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508-065-1

Beiersdorf AGs Brand Architecture Strategies: Challenges in


Nurturing an Umbrella Brand Nivea
In 2006, Nivea, a global skin care brand, represented over 70% 1 of the Beiersdorf AGs
(Beiersdorf) consumer segments sales. For decades, Beiersdorf, a leading international company
principally engaged in the development of skin and beauty care, has been primarily known for its
Nivea brand. The companys core brands included Nivea, Labello, 8x4, la prairie, JUVENA,
Eucerin, Hansaplast/Elastoplast and Florena.

While the company successfully managed a highly concentrated brand portfolio, Nivea emerged as
Beiersdorfs largest brand in terms of sales, products and geographical reach. Nivea grew

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tremendously from a 545 million brand in 1990 to the one with sales of 3.1 billion in 2006. 2
Beiersdorf strategically capitalised on Niveas international appeal by launching a series of brand

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extensions for Nivea. Nivea was present across 15 successful product categories. 3 Beiersdorfs

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success in establishing Nivea as a broad skin care and personal care brand presented the
company with a new set of issues and challenges. While the repeated brand extensions could
eventually wear out the Nivea brand, the unsuccessful brand extensions could even dilute the
equity associated with the brand. In such a situation, the over reliance on an umbrella brand like
Nivea would put Beiersdorf at a great disadvantage with competitors like LOreal 4 and P&G 5 which
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were offering a wider range of brands.


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Global Cosmetics and Toiletries Industry: Competitive Scenario

The global cosmetic and toiletries market comprises product sectors including baby care, bath and
shower products, deodorants, hair care, colour cosmetics, mens grooming products, oral hygiene,
fragrances, skin care, depilatories and sun care. According to Euromonitor International, in 2006,
the global cosmetic and toiletries industry grew by 5.5%, marking a five-year high for the industry. 6
The positive performance was the result of a combination of mega trends, such as a worldwide rise
in consumer spending power and increasing consumer interest in health and appearance, fast
pace of innovation and rapid development of the cosmetics and toiletries market in emerging
economies. The cosmetics and toiletries sales were up by 10.7% in both Latin America and
Eastern Europe, compared to 3.2% in Western Europe and just 3% in North America. Some of the
markets in Asia Pacific also performed reasonably well, especially with China posting a growth rate
1 Euromonitor, Beiersdorf AG - Cosmetics and Toiletries World, http://www.euromonitor.com/pdf/C&T-

BEIERSDORF.pdf, June 2007


2 Ibid.
3 Ibid.
4 The L'Oral Group is the world's largest cosmetic and beauty company and is headquartered in the Paris suburb of

Clichy, France.
5 Procter & Gamble Co. is a Fortune 500, American global corporation based in Cincinnati, Ohio, that manufactures a wide

range of consumer goods including beauty and grooming products, houshold careand health and well-being products.
6 Suggitt Melissa, Global cosmetics and toiletries sales reach five year high in 2006,

http://www.euromonitor.com/Global_cosmetics_and_toiletries_sales_reach_five_year_high_in_2006, April 16th 2007

This Case was written by Sonpal A, Dadhwal V and Chatterjee C, IBS Research Center. It is intended to be used as the
basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The
case was compiled from published sources.
2009, IBS Research Center.
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whatsoever without the permission of the copyright owner.

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508-065-1

of 10.8%. 7 Though a mature market, Western Europe represented the largest market accounting
for nearly 30% of the global cosmetic and toiletries market. 8

While skin care with sales of $60.1 billion in 2006 constituted the largest product category in the
industry, sun care, baby care and fragrances also reported high growth rates. According to
Euromonitor International forecast, the industry is expected to reach global sales of more than
$313 billion by 2011 with an average annual growth of 3%. 9

Though the global cosmetic and toiletries industry was dominated mainly by western players such
as P&G, LOreal and Unilever, the competitive dynamics of the industry were fast changing in the
wake of increasing global reach of players in emerging markets. Cosmetic companies like Brazil's
Natura Cosmeticos and Russia's Kalina and Faberlic started gaining significant grounds at the
global level. Further the growing influence of private labels across Western Europe the largest

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cosmetic and toiletries market in the world posed another challenge to the global players.

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LOreal continued to be a global market leader in product categories including skin care, sun care
and colour cosmetics. Unilever and P&G were market leaders across categories in deodorants,
mens grooming products, and bath and shower products. The players like Colgate-Palmolive
relied heavily on bath and shower products. Este Lauder and Avon participated mainly across
skin care, makeup, fragrance and hair care products. Beiersdorf, which was ranked seventh
among top ten global players in the industry, successfully participated across all the product
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categories 10 (Exhibits I (A) and I (B)).


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Exhibit I (A)
Global Top Ten Rankings 2006

Global Brand Owners Market Share


Procter & Gamble Co 12.7%
L'Oral Groupe 10.1%
Unilever Group 7.1%
Colgate-Palmolive Co 4.0%
Este Lauder Cos Inc 3.9%
Avon Products Inc 3.3%
Beiersdorf AG 3.1%
Johnson & Johnson Inc 2.8%
Shiseido Co Ltd 2.6%
Kao Corp 2.5%

Source: Hofmann Oliver, New company rankings: could Western beauty firms be under threat?,
http://www.euromonitor.com/New_company_rankings_could_Western_beauty_firms_be_under_threat, March 21st 2007

7 Ibid.
8 State of the Industry: Eco-values Escalate, http://www.gcimagazine.com/marketdata/7862872.html#5, June 6th 2007

9 State of the Industry: Eco-values Escalate, op.cit.


10 Skin Care, Sun Care, Baby Care, Bath and Shower Products, Mens Grooming Products, Deodorants,
Colour Cosmetics, Depilatories, Fragrances and Hair Care.

