CASE STUDIES

Procter & Gamble Shampoo Case Study

Addressing individualism trends in the haircare market
Reference Code: CSCM0176 Publication Date: June 2008

DATAMONITOR VIEW Catalyst

Procter & Gamble has continued to increase its share of the shampoo market in the US, and now accounts for almost a quarter of sales in this field. This case study looks at the companys brands and how they have evolved and diversified in order to drive growth in the mature US haircare market.

Summary
Shampoo products are no longer expected to simply clean the hair. More demanding consumers and more individual hairstyles mean that tangible benefits are now sought after in shampoos. While traditionally shampoo products were designed to be suitable for all, consumers are now looking for products suitable for their specific hair type. Pantene was acquired by Procter & Gamble in 1985, and has been able to grow from its prestige and exclusive routes into one of the most successful mass-market CPG brands in the world. The brand has managed to maintain a premium aspect despite this mass-market appeal. Head and Shoulders has been sold in the US for over 40 years and has traditionally been known for the antidandruff benefits of its products. Procter & Gamble has been able to successfully reposition Head and Shoulders by introducing several new collections designed to cater for different consumer needs. The female focused Herbal Essences brand has experienced strong sales growth as the brand continues to stress the benefits of its natural ingredients. Synthetic ingredients have fallen out of favor with some consumers who have become wary of potential damage to health and the environment. The Aussie range of shampoos was native to Australia, but Procter & Gamble has continued to stress this heritage when selling the brand in the US. This is another brand which has undergone a recent relaunch, with more collections added to cater for specific consumer needs.

Procter & Gamble Shampoo Case Study

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Procter & Gamble Shampoo Case Study

ANALYSIS Consumers demand more from haircare products

Shampoos have diversified to meet consumer needs
Traditionally, shampoos were formulated for three different hair types normal, greasy and dry. In recent years, the haircare market has diversified significantly to cater for many more hair-types. A shampoo which simply cleans is unlikely to find favor with consumers who are demanding functional benefits. Specific products for colored, damaged, curly and straight hair among many others have become the norm in shampoos, moving them away from their historical positioning as toiletries and towards beauty products used as part of a regime. An increased emphasis has been placed on personal appearance, with hairstyles being a big part of this. Consumers now associate their personal appearance with health and wellbeing.

Figure 1:

The diversification of the haircare market

Consumers demand more functional benefits from haircare products - shampoos are expected to do much more than simply clean the hair

Widespread fears over a number of synthetic compounds causing damage to health and the environment have prompted a strong demand for natural ingredients

Advancing technology has enabled manufacturers to successfully include ingredients in shampoos which can deliver functional benefits

The haircare market has diversified

Increased individualism among consumers has lead to the success of products formulated for specific hair types

More unique hairstyles are popular with consumers and these styles will inevitably involve more day-to-day maintenance

Haircare products are now viewed as beauty products rather than their traditional positioning as toiletries

Source: Datamonitor analysis

DATAMONITOR

Shampoos are often positioned to assist hairstyles and repair damage

Perming, straightening and coloring hair are all popular treatments with consumers, and each one of these processes causes damage. This creates markets for products which can help to slow down and repair this damage as part of an everyday routine. Many shampoo brands now offer ranges of products suitable for those who regularly treat their hair in this

Procter & Gamble Shampoo Case Study

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Procter & Gamble Shampoo Case Study

manner. In particular, straightening hair has become popular with consumers since hair straighteners were made available for mass distribution. The straightening process involves using hot appliances on the hair, and shampoo brands have adapted by providing ranges of products for heat-damaged hair. Shampoos now also offer assistance in maintaining hairstyles, with products designed to enhance and protect color, along with formulations which maintain curls after the perming process. The global megatrend for individualism has also seen consumers demand ever more unique hairstyles, which will invariably require more maintenance.

Mass-market shampoo brands have continued to increase sales in the US

Despite the shift to more niche-based and premium products, mass-market brands have continued to gain market share in the US. Brands have diversified portfolios in order to provide specific solutions for particular hair types, while several massmarket labels have attempted to emphasize premium credentials. The different needs of different hair types have been more widely publicized and ethnic-specific brands are now becoming more commonplace in the market. Traditionally, consumers from minority ethnic brands have used mass-market brands due to a lack of choice. While many ethnic-specific brands have been introduced to the market, mass-market brands have continued to fare better in this category.

Procter & Gamble has adapted to consumer demands

Procter & Gamble has continued to see its haircare brands achieve strong sales growth and the group accounted for 24.4% of all sales in the US shampoo market in 2006. The company has applied several strategies across its brands, many of which have been relaunched and repackaged. Rather than try to provide single products which are suitable for everybody, the companys brands have diversified in an attempt to cater for the growing number of niches in the market. The group has also found success in relaunching a number of its brands in order to raise premium credentials.

