Olay global competitiveness On October 4, 2017, Procter & Gamble (P&G) North America Skin Care General Manager Chris Heiert received an email from a senior leader. Any perspective on Jul/Aug/Sep Olay sales? The sales report shows sales are -12%, a significant miss on a low estimate. My guess is there must be some special causes in the quarter and wanted to get your thoughts on whether the plan will return Olay sales to grow in Oct/Nov/Dec and whether you still plan to deliver your sales growth promised for the fiscal year. Heiert had seen good and bad quarters at Olay, a P&G-owned brand, over the course of his career. When he first joined as an Assistant Brand Manager in 2000, Olay was just establishing itself as the leading skincare brand in the world. By the time Heiert rejoined the brand in 2015, however, Olay’s sales had been declining consistently for several years. Each year, Olay lost 5% to 10% of its consumer base for the past five years. Every valiant attempt to fix the situation failed. From its peak at over $2 billion in retail sales in 2009, sales had fallen to just over $1 billion in retail sales by fiscal year 2017. (See Exhibit 1a for Olay’s global sales growth year-over-year since 2000 and Exhibit 1b for U.S. sales from 2010-2016.) Heiert needed to act fast to revive Olay. But how? There was no shortage of ideas on the table—he and his team debated everything from brand equity, new consumer groups, kickstarting innovation, altering their marketing and distribution models, and what categories the brand should play in. The brand needed an immediate turnaround. If Olay could not reverse course, P&G might consider divesting the brand. In a deal in 2015, P&G had already sold off 43 beauty brands to Coty Inc.

1. Facelift At Olay
Facelift At Olay
Facelift At Olay
Himanshu, Mark
Himanshu, Mark
Merghani, Mona,
Merghani, Mona,
Sapna
Sapna
MBA 661

2. PROCTER & GAMBLE IN OUR LIFE

3. SK-II a luxury beauty brand in
Japan
Pantene and Head & Shoulders
shampoos
Olay Skin care
$9 billion in annual sales.
P&G Beauty
Presenting P&G Beauty Product

4. Global Skincare in 2017
The global skincare market grew steadily from $98 billion in 2012 to $128 billion by 2017.
The largest skincare market was China($26.9 billion).The U.S.($17.9 billion).
China was also the fastest-growing market at 8.7% annual growth,followed closely by
South Korea(7.4%) and theUS(6.7%).

5. France was the largest exporter of skincare products to China,primarily through LOréal
and Lancôme.
The second-largest exporter was South Korea,a skincare innovation hub.
In 2016,among Chinese consumers, L’Oréal had 4.7% market share followed by Mary
Kay with 4.2%,and Olay with 3.3%.
the reality of China’s modern beautv-products consumer who increasingly buys
makeup and skincare items while traveling abroad or shopping online.
China The World’s Largest Skincare Market

6. Skin Care - US Market
$ 17.7 Billion in 2016
70% of adults occasionally using
facial cleansers 2011 – 2016
Growth (6.7 Billion Annual) Industry
Revenue
70%
30%
70%

7. COMPETITIVE
ANALYSIS
Understanding
Skn care
Competition in
the US Market

8. PRODUCTS
ON MARKET
Neutrogena Hydration
products, in millenniums.
Aveeno for natural ingredient
26% Market Share
1
Approaching Millennium
2

9. Magazine and TV
Sephora , Ultra
Indie Brands
(Independed,
Innovative,
Purposful Brands)
Walmart ,
Costco,Target
Direct to
Consumer ( DTC)
Acne Treatment (
Roden + Field)
Customer Approach

10. KOREAN
Beauty

11. Initially niche player, Korean brands entered Walmart in 2016 when mass retail introduced
Masqueology sheets.
2015-2016 US sales increased to 27% in skin care.
Innovative products such as sheet masks and essences, packaging, branding and mists concepts
captured attention.
Advertising the ingredients like retinol, maple syrup and snail mucus.
In 2014, SOKO glam introduced 10 step korean skin care routine from (Step-1) eye removal makeup to
(Step-10) applying night cream which broden awareness among the US consumers about variety of
skin care products.
Lead to growth of DTC brands like glossier and roadan+fields.

