Clairol: Brands In Demand

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Sometimes, getting what you want isn't all it's cracked up to be. Case in point: Procter & Gamble Co.'s long and aggressive pursuit of Clairol, which earned it a brand in trouble. When they bought the business from Bristol-Myers Squibb Co. in May 2001, P&G executives said they'd coveted Clairol for decades. But by then, no amount of dye could cover the brand's graying.

"Clairol was a really great brand with a good equity, but it was very old, very tired and needed a very different approach," said Neil Kreisberg, exec VP overseeing the P&G business, including Clairol, at Grey Global Group.

Clairol hair color's dollar-share declines are among the steepest ever in package goods. As recently as 1999, Clairol edged rival L'Oreal by a hair-40.6% to 40.5%, according to figures from VNU's ACNielsen Corp. reported by Banc of America Securities. By 2002, L'Oreal led by 13 points-47.6% to 34.5%. And by the four weeks ended March 23, the gap widened to nearly 20 points-50.7% to 31.2%.

Publicly, P&G Chairman-CEO A.G. Lafley acknowledged in March that Bristol-Myers "milked the heck" out of Clairol. Privately, he's told people close to the company that P&G underestimated Clairol's problems, though he would not comment on that report.

Mr. Kreisberg said at the P&G alumni reunion in April he believes Clairol now has the right approach, including the fall-launched Colorwonderful campaign, which he said helped stabilize the brand in anticipation of new product launches, such as the restage of the Nice `n Easy and Ultress lines.

Products began hitting stores in February, and a new TV and print effort from Grey for Nice `n Easy featuring Cindy Crawford broke last month.

round one

"We've made the first round of improvements," Mr. Lafley said in an April conference call, adding that he expects P&G's pending purchase of Wella to "accelerate our learning curve. ... We're cautiously optimistic and expect to improve in the weeks ahead."

He still sees the Clairol deal beating financial projections, thanks to cost cuts, and P&G issued a statement of support for the brand. "We have had a very strong sell-in behind the new initiatives we are bringing to the markets, such as the redesign of our flagship brand Nice `n Easy," a spokeswoman said. "It is too early to tell what the impact of these initiatives will be on shares, but we are investing and focusing heavily behind the initiatives to ensure their success."

Banc of America Securities analyst Bill Steele believes P&G can turn Clairol around in far less than the five years it took to fix the Tampax brand P&G bought in 1997.

But reversing trends may be harder in hair color. P&G told Wall Street it decided to buy Clairol, rather than apply its hair-color technology to an existing P&G brand, because of women's intense loyalty to their box and color number. Now, more of that loyalty belongs to L'Oreal.

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