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Exhibit I (B)
Overview of the Global Cosmetic and Toiletries Industry 2006

Beiersdorfs
Product Categories Global Market Leaders
Rank
Skin Care LOreal* 2nd
Deodorants Unilever (Rexona) 3rd
Mens Grooming** Unilever, P&G 3rd
Sun Care LOreal 2nd
Bath & Shower Products Unilever, Colgate-Palmolive*** and 8th
P&G
Colour Cosmetics LOreal(Gemey/Maybelline/Jade), 16th
Avon and P&G (Max factor)
Hair Care P&G(Head and Shoulders, 10th
Pantene and Wella)

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Baby Care Johnson & Johnson 3rd
Depilatories P&G(MACH3, Gillette) 35th

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*While LOreal achieved its position with a variety of brands, Beiersdorfs products were concentrated under the Nivea brand.
**excluding razors and blades
***Unilever and Colgate-Palmolive rely heavily on bath and shower products which respectively represented 25% and 19% of their
cosmetics and toiletries sales in 2006.

Compiled by the authors from Euromonitor, Beiersdorf AG - Cosmetics and Toiletries World,
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http://www.euromonitor.com/pdf/C&T- BEIERSDORF.pdf, June 2007


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Beiersdorf AGs Business Portfolio


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Germany based Beiersdorf is a consumer goods group engaged in production and marketing of
cosmetic and toiletries, medical goods and adhesive tapes. It is headquartered in Hamburg,
Germany and employs about 17,000 11 people. The group operates primarily in Europe, the US,
Africa, Asia and Australia (Exhibit II).

Exhibit II
Beiersdorfs Regional Ranking 2006

Companys Regional
Region
Share in % Ranking
Eastern Europe 4.9 6
Africa and Middle East 3.7 5
Asia Pacific 0.9 16
Latin America 1.9 9
Australia 3.0 9
Western Europe 6.9 3

Source: Euromonitor, Beiersdorf AG - Cosmetics and Toiletries World, http://www.euromonitor.com/pdf/C&T-


BEIERSDORF.pdf, June 2007

Beiersdorf operates with its two business segments consumer segment 12 and tesa. 13 In 2006,
consumer segment and tesa segment represented 84.5% and 15.5% of the groups sales

11 Our Profile, http://www.beiersdorf.com/Area-About-us/Our-Profile.aspx?l=2


12 The consumer division manufactures and distributes consumer products in skin and beauty care under
the international brands Nivea, 8x4, Atrix, Eucerin, Labello, La Prairie, Juvena, Futuro, Florena, Hansaplast
13 The tesa business segment has been an independent affiliate within Beiersdorf. With over 3,700

employees and operations in more than 100 countries, tesa is one of the worlds leading manufacturers

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respectively. 14 In 2006, the company reported sales of 5120 million, an increase of 7.2% over
2005. While Beiersdorfs operating profit of 477 reported a decline of 10.2%, the net profit nearly
doubled from 335 million in 2005 to 664 million in 2006 (Annexure I).

For consumer segment sales, Europe represented a key market for Beiersdorf, which accounted
for over 72% of the companys consumer segments sales. Beiersdorfs presence remained
relatively marginal in North America. North America, the third largest cosmetic and toiletries market
in the world, accounted for around 7.5% of the consumer segments total sales and reported a
decline of 4% in all. As these regions were expected to remain sluggish over the 2006-2011
periods, the company had been strategically shifting its focus on fast growing emerging markets.
The sales in Latin America which accounted for 7.5% of the segments sales grew 16.9% in 2006.
The markets in Asia-Pacific and Africa, which accounted for 12.6% of the sales in the consumer
segment, also achieved double-digit growth of 12.4% in 2006 15 (Exhibits III (A) and III (B)).

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Exhibit III (A)

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Beiersdorfs Region-wise Consumer Segment Financial Facts 2006

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Details Europe* America** AF/AS/AUS*** Total
Net Sales (EUR million) 3,134 647 546 4,327
Share of Consumers Sales 72.4% 15% 12.6% 100%
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% Change (Nominal) 6.1% 7.6% 12.4% 7.1%


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EBIT**** 486 11 27 524


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EBIT Margin**** 15.5% 1.8% 4.9% 12.1%


EBIT 2005 417 18 35 470
EBIT Margin 2005 14.1% 2.9% 7.3% 11.6%
* Europe constituted Western Europe, Eastern Europe and Germany
**America includes North America and Latin America
***Africa/Asia and Australia
**** Excluding expenses for special factors

Compiled by the authors from Annual Report 2006, http://www.beiersdorf.com/Area-IR/Financial-Reports/Annual-


Reports.aspx?l=2,

Exhibit III (B)


Segregation of Consumer Segments Sales in Europe 2006
Germany Western Europe Eastern Europe Total
Sales million 1010 1697 427 3134
% Share 32% 54% 14% 100%
Change (Nominal) 0.1% 6.6% 20.8% 6.1%

Source: Annual Report 2006, http://www.beiersdorf.com/Area-IR/Financial-Reports/Annual-Reports.aspx?l=2,

The consumer segment comprised a handful of highly successful brands like Nivea, 8x4, Atrix,
Eucerin, Labello, La Prairie, Juvena, Futuro, Florena, and Hansaplast. Beiersdorf participated
across all product categories and had a significant presence in fast growing categories including
skin care, sun care and mens grooming products, deodorants and baby care (Exhibits IV (A) and
(B)).

of self- adhesive system and product solutions for industrial customers and consumers. It focuses on
the electrical and electronics automotive, as well as printing and paper industries.
14 Annual Report 2006, http://www.beiersdorf.com/Area-IR/Financial-Reports/Annual-Reports.aspx?l=2,

2006
15 Ibid.

