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22/11/2012

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IBS Hyderabad
Date: 22/11/2012 Time: 21:35:45

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Old Spice: Strategies to Transform its Brand Image


This case was written by Brinda Gothandapani under the direction of Bharathi S. Gopal, IBSCDC. 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. This case was compiled from published sources.

Lice nse to use for IBS Kolkata Se m-II, Class of 2014

2009, IBS Case Development Center. All rights reserved. To order copies, call +91-08417-236667 or write to IBS Case Development Center (IBSCDC), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@ibscdc.org

www.ibscdc.org

BBP0082B

Old Spice: Strategies to Transform its Brand Image

P&Gs Old Spice is a major player in the male grooming sector in the US. In spite of having iconic brand recognition, it has taken initiatives to revamp its image since 1992. Old Spices need to revamp its historic image has become stronger with the successful launch of Axe[1] by Unilever in 2004. The company wants the brand to embrace a fresher look and go younger and spicier to capture the first time users. In a bid to tackle the competition and to hold the leader position in the male grooming market in the US, Old Spice is preparing to
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rejuvenate its image.

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rejuvenate its image.

Male Grooming Sector in the US: The Competitive Landscape

Since the late 1990s till 2007, the market for male grooming products in the US was dominated by Old Spice, Right Guard and TAG from Gillette[2] and Axe. In 2003, Old Spice was the leader of the entire male grooming market with a share of 20%, followed by the Gillette brands with 19% market share and Axe with 16% market share. [3]

Estimated at $1.7 billion in 2004, the antiperspirant and deodorant market in the US grew a modest 3% between 1999 and 2004. [4] Statistics also reveal that during 2004-2005 the sales for the antiperspirants and the deodorant market in US grew approximately at 2.3% to reach $1.9 billion, and it is estimated that sales will reach $2 billion by 2010. [5]

Grooming products like shaving creams, deodorants and sprays, cosmetics and hair gels, targeted at males made up the largest segment of the market, with 41% market share in 2004. This market witnessed a growth of 6% between 2002 and 2004. [6] Industry experts feel that the male grooming sector has a high potential for growth, as the average US male consumers awareness of personal care products is increasing. It has been forecasted that during the period, 2004 to 2008, the value of the male hygiene segment (which is a part of the male grooming market) will increase to nearly $8.1 million. [7] It is also predicted that the overall US market for male grooming products is set to rise from $31.5 billion in 2003 to $37.6 billion in 2008. [8]

The market seemed promising for the main players namely, P&G and Unilever. In 2005, P&Gs Old Spice continued to be the market leader in deodorants and antiperspirants category. But, with the success of Axe sprays among the young users, Old Spice was struggling to catch up with Axe in this category. By the end of 2006, Axe was in the top position in the body spray category with sales of $71 million, followed by Tag (from Gillette) with $21 million and Old Spice in the third position with $10 million. [9] However, it was not the young men alone, who were responsible for driving up industry sales figures. In a study done in 2006, it has been reported that in the US, the per capita usage of the personal hygiene and fragrance products of men are notably higher with men over 45 years. Nearly 42% of skin care, make-up, personal hygiene, fragrances and hair care usage was from the over 45 years age group. It has also been revealed that, a typical consumer aged over 45 years spent more than $45 per month on personal care products. [10] Further studies have also shown that appearance concerns intensify with age. It has been observed that as age progresses, the number of occasions during which male grooming products are used also increased (Exhibit I). Men in the age group of 50 to 64 years and above gave significant importance to spending time on personal appearance. It has also been revealed that there is an increasing demand for male grooming products that are convenient to be used while at work and while driving.

Exhibit

Mature consumers share of occasions is increasing (2004-2009 in millions)

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Increased prioritisation of personal grooming by males has resulted in the creation of a highly complex and dynamic market in 2007. As such, this has meant more product varieties such as antiperspirants, hair gels, body washes, etc. and thus more shelf space for such products.

The various market players are strengthening their positions in the market with innovative product-series like hair gels, age defying creams, toning creams, deodorants and sprays which satisfy specific needs of customers. This is mainly due to the increased demand from adult male customers for trendy products addressing specific needs of diverse occasions. It is also cited that the younger generations in recent years (since 2000s) prefer male grooming products that claim to enhance sexual desires and capture female attention. Further, to dominate the market, the major players like Axe, Right Guard, Tag and Old Spice are competing on the platforms of brand positioning, brand building, merchandising and pricing.

