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Happier Days for Hair Care?

By: Briony Davies
Posted: September 2, 2008, from the September 2006 issue of GCI Magazine.

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The largest subsector within hair care is shampoo, with sales of $14.8 billion in 2005. At a global level, it is evolving at a slightly higher rate than hair care overall. In mature markets, the increased penetration of highly sophisticated, technologically advanced product formulations within the upper mass-market segment has been a key strategy. Several mainstream brands—including Pantene, Clairol Herbal Essences and L’Oréal Elsève/Elvive—increasingly offer premium attributes such as vitamins, sun protection and aromatherapeutic qualities to push products higher up the price platform.

Last year, the trend toward upper-mass products was especially evident in the Japanese market, where new shampoos such as Fino from Shiseido, Asience from Kao and Resche from Kanebo contributed to an increase in average unit prices. In the U.K., Alberto-Culver stole share from Unilever due to the roll-out of its TRESemmé brand in 2005. Enjoying high credibility among consumers with its salon heritage, TRESemmé struck a nerve in the U.K. by offering what is perceived as premium hair care at affordable prices. Other professional hair care brands, including John Frieda and Nicky Clarke, suffered in turn, and are expected to lose value share in the future.

Already struggling with brand loyalty, the shampoo sector faces more difficulties due to discounting and expanded availability through supermarkets and other mass outlets. Budget and private label formulations also have become more sophisticated, with consumers increasingly able to spend less for more. In mature markets, manufacturers need to differentiate themselves to ensure that they continue to win consumer loyalty in the face of ongoing price wars between supermarkets, discounters and pharmacies.

Conditioner Captivates Consumers

The conditioner sector, with 9% growth globally, was the most dynamic hair care subsector in 2005. The sales decline of two-in-ones is fueling conditioner’s growth, and consumers’ preference for separate products is becoming common even in emerging markets. China is the largest global market for two-in-ones, but Chinese consumers appear to be ditching the format in favor of conditioners. This may be attributed to successful marketing by manufacturers that convince consumers of the need to protect hair against colorants, styling agents and daily pollutants. Manufacturers that are keen to seize the share of sizable growth forecast for India, already the fourth-largest market in the world, need to grasp local nuances.

Styling Agents Lost Their Stick

Once the darling of hair care, styling agents appear to be losing their grip, with less than 2% growth throughout the past year. The U.S., Japan, France, Germany and the U.K., all large markets, have registered minimal growth since 2004. With a natural look in vogue and shampoos increasingly taking on styling properties, the future of styling products looks bleak. Dove’s range of styling products, however, is a notable success story. The range was launched in 2005 in the U.S., and rapidly seized a 2% share of a market in which it had no presence. Its success can be attributed to both its unique positioning and the extensive advertising campaign that supported the launch. The campaign focused on four female cartoon characters: Wilma from The Flintstones, Marge from The Simpsons, Velma from Scooby-Doo and Jane from The Jetsons—each known for a particular, unchanging hairstyle. The idea is that these women have been forever stuck in their styles, which is a metaphor for real-world women whose use of traditional styling products has left their hair stiff and sticky. The advertisements show these characters with new, more appealing hairdos styled with Dove products. Manufacturers could follow Unilever’s lead by attempting to create a need for such products, even when fashion trends say they are not in vogue.

Complacency Not an Option