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Exhibit IV (A)
Beiersdorf Regional Share in Cosmetic and Toiletries by Sector 2006

Global Global
% Share WE EE NA LA AP Aus AF/ME
Share Ranking
Cosmetic and Toiletries 6.9 4.9 0.4 1.9 0.9 3.0 3.7 3.1 7th
Baby Care 8.4 13.1 -- 2.2 0.7 -- 5.3 4.0 3rd
Bath and Shower Products 6.1 8.0 -- 0.7 0.2 2.2 1.3 2.4 8th
Colour Cosmetics 4.1 0.4 -- -- -- 0.0 2.4 1.2 16th
Deodorants 14.0 12.8 -- 4.7 16.6 8.3 7.1 8.5 3rd
Depilatories .02 0.1 -- -- -- -- -- 0.1 35th
Hair Care 2.5 2.7 -- -- -- -- 0.7 0.9 10th
Mens Grooming Products 7.3 8.1 1.5 2.2 1.8 3.7 9.2 4.4 4th
Skin Care 16.6 10.6 2.1 8.2 1.7 7.8 15.4 7.4 2nd
Sun Care 20.4 15.3 -- 13.6 2.7 15.0 22.0 11.6 2nd

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-- signifies no presence or negligible share
WE: Western Europe, EE: Eastern Europe, NA: North America, LA: Latin America, AP: Asia Pacific, Aus:

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Australasia, AF/ME: Africa and Middle East

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Source: Euromonitor, Beiersdorf AG - Cosmetics and Toiletries World http://www.euromonitor.com/pdf/C&T-
BEIERSDORF.pdf, June 2007
Exhibit IV (B)
Break-up for Beiersdorfs Total Sales
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Category % of Companys Sales*


Skin Care 50.0
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Sun Care 8.1


Baby Care 2.1
Mens Grooming Products 10.7
Colour Cosmetics 4.8
Fragrances 0.4
Hair Care 5.1
Depilatories 0.0
Deodorants 12.4
Bath and Shower Products 6.4

* Percentage of company sales in each sector is calculated from rsp sales (retail sales price) within this market in 2006. This figure
may be slightly distorted by double-counting products which appear in more than one sector.
Compiled by the authors from Euromonitor, Beiersdorf AG - Cosmetics and Toiletries World
http://www.euromonitor.com/pdf/C&T-BEIERSDORF.pdf, June 2007

Though it comprised brands catering to different consumer groups ranging from premium (La
Prairie) to mass (Nivea), Beiersdorfs brand portfolio remained highly concentrated as compared to
its competitors.

Evolution of Beiersdorf AGs Brand Portfolio

In 1882, Paul C. Beiersdorf (Beiersdorf), a pharmacist, developed gutta-percha plasters 16 in his


laboratory laying the foundations for modern plaster technology. Beiersdorf received a patent for
his invention in the same year and this year was taken as the date of incorporation of Beiersdorf
AG. In 1890, a pharmacist, Dr. Oscar Troplowitz (Troplowitz) took over the company and in 1892,
the company started production of the first technical adhesive tapes along with medical plasters
and the first adhesive rubber at a factory in Hamburg, Eimsbuttel, Germany. The company

16 A medicated bandage covered with substance similar to rubber.

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manufactured a wide range of products during the first decade of the 20th century, including soaps,
depilatories, mouthwashes, and shaving soaps.

It was only after 1900, that Beiersdorf started revolutionising the cosmetic industry. Following the
establishment of its first overseas branch in London in 1909, the company introduced Labello lip
balm. Though Beiersdorf had launched its first lip care balm in 1902, Labello lip balm became one
of the companys most popular products of all time. Labello was uniquely positioned with its sliding
tube packaging and provided the basis for all future lip care products in the industry. In 1911,
Beiersdorf purchased the patent for a material called Eucerit 17 . Developed by Dr. Isaac Lifschutz,
Eucerit was being marketed as an emulsifying agent. Beiersdorf took over the manufacturing of
Eucerit and launched the first product featuring Eucerit, Eucerin Powder.
NIVEA Creme was launched in 1911. Troplowitz used Eucerit, which was originally discovered for
the medical applications, as the base for NIVEA Creme. Positioned as the worlds first long-lasting

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moisturiser, the cream was a revolution in the cosmetic industry. In 1922, Beiersdorf introduced the
first self-adhesive plaster under the name Hansaplast. The new brand was basically a further

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development of Leukoplast 18 , which was developed during Beiersdorfs early years. Hansaplast
was the first non-medicinal plaster to protect wounds and minor injuries. The first-aid bandages
were further improved in 1931, enabling people to treat their own wounds without a doctors aid for
the first time.

In 1935, the company introduced a transparent tape known as Klebefilm which was renamed
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tesafilm in 1941. It rapidly developed into one of the world's bestselling tapes and a major product
line for Beiersdorf.
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In 1951, led by intensive research and development, Beiersdorf became the first company to
launch a deodorant that inhibited the growth of the sweat decomposing bacteria. Following this,
Beiersdorf launched the first deodorising soap under the name of 8x4. This brand was successfully
extended into a product family during the 1950s and 1960s. The company launched an 8x4 powder
in 1952, an aerosol spray and roll-on in 1958, a stick in 1963 and a bath gel in 1967. 8x4 emerged
as one of the worlds oldest and best-loved deodorant brands and received tremendous success
on a global scale. Meanwhile, in 1955 Beiersdorf also launched a protective hand cream under the
name of brand atrix.

The 1960s signified the development of new product categories and expansion of the existing
product lines. Tesafilm was emerging as a profitable business area in the wake of worldwide
automation of industry. Nivea had solidified its position as the most popular skin cream in the
world. Beiersdorf strengthened its Hansaplast brand through introduction of new bandages and
medical products. The utility of Eucerin was being constantly re-discovered with the development
of new innovative products and was finally positioned as a medical skin care brand among
dermatologists. By the early 1970s, most of the Beiersdorfs product lines including Nivea, tesa,
and Hansaplast started emerging as the market leaders across the Europe.

Between the mid of 1970s and 1980s, the new product development was leading the growth in
Beiersdorf. As Nivea established itself as a successful skin care brand in the market, the company
started leveraging its strong brand equity in the market and started extending the brand. Beiersdorf
gradually changed its strategic approach to its brand portfolio. While it narrowed the focus of its

17 The first ever water-in-oil emulsifier.


18 A surgical tape.

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operations to product development in areas of core competence including skin care, tapes, and
medical supplies, it started making acquisitions. The company added new brands to its brand
portfolio to penetrate new market segments and new distribution channels.

