Procter & Gamble's Root-to-End Pantene Makeover

What does a woman do when her do starts to look tired? Cut off split ends, switch conditioners, maybe try a little color. That's pretty much what Procter & Gamble (PG) is doing with Pantene, the market leader in hair care, with some $3 billion a year in sales. The health and beauty giant tapped 17 PhDs and technologies usually reserved for space and medical research to overhaul the brand. The results of the more than two-year effort started showing up on store shelves this month. "It took going beyond what was really common to hair-care research to look for different ways to understand what was at the root of the problem," says Jeni Thomas, a senior scientist at P&G's beauty research facility north of Cincinnati.

The company is hoping the third revamp since 1999 of its biggest beauty brand will restore sales in the U.S., where competition from cheaper rivals—including private-label alternatives—has intensified with the recession. Two-thirds of Pantene shampoo varieties saw sales declines in the 52-week period ended Apr. 18, according to SymphonyIRI Group, a Chicago-based research firm. P&G, like other big consumer-products companies, also has been under pressure from big-box retailers and drugstore chains that are trying to cut down on brand clutter. "You'd go to CVS (CVS) or Wal-Mart (WMT) and the whole shelf would be Pantene," says Ali Dibadj, an analyst with Sanford C. Bernstein (AB). "They added more and more products that confused the consumer."

As part of the relaunch, P&G reduced the number of shampoos, conditioners, and styling aids by close to one-third, to around 116 products. The entire line has been reorganized around four specific hair types—color-treated, curly, fine, and medium-to-thick—and color-coded to make selections easier for shoppers. Computer modeling allows P&G to predict the performance of millions of shampoo and conditioner prototypes without having to develop them. Still, 600 formulas were tested on more than 20,000 women worldwide. An atomic force microscope, similar to one used on NASA's Phoenix Mars Lander, and micro-computed tomography, used to measure bone density, helped reveal how ingredients interact with different hair types. "Research showed us a lot of ways to innovate in the category that quite frankly was needing some innovation," says Julie Marchant-Houle, P&G's North America marketing director for retail hair care.

It wasn't always this complicated. As recently as the 1960s, shampoo was essentially soap, and people used oil to add softness and sheen. Nowadays a bottle of shampoo carries about a dozen ingredients. Pantene's reformulated potions include 13 substances P&G has never used before, including polymers developed in partnership with university labs and other research institutions, says Thomas, who like Marchant-Houle sports a mane as shiny and smooth as the models in Pantene's TV ads.

For now, the revamped Pantene line will be available only in North America. Although previous overhauls were accompanied by price increases, P&G is holding the price steady this time, at around $4 per bottle. "It's a way to try to win back the hearts of their consumers," says Jason Gere, an analyst with RBC Capital Markets.

The bottom line: P&G is counting on a reconfigured Pantene lineup to beat back competition from hair-care upstarts and private-label brands.

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