Old Spice: The Evolution of the Brand

Old Spice is one of the major players in the US male grooming market. [11] Since its initial days, it provided its customers with products to protect themselves from body odor and perspiration. Old Spice was originally owned by the Shulton Company that was established in 1934 by William Lightfoot Schultz. In 1937, the company came up with its first fragrance product for women named, The early American Old Spice for women. The following year (1938), Old Spice for men was launched. Though the male grooming sector grew rapidly in the 1960s, the company was not able to source enough funds for its expansion. Eventually, in 1972, Shulton was sold to American Cyanamid[12].

Between the 1970s and the 1990s, Old Spice posted total sales of around $600 million a year. It had an operating margin of 8%, while the other divisions of Cyanamid performed better. [13] The Old Spice brand was somehow not able to keep up with the American Cyanamids profit-making objectives. Further in 1990, Cyanamid reoriented its business focus towards drugs and agricultural products. It was also felt that Old Spice was too small a division to compete with consumer product giants likes Procter & Gamble (P&G). Finally, American Cyanamid sold the product lines under its Shulton Consumer Products unit to various buyers. The Old Spice toiletries division was sold to P&G for $300 million[14], a price that many industry analysts believed to be a good deal for Cyanamid.

P&G looked into several issues before it opted to acquire Old Spice. Firstly, the company felt that with consumers being loyal towards its soap and deodorant brands, it would not have to spend much on creating brand awareness and recognition. Secondly, P&G being already a leader in the womens deodorant market with its brand Secret, felt that entering the male grooming sector with an established brand like Old Spice would help reinforce its total market position.

Ever since Old Spice was acquired by P&G in 1990, the company had been toying with the idea of changing the image of an Old mans product. Anticipating a future risk from other players in the industry, P&G felt that it was pertinent to give a makeover to Old Spice
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product. Anticipating a future risk from other players in the industry, P&G felt that it was pertinent to give a makeover to Old Spice and strengthen its brand image. In 1993 it tried to project a spicier image for its Old Spice brand by concentrating on sporty fragrances. It also focused on capturing markets on the basis of how effective the product was in killing germs that caused perspiration odour. Old Spices focus was on two lines of grooming products High Endurance, a basic grooming line dealing with antiperspirants, deodorants, hair and body wash, shaving products; and Red Zone, antiperspirants, deodorants, body washes, and body spray (Exhibit II). a higher-end product line consisting of

Basic Grooming line


High Endurance Deodorants High Endurance Gel Red Zone Deodorants

Exhibit II Range of Old Spice products Range of Products


Fresh, Pure Sport, Mountain Rush, Artic Force, Pacific Surge. Fresh, Pure Sport, Mountain Rush, Artic Force, Pacific Surge After Hours, Pure Sport, Glacial Falls, Aqua Reef, Metallic Ice Fresh, Pure Sport, Mountain Rush Fresh, Pure Sport, Mountain Rush, Artic Force, Pacific Surge. Original, Fresh, Pure Sport, Artic Force After Hours, Pure Sport, Glacial Falls, Aqua Reef, Metallic Ice After Hours, Pure Sport, Glacial Falls, Aqua Reef, Metallic Ice, Original, Mountain Rush, Artic Force, Unscented. After Hours, Pure Sport, Glacial Falls, Aqua Reef, Metallic Ice
Compiled by the author from http://oldspice.com/

Year of Launch
1994 1998 2000 2002 2002 2003 2003 2003

High Endurance Aerosol and body wash High Endurance Body Spray High Endurance Invisible solid Red Zone Invisible Solid Red Zone Soft Solid

Red Zone Body Spray

2004

Old Spice experienced a consistent growth, with an increased sales volume from $97.8 million in 1997 to $143.4 million in 2002. In 2003 it grew by 13% compared to the 1% growth of the US deodorant industry. By the end of 2003, Old Spice recorded total sales of $112 million. Of this, the deodorants and antiperspirants category recorded sales of $63 million, while the Red Zone line had sales of $49 million. The following year (2004), Old Spices sales increased to $200 million helping it gain a 20% market share. It is predicted that in 2006-2007 Old Spice would achieve sales of more than $2.5 billion. [15]

Encouraged by the sales growth of its Red Zone line and other products, Old Spice launched another product in 2006, to enhance its sporty outlook. It introduced an all-new fragrance called OS-Signature, which won the FHMs [16] 2006 Grooming award, for the Best Sporty Fragrances [17].