In 1990, Beiersdorf acquired Juvena 19 , a Switzerland based cosmetic brand. The brand later
became one of the core brands for Beiersdorf. In 1991, Beiersdorf moved ahead with another
acquisition of La prairie 20 , a brand which was primarily known for its exclusive, high-priced anti-
ageing products. The brand kept on embracing emerging needs of the market while holding onto
the same positioning. Later this brand also became a premium skin care brand for Beiersdorf. 21
Following this, the company made another acquisition of the FUTURO 22 brand in 1995.

In late 1997, Beiersdorf streamlined its business portfolio to focus on key business areas. It
initiated restructuring for professional wound care and self-adhesive technology areas. Eventually

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in 2001, tesa AG was formed into a wholly owned affiliate of Beiersdorf. Professional wound care
was spun off in line with the new strategy and BSN medical was formed as a joint venture between

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Beiersdorf and Smith & Nephew. 23 Beiersdorf now constituted three divisions; cosmed, medical
and tesa. The same year, Beiersdorf acquired Elastoplast brand from Smith & Nephew (UK) to
gain a foothold in markets in Canada, South Africa and New Zealand which helped the company to
pave the way for launching other products. In 2002, Florena, a cosmetic brand, became a wholly
owned subsidiary of Beiersdorf. Florena was associated with nearly 200 products including
creams, shower gels, toners, lotions, after-shave lotion, shaving creams, deodorant sprays,
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sunscreens and acne treatment.


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In 2003, the company sharpened its focus on development of its core business areas and its
respective brands. Beiersdorf undertook another restructuring and grouped its activities into two
business segments; Consumer and tesa. During this period, the company decided to place
emphasis on its core brands and developed a highly concentrated portfolio of brands in a limited
number of product categories. In 2006, Beiersdorfs consumer segment comprised eight core
brands. Beiersdorf owned two global brands, Nivea and La Prairie. Along with Eucerin, which had
potential for global distribution, other five regional brands including Atrix, Juvena, Labello, Florena,
and 8x4 constituted Beiersdorfs core brands.

Though, Beiersdorf was strong financially to make a number of acquisitions, the company
deliberately chose to focus on a limited number of brands. Beiersdorfs focus on small number of
brands led by research and development resulted in on-going development of its brands. The
company held an independent set of stand-alone brands and strategically positioned its brands on
their functional benefits to cater to niche segments. Beiersdorf constantly leveraged the positioning
of its existing brands to integrate new and emerging product categories into its business portfolio.
The companys brand strategy was threefold. Besides increasing its market share in the existing

19 Juvena is a pioneer in soft emulsions and effective formulas since 1954. The brand was developed by
the Divapharma pharmaceutical laboratory, founded in 1945 in Zurich.
20 The brand originated at the "la prairie" beauty clinic, which was founded in Montreux, Switzerland in

1931 and is considered a pioneer in anti-aging treatments.


21 The global appeal of its name resulted in the renaming of Juvena/La Prairie into La Prairie Group in 2006 which housed

four brands: La Prairie Switzerland, Juvena of Switzerland, Marlies Moller Beauty Hair Care and SBT Skin Biology Therapy.
22 The company was founded in Ohio, USA in 1917 by Georg Jung, a German, and produced bandages right from the start.

The Futuro brand with its black and yellow packaging was born in 1936.
23 Smith & Nephew is a British medical devices company headquartered in London. It carries research, development,

manufacturing and marketing of devices and products for the fields of orthopaedics, wound management and endoscopy.

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markets, Beiersdorf used its brands to enter new market segments and even new markets.
Beiersdorfs strategy to leverage the synergies through its brand families had worked for the
company. The company religiously followed brand extensions to group number of product
categories under one brand. Though all the brands in Beiersdorfs portfolio were carried as
independent identities, these brands were extended rigorously across various product categories
(Annexure II).

The company strategically capitalised on the strength of its umbrella brands for all the products.
Beiersdorf capitalised on the popularity of its brands and brand equity attached to its brands. Its
strategy was getting more and more pronounced with the growth of its Nivea brand. Nivea brand
grew tremendously over the years and emerged as a major brand family and the largest skin and
personal care brand in the world. In 2006, the brand was present across all cosmetics and toiletries
except oral hygiene through its different lines: NIVEA Creme, NIVEA VISAGE, NIVEA BEAUT,

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NIVEA Hair Care, NIVEA Soft, NIVEA Body, NIVEA SUN, NIVEA Hand, NIVEA Deodorant, NIVEA
VITAL, NIVEA Bath Care, and NIVEA for Men, NIVEA Lip Care, NIVEA Baby and NIVEA Intimate

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Care.

Nivea: A Flagship Brand

Nivea brand evolved consistently from one signature product to over 500 products, encompassing
15 product categories. Nivea was born in 1911. Following Beiersdorfs custom of giving Latin
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names to pharmaceutical products, Dr. Troplowitz called this cream NIVEA. The name was
derived from the Latin adjective niveus/nivea/niveum, meaning snow, reflecting the snow white
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colour of the cream. As the worlds first multi-purpose skin cream, NIVEA Creme was quickly
adopted by the families worldwide. It was introduced throughout Europe in 1912. Most European
users were first introduced to NIVEA Creme during their childhood. They grew up learning that it
was the product that could be used by the entire family for a healthy skin. NIVEA Creme
successfully captured the mind space of consumers early in their lives. The typical scent, feel and
softness of the cream constituted the brand essence for Nivea. It remained the companys core
product as the carrier of the Nivea brand name.

In 1912, the first advertisement of Nivea was created by the famous poster artist, Hans Rudi Erdt
titled With the likeness of a Lady, depicting attributes of the ideal woman which prevailed in those
times. Print media played an important role in Nivea marketing campaigns in those times.

