CLMM- 021

Nurturing a Mother Brand - Nivea

In May 2003, a survey of ‘Global Mega Brand Franchises’ revealed that the Nivea
cosmetics brand had a presence in the maximum number of product categories and
countries. The survey, conducted by the US-based ACNielsen, aimed at identifying
those brands which had ‘successfully evolved beyond their original product
categories.’ A key parameter was the presence of these brands in multiple product
categories as well as countries. Nivea was the market leader in skin creams and
lotions in 28 countries, in facial cleansing in 23 countries, in facial skin care in 18
countries, and in suntan products in 15 countries. In many of these countries, Nivea
was reportedly believed to be a brand of local origin – having been present in them
for many decades. This fact went a long way in helping the brand attain the leadership
status in many categories and countries. In its home country Germany too, many of
Nivea’s products were the market leaders in their segments. This market leadership
status translated into superior financial performance. Between 1991 and 2001, Nivea
posted double-digit growth rates every year. For 2001, the brand generated revenues
of € 2.5 billion, amounting to 55% of the parent company’s (Beiersdorf) total revenue
for the year. According to analysts, the brand was the single largest factor for the
4.4% increase in the company’s revenues (€ 4.74 billion) and 10.7% increase in after-
tax profit (€ 290 million) for the year 2002.

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This is an abridged version of the case “Nivea - Managing an Umbrella Brand." Case Studies are
intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective
handling of a management situation.
 Nurturing a Mother Brand - Nivea

The 120-year-old, Hamburg (Germany) based Beiersdorf has often been given the
credit for meticulously building the Nivea brand into the world’s number one
personal care brand. According to a survey conducted by A C Nielsen in the late
1990s, the brand had a 15% share in the global skin care products market. While
Nivea had always been the company’s star performer, the 1990s were a period of
phenomenal growth for the brand. By successfully extending what was essentially a
‘one-product wonder’ into many different product categories, Beiersdorf silenced
many critics of its umbrella branding decisions.
Millions of customers across the world have been familiar with the Nivea brand since
childhood. The visual (color and packaging) and physical attributes (feel, smell) of
the product stayed on in their minds. According to analysts, this led to the formation
of a complex emotional bond between customers and the brand, a bond that had
strong positive undertones. According to a superbrands.com.my article, Nivea’s blue
color denoted sympathy, harmony, friendship and loyalty. The white color suggested
external cleanliness as well as inner purity. Together, these colors gave Nivea the
aura of an honest brand.
The key brand values of Nivea (namely mildness, reliability, gentleness, protection,
high quality and value for money) ensured that generations of customers kept
patronizing Nivea. Commenting on the reasons behind the brand’s popularity, Uwe
Wolfer, a Beiersdorf board member, said, “Outstanding quality products to meet
consumer needs at the right time and constant updating of the advertising approach –
these are the essential factors in Nivea’s success, keeping the brand young, attractive,
sympathetic and familiar.”
To customers, Nivea was more than just a skin care product. They associated Nivea
with good health, graceful ageing and better living. The company’s decision to
associate Nivea with many sporting events, fashion events and other lifestyle related
events gave the brand a long-lasting appeal. In 2000, Franziska Schmiedebach,
Beiersdorf’s Corporate Vice President (Face Care and Cosmetics), commented that
Nivea’s success over the decades was built on the following pillars: innovation, brand
extension, and globalization.

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Innovations and brand extensions went hand-in-hand for Nivea. Extensions had been
made back in the 1930s itself and had continued in the 1960s when the face care
range, Nivea Visage, was launched. However, the first major initiative to extend the
brand to other products came in the 1970s. Naturally, the idea was to cash in on
Nivea’s strong brand equity. The first major extension was the launch of the ‘Nivea
for Men’ aftershave in the 1970s. Unlike other aftershaves available in the market that
caused the skin to burn on application, Nivea for Men soothed the skin. As a result,
the product became a runaway success.
The positive experience with the aftershave extension inspired the company to further
explore the possibilities of brand extensions. Beiersdorf also felt that Nivea’s unique
identity, the values it represented (trustworthiness, simplicity, consistency, caring)
could easily be used to make the transition to become an umbrella brand. The
decision to diversify its product range was believed to have been influenced by
intensifying competitive pressures as well. L’Orèal’s Plenitude range, Procter &
Gamble’s Oil of Olay range, Unilever’s Pond’s range, and Johnson & Johnson’s
Neutrogena range posed stiff competition to Nivea.
Though Nivea was the undisputed market leader in the mass-market face cream
segment worldwide, its share was below Oil of Olay’s, Pond’s and Plenitude’s in the
US market. While most of the competing brands had a wide product portfolio, the
Nivea range was rather limited. To position Nivea as a competitor in a larger number
of segments, the decision to offer a wider range was inevitable.
Beiersdorf’s research center, which employs over 150 dermatological and cosmetics
researchers, pharmacists and chemists, supported its thrust on innovations and brand
extensions. During the 1990s, Beiersdorf launched many extensions including men’s
care products, deodorants (1991), Nivea Body (1995), and Nivea Soft (1997). Most of
these brand extension decisions can be credited to Rolf Kunisch, who became
Beiersdorf’s CEO in the early 1990s. Kunisch firmly believed in the company’s ‘twin
strategy’ of extension and globalization.
By the beginning of the 21st century, the Nivea umbrella brand offered over 300
products in 14 separate segments of health and beauty. Commenting on Beiersdorf’s
belief in umbrella branding, Schmiedebach said, “Focusing your energy and

