"Though it comprised brands catering to different consumer organizations ranging from superior (La Prairie) to mass (Nivea), Beiersdorf's brand portfolio remained highly concentrated when compared with its competition" ["Beiersdorf AG's Business Portfolio", para 5 of the case study]. Identify the characteristics Peculiar to Beiersdorf's Brand profile.
Beiersdorf Brand - Product Matrix
Brands
Skin care
Sun care
Body Care
Baby Care
Face Care
Deodorants
Fragrances
Lip Care
Hand Care
Anti-age
Colour Cosmetics
Hair Care
Foot Care
Men's grooming
Others
Nivea
La Prairie
Juvena
Eucerin
Florena
8x4
Labello
Hansaplast
Beiersdorf's brand Portfolio Characteristics
As observed in the Beiersdorf's Brand-Product Matrix, Beiersdorf's brand stock portfolio contains eight brands specifically: Labello, Nivea, 8X4, La Prairie, Juvena, Eucerin, Hansaplast/Elastoplast, and Florena. Amongst these brands, the most prominent is the Nivea brand, that your company uses as the umbrella brand for wide skin care and personal good 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 prominent brand, has fifteen sub-brands with each sub-brand extensively extended to be able to meet the specific needs of the clients based on gender, age groups, and efficient benefits. The sub-brands are: Nivea Cream, Nivea Visage, Nivea Beaute, Nivea Scalp Care, Nivea Body, Nivea Soft, Nivea Hand, Nivea Sunshine, Nivea Deodorant, Nivea Personal Health care, Nivea Baby, Nivea Lip Good care, Nivea Bath Health care, Nivea for Men, and Nivea Visage Vital.
Ucerin, as a brand, also has several sub-brands. They include Face Good care, Hair Care, Deodorant, Body Care, Lip Care, Side Care, Ft. Care, Sun Care, and Anti Age.
Hansaplast's sub-brands are: Plaster, Wound Attention, Foot Care, Scar Reducer, Sport, Insect Bites, and Pain Relief.
The sub-brands within Florena are: Face Care and attention, Body Care, Mane Care, Pores and skin and Side Cream, and Florena for Men. La Prairie has only three sub-brands, which are: Skin Care Treatments, Fragrances, and Color. 8X4 is well known for the Deo Sprays and Roll-ons, Labello for the Lip Good care, and Juvena for skincare.
If we keenly consider the above brands, we recognize that similar sub-brands can be found. Nivea and Ucerin offer almost similar products. That is an essential strategy in market coverage. Here, the business widens its target group as it focuses on different consumers, market sections, and channel marketers. By doing this, the company maximizes its coverage for both available customers and the customers. This ensures that none of the clients is ignored. The company has also achieved in maximization of overlap. This ensures that there is certainly reduced or no competition on the list of brands themselves.
Beiersdorf's brand portfolio characteristics come with various benefits. First, the risks are lowered. The company operates in just 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 great things about reduced risks.
In case of any contamination or loss of image in a single brand, the other brands do not suffer from. Even if something within the umbrella brand does not meet the goals of the customers, the other products do not suffer from the same. It is because; the business has dedicated itself in enhancing the brand image and has succeeded in attracting customers' confidents in the products. Beiersdorf Company also loves great economies of range. Due to the presence of the father or mother brands, the expenses incurred in production, research and development, syndication, market research, etc are greatly reduced. With this portfolio, the give attention to the segmentation strategies is also improved. Over the years, Beiersdorf Company has been seen as the market specialist. Its products have globally emerged as market market leaders.
The expansion strategies at Beiersdorf Company are Line extensions, and Category extension. Line extension has been used in the advantages of new products in order to target the potential customers and market sections in the same product school. In such a case, the mother or father brand is made use of. Category extension in addition has helped the business to overcome different product categories.
As due to the extensions, the company has liked various benefits, among which can be: good image creation, risk reduction, great efficiencies in packaging, labelling, development, and marketing. Also, there are high likelihood of gaining distribution, as the expense of introductory and marketing are greatly reduced. The expenses of growing new brands are also removed. At the same time, consumers are reassured of varieties of products.