16. TOTAL EFFECTS
included active
ingredient such as
vitaniacin, 3 part
vitamin formula
designed to reduce
pimples.
in marketing olay
stated it would "fight 7
signs of aging"which
included
wrinkles,rough skin,
uneven tone, dullness,
visible pores,
blotches,age spots
and dryness.

17. Olay marked half price than other brands Lancome, estee lauder and clinique.
In 2000, launched daily facials, which were disposable cleaning cloths designed to remove
make-up, oil and grime.
$60 facial to 60-sec facial everyday.

18. Launched in 2003, higher price
$19.99.
The messaging used to promote
reflected the rising popularity of
plastic surgery.
The product promised to fight
wrinkles without such drastic
measures as chemical peels,cosmetic
surgery or laser.
L‘oreal became the competitor
advertising “ Botox in a bottle”
in 2005 $1 billion in global sales
made best skin care brand in US.
Regenerist

19. Masstige & X-Pro
Total effect and regenerist elevated olay's positining to a mass prestige level
brand.
This made cemented olay as a premium offering in mass environment.
The rejunivation of the skin care category in the mass channel encouraged
retailers to expand the shelf space for skin products.
Higher marigins grew to sales overall.
Olay competed with L'Oreal, Neutrogena and aveena in mass market and
clinique, estee lauder and lancone in prestige category
Olay introduced X-Pro which is proffessional anti aging line in 2008. it contained
the most sophisticated formula designed by dermatalogist
the kit caused $60 causing retail sale to clock $100 million in fist year.

21. 144 New SKUs (Sub brand
,brand)
A Wide range of products
To Compete with DTC
Strategy (Cost
leadership)
What went wrong?

22. Strategy (Cost
leadership)
144 skus created
confusion
Consumers often were
not sure which add. they
saw
End up not buying
anything

23. Strategy ( Focused Anti-
aging )
Millennials perceived as a
brand for their mother or
grand mothers
Retailers faced competition
against natural and new
brands as well as DTC brand
for younger consumers
This Resulted in reduced self
space for the products in
retailers such as walmart

24. Pressure to reach younger generation
let olay to launch a separate line in
2013 called “Olay Fresh”
This kit had combination of three
products Cleanser, Moisturizer,lotion,
and a brush.
This produced connected with the
younger consumers
But was not enough to offset the losses
of other products and popular enough
to get self space and advertising
Strategy ( Focused
Fresh Effects)

25. What is Olay’s Identity ?
Adding a new line of Fresh Effects even confused the consumers as what is
the identity of the brand.
New Leadership lead Olay to try different strategy
Cost leadership or reduced price
Introduction of new Products
Incentives to retailers
Increased media budget
Nothing worked to save on the declining sales of olay

26. Olay’s add
campaigns Agenda
“Your Best
Beautiful”
01
“Challenge
What's
Possible”
03
"Anti-aging"
to
"Ageless"
04
“Love The
Skin You
are in”
02

27. Identity Crises
1
The Brands point was loss
2
Olay got so to big and too complicated
4
Competing with DTC and Korean Brand
3
Consumers were not sure what olay is
anymore
5
Who Is
Olay?

28. Strategy,
Structure &
Rivalry
Porter's Diamond Model
Factor
Conditions
Related &
Supporting
Industries
Demand
Conditions

29. Factor Conditions

30. Related & Supporting
Industries

31. Strategy, Structure &
Rivalry

32. Demand Conditions

33. Porter's Five Forces

34. Sophie's
Choice for
Olay
5

35. Target younger women Target younger women
Optimizing the product portfolio

36. Expand product
portfolio
Reduce number of SKUs
Choosing the right customer segment

37. Thank you all