P&G Is Turning Into Quite A Makeup ArtistZachary Schiller
Crest. Tide. Head & Shoulders. Over the years, Procter & Gamble Co. has turned these products into consumer archetypes with a no-frills marketing approach that emphasized substance over style. P&G has always frowned on fads, preferring to stress what a product does rather than dazzling the consumer with flashy imagery. In fact, folks in Cincinnati used to joke that if P&G ever got into the lipstick business, it would sell 22 sizes--all in one shade.
As it turns out, P&G looks pretty snazzy in lipstick--not to mention eye shadow, blush, and facial creams. Defying the doubters who said the consumer colossus was too staid and serious to make it in the image-conscious world of cosmetics, P&G has been building up its position in beauty aids. Using its marketing acumen and hefty ad budget to reposition many of the languishing brands it bought in recent years, P&G has fashioned a $3 billion-a-year beauty business, figures Jay H. Freedman, an analyst with Kidder, Peabody & Co. Now, some investment bankers say, it is a contender to buy part or all of Revlon Group's $2.7 billion worldwide cosmetic business.
P&G isn't saying much about Revlon. But such a deal would be the capstone to a string of acquisitions--notably Richardson-Vicks Inc. (RVI) in 1985 and Noxell Corp. four years later--that have already made P&G the largest U. S. mass-marketer of makeup and facial cream. And P&G is emerging as a serious player in the global battle for market share among cosmetic giants such as L'Oreal, Unilever, and Japan's Kao and Shiseido.
It's not hard to understand why P&G Chairman Edwin L. Artzt is dolling up the company's beauty products. These businesses offer alluring margins--as much as double those within P&G's traditional household-product lineup. Cosmetics and other beauty-aid products also offer faster growth than many of P&G's mature product lines such as detergent and toilet paper. But even company insiders wondered if P&G's marketing touch might prove a little leaden in a business that sells hope in a bottle. "Never lose sight of the fact that they're a soap company," says one former P&Ger. "The challenge is to loosen up their thinking."
P&G has turned out to be more of a freethinker than many expected, though. Consider Oil of Olay, an RVI face moisturizer that languished during the early `80s with a marketing campaign featuring middle-aged women. P&G repositioned Oil of Olay, realizing that it could attract younger as well as older women if it didn't dwell so much on what the product can do once middle age has arrived. Its campaign now features fresh-faced young women. The tag line: "Why grow old gracefully?"
P&G also expanded the product's reach by adding new Oil of Olay products for sensitive skin and long-lasting use and a line of facial cleansers. Last year, sales of Oil of Olay hit roughly $200 million, up 60% since 1985, the year the brand was acquired. "Every single company should watch the revamp of Oil of Olay," says Andrew Shore, an analyst with Prudential Securities Inc.
ANCIENT MARINER. Many familiar franchises have been getting such face-lifts at the hands of P&G lately. The company took Pantene, for instance, a shampoo that RVI had sold in department stores, and moved it into drug and food stores. It lowered the price a bit but used a classy package to retain an upscale image, successfully joining a move among marketers to offer glitzier products in mass outlets.
Bain de Soleil, a sunscreen line P&G bought in 1987, has roughly doubled its market share since the company began emphasizing its protective quality. The slogan: "Great color today. Great skin tomorrow." As with Olay, P&G is using line extensions to broaden Bain de Soleil's reach among consumers. It's now rolling out a line of sport sun lotions that are fairly water-resistant and offer all-day protection for active beachgoers. P&G is pitching the new lineup to men as well as women.
P&G's financial prowess--it annually spends $2 billion on advertising--obviously helps, too. Just four months after it bought Old Spice from American Cyanamid Co., P&G brought back the fragrance's masculine, head-turning symbol, the Mariner Man, in a series of network TV ads after an eight-year absence.
Another example: Backed by a dramatic increase in advertising, Noxell's Cover Girl makeup line gained a full point of market share, to 23%. P&G seems to be allowing Noxell managers to make the fashion calls, including a new Cover Girl campaign that takes a more glamorous approach.