David A. Aaker and Erich Joachimsthaler said, "The challenge is to create a brand team where all the sub brands and brands easily fit into and profitable" in The Brand Romance Spectrum. Discuss the Beiersdorf's Brand architecture strategies based on brand marriage spectrum.
The business conditions today have radically improved the tasks of brand managers because they are faced with global changes, route dynamics and market fragmentations. The high costs in creation of new brands put a great deal of strain on the brand assets. Due to these complexities and stresses, the brand professionals are faced with several obstacles that call for proper knowledge of both the human relationships and structures. "Brand architecture" gives the ultimate solution. According to Aaker and Joachimsthaler (2000), brand structures is defined as the organizing structure of the brand stock portfolio where in fact the brand tasks and the type of brand connections are described. Well-defined brand architecture can minimise wastage, misunderstandings, and market weakness; as it stimulates synergy, leverage, quality, and opportunities.
The Brand Relationship Spectrum
On the foundation of brand romantic relationship spectrum, Beiersdorf has used the "Branded House Strategy". Here, Nivea is the umbrella brand. Nivea provides the global umbrella under which a broad product line performs. The merchandise include Nivea Body Good care, Nivea Face Care and attention, Nivea Hand Care and attention, Nivea Men's Care, Nivea Sun Attention, Nivea Bath Care, Nivea Lip Treatment, and Nivea Deodorants. With this kind of brand structures strategy, there is a lot of clarity, synergy, and leverage.
Beiersdorf looks forward to maximum clearness, as the customers know precisely what emerges. From a branding point of view, it's very easy to comprehend the brand since all the merchandise within the brand speak the same meaning. This enhances clarity when compared with several individual brands where each brand has its organizations. Customers easily know, understand, and remember the brand. Communication lovers and the employees also gain greatly from the clarity and the give attention to a single dominant brand. When compared with other strategies, the question of brand priorities or the need to protect the brand will not arise.
In addition, Beiersdorf likes maximization of synergy. Participation in a single product market, say, Nivea Face Care and attention, creates associations and awareness which helps other products like Nivea Body Good care, Nivea Men's Good care, among others. Innovations and improvements in quality of 1 product enhance the brand in other products as well. Furthermore, an exposure of the brand in a single product creates presence, which enhances the brand awareness in every the other products. In most contexts, there's a lot of input and initiatives in umbrella brand Nivea to be able to build its overall image.
This strategy provides room for more cost effective means in starting of services and brand extensions. Whenever a new product is usually to be introduced into the market, the promotional costs are greatly reduced. Because of the life of the same brand, new products always have increased likelihood of customer acceptance given that they carry the same brand name. Building of the new product recognition from scratch is very eliminated. In terms of brand advertising, Beiersdorf looks forward to economies of range. The resources are channelled better due to the fact that only 1 brand is advertised.
One of the negatives of the strategy is the opportunity of brand dilution. If not properly supervised, there can be dilution of the umbrella brand Nivea when product proliferation occurs. All products may well not have the same positioning theme. Any deviation from the umbrella brand's setting will result into the dilution of the key setting theme of the whole branded house. The company can also be forced to forgo a lot of market opportunities when the opportunities fail to fit into the placement of the parent's brand.
If one brand fails, there may be adverse negative influences on the entire branded house due to the fact that all the products carry same brand. Any controversy that involves a single product can adversely influence the other staying products. While using branded house strategy in a sizable market talk about, it becomes extremely difficult to keep the quality position or the good image of the umbrella brand. The ability of the company to target specific communities is also limited as compromises are always required.
The brand contributes value to the services due to its value position, the credibility, and the communication efficiencies producing into cost advantages. Beiersdorf's grasp brand always makes the products more desirable to the clients, therefore making the brand collateral to be leveraged in the new context. Nivea offers great visibility to its services. At the same time, there are great reductions in the costs of deals and advertisements, presentation and displays, and brochures, as the last brand building initiatives are adopted and used directly.
