Aok

1. Aok Repositioning for a European Launch Julia Albrecht

2. Agenda • Analysis of Aok • Competition Analysis • Market Trends • Recommendations for Aok • Packaging Brief

3. Aok • Skin care brand • Slogan: “Naturally effective” • Claims to provide “Naturally clear skin at every age” • Its roots lie at the Baltic Sea • Comprehends nature as a source of beauty • Belongs to • Mass-market brand, distributed through supermarkets, department stores and drugstore chains • Available in Germany and Austria

4. Brand History • 1885: Invention of „Seasand Almond-bran“ by the pharmacist Wilhelm Anhalt in Kolberg (health resort at Baltic Sea, today Poland) • 1903: Aok becomes registered trademark • Aok = Anhalt Ostseebad (health resort Baltic Sea) Kolberg • Early mission: „To preserve and accentuate natural beauty“  „Beauty is a gift“ • First products: Almond-bran powder, Almond-bran Soap and Seasand Almond-bran (used as Peeling or Mask)

5. Brand History • 1974: Introduction of skin care series for different types of skin (cleansers & creams) • 1982: Introduction of “First Beauty” to target teenagers with impure skin • 1983: Henkel acquires Aok cosmetics • 1988: Introduction of the slogan “Naturally effective” • 2004: Introduction of “Pur Balance” to target above-20-year-olds with impure skin • 2006: Introduction of “Clear Action for men” to target male teenagers • 2007: Relaunch and Launch of “Pur Lift” to target above 30-year-olds with first wrinkles and impurities

6. Packaging and Portfolio Evolvement “Pur Balance” reduces impurities; for >20-year-olds “Kräuter Aktiv“ for greasy and mixed skin; with herbs “Vitamin E“: reduction of first wrinkles; canceled in 2006 “First Beauty Cooling“: extra strong against pimples Extra moisturizing for dry and sensitive skin with almond “First Clear“ (Anti-Acne) 1903 1980s “First Beauty” 1982 “Clear Action“ for men; canceled in 2008 1990s Since 2000

7. Aok Today Cancelation in 2008

8. Product Portfolio Pur Lift Pur Balance First Beauty Packshots Cleansing (4 SKUs) Care (2 SKUs) Cover (4 SKUs) Cleansing (5 SKUs) Care (7 SKUs) Cleansing (4 SKUs) Care (5 SKUs) Portfolio Young women < 20 Young women >20 Women >30 Target Pure skin + Lifting effect Pure skin + mild care Pure skin + moisturizing Benefit Soy-protein + Ginseng extracts Mint + Yoghurt extracts Tea + Ginseng extracts Ingredients Ø Price € 4,99 € 5,99 € 6,99

9. Internal BCG Matrix Growth Pur Lift Pur Balance Accounts for around 40% of Brand Revenues First Beauty Clear Action Market share

10. Communication History • 1903 • Informative • Explaining the • Aok philosophy • 1926 • Informative and • emotional • society ladies • 1970s • Informative • The correct way • to clean and care

11. Communication History 1997 2004 1980s • Sales Promotion “Get to • know your skin” • Accompanied by personal • consultation • Pur Balance TV Spot • Setting: Baltic Sea • The “Aokanerin” as brand • symbol: active, self- • confident, natural women

12. Communication Today • Baltic Sea always chosen as setting • Starring naturally beautiful women • Emotional appeal by using humor • Example: current spot for Pur Lift (Summer 2007) http://de.youtube.com/watch?v=TMrzeGXcrfM

13. Brand Equity Pyramid Product Core Communication Core Less loyalty because no more products for the “old” customers? Brand Resonance High credibility due to history High quality ingredients Reliability Tradition Consumer Judgements Consumer Feelings Effective and reliable reduction of impurities Gentle & nourishing Pure skin for women at every age For natural beauty Brand Imagery Brand Performance Skin care With natural ingredients For impure skin Brand Salience (Awareness)

14. Brand DNA Natural beauty Natural ingredients Pure skin The sea Cleansing and care For women at every age

15. Main Competitors 1. First Beauty • Bebe Young Care ( only in Germany) • Clearasil • Garnier (Pure) • Neutrogena (Visibly Clear) • L‘oréal Paris (Pure Zone) • Nivea Visage Young 2. Pur Balance • Garnier Pure • Neutrogena (Visibly Clear) • Nivea Visage Young 3. Pur Lift • Nivea Visage • Olay • L‘oréal Paris • Garnier (Nutritionist) • Neutrogena (Pure Glow) + competition from Store Brands