The Brand Image Challenges of Old Spice

Since the early 1990s, P&G was trying to give Old Spice a cool look and appeal to the younger customers. In 2000, Old Spice focused
on capturing the market of first time users of male grooming products by distributing samples of High Endurance products to the fifthgraders. These samples were distributed in over 90% of the schools in the US. By the end of 2000, P&G came up with a highly successful challenge advertisement, where it assured young men of their money back, if they were not satisfied with the product. To further boost the sales, in 2000, the Old Spice line of High Endurance products entered into an agreement with NASCAR[18] to sponsor the auto-racing driver, Tony Stewart[19].

Despite all its attempts, Old Spice felt threatened when Unilever launched Axe in the US in 2003. Unilever realised that the traditional modes of product promotions would no longer help it differentiate Axe from other competitors in the market. Hence it aimed at promotions through viral marketing to reach the teens. Unilever says that its return on investment on viral marketing has exceeded all expectations [20]. Its promotional sites like www.theaxeeffect.com, www.axehouseparty.com, and the ads on radio, TV, and magazines that were aimed to create brand awareness among the 12 to 24 year old men cost slightly less than $1 million. [21] The websites invited viewers to register and participate in online contests and games. The sites were expected to draw about 100,000 hits during the first
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invited viewers to register and participate in online contests and games. The sites were expected to draw about 100,000 hits during the first month of launch in March 2003. [22]Instead, the site got 7 times the estimated number. [23] By the end of 2003, Axe began to threaten the rival brands, Old Spice and Right Guard[24].

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The Axe advertisements

focused on female attention, and how

young

men

could

get spontaneously laid on using Axe.

Though not a subtle message, advertising experts feel that, it was designed to avoid the mistake of confusing product attributes with brand benefits. As Axe brand director, Diggi Thomson, clarifies, We are not selling 24-hour protection. Our audience wants girls. [25]

Axe was successful in capturing a significant amount of market share by the end of 2004. P&G realised that its revamping strategy was not drawing men in the 25 to 45 years age category, and it also felt that customers still thought of Old Spice as an old mans brand. Hence, P&G decided to skip a generation and focus on the first time deodorant users. It focused on hygiene as a positioning platform for promoting Old Spice among the first time deodorant users.

Despite Old Spices attempts to change its brand image, launch new products, and focus on capturing the younger male market , it had to face a stiff challenge, from Axe . Analysts point to the fact that though Axe was launched in the US market almost 65 years after Old Spice, it was able to capture the market within a short span. Axe established itself as the world's top male grooming brand, by coming up with a constant stream of new product ideas. Axe advertisements were more sexually aggressive, and appealed to the customers with enthusiasm and wit of the campaign. The Axe campaign was so successful that it was voted as the most innovative of the 135 marketing campaigns reviewed for the 2003 Sweet Spot Awards[26], by the Business-2.0 panel. [27] Market analysts observed that the industry sales in the deodorant category for 2004-2005 increased by 67% particularly because of the sex-laced ads of Axe focusing on teenage boys. [28] Industry insiders feel that, influenced by Axe, P&G begun working on similar lines to freshen up its focus on revamping the brand image of Old Spice and gain back its position as a classic iconic brand. The increasing demand for male grooming products since the 2000s among the young consumers compelled Old Spices makeover. However, Old Spice intends to maintain its historic image and remain focused on its existing customers of the 40 and above age group as well. Throwing insight on P&Gs strategy to go younger, Esi Eggleston Bracey, P&Gs General Manager for deodorants and antiperspirants, expressed that, To make it successful we absolutely had to take the brand younger. Because as a marketer, you look and say most of my user base is aging. It was a no brainer. Why we targeted the young men is we had to go after the entry point. We know that when consumers start to use deodorant, they stick to it. So our hypothesis was, we wanted to get them in young and that we would retain them, and they would become more loyal. So we thought about it as both a short-term and long-term strategy to go younger.[29]