Beiersdorf's Nivea brand has excelled in interacting with the assorted needs of the clients because of its relevance. The position of the brand is high and proper, with the high products' value building the basis of charges. Nivea brand equity is strong therefore 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 displays its sources of brand collateral.
"Though all the brands in Beiersdorf's profile were taken as indie 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 do Beiersdorf employ its brands as proper progress vehicles?
The Ansoff Expansion matrix
Market penetration
Beiersdorf Company always concentrates in selling its existing products in to the existing markets. By doing this, 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 business has very competitive strategies in charges, and marketing (including sales advertising and advertisements). Other brands like Ucerin, Hansaplast, Florena, and La Prairie have also managed to keep up with the market show.
There has been security in dominance of the development marketplaces - the strong image, that your Nivea umbrella brand has created on the market, has resulted in the security in the dominance of the expansion market. Even though the company encounters stiff competition from other greater companies in your community, it has were able to thrive therefore of the fantastic image of its Nivea brand.
The company maximizes on the increased consumption of its products by the prevailing customers. Nivea brand products have always made the market to be unattractive because of its competitors. That is consequently of the great satisfaction that customers derive from the Nivea products. These products are always associated with quality and dependability. This is a graphic that always appeals to the clients. Also, the company closely invests in general market trends and inventions, as it produces into the market the tailor-made products. The business's management team is highly experienced. The brand professionals always understand the customer needs. They always try to keep up with the relevance of the products through constant inspections. The business realizes that Nivea brand sorts its mass for sales. It therefore tries by all the possible means to ensure that the brand remains relevant, as its quality remains high.
Market Development
This is the strategy applied when the business wishes to market its existing products into new market segments. Beiersdorf Company has greatly achieved in making use of the marketplace development strategy, specifically for its Nivea brand.
The company constantly exploits the actual geographical markets. The fantastic enlargement of Nivea in to the global market attests to the. The company's products have been the market leaders in a variety of countries including China, Russia, the Czech Republic, Slovakia, Saudi Arabia, Bulgaria, Romania, Ireland, Guatemala, Belgium, Netherlands, Switzerland, Portugal, France, UK, and USA, amongst others.
The company achieves this by:
Creating new syndication programs, which ensure that the product is made available in the desired geographical location. The business has exposed various stores in a variety of parts of the world.
Product exportation - In the absence of Beiersdorf's products in an area discovered as a potential market, the business always holiday resort to exportation of the products to that specific location.
The company has generally used the costs policy in order to attract the potential customers. It has greatly helped in the creation of the marketplace segments.
Finally, the company specializes in its good image as it uses unique presentation to uphold its recognized quality and value. The steadiness in the product packaging style greatly assists with maintaining customers' view on the grade of the product.
Product Development
This is the development strategy where organizations aim at producing new products in to the existing markets. This is actually the strategy, which Beiersdorf Company has greatly been successful in making use of.
Since the establishment of Nivea as a wide skincare and personal care and attention brand, various products have been presented into the market. This has been greatly accelerated by the great quality and satisfaction, which is associated with the Nivea brand.
In introducing new products under the prevailing brand Nivea, the company always looks forward to economies of range, as there are excellent reductions in costs. The new product also looks forward to great popularity and positive notion in terms of quality and service. The brand new products that are developed always charm to the market.
Diversification
This progress strategy will involve the launch of new products into new market segments. This strategy is very dangerous and companies always avoid it. Beiersdorf Company is not left out. In cases like this, the company steps into market, which it has no experience about. Just incase the business is compelled to utilize this strategy; then, it must determine the risks and have a clear idea of the possible profits.
Kevin Street Keller said, "Building a strong brand will involve maximizing all then characteristics" in The Brand Report Card. Evaluate the success of Nivea brand as a true global brand using the ten parameters given in this article quoted.
Keller (2000) gives ten parameters saying that a successful brand is the one which excels at delivering the benefits customers truly desire.
