In 1990s P&G’s largest and best-known skin care brand “Oil of Olay” was struggling and the company needed domination in skin care to be a credible player in the beauty business. The “Oil of Olay” was seen as old-fashioned and no longer relevant. The Skincare market had the potential to provide “Halo Effect” for the brand in other beauty categories like hair care, cosmetics, and fragrances.
How to be a leader in a Skin Care Market? P&G team realized that only innovations could help in becoming a leader in the market.
The management team had to do something to gain the market share – They had three strategic choices in front of them -Should they launch another new brand? Buy an established Skin-Care leader? or Re-invent the Olay Brand?
How to decide the choice? Who will answer the above questions? – Yes, Only your customers. If the management team answer the questions, based on their past experiences, they would be blocking innovations for the product. Only innovations can increase the market share. How would you get answers from the customer? Through Design Thinking or User Focused Thinking.
Design Thinking is to think from a User Perspective – Be a User to understand their attitudes, behaviors, actions – Learn to get into the mind of User and Understand his thought process. The first step in Understanding your consumer’s mind is “User Research”
The P&G team did a detailed work to understand the consumer and concluded the following based on the research insights
- Consumers were well aware of “Oil of Olay” brand name. It appeared that the brand had potential, especially with the right push behind it.
- Olay’s existing customers are price sensitive(Older women aged fifty-plus – who use Olay Brand for fighting wrinkles)
- The users minimally invested in skin care and would not pay premiums for skin care products
- Every other competitor was focusing on this segment and opportunities for growth appeared limited.
The conclusion is to use the Olay Brand Name itself, but need to reinvent the brand and Reinvention is possible only through innovation.
EXTREMES AND OUTLIERS
To Innovate, one of the wonderful “Design Thinking” tools – Look at your Non-Customers.
Focusing on existing customers will break the existing market into finer segments, forcing us to tailor the offerings further, and reducing the market further. To break away from this, the first step is to shift your focus from “Customers” to “Non-Customers”
W.Chan Kim and Renee Mauborgne, in their “Blue Ocean Strategy”, divides those “Non-Customers” into three tiers.
- First Tier – “Soon-to-be” non-customers who are on the edge of your market,
- The second tier – “Refusing” customers who consciously choose against your market
- The third type – unexplored non-customers who are in markets distant from others
Focusing first on the third type of customers will provide ideas for innovation.
How would you locate your third type of Customers? Not by asking questions, but observing them. Observe to locate customers with sizeable pains, unarticulated needs, pains that have emotional attachments like anxiety, fear, and social implications.
P&G team observed that many women in mid-thirties were still using hand and body lotions on their face. They were cleansing, toning, moisturizing their skins by using day creams, night creams, facials and other traditional treatments.
P&G research team did a deeper research to understand the reasons
- In mid-thirties, consumers notice their first lines and wrinkles in face
- At this moment, they are vulnerable, anxious than the older segment
- They apply those lotions to keep their appearance youthful
- They are worried about keeping a Healthy Skin.
P&G felt that women in mid-thirties are highly committed to skin care and are more willing to pay for quality and innovation. Moreover, the users had taken the effort to solve this problem by applying those lotions. This had reinforced the potential opportunity. Another aspect – Frequency of use – The customers were using those lotions 2-3 times in a day – This target segment appeared to remain loyal if their rational and emotional needs are taken care of.
REFRAME THE PROBLEM
P&G team reframed their skincare as a business of helping women to have healthier, youthful and beautiful life rather than saying of making a line of skin care products
P&G understood that they could not just focus on “Wrinkles” alone. Thirty-Five plus women had other concerns for skin. In research, P&G team unraveled other needs – Dry Skin, Age spots, Uneven skin tones, Appearance of skin – No brands were focusing on those needs. These unarticulated needs of your customers are the “value propositions” of our new product.
Blue Ocean Strategy calls this as “Value Innovation”.
“Value Innovation” is nothing but creating a leap in Value offerings to buyers/users, thereby creating new uncontested market space, making competition irrelevant
BOS says that Value without Innovation is an incremental innovation, which will not help you stand out in a marketplace. Innovation without value to user tends to be technology driven, often shooting beyond needs of buyers or what buyers can afford. So, Blue Ocean Strategy suggests “Value” for User with “Innovation” is a “Radical Innovation” to achieve growth leadership in the market.
P&G scientists set out to work on sourcing and developing better skin-care compounds to meet the new value propositions.
P&G launched “Olay Total Effects” as a masstige(between mass and prestige segment) product in 1999, redefined the market of what anti-aging products could do. They followed up with an even more expensive brand, with a better ingredient-Olay Regenerist. Later they launched Olay Definity and Olay ProX. Olay had double-digit sales growth, with extremely high margins of profit, and a loyal growing consumer base.
References – Playing to Win by A.G Lafley, The Innovator’s Dilemma by Clayton Christensen, Blue Ocean Strategy by W.Chan Kim and Renee Mauborgne