The first brand extension came in the form of Nivea soap in 1919 followed by Nivea Hair Milk. The
products were positioned as gentle care products in line with NIVEA Creme's brand values. In
1921, Nivea launched its first baby care product in the form of baby soap, followed by baby
powder. The products were developed especially for sensitive babies and childrens skin. While
the popularity of the Nivea brand in the market offered an instantaneous goodwill to the baby
products, the association with the maternal gentleness attached to the baby care products
enhanced the brand equity for Nivea. In 1922, Nivea entered the market for mens products. The
first Nivea shaving soap, a forerunner of the shaving foams and gels was launched.

As the core product of the Nivea family, NIVEA Cremes formulation changed little since its initial
years. However, the packaging did undergo consistent changes reflecting the brand identity of
Nivea. NIVEA Creme was sold in a yellow tin during initial years. The fanciful decoration of green
tendrils reflected a popular artistic trend of the period, Art Nouveau (French for 'new art'). By
1924, Nivea initiated the use of its blue and white tins, which changed minimally in the years to

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come. The colour scheme became an important element of Niveas visual identity. In every visual
communication, the Nivea brand appeared in its globally popular blue and white colour
combination. The blue colour surrounding the brand logo was not just any old blue but a special
colour mixed exclusively in a complex development process. Nivea blue had a fresh and gleaming
look which perfectly complemented its brand image. While the Nivea brand was being extended
into different consumer segments, the advertising campaigns got more focussed around the brand.

In 1924, the picture titled Nivea Boys was used for Niveas advertising campaigns. The three
cheerful and cheeky-looking boys won the hearts of the female public. The picture successfully
portrayed the Nivea feeling natural, skin-friendly and fresh. The enthusiastic response to the
campaign encouraged Beiersdorf to take up another campaign with Nivea Girls. A campaign was
launched to find out Nivea Girls and the winners were to be paid 600 marks. We don't want
beauties, belles of the ball or kiss curls, but you should look healthy, clean and fresh and be

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simply gorgeous girls" was the vision of the campaign. Several trios of girls were selected among
the applicants and presented in a series of advertisements. Portraying real people as brand

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ambassador instantly connected Nivea to the masses.

Beiersdorf strategically designed its advertising campaigns to capture the spirit of those times.
During the 1920s, playing sports in the fresh air and the sun during leisure times was increasingly
getting popular among European families. Beiersdorf came up with an interesting concept.
Advertisements invited holidaymakers to have fun with giant air-filled rubber replicas of the NIVEA
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Creme tube, which were distributed at major seaside resorts. The photographs and drawings by
holidaymakers were eligible to take part in the competition conducted by Beiersdorf.
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In 1930, Nivea launched its first shampoo and its first styling product in the form of Nivea hair
fixative and Nivea brilliantine. The Nivea range was expanded further with an addition of Nivea
Nut Oil targeting sportspeople, which formed the foundation of NIVEA Sun. Nivea advertisements
got informative and provided tips on sunbathing and right ways to use NIVEA Creme in different
weathers. The company also started producing a weather calendar with daily weather forecasts.
Niveas brand evolution continued.

In 1959, NIVEA Creme's logo with the characteristic Creme' lettering appeared on the Nivea tin for
the first time. Together with the powerful Nivea characters in classic Roman typeface, this simple
logo lent uniformity to the brand communication. As NIVEA Creme' had established its brand
identity at an international level, the explanations about the product like for skin care, introduced
in 1928, and, for home and sport in 1931, were now no longer felt necessary. The logo remained
unchanged in the years to come (Annexure III).

Though Niveas product portfolio was not extensive, it formed the foundation of future product
categories for Nivea. While new product developments for the existing categories were driving the
growth for Nivea brand, the advertising campaigns played an important role in defining the brand
during the 1960s. Nivea advertising themes during the 1960s reflected the travel craze among
European families, which was picking up during those times. Nivea came up with an inflatable
Nivea ball that soon became a runaway success on many European beach resorts. The ball
symbolised the zest for life shared by all members of the family. This Nivea ball was used as a
decorative advertising aid, as beach toys and also for television advertising. This campaign was
the first television campaign focussing on Nivea brand rather than individual products under the
brand. This helped the company to establish a uniform brand image for Nivea throughout Europe.

9
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During the 1970s, backed by research and development, Nivea continued introducing new
products under the existing product categories. Besides, NIVEA Sun Oil, the company introduced
NIVEA Baby fine range, which comprised a powder, a bath cream, soap and cotton-wool tips. The
company also launched few other products for bath care and NIVEA for men product lines. By the
1970s, Beiersdorf was on its way to become a global company. It had 18 foreign subsidiaries as
well as 22 licensing agreements to produce its products in the local markets. 24 The competition
increased for Nivea from other global brands. To defend NIVEA Cremes leading market position,
Beiersdorf launched the Creme de la Creme campaign with a core message, There's nothing
better than NIVEA Creme. The campaign underlined the Beiersdorfs brand's claim to leadership.
Another campaign which became a huge success was the Only Me campaign. The different
images presented NIVEA Creme as a multi-purpose skin care cream. Nivea was portrayed as a
day cream, a night cream, as a cream for different weather conditions, as a moisturiser and a
protective cream. While all the variations showed the familiar blue and white Nivea tin, the themes

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varied symbolising different benefits of NIVEA Creme. This series of advertisements, which ran in
Europe between 1973 and 1988 with over a hundred different themes, became an absolute serial

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success story for NIVEA Creme. Though the advertising campaign underlined the multipurpose
competence and quality of NIVEA Creme, it also in some way cannibalised its own other skin care
products like NIVEA Baby Care Creme and NIVEA Creme bath.

In the 1980s, while NIVEA for Men emerged as a prominent sub-brand in Nivea Family, Nivea
entered a new segment through NIVEA VITAL. The skin research team at Beiersdorf succeeded in
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developing the first special care series for mature skin. The VITAL product range aimed
specifically at the aging segment of the market. While the product was revolutionary itself, the
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advertising also ventured into completely new territory as it had previously been almost a taboo to
show mature women in cosmetics advertisements.