16. Main Competitors – Clearasil • The first effective acne medication ever introduced for teenagers; created in 1950 by Ivan Combe in the US • Today the brand belongs to Reckitt-Benckiser • Product lines: Deep Cleanse, Spot Control, Ultra, Blackhead Control • Mainly cleansing and special treatment products • Brand DNA: Fights acne Provides clear skin Aggressive Causes confidence Dries out skin For teenagers

17. Main Competitors – Neutrogena • First product under Neutrogena brand was a soap, that restored the skin pH, rinsed quickly leaving no soap residue (invented1954 in the US) • Johnson & Johnson acquired the brand in 1994 • Products today: Facecare, Bodycare, Haircare, Suncare, decorative cosmetics; in Europe only Facecare and Haircare • Facecare Portfolio: Pure Glow – cleansers and moisturizers that brighten skin and leave it glowing, like a spa treatment Deep Clean – cleansers that penetrate deep into the pores dissolving dirt, make-up and oil Visibly Clear – Anti-bacterial cleansers and special treatments that fight and prevent spots and blackheads Norwegian Formular – moisturizers and cleansers that make dry skin soft and healthy

18. Main Competitors – Neutrogena • Brand DNA Norwegian Formula Hand-cream Dry skin Dermatological Celebrity spokespersons Acne-wash

19. Main Competitors – Garnier • Garnier originally was a Haircolor and –care brand • The brand was acquired by L‘oréal in 1964 • Products today: Haircare, Haircolor, Hairstyling, Facecare, Bodycare, Suncare • Facecare portfolio (main subbrands): Pure - cleanses and purifies oily and impure skin Total Comfort - provides 24-hour moisturization to soothe and protect dry skin Nutritionist – combats signs of dullness, fatigue and dryness Ultra Lift - reduces deep wrinkles, makes the skin firmer and smoother (Re-) Density - reduces wrinkles and plumps-up the look of mature skin

20. Main Competitors – Garnier • Brand DNA Take care Dynamic Natural ingredients Laboratoires Natural beauty Colorful

21. Main Competitors – Nivea • Nivea Cream was invented in 1911 by Beiersdorf in Hamburg, Germany • Nivea was the first stable oil in water cream in the world • Soap, Powder and the first haircare products (“Hair-milk”) followed • Products today: Facecare, Bodycare, Handcare, Bathcare, Haircare, Deodorants, Suncare, Lipcare, Decorative cosmetics, Men’s Care, Babycare • Facecare portfolio (main subbrands): Nivea Visage Young – for mixed and oily skin Nivea Visage Sensitive – for sensitive and dry skin Nivea Visage Oxygen Power - Oxygen boost & all day hydration for all skin types Nivea Visage Q10Plus – Anti-wrinkle, with coenzym Q10 Nivea Visage DNAge – Anti-Age, increases surface skin cell renewal

22. Main Competitors – Nivea • Brand DNA Caring Trusted brand Natural beauty Nivea = the “snow-white“ Pure and simple Family Blue and white

23. Main Competitors – L‘oréal Paris • L‘oréal originally was a Haircolor brand • In 1907, Eugène Schueller, a young French chemist, developed the first L’oréal innovative hair-color formula • Products today: Haircolor, Haircare, Hairstyling, Facecare, Bodycare, Suncare, Men‘s care, Decorative Cosmetics • Facecare portfolio (mainly care, few cleansing products) Pure Zone – Continuous purity for Teenage skin Hydrafresh – Active Hydration for young skin Nutrissime – Intense hydration for sensitive and dry to very dry skin Wrinkle Decrease (Collagène) – Active care fighting first wrinkles Derma Genesis– Helps to renew the skin cells for a younger looking skin Revitalift – Intensive Anti-wrinkle and firming from age 40 Age Perfect – Care for mature skin from age 50 Age Re-Perfect – Care for very mature skin from age 60

24. Main Competitors – L‘oréal Paris • Brand DNA Innovative “Because we are worth it” Advanced technologies Promises not always believable Paris High-end

