Nivea - Managing an Umbrella Brand


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Case Details:

Case Code : MKTG087
Case Length : 13 Pages
Period : 1987-2003
Pub Date : 2003
Teaching Note : Available
Organization : Nivea
Industry : Cosmetics
Countries : Germany

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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An Ode to Nivea's Success Contd...

According to analysts, the brand was the single largest factor for the 4.4% increase in the company's revenues (€ 4.74 billion) and 10.7% increase in after-tax profit (€ 290 million) for the year 2002.

The 120-year old, Hamburg (Germany) based Beiersdorf has often been credited for meticulously building the Nivea brand into the world's number one personal care brand. According to a survey conducted by A C Nielsen in the late 1990s, the brand had a 15% share in the global skin care products market.

While Nivea had always been the company's star performer, the 1990s were a period of phenomenal growth for the brand. By successfully extending what was essentially a 'one-product wonder' into many different product categories, Beiersdorf had silenced many critics of its umbrella branding decisions.

Nivea - Origin & Evolution

Beiersdorf was a well-known name in Germany in the early 1900s due to its range of body care products, adhesive tapes and bandages (Refer Exhibit I for a brief note on the company). In 1912, Beiersdorf's owner Oskar Troplowitz (Troplowitz), a chemist Isaac Lifschütz and a dermatologist Paul Unna jointly developed a skin cream based on Eucerit, the first ever water-in-oil emulsifier.

In addition to Eucerit, the cream contained glycerin, citric acid, oil of rose and extract of lily of the valley (fragrant bell-shaped white flowers). Prior to the introduction of this cream, skin care creams were prepared using animal and vegetable fats.

Such creams decomposed as the fats lost their freshness. The mild, sweet-smelling product introduced by Beiersdorf, with its stable, long-lasting formula was thus a revolutionary product for cosmetic buyers. Troplowitz named this product Nivea, based on the Latin world 'nivius' (meaning snow-white). Before Nivea, skin creams were targeted primarily at women from the upper strata of society.

However, Beiersdorf mass-marketed Nivea, thus making it very popular with customers. As the market for female grooming evolved, Beiersdorf took the help of advertising to gain recognition. By the time the company began exporting Nivea to other countries in the 1920s, it knew that it had a winner on its hands...

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