Extending a brand without overextending

Published Jul. 26, 2001|Updated Sep. 10, 2005

In May, a new advertisement began appearing on billboards and aboard subways and buses in New York, Chicago and Philadelphia. In it, black-and-white pictures show a young woman, with dark flowing hair and upraised arms. Beside the picture, a slogan for a deodorant blares: "Next stop, armpit heaven."

The brand? Dove.

For 40 years, Dove, with one exception, meant a bar of soap. A pretty, soft, oval-shaped bar, but just soap, nonetheless. Yet in the past few years, Unilever, the British-Dutch conglomerate that makes Dove, has been pushing hard to transform the name into a megabrand. The Dove name now adorns facial wipes, body washes, anti-aging cleansers, "skin nourishing" treatments and the underarm deodorant _ plus, of course, several varieties of bar soap, including a brand-new striped version laced with vitamin E and called Nutrium.

Dove is a prime example of several trends sweeping the consumer products industries. In recent years, prompted by a quest for more efficient marketing and greater returns on investment, many companies have been culling their hundreds of brands, dumping small or slow-growing lines and focusing on building up the biggest names. Megabrands, also known as power brands, are the mantra for corporate executives seeking faster growth and bigger profits.

For Unilever and Procter & Gamble, two of the world's biggest makers of personal-care goods, the trend has put two vastly different products, Dove and Olay, into direct competition.

Thanks to Dove, Unilever overtook Procter & Gamble as America's leading soapmaker in 1991. Today, Unilever sells $318-million worth of Dove bar soap a year, nearly 24 percent of that market (measured by revenue) and far ahead of the nearest competitor. But since 1999, amid Procter & Gamble's relentless campaign of brand extension, sales of all Olay products in the United States have surpassed those for the Dove line. Still, Dove's worldwide sales exceed $1-billion, giving it the lead over Olay globally and making it the third-biggest brand for Unilever, whose sales reached $46.7-billion last year.

And Unilever has even greater ambitions for Dove. "The aim is to be the biggest," said Dr. May Shana'a, a director of development at Unilever. "We want to be on the top of the mind, like Coke. We are close. Globally, Dove is moving there."

Balancing an extension

Dove made its debut in 1955 as a synthetic soap bar that moisturized, and it quickly became a household name _ remember its "one-quarter cleansing cream" slogan? Oil of Olay began in 1946 as a facial moisturizer that was supposed to reduce wrinkles. ("Oil of" was dropped from the product name in 1999.)

But since 1990, when Unilever's patent expired on the primary synthetic cleanser in Dove _ and as Procter & Gamble began to create new versions of Olay _ the two brands have been fighting for the same customers, introducing similar extensions and jockeying for first place in the market for premium cleansers.

Yet both also face a crucial challenge. Any company can put an established brand name on any product, but if the extension does not fit with a shopper's image of the original, the move can do more than fail.

"How far can you stretch a brand before you start damaging it?" said Allen Adamson, the managing director at Landor Associates, a corporate branding firm. "The tendency is to stretch as far as we can. But if we stretch too far, people don't know what the core promise is anymore."

Unilever got a late start in extending Dove, in part because an early experiment left it gun-shy. In 1965, Unilever introduced Dove dishwashing liquid to compete with Palmolive, which was winning customers with its promise that it "softens hands while you do the dishes." But too few consumers followed Dove's move to the kitchen: the dishwashing liquid did not sell well, so Unilever cut its price.

Soon, the Dove image was muddied, associated with an inexpensive as well as a premium product, and with a harsh as well as a gentle soap, said Adamson, who worked for Unilever in the early 1980s as a brand manager for Dove dishwashing liquid and other products.

Olay, too, has had its missteps. In 1999, Procter & Gamble gave the Olay name to a line of cosmetics. But consumers identified the brand only with moisturizers, not with mascara, eye shadow, facial makeup, lipstick and nail polish. Early this year, the cosmetics line claimed less than 3 percent of the $3.3-billion cosmetics mass market _ a market that demands advertising in order to compete. Last month, A.G. Lafley, the chief executive of Procter & Gamble, said he would shut down the Olay cosmetics business.