25. Main Competitors – Olay • Oil of Olay Beauty Fluid was born in the early 1950s • The Beauty fluid was developed to give women what they really wanted: younger-looking, beautiful skin • In 1985 the brand was acquired by Procter & Gamble • Facecare portfolio today: Classic – Range of moisturizing beauty fluids and cleansers Complete - deep, rich moisturization with added vitamins and SP15 Total Effects – fights 7 signs of ageing Regenerist – regenerates the skin and makes it look younger Definity - helps reduce the appearance of discolourations, age spots, uneven skin tone and fine lines

26. Main Competitors – Olay • Brand DNA Anti-Age Oil Advanced technologies For older women Beauty treatment High-end

27. Competitive BCG Matrix Growth Market share

28. Competitive Positioning Young Target Older target should not be neglected  Growth! Men Women Old Target

29. Competitive Positioning Hedonistic Natural Ingredients High- tech Formulas Natural positioning should be strengthened Functional

30. Competitive Positioning Traditional Traditional positioning should be strengthened, more skin problems targeted  Growth! Adresses few skin-problems Adresses many skin-problems Innovative

31. Competitive Brands by Skin Type Opportunity for stretching

32. POPs Synthetic ingredients Botanic extracts Natural Beauty Promise of clear skin PODs Baltic Sea ingredients For pure skin at all ages Addresses combination of impure skin/ wrinkles Long tradition POP/ POD Aok vs. Competitors

33. Aok Weaknesses and Challenges • Low Market share and growth in Germany • Not targeting older segment • Only focusing on impure skin • Claiming to be natural while it is far from being organic  threat from real organic products • Loss of roots (Pharmaceutical, Baltic Sea) • Brand name without meaning to non-German consumers • Not strong and differentiated enough to survive in European mass-market

34. Aok Today and Future Direction Natural Native Functional Adressing many needs Adressing one need Cosmopolitan Emotional High-tech

35. The European Face Care Market • The face care market has been growing in the past and is forecasted to grow in the future at a moderate rate • Supermarkets and hypermarkets are the most important distribution channels (42.7%) • Specialist retailers and pharmacies together distribute a further 44.7% of the market's revenue

36. Skin Care Revenues by age (Dec. 2006) Market Trends • Anti Age • Biggest segment in face care market • In the past two years (2005-2007) this segment has grown more than 50% in absolute value • (Source: Datamonitor) • (Source: Datamonitor) • Older population makes up most • of face care revenues • Growth is very likely to continue • due to ageing of population • (Source: Consumer Panel Copras) • (Source: Eurostat)

37. Market Trends • Wellness • Combines health with beauty, sport, tourism, urban daily life, and environmental awareness • “Wellness focuses on positive, preventative action — getting the body into shape and keeping it that way in spite of stress, germs, age, and anything else that ails us” • Business Week (April 11, 2005) estimates the U.S. market at $400 billion • Skin care brands opening spas (new ways of distribution)

38. Example: Biotherm • Facecare, Make up, Bodycare, Suncare, Men‘s care with thermal plankton • Over 50 years ago Biotherm biologists discovered thermal plankton's affinity with the skin and its effectiveness • 20 years of research were necessary to obtain a more active and concentrated form: Pure Thermal Plankton • Luxury brand distributed through specialist stores and pharmacies

39. Example: Nuxe • Founded in 1957 by a Paris pharmacist with a fascination for phytotherapy and aromatherapy • Cosmetological concept combining nature, health and beauty • NUXE = Nature + Luxe (Luxury) • Principles: no mineral oils, non-comedogenic products, no synthetic coloring agents, no animal ingredients • Main products: Facecare, Bodycare • The brand owns several Spas across Europe

40. Market Trends • Natural and Organic Cosmetics • Growth of more than $2 billion, to $6.1 billion between 2002 and 2006 and projected sales of nearly $10.2 Billion until 2012 in the US (Source: "Natural and Organic Personal Care Products in the U.S." report) • More than € 1 billion in sales and a growth of 20% in Europe in 2006 (Source: The European Market for Natural Cosmetics, report by Organicmonitor) • Organics personal care market in the UK valued at $12.0 million in 2001, rising to US$16.3 million in 2006; forecast for 2011 is $21.9 million (Source: Datamonitor) • Germany with largest growth: projected market share of organic cosmetics of 10% in 2012 (Source: The European Market for Natural Cosmetics„ report by Organicmonitor)

41. Market Trends • Natural and Organic Cosmetics • Organic cosmetics are usually certified to ensure credibility • There is no common European certification • The Ecocert (France) and the Soil Association (UK) label are internationally used; however, each body uses slightly different standards for organic cosmetics

