As seen in the Beiersdorf’s Brand-Product Matrix, Beiersdorf’s brand portfolio contains eight brands namely: Labello, Nivea, 8X4, La Prairie, Juvena, Eucerin, Hansaplast/Elastoplast, and Florena. Amongst these brands, the most prominent is the Nivea brand, which the company uses as the umbrella brand for broad skin care and personal care. Most brands have sub-brands. They include Nivea, La Prairie, Eucerin, Hansaplast, and Florena). The other remaining brands have no sub-brands.
Nivea, being the umbrella brand and the most dominant brand, has fifteen sub-brands with each sub-brand extensively extended so as to meet the specific needs of the customers based on gender, age groups, and functional benefits. The sub-brands are: Nivea Cream, Nivea Visage, Nivea Beaute, Nivea Hair Care, Nivea Body, Nivea Soft, Nivea Hand, Nivea Sun, Nivea Deodorant, Nivea Intimate Care, Nivea Baby, Nivea Lip Care, Nivea Bath Care, Nivea for Men, and Nivea Visage Vital.
Ucerin, as a brand, also has several sub-brands. They include Face Care, Hair Care, Deodorant, Body Care, Lip Care, Hand Care, Foot Care, Sun Care, and Anti Age.
Hansaplast’s sub-brands are: Plaster, Wound Care, Foot Care, Scar Reducer, Sport, Insect Bites, and Pain Relief.
The sub-brands within Florena are: Face Care, Body Care, Hair Care, Skin and Hand Cream, and Florena for Men. La Prairie has only three sub-brands, which are: Skin Care Treatments, Fragrances, and Color. 8X4 is known for the Deo Sprays and Roll-ons, Labello for the Lip Care, and Juvena for skin care.
If we keenly consider the above brands, we realize that similar sub-brands are offered. Nivea and Ucerin offer almost similar products. This is a very important strategy in market coverage. Here, the company widens its target group as it targets different consumers, market segments, and channel distributors. In so doing, the company maximizes its coverage for both the available customers and the potential customers. This ensures that none of the customers is ignored. The company has also achieved in maximization of overlap. This ensures that there is reduced or no competition among the brands themselves.
Beiersdorf’s brand portfolio characteristics come with various benefits. First, the risks are lowered. The company operates within a wider market range as it maximizes the coverage on customers. The umbrella brand Nivea has good image that makes the sub-brands to enjoy benefits of reduced risks.
In case of a contamination or loss of image in one brand, the other brands do not suffer. Even if a product within the umbrella brand fails to meet the expectations of the customers, the other products do not suffer from the same. This is because; the company has committed itself in improving the brand image and has succeeded in attracting customers’ confidents in the products. Beiersdorf Company also enjoys great economies of scale. Due to the existence of the parent brands, the costs incurred in production, research and development, distribution, market research, etc are greatly reduced. With this portfolio, the focus on the segmentation strategies is also enhanced. Over the years, Beiersdorf Company has been seen as the market specialist. Its products have globally emerged as market leaders.
The extension strategies at Beiersdorf Company are Line extensions, and Category extension. Line extension has been used in the introduction of new products so as to target the potential customers and market segments in the same product class. In such a case, the parent brand is made use of. Category extension has also helped the company to conquer different product categories.
As a result of the extensions, the company has enjoyed various benefits, among which are: good image creation, risk reduction, great efficiencies in packaging, labelling, production, and marketing. Also, there are high chances of gaining distribution, as the cost of introductory and marketing are greatly lowered. The costs of developing new brands are also eliminated. At the same time, consumers are assured of varieties of products.
1. David A. Aaker and Erich Joachimsthaler said, “The challenge is to create a brand team where all the sub brands and brands fit in and productive” in The Brand Relationship Spectrum. Discuss the Beiersdorf’s Brand architecture strategies on the basis of brand relationship spectrum.
The business environments today have radically changed the roles of brand managers as they are faced with global changes, channel dynamics and market fragmentations. The high costs in creation of new brands put a lot of pressure on the brand assets. Due to these complexities and pressures, the brand managers are faced with several challenges that call for proper understanding of both the relationships and structures. “Brand architecture” gives the ultimate solution. According to Aaker and Joachimsthaler (2000), brand architecture is defined as the organizing structure of the brand portfolio where the brand roles and the nature of brand relationships are defined. Well-defined brand architecture can minimise wastage, confusion, and market weakness; as it promotes synergy, leverage, clarity, and opportunities.