The Revamping of Old Spice

With the success of Axe, P&G reset its plans for revamping Old Spice, with strong focus towards preserving its distinguished historic brand image. In February 2006, P&G announced giving its global advertising of Old Spice to Weiden + Kennedy[30] (W&K), which is known for creating iconic campaigns such as Nikes Just do it. P&G hired the agency to rethink on the creative energy and appeal for Old Spice. P&G clarified that it was not trying to change Old Spices perceived image of being an experienced, iconic rich brand, but was aiming at male customers aged 12 to 34 years. Further clarifying their stand on going younger, Esi Eggleston Bracey stated that, When we first got the brand, we knew we had to go younger than 55. So young men. What we learned over the years was we can get teen and young adults by targeting what we call the sweet spot. We know teens aspire a little older, and we know adults aspire a little younger. That tends to be the 20 something.[31]

W&K intended to develop a campaign for Old Spice based on the experience theme. The tag line- Experience is Everything[32] was
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W&K intended to develop a campaign for Old Spice based on the experience theme. The tag line- Experience is Everything[32] was its first effort towards creating an iconic ad campaign for Old Spice. In its struggle to capture younger customers, P&G positioned its Red Zone product line to compete with Axe. A recent advertisement, in 2004, on Red Zone shows a girl getting a positive feel about her partner, however knuckleheaded he acts, rather than advertisements that focus on showing that sprays arouse sensuality and craze (Annexure ).

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In its endeavor to capture the younger generation, the brand also renewed its contract with Tony Stewart in 2006. Referring to the brands relationship with Tony Stewart, Carl Stealey, Brand Manager of Old Spice said, Working with a NASCAR champion like Tony Stewart is a perfect fit for Old Spice, with more NASCAR fans choosing Old Spice than any other deodorant[33].

To compete on an equal footing with Axe, P&G launched two websites- ExperienceOldspice.com, and Voice of Experience in 2007[34]. The famous Hollywood actor, Bruce Campbell[35] campaigned for OldSpice.com. The site includes challenging games, and a 50- question test deciding whether the contestant is a man or a boy. Voice of Experience features insight and guidance on topics like entertainment, cars, fashion/grooming, music, food and beverage, games and sports and relationships. In February 2007, Old Spice teamed up with Xbox.com for the first Xbox Rewards, a game to prove that Experience is Everything.[36] However, analysts opined that P&G would need to be cautious about what it said in its advertisements regarding Old Spice.

Recent studies conducted during 2005-2006, on advertisements for personal care products reveals that more than 3/4th of the respondents feel that product claims made by cosmetics and toiletries companies are often exaggerated.[37] According to analysts, the mega brands disappoint customers with over- exaggerated ads that promise too much from their products, but finally perform lower than the customers expectations. This disappointment in customers can however be reduced by focusing on information-heavy advertising and promotion, fewer misleading visuals and greater result- explanation.

With a great history to its credit, Old Spice is planning to grow, and reinvigorate itself. According to analysts, Old Spice, till the launch of Axe in the US had left many of its competitors far behind. However the success of Axe has compelled P&G to revamp the image of Old Spice. Further, by losing its market position to Axe in the spray category, Old Spice is determined to fight back . Alex Lipinski, Marketing Director of P&G is positive about Old Spice and concludes, The brand has the legs to be a male-grooming mega brand.[38]

Annexure Old Spice Ad Spot

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Axe/Lynx is a Unilever owned brand for mens deodorant and body sprays. The media has portrayed Axe as the powerful attractant
[1]

to women, called the Axe Effect. Axe made its debut in 1983 but was launched in the US only in 2003
[2]

P&G acquired Gillette for $57 billion in 2005. Its range of products include Gillette complete skincare, Fusion, Fusion Power,

Mach3, M3 Power, M3 Power Nitro, Mach3 turbo, Satin Care, and Venue Berner and Robert, Extreme Makeover, http://web.ebscohost.com/bsi/detail?vid=5&hid=17&sid=4f1b756c-ae3a-42a2a62cfbcd890e26de%
[3]

40sessionmgr7, November 1st 2004 Bone Daniel, Understanding Todays Personal Care Consumer, http://www.incosmetics.com/2007/files/pres_datamonitor.pdf,
[4]

