CLAIROL, L'OREAL SWELL SHARES IN SHAMPOO SECTOR: PANTENE HOLDS LEAD; P&G TESTS PHYSIQUE AS PRESTIGE LINE IN MASS MARKET

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Women in clairol Herbal Essences commercials aren't the only ones enjoying themselves. Executives at Bristol-Myers Squibb Co. have something to shout about, too.

The ad campaign that broke last year, featuring women in the throes of orgasm as a pun on the word "organic," didn't play well with critics. But it did help Clairol vault from No. 5 for 1997 to No. 2 at the mid-point in '98 in the crowded $1.56 billion category.

L'OREAL THE GROWTH LEADER

Sales of Clairol's shampoo at mid'-98 were 84.2% above the same period in '97, according to Information Resources Inc. data that show only L'Oreal climbed faster among the majors -- 98.3% to $86.1 million.

A different formulation from an early-90's version, strong sales effort and good timing played roles along with the advertising in the success of Herbal Essences, say consultants.

PANTENE UNCHANGED

Top-selling Pantene stood still amid the market surges by Clairol and L'Oreal. Even so, P&G remains committed to doubling its Pantene business within five years, says a company spokeswoman. Though it had new product on the market (Pantene dandruff-control for men), the brand had no growth during '97 and a decline of 1 share point (although a 1.2% dollar gain) at mid-'98 vs. the prior-year period.

In the same period, category sales rose a robust 7.6% as P&G's shampoo dollar share fell more than 2 share points, from 35.6% to 33.2%.

Head & Shoulders, backed by increased ad spending, was a hearty climber, up 10.9%. Pert Plus sales were off 5.3%, continuing several years of decline.

"Last year, our category focused on making true strides in the styling category, with rollouts of flexible-hold versions of Pantene and Vidal Sassoon hair spray," says a P&G spokeswoman. "While we experienced strong growth in that segment, we're clearly disappointed in our shampoo performance overall."

P&G is developing new shampoo and conditioning products in the Vidal Sassoon line, where the new Formesilk rollout is marketed as a partnership with the Vidal Sassoon Salons and Academies. It also expects a new product launch and "new conceptual platform" to broaden the appeal of Pert Plus beyond its loyal male consumers.

P&G WELL POSITIONED

"I don't think there's been any stumbling at P&G," says Burt Flickinger, consultant with Reach Marketing. "Consumers are moving toward more prestige brands, and P&G is doing a brilliant job marketing Pantene [as a prestige brand]. Vidal [Sassoon] shows some signs of going through a renaissance. Longer term, P&G is very well-positioned to maintain growth."

Ultimate mass-market prestige brand could be P&G's Physique line currently in test. Its $7-to-$8 unit price is a new frontier for mass-market haircare. "It's insult pricing in a lot of ways," says Ken Harris of consultancy Cannondale Associates. "Frankly, people are spending that much for salon products."

At Unilever, the integration of Helene Curtis is "going only marginally well," says Mr. Flickinger, though the company's sales in the category are up 11.8% at mid-year. "Historically, Unilever tends to be a bit of an old-boy network; they haven't brought many of the Helene Curtis people into the Unilever headquarters to help manage the franchise," he says. "That's making the transition a modest success instead of a major one."

THERMASILK INTRO

The company rolled out Thermasilk with an $82 million campaign in March while boosting spending behind the Finesse, Salon Selectives and Suave brands. Thermasilk is designed to allow extra conditioning to kick in during blow-drying of hair. P&G took some of the edge off the Thermasilk launch, introducing in May a heat-activated Pantene conditioner.

Through July 26 of this year, or roughly four months since ads broke, Thermasilk had $24.4 million in sales, according to IRI, behind projected levels of $120 million in the first year.

Behind the L'Oreal gains is a broader product line, improved formulation of Vive and introduction of VitaVive for daily care of normal hair. Key to L'Oreal's success is product sub-branding and the movement of the sub-brands from upscale retailers to midchannel drug and mass outlets. "They've been able to reach more points of distribution and be very aggressively supported by retailers," says Mr. Flickinger, noting that's counter to P&G's mass-to-prestige journey for Pantene and Vidal Sassoon.

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