of purchasers are actually made by mums, buying for teenagers. Mums are more likely to buy the product from supermarkets whilst doing their grocery shopping. NIVEA distributes through a range of outlets that are cost effective but that also reach the highest number of consumers. Its distribution strategies also consider the environmental impact of transport. It uses a central distribution point in the UK. Products arrive from European production plants using contract vehicles for efficiency for onward delivery to retail stores. Beiersdorf does not sell direct to smaller retailers as the volume of products sold would not be cost effective to deliver but it uses wholesalers for these smaller accounts. It doesn't sell directly through its website as the costs of producing small orders would be too high. NIVEA does not plan to use any above-the-line promotion for NIVEA VISAGE Young. The promotion of NIVEA VISAGE Young is consumer-led. Using various below-the-line routes, NIVEA identifies ways of talking to teenagers (and their mums) directly. A key part of the strategy is the use of product samples. These allow customers to touch, feel, smell and try the products. NIVEA VISAGE Young launched an interactive online magazine called FYI (Fun, Young &Independent) to raise awareness of the brand. The concept behind the magazine is to give teenage girls the confidence to become young women and to enjoy their new-found independence. NIVEA VISAGE Young has recognized the power of social network sites for this young audience and also has pages on MySpace, Facebook and Bebo. The company is using the power of new media as part of the mix to grow awareness amongst the target audience. NIVEA VISAGE Young is a skincare range in the UK market designed to enhance the skin and beauty of the teenage consumer rather than being medicated to treat skin problems. As such, it has created a clear position in the market. This shows that NIVEA understands its consumers and has produced this differentiated product range in order to meet their needs. CASE-BASED QUESTIONS i) Apply Porters Five Forces Model to analyze the competitive forces that Nivea has to face in the skin care industry. (5 marks) ii) Which Market Position does Nivea Visage Young hold in UK market, justify your answer? Then, based on the market position it holds, which competitive strategy is it using to defeat the competition (please explain a specific strategy)? (2 mark) iii) Below is the BAV model by Y&R. It uses four pillars to analyze Brand Equity. Where would you place the whole Branded House of Nivea and why (explain via the pillar pattern) (2 mark) The PowerGrid Power leaders Niche/Unrealised potential Declining leaders Brand strength (Differentiation and Relevance) New Eroded Unfocused Brand stature {Esteem and Familiarity) i) Which brand development strategy did Nivea follow by launching Nivea Visage Young (in term of product category and brand name) and HOW? (2 marks) ii) What can Nivea Visage Young do (other than what is given in the case) in order to achieve Brand Resonance; give concrete tactics and tools in the answer? (4 marks)