42. Example: Yves Rocher • “The world leader in botanical Beauty Care” • Natural, accessible beauty – beauty for every woman • The Yves Rocher product line contains over 150 active plant ingredients • Founded over 40 years ago by Yves Rocher • First product: a simple cream, based on the Lesser Celandine plant and produced in the family attic • Distribution through own stores

43. Example: Weleda • Anthroposophic and Homeopathic Medicines and Natural Bodycare • Founded in Switzerland in 1921 by the Dutch medical doctor Ita Wegman and the renowned philosopher Rudolf Steiner • Committed to producing naturally, ethically, safely, without animal experimentation and without damaging the environment • Organic certification: BDIH (German) • Product portfolio: Facecare, Bodycare, Bath & Shower, Suncare, Babycare, Haircare, Men‘s Care, Dental Care, Deodorants • Distribution via specialist stores, pharmacies and drugstores

44. Example: Sanoflore • Founded 20 years ago in south-eastern France • Manufactures organic cosmetics and aromatherapy products • Handles all the stages in the aromatic and medicinal plant chain, from cultivation with partner farmers to the finished product • Acquired by L‘oréal in 2007 • All products are certified by French organic label Ecocert • Distribution through pharmacies and specialist shops

45. Wrap-up: Market Trends • The face care market in Europe is projected to grow and therefore bears some future potential • As the population is growing older, Anti-Age is a continuing trend • The Wellness Trend has mainly been embraced by luxury brands • The natural & organic segment is experiencing tremendous growth • A difference is to be made between natural (e.g. Yves Rocher, Nuxe) and organic (e.g. Weleda, Sanoflore) cosmetics  organic products are usually certified! • Natural & organic products are mostly distributed through own stores or specialist stores and pharmacies

46. Recommendations:1. Strengthen Natural Positioning • Aok is already associated with natural cosmetics by German consumers (in a study conducted by IRI in 2006, 20% of respondents considered Aok to be natural) • In order to be successful throughout Europe, the brand needs to build and communicate its natural image further • Stress natural ingredients • Claim “not tested on animals”  “Leaping Bunny” Logo • Ultimatelythe brand’s products should becomeorganic  certified by “Ecocert” Henkel already avoids animal testing wherever possible

47. Recommendations:1. Strengthen Natural Positioning • Put emphasis on educating consumers as there is still ambiguity about what “organic” means  through website, PR campaigns, advice at POP, Promo-material • Distribution through Drugstores, selected Super- and Hypermarkets  make organic cosmetics available to the masses! • Upgrade the brand by also distributing through specialist stores and pharmacies (new competition!) • Maintain affordable prices, as high prices are the main barrier for not buying organic cosmetics (Source: IRI Shopper Study in Germany, 2006) The first mainstream organic cosmetic brand: traditional, with modern insights; high quality, but affordable

48. Recommendations:2. Stress Heritage • Exploit Baltic Sea heritage to support the natural/ organic positioning and stress wellness aspect  more emotional appeal! • Educate consumers about “Kolberg”: Baltic Sea Resort  set-up organic spa at Baltic Sea • Develop more products with organic ingredients from the (Baltic) sea, e.g. with algae extracts, sea minerals, mud, orchid extracts • Use promotions related to the Baltic Sea e.g. sweepstake with wellness weekend at Baltic Sea as prize • Stress that the brand was founded by a pharmacist to build credibility and upgrade the brand Aok‘s heritage is unique giving it a POD; even when facing new competition in new distribution channels

49. Recommendations:2. Stress Heritage • Leverage secondary brand equity: Beach & Sea Wellness Wind Baltic Sea Vacation Rich nature Relaxation

50. Recommendations:3. Adress More Than One Need • Aok used to address consumers >40 but with its repositioning as “providing clear skin at every age” it started to neglected them • Mostly teenagers and people <40 suffer from acne and impurities; “Older” skin has different needs  Focus too narrow; no room to extend the brand! • Get rid of the claim „Clear skin at every age“ • Come back to a broader positioning “ Natural beauty for any skin” • Introduce product lines for other skin types (normal skin, sensitive & dry skin) and especially Anti-Age care! Broader Positioning “Natural Beauty for any skin” focuses on Aok’s core competencies and gives room for brand stretching (even into Body- and Bath & Shower Care possible!)