Those were hardly the first, or last, times that marketers got brand extension wrong, making less with more, rather than the other way around. In 1981, two marketing experts, Al Ries and Jack Trout, published a broadside against brand extensions, "Positioning: The Battle For Your Mind," which argued that every extension could subtly change what a brand stood for. In the long run, if "you change what consumers think of your core brand, in time the line extension will cost you money," said Ries, who published a new edition of "Positioning" this year.

These days, perhaps Unilever's riskiest step is Dove antiperspirant. If consumers can picture the qualities of Dove soap in an underarm deodorant, the extension may succeed. But if a Dove that stops perspiration as well as moisturizes is confusing to consumers, or if the advertisements are jarring, not soothing, then the deodorant may fail, and consumers' perception of the overall brand may change for the worse.

But what Unilever, Procter & Gamble and other companies trying to create megabrands need to know is essentially unknowable. They must guess how different they can make a product and still have it convey the same image. Can a deodorant or facial wipe contain the qualities that a consumer associates with a bar of soap? More fundamentally, how strong is brand loyalty today? How far can companies push it?

The answers depend on how much trust shoppers have, not only in an individual product, but also in the brand name that sells it.

Building a better bar

Dove, which Unilever developed in its American laboratories and first sold in 1955, always showed promise. In the 1960s, commercials for Dove soap became a staple of daytime television.

"Dove creams your skin while you wash," the iconic ads promised, helping to establish its place as a premium product that offered something different. Dove's sales grew steadily in the 1960s, but its market share began to decline in the 1970s as brands like Dial and Tone, as well as Unilever's own Caress, grew stronger.

Then, in 1979, Dr. Albert M. Kligman, a dermatologist at the University of Pennsylvania, conducted an independent study showing that Dove dried and irritated skin significantly less than other soaps. Based on that study, Unilever began an extensive marketing program with doctors. Dermatologists and pediatricians began recommending Dove for their patients. To this day, Unilever spends $8-million to $10-million a year promoting the soap with physicians, and about 25 percent of Dove users say they buy the soap because a doctor recommended it, said Peter Waxman, the brand manager for Dove in the United States.

That medical marketing program drove Dove's growth in the 1980s. In 1986, Dove became the best-selling soap brand, in dollar sales. And in 1991, Unilever, whose soap brands also include Lever 2000, surpassed Procter & Gamble as America's largest soap maker. (P&G's biggest soap then was Ivory. Now it is Zest.)

But even as Dove took the lead, the competitive landscape was shifting. Unilever's original patents on Dove had expired, and by 1991, Procter & Gamble was testing an Oil of Olay beauty bar with moisturizing properties similar to Dove's. The new Olay bar was rolled out nationally in 1993; Olay body wash arrived the next year. In 1995, sales of the body wash totaled $80-million, or about 27 percent of that market, which has one of the highest margins in soaps.

"We really knew from our consumer research what people wanted," said Virginia Coleman Drosos, the global Olay general manager. "We knew we could provide that product."

Today, Unilever scientists and marketers acknowledge that they were chagrined. A body wash was a much more natural fit for Dove than it was for Olay, they thought. But Procter & Gamble got to the national market nearly a year ahead of Unilever.

In Unilever's low-slung, drab brick research labs in Trumbull, Conn., scientists rushed to catch up, quickly developing a body wash modeled on the style favored by Europeans, where body washes began. In 1995, Dove body wash was in stores. But going head-to-head with Procter & Gamble, Unilever stumbled.

Shana'a, the research director, said the company had failed to capture the essence of Dove. Olay's body wash cleaned better, moisturized more effectively and felt more pleasant on the skin than Dove's version. Procter & Gamble had realized that Americans wanted something lighter and more moisturizing than the liquids popular in Europe; Unilever had not.

"They broke my heart," Shana'a said. "They had a superior product. They beat us clinically. Dove body wash missed because it was not like the bar; we launched something closer to shampoo."