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investments on one umbrella brand has strong synergetic effects and helps build
leading market positions across categories.” A noteworthy aspect of the brand
extension strategy was the company’s ability to successfully translate the ‘skin care’
attributes of the original Nivea cream to the entire gamut of products.
The company ensured that each of its products addressed a specific need of
consumers. Products in all the 14 categories were developed after being evaluated on
two parameters with respect to the Nivea mother brand. First, the new product had to
be based on the qualities that the mother brand stood for, and second, it had to offer
benefits that were consistent with those that the mother brand offered. Once a new
product cleared the above test, it was evaluated for its ability to meet consumer needs
and its scope for proving itself to be a leader in the future. For instance, a Nivea
shampoo not only had to clean hair, it also had to be milder and gentler than other
shampoos in the same range.
Beiersdorf developed a ‘Nivea Universe’ framework for streamlining and executing
its brand extension efforts. This framework consisted of a central point, an inner
circle of brands and an outer circle of brands. The center of the model housed the
‘mother brand,’ which represented the core values of trustworthiness, honesty and
reliability. While the brands in the inner circle were closely related to the core values
of the Nivea brand, the brands in the outer circle were seen as extensions of these
core values. The inner circle brands strengthened the existing beliefs and values
associated with the Nivea brand. The outer circle brands, however, sought to add new
dimensions to the brand’s personality, thereby opening up avenues for future growth.
Every brand in the portfolio either enhanced or expanded the associations with the
mother brand. For instance, Nivea Visage offered the core values and enhanced the
mother brand by adding its feminine and technologically advanced image to it. The
deodorants range extended the core values by adding personal hygiene and body care
benefits to it. By following this kind of framework, Beiersdorf was able to ensure that
the various sub-brands benefited from the attributes of the umbrella brand.
The extensions into decorative cosmetics, hairstyling and technologically advanced
products (such as the Nivea Visage cleansing strips and facial cream Nivea Visage
Q10) were accepted well by customers across the globe. Beiersdorf’s extension

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decisions helped rope in many new customer segments: men (men’s care), women
with mature skin (Nivea Vital), and people who purchased cosmetics (Nivea Beautè).
Commenting on Beiersdorf’s success with various Nivea product categories, Jan
Lindemann, Global Director (Brand Valuation) at Interbrand, said, “They are a classic
example of how far you can go with brand extensions.” In Interbrand’s annual list of
the world’s 100 most valuable brands for 2002, Nivea posted the second largest gain
of 16% in its brand value – largely due to its success with the brand extensions.

Questions for Discussion:

1. How can you explain the success of Nivea as a mother brand that has been
extended to 14 categories of products?
2. What are the pros and cons of adopting the umbrella branding strategy for a
personal care products manufacturer like Beiersdorf?

Additional Readings and References:

1. Anhalt, Nickel Karen. “How Germany’s Beiersdorf Succeeds with its Own
Style.” www.businessweek.com. 28, June, 1999.
2. Watts, Christopher. “Beiersdorf: Taking Care of Itself.” www.forbes.com.
08, January, 2001.
3. “The World’s Greatest Skincare Brand.” www.business2000.ie. 2000.
4. Datson, Trevor. “Nivea and Nestle Extend the Bounds in Mega Brand Survey.”
http://uk.news.yahoo.com. 01, April, 2003.
5. “Beiersdorf Brand is ‘Global Mega Brand Franchises’.” www.ameinfo.com.
10, May, 2003.
6. www.nivea.com
7. www.beiersdorf.com