Marketing Management Case Study on NIVEA: Brand Extension and Strategy

This marketing case study examines NIVEA's brand strategy, consumer-led approach, and marketing mix. It delves into NIVEA's brand image, sources of equity, and the effectiveness of its sub-brand strategy, exploring the pros and cons of brand extension. The analysis covers the role of NIVEA Crème in advertising and potential product category extensions, including the men's grooming category. The study also addresses the key components of the marketing mix (product, price, place, promotion, and people) and how they interrelate to achieve marketing objectives. The student explores how NIVEA manages brand extensions and analyzes the risks and benefits associated with these strategies, offering insights into the brand's market positioning and future opportunities.

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Marketing Management Case Study
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MARKETING MANAGEMENT CASE STUDY
Question 1
Describe what is meant by a business being ‘consumer led.'
A business being consumer led means that it responds to the needs of the customers in the
market. It is a path followed by a company so as to lead the target market to buy the products and
providing means of accessing the product. It can also be described as a guiding philosophy in
which all the decision made take the customers as the key. The concept of consumer leading is
described in promotional strategy and a company like NIVEA Visage Young is an example. The
company uses their below-the-line routes by assessing various ways of getting the views of the
target market. The breakthrough in this type of marketing is establishing the value consumer and
then focusing all the operations around them. The marketing strategy gives the consumer a real
experience in which they can smell, feel, touch and try the products. For example, the company
launched an online magazine which functions as a platform to create awareness to young people
about the need to enjoy their independence and this enhanced brand awareness (Superbrands Ltd
2004).
Business growth as impacted by consumer influence
This type of marketing entails focusing all the resources towards pleasing the valued consumer
and what their perception is about the company and what they might say to potential customers.
The voice of the customer is crucial in decision making to achieve increased growth. This type of
marketing is broad, and the company must consider the dissatisfied consumers. In this concept,
the Net Promoter Score is used, and it is described as the one number you need to grow. NPS is
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calculated by taking the percentage of the customers most likely to recommend the products and
subtracting the number of customers most unlikely to recommend.
Question 2
What is the brand image and sources of equity for the Nivea brand? Does it vary across
product classes? How would you characterize their brand hierarchy?
NIVEA's brand is as a result of a company providing quality skin care, cosmetic care, and
personal care. The source of the company's brand equity comes from NIVEA Crème which is
their best selling product. The brand is considered the best for the care, protection, reliability,
mildness, pure and simple. The continued customer loyalty is due to the assured quality they are
accustomed to. The brand image and source of equity is dynamic across the product class, and
each class has developed products which the consumers interact with (Superbrands Ltd 2004).
Despite the main source of equity being NIVEA Crème, the company has other products such
NIVEA Milk, Soap and includes their skin care products. The image of the brand has stayed
steady across all the products referring to them as gentle. The products have stayed true to
personal care and skin crèmes. NIVEA has held much of the market percentage in skin care
products despite competition from Beiersdorf.
Question 3
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What are the pros and cons of the sub-brand strategy? Should NIVEA run a corporate
brand or umbrella ad for all of their products? What is the role of the NIVEA Crème
advertising? Should it be changed?
Pros and cons of sub-brand extension
Pros
 Sub-brands helps in marketing the mother brand.
 Help monopolize the market.
 Brand loyalty is established.
 Each sub-brand promotes specific product features and benefits for a specific target
market.
 They help by giving a common message of quality and care.
Cons
 It is difficult to administer the entire products.
 It is hard to compete with the professional companies.
 Various products do not make the profit for the company.
Corporate branding is when a company applies its name to a product and therefore the company
and the product become the brand name. Umbrella branding involves marketing practice using a
single brand name for the sale of two or more related products (Mack 2014).
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NIVEA should run an umbrella brand since it helps the addition of value to the products
operating under it. It also helps towards the addition of value to the new products being
introduced under the umbrella brand. This is done through the addition of links which help it
value positions, provision credibility and generation of communication efficiencies. Running an
umbrella brand helps facilitate new product acceptance in the market (Superbrands Ltd 2004).