Olay was on a roll. It quickly introduced new improvements to its facial moisturizers, winning the largest share of the body-wash market, and developing a beauty bar that competed directly with Dove.

In 1996, Unilever scientists worked on altering their body-wash formula. First, they made the liquid thicker and the lather creamier, making the Dove body wash feel as good as Olay's. Two years later they added sunflower oil, whose triglycerides moisturized as well as Olay's. The next reformulation, in 1999, changed the ratio of cleansers, added better moisturizers and, in the opinion of Shana'a, made the product better than Olay's.

At the same time, she and her colleagues started work in earnest on a counterpunch _ a new version of Dove. Many consumers, especially aging baby boomers, were demanding personal-care products that improved their skin. The Olay brand had such a reputation, and Unilever wanted one for Dove.

Unilever scientists began working on a technology that would deposit lipids, cholesterol and more tryglercides on skin. This would allow them to claim "skin nourishing" properties. Waxman, the Dove brand manager, said extensions must reinforce Dove's central image as a feminine product that gently moisturizes the skin, even as they add new attributes. And a successful new product, he added, must help drive sales of the original line of soap.

In 1999, the year Procter & Gamble dumped the "Oil of" from Olay's name, the brand's American sales reached $462-million, overtaking Dove, which had $392-million. Unilever's response was to start its Dove Nutrium line. Nutrium body wash, containing vitamin E, sells at a 50 percent premium to regular Dove body wash and comes with a dual-chambered bottle and a promise of skin nourishment. Later that year, Unilever introduced an "age-defying" version of Nutrium body wash with anti-oxidants, chemicals that are supposed to reduce signs of aging.

With its new formulation of regular Dove body wash and the new Nutrium products, Dove began to pull close to Olay in the category. Last year, Olay body wash had a 12.4 percent share and $78.1-million in sales, down from $80.2-million and 26.7 percent in 1995. Dove body wash, meanwhile, had a 12.0 percent share and $76.1-million in sales, compared with a 13 percent share and $45.9-million in sales in 1995, according to Unilever. In other words, as others entered the market, Dove had increased sales and lost little share, a far better record than Olay's.

A dead heat

Today, Olay and Dove are nearly equal in overall sales. During the past 12 months, $516-million in Dove products were sold in the United States, compared with $467-million for Olay, excluding the $88-million from its defunct cosmetics business, according to Information Resources.

Brand extensions are likely to become more common in coming months. Certainly, Unilever officials are contemplating taking on Procter & Gamble in other areas. In Taiwan, for example, the company is testing Dove shampoo, and Unilever scientists in the United States are developing anti-aging moisturizers that might be sold under the Dove name.

During economic slowdowns, companies are more likely to introduce extensions than new brands, Adamson said. When a company is trying to cut expenses, the price of starting a new brand with new advertising can look prohibitively expensive. During the recession in the early '90s, many brands were pulled beyond their limits, Adamson said. Dove deodorant, he worried, could be such a step.

But Peter Waxman, Dove's U.S. brand manager, said the deodorant would succeed because it borrows the moisturizing message of Dove and then brings it to a new area, underarms, and a new audience, women younger than the average current user of Dove soap. That new demographic group required a different advertising message, said Bob Hay, the executive group director for Dove at Oglivy & Mather, its advertising agency.

"With a younger target, I think the advertising needs to venture out from the softer, more conservative style," Hay said. "If advertising deodorant doesn't make us squirm then we aren't doing our job."

During its first year on the market, Dove deodorant had $75-million in sales, gaining a market share of 4.5 percent. That drove up Unilever's overall share of the deodorant market to 18.5 percent from 15.6 percent.

What happens next is anyone's guess. Trout said such short-term sales figures could blind brand managers, and wondered how long consumers who were trying Dove deodorant would stick with it.

But Donna Barson, another branding and marketing consultant, disagreed.

"If you have a good name," Barson said, "there is no reason not to extend your brand." She herself has become an avid user of Dove deodorant, saying it irritated her skin less than competing brands. What made her try the product? The name, of course.