The Brand Relationship Spectrum
On the basis of brand relationship spectrum, Beiersdorf has adopted the “Branded House Strategy”. Here, Nivea is the umbrella brand. Nivea provides the global umbrella under which a wide product line operates. The products include Nivea Body Care, Nivea Face Care, Nivea Hand Care, Nivea Men’s Care, Nivea Sun Care, Nivea Bath Care, Nivea Lip Care, and Nivea Deodorants. With this kind of brand architecture strategy, there is a lot of clarity, synergy, and leverage.
Beiersdorf enjoys maximum clarity, as the customers know exactly what is offered. From a branding perspective, it is very easy to understand the brand since all the products within the brand communicate the same message. This enhances clarity as compared to several individual brands where each brand has its own associations. Customers easily know, understand, and recall the brand. Communication partners and the employees also benefit greatly from the clarity and the focus on a single dominant brand. As compared to other strategies, the question of brand priorities or the need to protect the brand does not arise.
In addition, Beiersdorf enjoys maximization of synergy. Participation in one product market, say, Nivea Face Care, creates associations and visibility which helps other products like Nivea Body Care, Nivea Men’s Care, among others. Innovations and improvements in quality of one product enhance the brand in other products as well. Furthermore, an exposure of the brand in one product creates visibility, which enhances the brand awareness in all the other products. In most contexts, there is a lot of input and efforts in umbrella brand Nivea so as to build its overall image.
This strategy provides room for more cost effective means in launching of new products and brand extensions. When a new product is to be introduced into the market, the promotional costs are greatly lowered. Due to the existence of the same brand name, new products always have increased chances of customer acceptance since they carry the same brand name. Building of the new product awareness from scratch is totally eliminated. In terms of brand promotion, Beiersdorf enjoys economies of scale. The resources are channelled more effectively due to the fact that only one brand is promoted.
One of the disadvantages of this strategy is the possibility of brand dilution. If not properly monitored, there can be dilution of the umbrella brand Nivea when product proliferation occurs. All products may not have the same positioning theme. Any deviation from the umbrella brand’s positioning will result into the dilution of the main positioning theme of the entire branded house. The company may also be forced to forgo a lot of market opportunities when the opportunities fail to fit into the positioning of the parent’s brand.
If one brand fails, there can be adverse negative impacts on the entire branded house due to the fact that all the products carry same brand name. Any controversy that involves a single product can adversely affect the other remaining products. With the branded house strategy in a large market share, it becomes extremely difficult to maintain the quality position or the good image of the umbrella brand. The ability of the company to target specific groups is also limited as compromises are always required.
The brand name adds value to the new products due to its value position, the credibility, and the communication efficiencies resulting into cost advantages. Beiersdorf’s master brand always makes the products more appealing to the customers, thereby making the brand equity to be leveraged in the new context. Nivea offers great visibility to its new products. At the same time, there are great reductions in the costs of promotions and advertisements, packaging and displays, and brochures, as the prior brand building efforts are adopted and used directly.
Beiersdorf’s Nivea brand has excelled in meeting the varied needs of the customers due to its relevance. The position of the brand is high and proper, with the high products’ value forming the basis of pricing. Nivea brand equity is strong as a result of the perfect marketing strategies, which include advertisements and promotions. Due to its excellent products, we deduce that the company properly understands the needs of the consumers as it monitors its sources of brand equity.
2. Though all the brands in Beiersdorf’s portfolio were carried as independent identities, all these brands were further extended rigorously across various product categories.” [Section: “Evolution of Beiersdorf AG’s Brand Portfolio”, para 11 of the case study]. How did Beiersdorf employ its brands as strategic growth vehicles?
The Ansoff Growth matrix
Beiersdorf Company always concentrates in selling its existing products into the existing markets. In so doing, the company has managed to achieve the following:
There has been an increase in the market share of the company’s products. Considering the Nivea brand as an umbrella, the company has very competitive strategies in pricing, and marketing (including sales promotion and advertisements). Other brands like Ucerin, Hansaplast, Florena, and La Prairie have also managed to maintain the market share.
There has been security in dominance of the growth markets – the strong image, which the Nivea umbrella brand has created in the market, has resulted in the security in the dominance of the growth market. Even though the company faces stiff competition from other larger companies in the region, it has managed to thrive as a result of the great image of its Nivea brand.
The company maximizes on the increased usage of its products by the existing customers. Nivea brand products have always made the market to be unattractive for its competitors. This is as a result of the great satisfaction that customers derive from the Nivea products. These products are always associated with quality and reliability. This is an image that always appeals to the customers. Also, the company heavily invests in market research and innovations, as it releases into the market the tailor-made products. The company’s management team is highly competent. The brand managers always understand the customer needs. They always try to maintain the relevance of the products through constant inspections. The company understands that Nivea brand forms its bulk for sales. It therefore tries by all the possible means to ensure that the brand remains relevant, as its quality remains high.
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