Role of NIVEA Crème in advertising and should it be changed
NIVEA Crème acts the brand signature product. It usually contains a portfolio of products
addressing specific skincare products. It is usually available in various designs for younger
people such NIVEA Soft. NIVEA Crème should not be changed since it is the brand signature
product.
Question 4
Discuss the risks and benefits of NIVEA's brand extension into new product categories and
customers. How have NIVEA's executives managed this extension? Have they missed
opportunities such as perfume or foot care?
Brand management has become and issues for many brand managers due to increased
competition and the decreasing product life. Brand extensions have various benefits such as they
facilitate new product acceptance. This is so as it improves brand image and minimizes the risks
perceived by the target market. There is an increase in the probability of gaining distribution and
trail and improve the efficiency of promotional expenditure. The costs of introductory and
follow-up market programs and the costs of development of new products are reduced.
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Brand extension helps in providing feedback to the parent brand. It is possible to clarify brand
meaning and the enhancement the parent brand image. New customers are welcomed into the
brand, and the market coverage increased while providing for the subsequent extensionsm(Mack
2014).
The risks of brand extension
The cases of customer confusion and frustration are not uncommon, and this would dent the
parent brand. There might also be retailer resistance, and the extensions might succeed thereby
destroying the parent brand. There is the risk of dilution of brand meaning, and the company
might miss the chance of developing new brands.
Management of Brand Extension by NIVEA
The management has struck a balance between fit and parent brand strength ensuring a
successful brand extension success. The management has understood the way their target
consumers evaluate if the brand extension fits the core brand. This has been crucial in the
success of brand extension. They have been able to maintain the core values of the parent brand
to the brand extensions, and this includes relevance, recognition, and credibility. NIVEA has not
missed on opportunities since they have focused on the niche where they believe to be strong and
the customers respond positively.
Question 5
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Should NIVEA pursue a Men's grooming category? Does the company risk alienating its
core customer base of families and women or is this a natural next brand extension?
This is an area which is not predictable. There have been competitors extending to men's soaps,
but there are not many with mildness. NIVEA already did this with the mean aftershave. They
should, however, maintain with their slogan for mildness. The company should look into the
state of competition and also look into hair coloring products and marketing as hair coloring that
is gentle on the hair and also long lasting. It should allow hair to be natural and healthy. They
should think on getting to pet skin care products despite the idea being farfetched. This is due to
many customers having pets with skin condition and marketing them as mild and caring for the
animal skins. Companies have to expand their lines due to the variety of the customers' service.
The strategy should build a reputation in one brand and then extend the product line, and this
seems to work for NIVEA.
Question 6
What are the key parts of the marketing mix? Explain how each works with the others.
The marketing mix model has bed used by businesses as a way to enhance implementation of the
marketing strategy and is also known as the 4 Ps. It is usually used when trying to formulate the
maximum response in the target market blending various variables and optimizing them. It is
crucial to understand that the principles of marketing mix can be controlled and adjustments can
be scheduled at intervals depending on the changing needs of the target market and other factors
in the market (ICMRINDIA.org 2016).
P1- Product
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Marketing can be described as a way of finding the target group and anticipating their needs and
consequently satisfying those needs. The company has the responsibility of ensuring that the
products and services meet the quality standards of the consumers. The following should be
done:
 Perform simple survey by enquiring from the consumers what their perception is of every
product and them satisfaction by the quality. One can also enquire if the support services
meet the quality threshold and its effectiveness in satisfying their needs. Lastly one can
get information on probable change of the needs in short and long run.
 The initial step should be for every product and service the company offers.
 Formulate a system that helps is the collection and analyses of the feedback so as to
develop a product tailored to customers' needs.
 Investigate the life cycle of the product so as to understand the market mix. Products
usually move from the introductory stage, growth, maturity stage, and the starts to
decline. By knowing this, one knows what market is required for each stage.
 Profitability analyses should also be conducted. Find the products which have high
profitability, what are the support services and what can be improved.
Traditionally most people thought that good products are self-selling, but this doesn't apply in
today's competitive environment especially due to technology allowing customers to send
feedbacks and ask for refunds for bad products. All companies should understand they have
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defined the functionality, quality, appearance, brand, packaging, support and warranty to ensure
customer satisfaction (ICMRINDIA.org 2016).
