First Person: Getting the Value Equation Right

“Everybody is learning from the recession,” says Neal Matheson, Unilever’s chief technology officer. “It has just made it really clear that if you can’t differentiate yourself in a way that is recognizable and aspirational to consumers, you’d better darn well get the cost down. You’re not going to be able to compete with a lot of me-too [products] at huge price premiums.”

Matheson identifies a clear distinction between “cheap” and “value.” “You’ve got to get the value equation right. The impact of the recession is that people will remember this [aspect] more. When everything was going gangbusters in the 1990s, if the value equation wasn’t quite right you could still probably get away with it. You could get away with a fragrance that was just ‘OK’ at building the concept and being consistent with brand equity. Now the consumer says, ‘I don’t think so—this doesn’t feel right.’”

Matheson sees this as a positive development of the current financial crisis: “It’s going to reward people who do their homework, get all of the elements right, create a really holistic design, and get the execution in the marketplace just right.”

When it comes to differentiation, Matheson sees fragrance playing a role as part of overall product concepts. A perfect example, he says, is Axe, an internationally successful body spray brand that proved many skeptics wrong. “That to me epitomizes some very good fragrances that are targeted to the concept. In the context of their brand equity and the actual line extension being introduced, they work great—they’re brilliant.”

It is just this sort of fragrance-driven success that leads Matheson to conclude, “We have to be much more focused on differentiation that the consumer actually wants and then leverage it in as many ways as we can.”