Procter & Gamble has turned Pantene into one of the most successful CPG brands in the world
Pantene looks to retain its premium positioning
Pantene is widely recognized as the most successful haircare brand in the world, with global sales consistently over $1 billion. Procter & Gamble acquired Pantene in 1985, when the brand was a true prestige product sold almost exclusively through department stores. The company moved Pantene through the mass market channels and it became the worlds best selling haircare brand in 1995. This position has been maintained and the group has been able to continue increasing sales. The brand was given a relaunch in 2007, with the introduction of a new logo and packaging. The move was designed to give Pantene a more upscale and premium look, akin to its previous positioning as a prestige product. The new packaging

Procter & Gamble Shampoo Case Study

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Procter & Gamble Shampoo Case Study

featured updated color schemes, which helped to categorize Pantenes products more easily. Variants of Pantene now include Hydrating Curls, Color Revival, Extra Straight and Anti-Frizz. Each range features a different metallic foil emblem, a measure designed to bring a more premium aspect to Pantenes packaging.

Figure 2:

The unveiling of the new Pantene logo

Source: Pantene

DATAMONITOR

Ethnic-specific ranges prove popular in the US

Procter & Gamble has also introduced variants of Pantene which are suitable for different ethnic hair types. The Relaxed & Natural range comprises products designed to provide anti-breakage and moisturizing benefits. These are the two properties most sought after by African-American and Hispanic consumers in the US, according to Datamonitor's salon survey 2007. The My Black Is Beautiful initiative was launched by Procter & Gamble in 2007 in order to promote several of its brands to African American women. The ongoing campaign features conventional advertising and sponsorship of community events such as the Essence Music Festival. The campaigns website also includes a social networking aspect, which encourages black women to trade health beauty tips. Pantene is one of the brands involved in this campaign, with a particular focus on the Relaxed & Natural range. The brand has gained success in another niche market through this approach.

Procter & Gamble Shampoo Case Study

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Procter & Gamble Shampoo Case Study

Head and Shoulders has been repositioned as an everyday shampoo brand
Head and Shoulders was originally designed as an anti-dandruff shampoo
The Head and Shoulders brand was originally introduced in the US in the 1960s and was almost exclusively designed as an anti-dandruff shampoo. The brand only began to introduce a significant range of variants in the late 1990s as it looked to shed its therapeutic and medicinal image. This process is still ongoing as evidenced by the welcome message on the brands website which reads Head and Shoulders has changed. The diverse range of Head and Shoulders products now claims to do much more than simply fight dandruff. Many new variants of the brand offer a range of functional benefits for different hair types. Procter & Gamble recognized that consumers would no longer use a shampoo solely for its anti-dandruff benefits, and began to introduce more functional qualities designed for specific hair-types.

New variants of Head and Shoulders have helped to move the brand away from its traditional image
Collections in the Head and Shoulders range now include Ocean Lift, Citrus Breeze and Extra Volume. The new ranges emphasize the fragrance and functionality of the products, while anti-dandruff benefits are treated as secondary. In terms of dollar share, Head and Shoulders Classic Clean was the best selling shampoo product in the US in 2007 (Source: AC Nielsen).

Figure 3:

The updated Head And Shoulders range of products

The Head And Shoulders range has expanded

Head And Shoulders has introduced variants designed for different hair types along with different fragrances. The brand no longer seeks to portray itself as a solution solely for dandruff. The packaging for Head And Shoulders has been given an overhaul designed to give a sleeker look to the brand.

Source: Head And Shoulders

DATAMONITOR

The Head and Shoulders website offers advice to consumers on which product would be most suitable for specific needs. The feature recommends products from the expanded Head and Shoulders range based on hair and scalp conditions.

Procter & Gamble Shampoo Case Study

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Procter & Gamble Shampoo Case Study

Herbal Essences has become a popular haircare brand with women
The brand retains a natural and ethical image despite the inclusion of several chemical ingredients
Herbal Essences offers products which rely on active natural ingredients and is Procter & Gambles fastest growing shampoo brand. Effective natural ingredients are much sought after by consumers who have become distrusting of harsh synthetic compounds in personal care products. Chemical ingredients are increasingly associated with dangers to health and the environment, resulting in a high consumer demand for natural products. The brand was founded in the 1960s and at the time promoted a natural image in line with the cultural movement of the time. The natural aspect of the brand has remained intact and Procter & Gamble has continued to stress this as consumers exhibit a growing desire for natural products which dont compromise on efficacy. This is in spite of the fact that Herbal Essences also contains many much-maligned chemical ingredients including phthalates and parabens; nonetheless it is still marketed on the strength of its natural ingredients.