This first parameter is quite evident regarding Nivea brand. A range of products offered under the umbrella brand Nivea completely satisfies the varied needs of the customers. The Nivea For Men face care and attention highly matches the needs of its consumers. In 2006, it emerged as the best product in Chinese language men face health care market. The key drivers include NIVEA Sunlight, NIVEA FOR MEN, NIVEA deodorant, and NIVEA body. NIVEA FOR MEN has been the marketplace leader in various parts of the earth including Russia, the Czech Republic, Slovakia, and Saudi Arabia.
Nivea Deo has been the market leader in Croatia, Romania, and Thailand. NIVEA Sunlight has similarly been the best brand in Norway. Within the men's shaving products category, Nivea products will always be in the business lead in Germany. The products include the ointments, the gels, and the foams; which highly fulfill customers' requirements.
The rapid development in the Nivea brand is an indication of customers' satisfaction with the brand's products. In 2003, NIVEA SUN emerged as the market head in Italy where it continues to increase the lead at this point. This also confirms the great satisfaction, that your consumers are based on the Nivea products.
The introduction of NIVEA VISAGE YOUNG in to the young market section in 2003 has generated a very big impact. Greatest successes of Nivea brand in the entire year 2003included the exceptional performance of Nivea Lip Treatment, which took the market business lead in UK. NIVEA FOR MEN also became the leader in the after-shave and the cosmetic market in Poland and United States. NIVEA VISAGE is definitely the strongest brand on face health care market in a variety of parts of the earth including Bulgaria, Romania, Ireland, and Guatemala.
Other Nivea products which may have documented impressive market leads anticipated to great customer satisfactions includes the Nivea Hands which required the lead in Belgium, Netherlands, Switzerland, and Portugal in the year 2004. NIVEA FOR MEN arrived to the records as the first brand in Asia to start complete whitening range for men. In every subsequent unveiling of Nivea's products, there's a great progress in your skin care item. The Energetic Firming, which is the most advanced men's skin care item, premiered in 2005 in France and UK, before it captured the entire world market.
For a fresh Nivea product to be presented, the client needs must first be looked at. This is why all the new products perform extremely well on the market. They completely fulfill the needs of the customers. The Nivea men's products are personalized especially to the needs of men's skin.
In the next parameter Keller (2000) says that the brand should stay relevant. Strongest brands have their brand equity tied to the quality of the merchandise or the service. In the above discussion, we have seen that Nivea upholds quality as customers derive great satisfaction from the various Nivea products. It's understandable; therefore, that Nivea brand has remained relevant on the market. Other intangible factors considered in brand relevance include end user imagery or the sort of person using the brand. Generally, all the users drive great satisfaction from Nivea products, an integral sign of the brand's relevance. Another factor is the consumption imagery or the problem in which the brand is used. Nivea brand has became relevant in every the situations. Nivea has maintained its good image, which presents quality, sincerity and competence. Nivea brand has were able to stay on the leading edge without dropping site of its primary strengths.
The third parameter, is that the costing strategy should be predicated on consumers' perceptions of value. It will always be difficult to attain a perfect balance of product quality and cost, as the manufacturer would always purpose at making the most of the profit while the customer is aimed at lowering the expenses. However, at Beiersdorf, professionals try to understand the partnership between your product quality and price. That is very important to the business since, if the company remains with the creation of high quality products and charges low prices on the merchandise, it risks jogging at a loss. At the same time, if the business charges higher prices which do not match the quality of the product, then, it perils losing customers. The fact that Nivea brand continues to generate profit to the company and at the same time remains the market head; is a perfect sign that the product quality and the price are greatly linked.
The image which Nivea brand shows automatically improves the value of the brand. Nivea brand, being a world head in customer satisfaction, has a great value. Along with the improvement in the quality/value of the Nivea products, there has been a remarkable link with the rates. The quality of the product and the purchase price are always directly proportional.
The fourth parameter is the brand position. A well-positioned brand always attracts attention of the customers. Even in the optimum of competition, such brands retains up with the opponents by creating both details of parity and tips of difference, which helps in acquiring advantages on the rivals. Nivea's product quality and superiority has managed to get prolong its global market lead beyond the particular competitors can perform.