But for all the changes it's making, P&G seems to know when to leave well enough alone. Despite its overhaul of Oil of Olay's packaging, for example, it kept the Egyptian-style emblem that gives the brand an aura of mystery. And it has decided to carry on Noxell's annual Cover Girl high school beauty contest. In past years, such winners as Cheryl Tiegs and Christie Brinkley have been featured in Cover Girl magazine ads.
P&G has chosen a good time to lay on the marketing muscle: Its two top rivals are in limbo. Maybelline Inc. recently endured both ownership and management changes. Meanwhile, the future direction of Revlon is up in the air. P&G is charging ahead abroad, as well. It has built up its Vidal Sassoon shampoo line into a household name in Britain, in part through selling a combination shampoo and conditioner there. In the U. S., that same combo is sold as Pert Plus, a once-flagging label that has become the market leader and now generates $140 million a year. P&G's success abroad has heated up speculation that the company would love to grab Revlon's foreign cosmetic businesses, which include Max Factor and the German Betrix Cosmetics line.
Back at home, the detergent king's most surprising success has come in that most ethereal of categories, women's fragrances. P&G's new Navy perfume, which Noxell introduced just as it was being acquired, is now pulling down $25 million in annual revenues. With Navy, P&G eschewed the racy and sometimes weird ads of other perfumes such as Calvin Klein's Obsession, aiming instead for an aura of classic elegance.
TOUCH OF GREEN. Launched with a fashion show at New York City's Plaza Hotel, Navy was heavily promoted at a midscale price, about $12.50 an ounce. The approach has helped P&G trounce Luna Mystique, the mass-market fragrance of archrival Unilever. "In every aspect of the marketing mix, Navy has the edge," says Suzanne Grayson, a marketing consultant based in Santa Barbara, Calif. Sources say P&G is already working on another mass-market perfume.
P&G is also throwing in a dash of green marketing in a bid to win environmentally conscious consumers. On Apr. 1, P&G will start shipping a new Vidal Sassoon hair spray that promises the fine mist of an aerosol with no chemical propellants. The user pumps the cap up and down 10 or 15 times to build pressure that powers the spray.
That's the kind of research-driven product modification P&G is renowned for. But some still wonder whether this approach will work in cosmetics. "If you think you can out-R&D the next guy in a business that has fashion in it, you're going to have problems," explains Allan G. Mottus, a health and beauty products consultant based in New York.
Nor is P&G's beauty care business without its blemishes. The company is trying to restore some luster to its faded Prell shampoo by relaunching it in a new, gentle blue formula. And it's trying to reenergize its lagging Camay soap with new scents and packaging. Embarrassingly, P&G has been pummeled at home in the beauty-soap business by Unilever's Dove.
Which again raises the question: Can P&G peddle fashion? "Intelligent people always can learn," says a source at Cosmair Inc., the U. S. distributor of L'Oreal and Lancome. True enough. And given its early triumphs so far, P&G is proving a quick study indeed.
PRIMPING AT P&G OIL OF OLAY
With its "Why grow old gracefully?" pitch, this face cream is now aimed at younger women. New cleansing products have been added, too
Once a dying brand. P&G reworked product into a shampoo and conditioner combo. It's now the No. 1 shampoo
This top-selling mass-market cosmetic line is going uptown with higher prices. P&G boosted ad spending, and Cover Girl gained share in 1990
Salon brand goes green with its hair spray offering. New canister relies on hand pump, rather than chemical propellants, to spray product
Maiden voyage into perfume for P&G. Classic packaging and midscale price are winning high marks
HOW P&G GOT ALL DOLLED UP Acquisition Year Price RICHARDSON-VICKS 1985 $1.2 billion Oil of Olay/Pantene BAIN DE SOLEIL 1987 $80 million Sun lotion NOXELL 1989 $1.3 billion Cover Girl/Noxzema OLD SPICE 1990 $330 million DATA: KIDDER PEABODY & CO.
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