At the beginning of the 1990s, Nivea was already a global brand with a wide range of products
catering to the full spectrum of consumer segments. The 1990s were significant for Beiersdorf. The
continuous product development at Beiersdorf led to a well-defined brand portfolio including NIVEA
Bath Care, NIVEA Hair Care, NIVEA SUN, NIVEA Body, and NIVEA VISAGE (Annexure IV).

Nivea further extended its brand to enter the lip care market with NIVEA Lip Care. It got huge
popularity in Japan and subsequently entered markets in China, Korea, Turkey and finally in late
1990s, England and Poland. The product lines established their own independent identities as
sub-brands. These sub-brands were named descriptively. While the product packaging, labeling,
advertising campaigns and even the logos were not uniform, these still remained connected to the
NIVEA Cremes core values. Nivea, primarily through Nivea Creme acquired a unique, universal
brand identity as a product for loving care for skin. It successfully maintained strong core values
whilst remaining relevant to changing needs of consumers. Mildness, reliability, gentleness,
protection, high quality, and value for money all remained strongly associated with Nivea. It
gradually transformed itself from a single skin care brand to a trustworthy and contemporary
personal care brand.

In 1991, Nivea launched its first deodorant range with NIVEA Deodorant. The market for
deodorants at that time was crowded with products having strong effects and fresh fragrances. The
Nivea brand helped the product to uniquely position itself in the market with its typical gentle Nivea

24 Jones Geoffrey, Globalizing the Beauty Business before 1980, http://www.hbs.edu/research/pdf/06-056.pdf

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Care impression. The commercial was placed showing a delicate feather as a symbol of softness
of the new NIVEA deodorant.

In 1992, Beiersdorf launched a new ad campaign, Blue Harmony which captured wonderful
moments of human togetherness and successfully associated the brand with impressions of
tenderness, trust and safety. As the Nivea brand was getting extended into new product
categories, the company strategically increased its focus on communicating core values
associated with Nivea brand. In 1994, the company strategically targeted the young segment of the
market with its new skin cream. Though universal image of NIVEA Creme among all the
demographics was a challenge for the new NIVEA Soft cream but the new sub-brand successfully
positioned itself as a specialist skin care cream for the younger generation.

Between 1990 and 2000, Nivea nurtured its existing sub-brands and added new sub-brands to

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enter the new market segments. Nivea made a huge advance into colour cosmetic market with
NIVEA BEAUT. NIVEA BEAUT carried a strong brand positioning as a sub-brand to Nivea.

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NIVEA BEAUT not only entered a new market segment but also strategically rejuvenated the
brand itself among young girls. It added a fashion touch to this heritage brand. Following the
success of NIVEA BEAUT in France and Belgium, It was launched on a global scale in 1998. In
the same year NIVEA Hand Care was launched.

The year 2002 was the best in Beiersdorf 120-year history. While Beiersdorfs sales rose to 4.7
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billion, Nivea sales reached 2.6 billion mark from 821 million in 1993 25 (Annexure V and VI).
Thereafter Beiersdorf strategically leveraged upon Niveas widely recognised and respected sub-
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brands to enter the new markets and these sub-brands started taking leading positions in a series
of different market segments like mens care, deodorants, skin care and anti-age products
(Annexure VII). In 2004, Beiersdorf restructured its business portfolio which previously consisted
of the cosmed, medical, and tesa divisions. Beiersdorfs business portfolio now comprised two
divisions; consumer and tesa.

Beiersdorf relentlessly focused on innovation. Its continuous focus on new improved product lines
helped the company to grow even in saturated markets like Germany. For example, Beiersdorf
launched three new Nivea products to create new market demand in Germany. The launch of
NIVEA for Men, NIVEA SUN (Immediate Protection), and NIVEA Deodorant (PURE) in Germany
significantly helped the company to revive the market.

Beiersdorf followed a strategic pattern to take its Nivea brand into new markets. While Beiersdorf
kept Nivea brand values intact, it extended the brand progressively, penetrating new markets and
new consumer needs. The order of entry in each country was planned in such a way that it
deepened the role of Nivea. The brand was launched in each country using its cornerstone NIVEA
Creme. It was introduced in its prototype little blue and white round tin, portraying itself as a
healthcare brand. This was followed generally by the launch of care products 26 to build the initial
trust among customers. The company then capitalised on the goodwill and reputation of its core
brand to launch new sub-brands associated with hygiene 27 , hair care products and beauty
products. Beiersdorf built its Nivea brand through systematic extensions, which significantly helped
the company to capitalise on the popularity of its core products in the international markets.

25 Annual Report 2002, http://beiersdorf.com/html/docs_pdf/2002_BDF_GB.pdf


26 Nivea Hand, Nivea Lip Care, Nivea Sun, Nivea Body.
27 Nivea Deo and Nivea Bath Care.

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While Beiersdorf strategically stretched its Nivea brand across products and markets, the
international marketing strategy played an important role in localising the brand. To establish a
consistent look among its sub-brands, Beiersdorf standardised its advertising formats for Nivea
across its international markets. Beiersdorf implemented perfect local execution with local agency
affiliates. For example, while models and language was being changed across global markets, the
content remained consistent. Thus the brand was often seen as a local brand in countries like
France, Poland, Spain and Mexico.

In 2004, Beiersdorf focused on Niveas POS 28 concept, which was successfully launched in
countries like Germany, Austria, Sweden, and South Africa. In Germany, while Nivea Blue Wall
was designed as self-service block placement for the Nivea range, One-Stop Shopping concept
presented the entire range of around 500 products at a single location. Special activities like skin

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tests and professional advice also formed the part of the campaign. The concept helped Beiersdorf
in acquiring new consumers and establishing strong consumer loyalty. The company pursued

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similar concepts in Austria with the NIVEA Club Center and in South Africa with the NIVEA Care
Center. In April 2006, Beiersdorf announced a new direction for marketing its Nivea brand. It
opened a unique wellness facility right in the middle of Hamburg, Germany; the NIVEA Haus. The
800 square meter area offered a broad range of wellness and spa treatments focusing exclusively
on Nivea products. Nivea emerged as a true global brand with its official website which was
present across 48 countries in 28 different languages. 29 The site in each country comprehensively
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accommodated local content to deliver up-to-date information on product availability in local


markets, latest promotions and product innovations.
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In 2006, Nivea extended further to reach the women segment with NIVEA Intimate. In the same
year, Nivea was named the most trusted skincare brand among European consumers for the sixth
successive year. Nivea brand held significant market share in almost all the product categories in
the global cosmetic and toiletries industry through its sub-brands. NIVEA SUN, NIVEA Deodorants
and NIVEA skin care were among the leading sub-brands. Nivea continued to have strong
positions in Europe and Australia (Exhibit V (A) and V (B)).