Considering Reliability in the brand as the fifth parameter, To be able to maintain a solid brand, there should be a balance between the continuity in marketing activities and the required changes that are needed so the brand remains relevant. The brand must maintain steadily its image, and the marketing strategies must not confuse customers either through mailing conflicting messages or otherwise. Since the advantages of Nivea's first advertisement in 1912, entitled "With all the likeness of a Lady, " Nivea hasn't had any conflicting or deceptive advert.
As per another parameter Nivea brand collection and hierarchy makes sense. Nivea is the umbrella brand under which several product procedures happen. The sub-brands under the umbrella Nivea brand in most cases target different market segments. With the normal brand name Nivea, there is maximum market coverage thus adding to collateral of the profile.
In addition, the brand makes good use of a full selection of marketing activities in building the brand collateral as dictated by the 7th parameter. The business spends heavily in promoting the brand and at exactly the same time specializes in the brand quality. This has helped in building the brand collateral.
Nivea brand managers always understand the value of the brand to customers. This is why there's a lot of invention and constant intro of services, which satisfies the customers' needs. Before an launch of a fresh product, an considerable market research is carried out which discloses to the brand professionals the exact dreams of the customers. The business then embarks on production of something, which is in line with the customers' needs. The company closely invests in the Nivea brand through considerable research, improvements, marketing and offers. The quality and image of the brand has not changed.
Due to the overdependence of the company on Nivea brand, brand audits are always completed at depth. This is done to ensure that the product quality and relevance of the brand remains intact, as any moderate change may lead the company into great deficits. Nivea brand is prosperous in line with the ten parameters.
Discuss the role of Nivea as an umbrella brand. Identify the critical factors that Beiersdorf utilised to successfully expand the Nivea brand.
Roles of Nivea as an umbrella brand
The main role of Nivea as an umbrella brand is the addition of value to the products operating under it. It also contributes toward the addition of value to the new products that are created into the market, and functioning under the umbrella brand Nivea. It achieves this through: addition of links which contribute to value positions; provision of credibility; sharing the presence; and era of communication efficiencies. By so doing, Nivea brand helps new product acceptance. These jobs are reviewed hereunder.
Enhancing the Value Proposition
Over the years, Nivea brand has built a great image that is appealing to the customers. The quality, consistency, and customer satisfaction of Nivea brand has stood the test of time. Because of this, new products created under the umbrella Nivea brand are highly accepted by the customers. In so doing, Nivea brand improves the image of the new product, and at the same time reduces the potential risks which may be perceived by the customers. The likelihood of the new product in increasing distribution and trial is also increased greatly.
Generation of Communication Efficiencies
The advantages of a fresh product demands the creation of unique packaging, offers and advertising. This is costly considering both the time and the financial aspect.
However, with Nivea as the umbrella brand, there is excellent reduction in product packaging and adverts costs. This greatly reduces the cost of introducing a new product and the follow-up programs in marketing. This results into great pleasure of the economies of size. The synergy also is commonly high.
In general, an umbrella brand is very important as it completely minimizes the expenses in creating a new brand and the associated dangers. At the same time, it boosts great efficiencies in marketing (advertisement and promotional) expenses. It also permits efficiencies in packaging and labeling.
Provision of credibility
After enhancing the value preposition, Nivea brand creates trustworthiness in the products that operate under the umbrella brand. Customers will always consider the new product as reliable. At the same time, customer hazards are removed. This great reliability is therefore of the Nivea products, which have maintained their credibility over time. Customers do not be concerned about the new product as there is always a preformed view on the new product which is established by the umbrella brand.
Visibility
The umbrella brand Nivea provides great product presence for the services presented under the brand name. Visibility allows for a new product to, not only gets an offering considered, but also indicates positive organizational and creation attributes.
Other than the aforementioned tasks, Nivea brand increases the understanding of Beiersdorf company image as it enhances its strength, uniqueness, and favourability. To customers, the umbrella brand conveys the profound company meaning and at the same time assures the clients of variety of quality products. The brand increases the market coverage as it also gives room for succeeding extensions.
