FMCGs are bucking the downward trend by targeting wider audiences but segmentation still has value.
If you are the sort of consumer who finds it difficult to make up your mind, walking down the personal care aisle of your local supermarket in search of, say, a bottle of body lotion could leave you feeling more than a little overwhelmed.
Where do you begin? An intensive moisturiser, perhaps? Or maybe a cellulite-busting firming lotion?
But you could also get that with a hint of a tint. Or shimmer. Or SPF. You start to despair and finally walk out with a bottle of good old-fashioned baby oil instead.
The burgeoning global skin care market, set to exceed $44 billion in sales by 2010, has for years largely been supported by the introduction of hundreds of highly segmented new products promising to treat almost every skin condition acne, wrinkles, whitening, sun damage while promising also to plump, tone and firm. In the Middle East, which has a strong market for beauty and grooming products and services, new products have always been very well received. The region's cosmetics and personal care sector recorded sales of $2 billion in 2007 and has grown 12 per cent annually over the past three years.
However, for a few years now, industry watchers have been predicting the slow death of product segmentation.
The Euromonitor International 2007 Cosmetics and Toiletries Global Report stated that consumers, overwhelmed and confused by too much choice, are starting to favour simplicity over segmentation. Hygiene brands such as toothpaste and soap were predicted to be the first hit, with evidence supporting a more gradual shift among hair care, skin care, fragrances and cosmetic products.
Return of the niche?
But will the economic downturn, with its keener focus on narrower customer profiles and growing preoccupation with more targeted advertising strategies, aid the return of the mega niche to the FMCG sector?
Industry leaders in the region don't seem so sure.
"Consolidation and strengthening of existing lines rather than segmentation will be the [future] norm," says Iain Potter, VP HPC, Unilever North Africa Middle East, whose brands include Dove, Lux, Sunsilk and Vaseline.
"FMCG companies will, however, continue to innovate and rejuvenate their brands, but will introduce an innovation or greater segmented offering only if there is a demand and the market requirements can support such an introduction."
Men's care and anti-ageing lines have traditionally benefited from highly focused customer engagement strategies, and this is likely to continue.
The streamlined approach is in essence a call for products that meet real customer needs, and when these needs are easily discernible, segmentation works. For men these needs lie mainly in personal care and grooming necessities shaving products and deodorants. For women, skin care products dominate.
Personal care brands like Nivea have addressed this by marketing clearly defined product lines essentially brands within a brand like Nivea for Men and Nivea Visage DNAge. Vaseline offers a special men's line, again clearly branded: Vaseline MEN.
L'Oreal offers certain active cosmetic lines like Vichy that are endorsed by dermatologists and distributed mainly in pharmacies rather than beauty counters at supermarkets.
More focus
Targeting clearly defined segments with clearly defined needs benefits from more focused and innovative marketing strategies.
For the regional launch of the M3 Power razor, Gillette used Playstations to attract young customers to the "Nitro Bus" gaming enthusiasts could hang out playing video games in a bus designed like a lounge which went round soccer stadiums, universities and malls, and could then try the product in a shaving booth on the bus.
"One of the most successful product launches we've witnessed recently was the Gillette Fusion launch," says Yassin Attas, associate director, External Relations Arabian Peninsula and Pakistan, P&G.
"Using the right influencers [brand ambassadors such as sportsmen Roger Federer, Tiger Woods and Thierry Henry] that are most relevant to our prime prospects, and communicating the key attributes the product stands for, is one of the most successful approaches, especially if you communicate it holistically and credibly across all touchpoints," he adds.
These touchpoints, especially in the region, have largely revolved around making sure men's brands stay macho and sporty.
At the launch of Gillette Fusion in Dubai two years ago, guests and press were flown by helicopter to a secret desert "laboratory", having first been handed a locked aluminium attach case containing a "fusion reactor".
Other companies have gone down the more conventional road while still associating themselves with high-adrenaline, high-action activities.
Margie Gilbride, marketing communications manager, Beiersdorf Middle East, whose brands include Nivea, says: "Nivea has a strong range of men's grooming products including shaving gels, after-shave balms, deodorants and shower gels.
"We use a number of touchpoints to reach men throughout the region including TV, press, men's magazines, outdoor and sponsorship of sporting events, specifically Karting and the Dubai Rugby 7s."
But for the most part, FMCGs are using traditional media like TV spots and display ads to focus their efforts on basic toiletries like soaps and shampoos that meet the needs of the wider public. The same economic reasons that have led many companies to go narrow are driving FMCGs to go wide.
Says Attas: "Further product segmentation on top of the existing line-up is inevitable, but it has to be driven by continuous consumer research and studies to identify which are the most critical needs of our consumers.
"Product technology is capable of supporting such segmentation, but this will not undermine the needs of the critical mass where they mostly demand more generic personal care products."
Crowning glories: Global trends round-up
Oral care
The global toothpaste market is forecast to reach $12.7 billion by 2012. An increase in sales of oral hygiene products in major markets worldwide has largely resulted from growing awareness of hygiene, and NPD. Innovation has led to a variety of new, high-priced, value-added multifunctional products.
There is now more demand for whitening and odour-fighting benefits rather than tooth decay protection. Europe is the largest toothpaste market in the world and is projected to be worth $5 billion by 2012, while Asia-Pacific represents the fastest growing and is projected to register a CAGR of over 4 per cent by next year. Key players include Church & Dwight, Colgate-Palmolive, GlaxoSmithKline, Johnson & Johnson, P&G, and Unilever.
Source: Global Industry Analysts, Inc, October 2008.
Hair care
The global hair care market grew by 3.7 per cent in 2007 to reach $34.7 billion in value, and by 2.9 per cent in volume to reach 9.7 billion units. The market is forecast to reach $41.5 billion in value by 2012, up 19.6 per cent since 2007. In volume terms it is estimated to reach 11.2 billion units, an increase of 15.3 per cent, over the same period. Shampoo sales make up 36.3 per cent of the global hair care market in value. P&G sales account for 21.7 per cent of the global hair care market's value. Supermarkets/hypermarkets are the leading distribution channel, accounting for 42.2 per cent of the total value.
Source: mindbranch.com, 2009
Gulf Marketing Review 2009