Exhibit V (A)
Niveas Overall Brand Share in Cosmetic and Toiletries by Sector
2005-2006
% Share 2005 % Share 2006
Cosmetic and Toiletries 2.7 2.7
Baby Care 3.7 3.7
Bath and Shower Products 2.1 2.1
Deodorants 6.5 6.7
Hair Care 0.8 0.8
Colour Cosmetics 1.2 1.1
Mens grooming Products 4.0 4.1
Skin care 6.1 6.2
Depilatories 0.1 0.1
Sun Care 11.5 11.4

Source: Euromonitor, Beiersdorf AG - Cosmetics and Toiletries World http://www.euromonitor.com/pdf/C&T-


BEIERSDORF.pdf, June 2007

28 Point of Sale.
29 http://www.nivea.com/history

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Exhibit V (B)
Niveas Regional Share in Cosmetic and Toiletries by Sector 2006

% Share WE EE NA LA AP Aus AF/ME


Cosmetic and Toiletries 5.9 4.0 0.3 1.7 0.4 3.1 3.1
Baby Care 8.4 8.8 -- 2.2 0.6 -- 5.3
Bath and Shower Products 5.5 6.7 0.0 0.6 0.1 2.2 1.2
Colour Cosmetics 4.0 0.3 -- -- -- -- 2.4
Deodorants 11 11.4 0.0 4.7 7.5 8.3 4.7
Depilatories .02 0.1 -- -- -- -- --
Hair Care 2.3 2.3 -- -- -- -- 0.7
Mens Grooming Products 7.1 7.2 1.3 2.2 1.6 3.7 8.9
Skin Care 13.6 9.1 1.9 7.9 1.3 7.7 13.2

Purchased for use on the MMK - Branding and the Creation of Value, at ESCP Europe London Campus.
Sun Care 20.1 15.2 -- 13.2 2.5 15.0 22.0

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-- signifies no presence or negligible share

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WE: Western Europe, EE: Eastern Europe, NA: North America, LA: Latin America, AP: Asia Pacific, Aus:
Australasia, AF/ME: Africa and Middle East

Source: Euromonitor, Beiersdorf AG - Cosmetics and Toiletries World http://www.euromonitor.com/pdf/C&T-


BEIERSDORF.pdf, June 2007
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Beiersdorfs success in establishing Nivea as a broad skin care and personal care brand presented
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the company with a new set of issues and challenges. Niveas portfolio had grown from six sub-
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brands in 1993 to 15 sub-brands in 2006. 30 Though the brand was growing smoothly, the growth
rate had been slowly declining (Annexure VIII).

In the process of establishing sub-brands for Nivea, there was a concern that the Nivea brand
image had weakened through the brands continuous extensions. Umbrella Branding Nivea offered
high levels of consumer acceptance to its sub-brands. However, the presence of Nivea brand
across heterogeneous products could dilute the brand. While brand equity dilution posed a major
challenge to Beiersdorf, launching Nivea into new areas was making it difficult to remain loyal to
the brands core values. Expanding NIVEA Hair Care into colorants was one such case. The use of
chemical treatments in the product would not align with Niveas brand philosophy, which was
based on gentle skin care. Further the presence of Nivea across contrasting categories like NIVEA
VISAGE and NIVEA VITAL Visage did pose challenges to these sub-brands in preserving their
respective brand identities.

Beiersdorf was at a major risk in over-relying on an umbrella brand. As Nivea formed the bulk of its
sales, Beiersdorf was highly vulnerable to any loss of consumer confidence in its flagship Nivea
brand. By far, Beiersdorf had successfully capitalised on the growth of its flagship brand. But
whether capitalising growth on one single brand would make a successful strategy in the long run
was yet to be seen?

30 Keller Kevin Lane, Nivea Managing a Multi-Category Brand, http://85.17.192.207/coolbrands/dmdocuments/ecnivea.pdf

13
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EUR million

BEIERSDORF.pdf, June 2007


2002
Annexure I

2003
2004
Beiersdorf AGs Financial Summary 2002-2006

2005

Source: Euromonitor, Beiersdorf AG - Cosmetics and Toiletries World http://www.euromonitor.com/pdf/C&T-


2006

14
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508-065-1

Annexure II
Brand Extension at Beiersdorf AG

Brands Product Categories


Labello Lip Care
Nivea Nivea Creme
Each sub-brand has been extensively Nivea Visage
extended to meet the specific needs of Nivea Beaut
niche segments on the basis of age Nivea Hair Care
groups, gender and functional benefits. Nivea Soft
Nivea Body
Nivea Sun

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Nivea Hand
Nivea Dodorant

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Nivea Visage Vital

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Nivea Bath Care
Nivea for Men
Nivea Lip Care
Nivea Baby
Nivea Intimate Care.
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8x4 Deo Sprays and Roll-ons


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La Prairie Skin Care Treatments


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Colour
Fragrances
Juvena Skin Care
Eucerin Face Care
Hair Care
Deodorant
Body Care
Hand Care
Lip Care
Anti Age
Foot Care
Sun Care
Hansaplast/Elastoplast Plaster
Wound Care
Scar Reducer
Sport
Foot Care
Insect Bites
Pain relief
Others
Florena Face care
Body care
Skin and Hand Cream
Hair care
Florena for Men

Compiled by the authors

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Annexure III
NIVEA Cremes Tin Packaging 1911-2006
1911 1924 1925

The blue tin with the white NIVEA logo made its premiere in 1925.