The critical factors that Beiersdorf utilised to successfully extend the Nivea brand
Beiersdorf Company actively engages in evaluation of the customers' dreams before it can create any new product in to the market. The company spends on extensive market research, advancement, and application of technology in creation of the new product. This is the main reason the Nivea brand has a great image and the associated client satisfaction. Nivea products are customized regarding to customers' wishes. This is the key reason for its expansion.
Nivea brand is well located and always allures the customers. Due to Nivea's product quality and superiority, it always conquers the marketplace. This has favoured the brand in terms of competition from others. Beiersdorf Company uses a unique packaging for Nivea products that is highly attractive. This brings clarity in the brand and minimises the chances of brand distress.
Beiersdorf Company has also invested greatly towards extension of the brand. The company extensively advertise its Nivea brand also take part in other marketing strategies so as to maximize the consciousness on its umbrella brand. The outcome is the upsurge in sales. This directly creates extension. The company has loved great and steady marketing strategies over time.
The great improvement in value of the Nivea brand is another technique for its extension. The overall image of Nivea brand depicts quality and competence. Customers always look for quality in order to derive maximum satisfaction from the merchandise.
The prices of Nivea products are average considering the product characteristics. Customers would always find it very inexpensive in using the Nivea products.
The competence of the management team at Beiersdorf Company plays a very important role in Nivea brand expansion. The brand professionals always know and deeply understand the value of the brand to the customers. This puts the clients at a very high position of enjoying great satisfaction from Nivea products.
Nivea brand has always continued to be constant in quality and price. For this reason consistency, the business finds it super easy to extend the product. With the nice brand image that already prevails, it is very easy to develop a new product, as the expenses are greatly reduced.
Kevin Lane Kellar and Sanjay Sood said, "Brand extensions, however, can be considered a double-edged sword. . " in Brand Collateral Dilution. Discuss the difficulties in stretching the Nivea Brand.
On the foundation of the study of Kellar and Sood (2003), brand extensions in the Nivea brand has feature a series of obstacles. Whenever a brand extension fails to achieve success, there is great damage posed to the umbrella brand. This can result into great loses if the extension is not prorely supervised. Brand extensions therefore present great hazards of brand equity dilution. The constant expansion into sub-brands for Nivea greatly weakened the Nivea's strong brand image.
Because of the great image of the umbrella brand Nivea, there is a high customer approval to its sub-brands. As the extension continued, there is the dilution of the brand image because of this of the existence of Nivea brand across almost all the heterogenous products. Beiersdorf company was faced with major concern in releasing Nivea into new areas due to the brand equity dilution. This created a whole lot of dificulties in making sure the maintenance of devotion to the brand core values.
A circumstance of inconsistency can be depicted in the Nivea brand extension. Some of the Nivea products offered customers an experience which is not steady with the objectives of the umbrella brand. This modified the customers' impressions about the whole brand resulting in equity dilution. For instance, the extension of Nivea Mane Good care into colorants diluted the brand equity. Also, the Nivea's brand idea, which was firmly based on mild skin care, wasn't able to allow for the use of chemical substance treatments in the product.
Also evident was the existence of Nivea in contrasting product categories. The two products which greatly dropped under this situation were the NIVEA VISAGE and NIVEA VITAL VISAGE. These sub-brands were posed with greater challenges in endeavoring to preserve their respected product identities.
However, Nivea's strong image has performed an essential role. Its durability dictates that for there to be always a recognizable brand dilution, there must be a very strong experience which is unambiguous and easily recognized. Most of the unwanted effects of brand extension for the Nivea father or mother brand have vulnerable expoerience and generally ambiguous thus are disregarded. Another factor that has preserved Beiersdorf Company from brand equity dilution is the diagnosticity. Customers' evaluations of the expansion products tolerate little affect to the mother or father brand, as the extensions of the Nivea brand aren't indicative of the quality of the father or mother brand. Some of the unsuccessful failures can be associated with lack of enough recognition among customers. Because of the fact that consumers might possibly not have heard the expansion product or service, the parent or guardian brand survives. It is also apparent that the brand expansion has greatly better the sales and at the same time reinforced customers' knowledge about the parent brand Nivea. That is why there's been a remarkable upsurge in sales of the Nivea products as the merchandise conquer the global market.