P2- Price
The price of products is essential as it provides profit hence crucial in market mix. Various
considerations should be made, and they include:
 The target market and the amount they are prepared to pay for the products and services.
The prices should not be set too low or too high to avoid customer confusion.
 The production costs help in determining the selling price. Failure to make the proper
calculations means that you will continue losing in the long run.
 Keep track of the competitors and what they offer at what price.
Price strategy involves factors such as the amount the customers are willing to pay. Price
competition can still be used by providing discounts and special offers. One should keep in mind,
the price lists, and discounts, allowances, financing and leasing options.
P3- Place
This includes the means of distributing products, and it affects the decisions on pricing and
promotions. If the target market is consumers, then the producers sell to wholesalers for
distribution. If the market is businesses, then one should sell directly (ICMRINDIA.org 2016).
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The products should be available at the right place, at the right time and in the right package. The
factors to keep in mind include locations, logistics, channel members, market coverage, service
levels and mobile.
P4- Promotion
The promotional mix constitutes of various elements and they include advertising, sales
promotion, public relations, personal selling and direct marketing. The promotional tool used is
dependent on the budget and the message to be conveyed to customers and the target group.
P5- People
This includes the employees, and they determine the quality of the products produced.
Employees who are happy, skilled and motivated translate to happy customers. There should be
an effort to train those employees who come into contact with the customers. The employees
should be involved in customer service standard settings (Dutta 2015).
The right employees should be recruited and trained in the way they deliver products and
services to the customers. The staff should be equipped with the right interpersonal skills and
service knowledge.
P6- Process
These refer to the frameworks used by the company the delivery of services to the consumers.
There should be good after sale service and be educated on ways to handle customer complaints.
Question 7
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Explain why the balance of the marketing mix is as important as any single element
The marketing mix is dynamic across the product type, and product life cycle and its elements
are crucial in making sure there is a balance when there is a product being marketed to the target
market. NIVEA Company uses four P, s of the marketing mix in identifying the strengths and
weaknesses of the combination of the market mix tools. It is very competitive when a company
has high-quality products at affordable prices and being high accessible while at the same time
marketed by the best promotional techniques. It would be a drawback if a company has products
at low costs and has high popularity but has no accessibility. To ensure growth, there is need to
integrate the essential marketing elements in a balanced manner (Dutta 2015). NIVEA has
formulated a range of products by making clear analyses of market situations and then designed
a balanced framework between their marketing tools. This has helped in improving their business
and to satisfy their consumers. The company has ensured balanced and hence providing a
competitive edge (Dutta 2015).
Question 8
Analyze the marketing mix for NIVEA VISAGE Young. What are its strongest points?
Explain why you think this is so
NIVEA VISAGE Young has improved their designs after market survey and produced with a
new formula, packaging, design and a new name in the target market. There has been a lot of
focus on the market strategy by being keen on the balance kept between marketing mix tools
giving the company an edge for the business development (Dutta 2015).
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Feedback from the younger target of the market reveals that they did not fancy a solution of skin
decease but needed beautifying benefits. They designed products for the consumers who did not
want a medicated product but wanted skin care. Since most competitors focused on problems,
this step provided NIVEA with a competitive advantage.
The pricing strategy employed by the company want to avail a variety of products at an
affordable price so as to increase the volume of purchase hence more market control. Due to a
range of products at low prices, the customers became loyal and kept on buying, and this was
beneficial to the company in the long run.
The company has been keen on the promotional strategies used, and hence they place their
products to allow easy accessibility. Such an example is placing products in retail shops for
accessibility and coupled this with the application of advanced promotional techniques.
References
Superbrands Ltd, (2004). Superbrands case studies: NIVEA. Retrieved on October, 4th 2016 from
http://www.campaignlive.co.uk/article/463937/superbrands-case-studies-nivea#
Mack, S. (2014). What are the benefits of product Umbrella Branding? Retrieved on October, 4th
2016 from http://yourbusiness.azcentral.com/benefits-product-umbrella-branding-24316.html
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