April 6th 2006


[5] [6] [7]

Ibid Ibid. Antiperspirant and Deodorants in the US,

http://www.pginvestor.com/phoenix.zhtml?c=104574&p=irol-newsArticle&ID=814203&highlight=old%20spice, 2006
[8]

Pitman Simon, Male cosmetics mega trends embrace feminine values, http://www.cosmeticsdesigneurope.

com/news/ng.asp?id=62057-1-oreal-shiseido-male-grooming, August 23rd 2005


[9]

Bittar Christine, Procter & Gamble Goes Provocative For Old Spice,

http://publications.mediapost.com/inder.cfm?fuseaction=Articles.showArticle&art_aid=536/, January 10th 2007


[10] [11]

Understanding Todays Personal Care Consumer, op.cit

In the deodorants and antiperspirants category though Old Spice remains a market leader, Axe holds the top spot in the male body spray category followed Tag from Gillette and Old Spice takes the 3rd place 12American Cyanamid was founded in 1907 by Frank Washburn, a Cornell-educated civil engineer. American Cyanamid which was,
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once solely a manufacturer of fertilizer, is making products as diverse as Pine Sol cleaner and L'Air du Temps perfume, in 2007. American Cyanamid is also into Pharmaceutical Preparations, Agricultural Chemicals, Surgical Appliances & Supplies, Chemical Preparations, commercial Physical Research, Biological Products except Diagnostic, and Plastics.
[13] [14] [15] [16] [17] [18] [19]

American Cyanamid, http://www.fundinguniverse.com/company-histories/American-Cyanamid-Company-History.html Ibid. Procter & Gamble Goes Provocative for Old Spice, op.cit. FHM is an international monthly magazine, which was originally named as For Him. 17Ales Tiffany and Clark Desi, Grooming awards, http://www.fhmonline.com/articles-1498.asp?cnl_id=6&stn_id=28, 2007 National Association for Stock Car Auto Racing (NASCAR), is the largest sanctioning authority for motor sports in the US

Tony Stewart, an auto-racing driver, became the 14th driver in NASCAR history with more than one championship, and joined fourtime winner Jeff Gordon as the only active full time drivers with multiple titles.
[20]

Mucha Thomas, Spray here. Get girl. Young men have just one thing in their minds. The trick is to convince them they can get

it if they wear the right deodorant, http//www.money.cnn.com/magazines/business2/business2_archive/2003/06/01/343387/index.htm, June 1st 2003


[21] [22] [23] [24] [25] [26] [27] [28] [29]

Ibid. Ibid. Ibid. Ibid. Ibid. Ibid. The Business 2.0 magazine is a sister concern of CNNs publications. . Antiperspirant and Deodorants in the US, op.cit. Berner Robert, Changing Old Spices Message, http://www.businessweek.com/magazine/content/04_44/b3906117.htm,

November 1st 2004


[30]

Wieden + Kennedy of Portland, Oregon is an independent, creatively led advertising agency that exists to create strong and

provocative relationships between good companies and their consumers.


[31] [32] [33]

Changing Old Spices Message, op.cit. Stevenson Seth, Smells Like Teen Spirit, http://www.slate.com/id/2107194/, September2004

Nextel Cup Champion Tony Stewart Announces 8th Race Busch Series Scheduled Driving The #33 Old Spice Car for owner Kewin Harvick, Inc, http://www.pginestor.com/phoenix.zhtml?c+104574&p+irol-newsArticle&ID=814203&highlight=old%20spice, February 8th 2006 Old Spice introduced Voice of Experience site, which is accessed through OldSpice.com. The site features a variety of topics giving
[34]

insights, guidance, perspectives that a man of experience appreciates Bruce Campbell is an American actor. He is best known for his role as Ash in Evildead. He also appeared in Army of Darkness and
[35]

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Darkness and Spider Man film series. Campbell is often known for taking quirky roles
[36] [37] [38]

http://www.xbox.com Understanding Todays Personal care Consumer op.cit

Bernet, Robert, Extreme Makeover, http://web.ebscohost.com/bsi/detail?vid+23&hid+15&sid+9505ae27-1771-453f9488-2ffd , November 2004

Exit

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