Herbal Essences continues to position its products to females

The Herbal Essences brand has become popular with women and continues to position its products to the female demographic. Packaging features bright and vibrant colors, and product names include Drama Clean and Color Me Happy. Products feature strong natural fragrances such as white nectarine and cucumber. Women typically spend more time caring for their hair than men, and Herbal Essences products capitalize on this fact by generally being divided into separate shampoos and conditioners. The brand has advocated a return to spending more time on haircare, rather than using two-in-one products, which although cheaper are perceived as being not always as effective.

Figure 4:

Herbal Essences NPD continues to focus on natural ingredients and products suitable for women

Herbal Essences Long Term Relationship was introduced to the US market in February 2008

The new product is said to be infused with red raspberry and satin. The shampoo is designed to provide protection against breakage and split ends, encouraging consumers to grow their hair longer.

Source: Datamonitor Productscan Database

DATAMONITOR

Procter & Gamble Shampoo Case Study

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Procter & Gamble Shampoo Case Study

The Aussie brand has gained mass-market success through new formulations
Procter & Gamble promotes the heritage of its Aussie brand
The Aussie brand of shampoo products was originally marketed in Australia, but is now focused on the US and UK markets. Procter & Gamble acquired the brand in 2003, by which time sales of Aussie had already been phased out in its native country. Procter & Gamble has continued to market Aussie in the US on the basis of its Australian background. The brands packaging still features a kangaroo and the slogan Add some roo to your doo, and ranges have names such as Sydney Smooth and Aussome Volume. The brands website advises that botanical ingredients are obtained from the Australian outback in order to formulate products. This emphasizes the heritage of Aussie, as well as highlighting the natural ingredients used in its products.

Aussie was relaunched to cater for more specific hair types

The Aussie brand was relaunched by Procter & Gamble in 2007 to include more niche collections and updated packaging. Four new lines were introduced as Aussie looked to provide for specific, individual hair care needs. The new products were designed to cater for all types of hair including damaged, dry and chemically treated. The brands packaging was revamped to create a more modern look. Streamlined bottles were introduced, designed to take up less space in the cluttered modern bathroom.

Figure 5:

Updated packaging provides more convenience for consumers

Aussie created new updated packaging when relaunching the brand. The new packaging was designed to provide convenience benefits by incorporating a more slimline design and an easier to open bottle.

Source: Datamonitor Productscan Database

DATAMONITOR

Aussie variants are designed to be suitable for African American consumers

African Americans are an important demographic to the haircare market. There were 35 million African Americans in the US in 2005 according to the US Census Bureau, representing a substantial proportion of the population. This group is also associated with some distinctive hairstyles such as dreadlocks and cornrows. These styles require a significant degree of

Procter & Gamble Shampoo Case Study

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Procter & Gamble Shampoo Case Study

maintenance, leading many African Americans to spend more on haircare products. While ethnic specific brands are popular with this group, they will chiefly be used for styling, while mass-market brands remain popular for everyday products such as shampoo. Aussie specifically recommends certain ranges for African American consumers. In particular, the Moist range is claimed to be suitable for African American hair, which will tend to be dryer and more prone to breakage than Caucasian hair. By providing a range of products suitable for use by a specific ethnic group, the brand is catering for a specific hair type, while making sure that consumers are not alienated and can still use a mass-market brand.

Procter & Gamble Shampoo Case Study

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APPENDIX Case study series

This report forms part of Datamonitor's case studies series, which explores business practices across a variety of disciplines and business sectors. The series covers a range of markets including food and drink, retail, banking and insurance, pharmaceuticals and software. Each case study provides a concise evaluation of a company that stands out in some area of its strategic operations, highlighting the ways in which the company has become one of the best in its field or how it deals with different problems encountered within that sector.

Methodology
A variety of research was carried out for this case study. This included researching the personal care market on Datamonitor's Interactive Consumer Database and on the Productscan Online Database of new products, alongside an extensive review of secondary literature and other in-house sources of information.

Secondary sources
Sector Insight: Shampoos and conditioners - Niche appeal brings opportunity; Brand Republic (August 2007) Hair care sales build on high-end product innovation, Drug Store News (June 2007)

Further reading
Natural Personal Care Consumers: Unlocking Future Potential (Datamonitor, DMCM4584, 5 March 2007) Understanding New Personal Care Behaviors & Occasions (Datamonitor, DMCM2469, 29 December 2006)

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Datamonitor consulting
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Disclaimer
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The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that Datamonitor delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Datamonitor can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.

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