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1926 1931 1935

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1931 the expanded range of uses for NIVEA Creme is made clear by adding the words FOR HOME AND SPORT
to the NIVEA Creme tin. This made NIVEA the ideal product for every
1940 1943 1949

In 1943 Beiersdorf started showing its corporate brand on the face of its tin packaging but in 1949 only it
discontinued the same.
1959 1970 2006

1959 logo on tin packaging remained a success and company continued with this logo for years to come.

Compiled by the authors from http://www.nivea.com/history

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Annexure - IV
Development of NIVEA Sub-brands 1980 to 2000
Sub-brand 1980s 1990s 2000
NIVEA Creme Nivea Creme continued to carry its brand image
NIVEA Bath Nivea Bath Care as a sub-
Care brand
NIVEA Baby Extension of baby products to
Care provide a complete care and
cleansing program for sensitive
skin of babies.
NIVEA For Men After Shave Balsam Introduction of Sensitive line Q10 Creme
Nivea For Men products Oil Control Linie
Assortment
NIVEA Hair Care Nivea Hair Care Sub-brand
Shampoo Formula

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Plus
Intensive Conditioner

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NIVEAStyling

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Shampoo for Men
NIVEA SUN Introduction of Nivea Sun. Firming Sun Lotion
Nivea Sun became and Moisturising Sun Lotion with
international name. immediate protection
Nivea children sun protection.
Sun Spray
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NIVEA Lip Care Nivea Lipcare for markets in


Asia and America
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NIVEA Body Nivea Lotion Nivea Body as a sub-brand


Nivea Skin Oil
NIVEA Deo Nivea Deo as a sub-brand Deodorant Wipes
Deo Stick and Stick for men Deo Compact
Deodorant Sensitive Balsam

NIVEA VISAGE Cleansing Milk and Global transition from NIVEA VisageYoung Range New Skin
Toner Gesicht (face) to Introduction of DNAge
NIVEA VISAGE started
Liposome Creme
AHA complex
Vitamin rebuilding cream
Q10 Anti-Wrinkle Cream
NIVEA Soft Launch of Nivea Soft
NIVEA BEAUT Stay-On Lippensticks and Strong & Pastel Nailpolish
Make-up Colour & Calcium Nailpolish
Time Balance Q 10 Make-up Max Volume Mascara
Mascara Optimal 3 in 1 Velvet Mat Make-up
International launch of Nivea Lash Revolution Mascara with
Beaute patented elastoflex brush
Flex&Strong with Bamboo
Nailpolish
NIVEA VITAL Launch of Nivea Introduction of Nivea Visage Vital
Vital
Launch of Teint
Optimal Range
NIVEA Hand Launch of Nivea Hand
NIVEA Hand Age Control
Cream Q 10
NIVEA Intimate Launch of Nivea Intimate Care
Compiled by the authors

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Annexure- V
Beiersdorf AGs Ten Year Financial Overview 1993-2002

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1) Figures up to and including 1997 prepared in accordance with Handelsgesetzbuch (German Commercial Code); from
1998 onward prepared in accordance with International Financial Reporting Standards (IFRS).
2) Sales changed from based on customers domicile to base on company domicile.

Source: Annual Report 2002, http://beiersdorf.com/html/docs_pdf/2002_BDF_GB.pdf

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Annexure - VI
Niveas Sales 1993-2002

Source: Annual Report 2002, http://beiersdorf.com/html/docs_pdf/2002_BDF_GB.pdf

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508-065-1

Annexure VII
Leading Sub-brands under NIVEA

2006 Nivea For men became number one in Chinese men face care market.
The key drivers included NIVEA SUN, NIVEA deodorant, NIVEA FOR MEN, and
NIVEA body
2005 Nivea launches what it claimed to be its most advanced mens skincare item in
the Nivea for Men line, Active Firming. The product was scheduled to debut in
France and the UK before gradually rolling out worldwide.
NIVEA FOR MEN was the first brand in Asia to launch complete whitening
range for men, thus strengthening its market lead. The new products are tailored
specially to the needs of mens skin. Up The first launch took place in Thailand

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and the range performed extremely well.
New product launches such as NIVEA body Q10, and NIVEA VITAL in Japan

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and NIVEA Deo in Singapore/Malaysia reinforced this growth.
2004 NIVEA was able to increase the number of its market leadership positions with
NIVEA Hand in Belgium, the Netherlands, Switzerland, and Portugal.
2003 NIVEA SUN extended its market leadership in Italy,
NIVEA VISAGE YOUNG was introduced to target young market segment.
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NIVEA for Men became the leader in the after shave/face care market in Poland
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and in the US. In Bulgaria, Romania, Ireland, and Guatemala, NIVEA VISAGE
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became the strongest brand on the face care market.


Another outstanding achievement was that NIVEA Lip Care took the market lead
in the UK.
2002 Nivea expanded its sales particularly in countries like China, the United
Kingdom, Norway, Thailand, Russia and South Africa.
Successful launches during the year included NIVEA Deo in the United
Kingdom, NIVEA for Men in Japan, South Africa and Canada, NIVEA Baby in
Hungary and NIVEA Visage in Korea.
NIVEA for Men has become market leader in Russia, the Czech Republic,
Slovakia and Saudi Arabia. NIVEA Deo became market leader in Croatia,
Romania and Thailand. NIVEA SUN became the leading brand in Norway. In
Germany NIVEA also secured the leading position in the mens shaving
products category (creams, foams, gels).
Compiled by the authors

20
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0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%

18.10%

15.40%

9.80%
12.10%

Compiled by the authors from www.beiersdorf.com


14.90%
15.10%
Annexure VIII

17.50%
16.00%
17.00%
NIVEAs % Growth Rate 1993-2006

6.90%
5.30%

4.40%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
4.80%
8.30%

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