"Beiersdorf's success in creating Nivea as a wide skincare and personal good care brand presented the business with a new set of issues and obstacles. " [Section: "Nivea a Flagship Brand", para 23 of the circumstance study]. Identify the problems Beiersdorf would face in Umbrella branding its flagship brand.
Beiersdorf Company has been majorly known for its great Nivea brand. The brand made over 70% of the company's consumer segment's sales. Nivea has surfaced as the Beiersdorf's giant in terms of sales, products, and geographical reach. The progress of Nivea brand from 1990 to 2006 is exceptional. The capitalization on the Nivea brand included the launching of a series of Nivea brand extensions globally. The rapid progress in Nivea's portfolio from six sub-brands in 1993to fifteen sub-brands in 2006 is an enough proof the company's capitalization on Nivea brand.
Establishing Nivea as a broad skincare and personal attention brand faced the Beiersdorf Company with a set of challenges. The business over-relied on the umbrella brand Nivea that subjected it to major hazards. Any loss of consumer confidence in the flagship Nivea brand would make the company more vulnerable because of the fact that Nivea produced the majority of the business's sales. Despite the fact that the company capitalized on the expansion of the flagship Nivea brand, this one-sided capitalization of expansion could not become a successful strategy over time. In turn, the over-dependence on the Nivea brand was highly accelerated. This overdependence also exposed the company to some risks. Even though the business experienced smooth development, there is a slow reduction in the expansion rate as illustrated in the IBS research by Sonpal, Dadhwal, and Catterjee (Annexure VIII, p 21).
The ongoing brand extensions positioned the father or mother brand at a great risk as it might lose its great image. The unsuccessful brand extensions may possibly also dilute the Nivea brand equity. This might put the company at great negatives with its competition like the P&G and the L'Oreal, which offered a wider range of brands within the same region. If by any chance, a brand extension does not meet the diverse demands of the customers, the umbrella brand suffers greatly. If the business greatly relied on the umbrella brand, various dangers emerge. The company can experience great deficits because of this of the overdependence. With persisted extension into sub-brands, the strong image of the parent or guardian brand stands higher likelihood of being weakened. Nivea also experienced the same situation. Because Nivea possessed built a solid image, its sub-brands were highly accepted into the market segments. However, increased expansion polluted the market with Nivea products. This led to the dilution of the Nivea brand image and also damaged the power of the company to launch new products under the same umbrella brand because of this of equity dilution.
Be that as it might, Nivea brand has successfully founded itself as a successful skincare brand on the market. This made the business to leverage its strong brand equity. The company then focused on developing the key business areas. Regardless of the company's financial strength, it limited the amount of its brands as it maximized the concentration on research and development. Since that time, the company has were able to have independent models of brands that are strategically positioned in terms of the useful benefits.
The great focus on innovation practiced by Beiersdorf Company resulted into better product lines. It has accelerated the development of the company even in saturated marketplaces. That is also the key reason Nivea brand has a solid image to the clients. The launch of three Nivea products; Nivea for men, Nivea Sunlight, and Nivea Deodorant helped the business in reviving the marketplace.
The use of the umbrella brand has made the company to place more focus on the marketing and campaign strategies. Without the correct advertising and marketing of the parent or guardian brand Nivea, the company may experience a reduction in sales. This is very dangerous due to the overreliance of the company on Nevia brand. There is excellent software of technology and creativity in Nevia products in order to boost the brand name and at exactly the same time increase the sales. The company has been constantly participating in extensive adverts since 1912. Also, Beiersdorf Company has been very keen on the advertisements so as to avoid chances of both conflicting and misinforming assertions. Indeed, the company has been offered a new set of issues and issues caused by its success in establishing Nivea as a broad skincare and personal good care brand.
