Beiersdorf is a leading international consumer goods group, selling cosmetics, plasters, cremes, and many other products for personal care and health. It focuses on the development and care of a few global consumer brands of products of everyday use.
With 90 subsidiairies and a developped network of distribution partners, Beiersdorf works in more than 100 countries all over the world and the group has known a huge international success through its different brands.
We were interested in knowing more about its internationalisation process and about its way of doing business internationally, and we wanted to try to discover the keys of its success.
In this report, we will first present the group Beiersdorf. Then, we will focus on its internationalisation process. And finally, we will compare its international strategy with the one of L'Oreal, one of Beiersdorf's main competitors.
The company was established in Hamburg in 1882, when the pharmacist Paul C. Beiersdorf took out a patent, which described a new method for manufacturing medical adhesive dressings containing medicinal substances. In 1890 the pharmacist Dr. Oscar Troplowitz acquired the laboratory from Paul Beiersdorf and recognised the long-term potential of products that make an effective contribution to solving everyday problems. Troplowitz brought out a large range of products, such as pomades mouthwashes shaving soaps, adhesives tapes, paraplats, lipsticks. However the most far-reaching changes came in 1911, when he initiated development of a long-lasting cream, which in December of that year came onto the market.
It was a well-balanced completely new cream. It was called NIVEA, coming from the Latin word "nivius" meaning snow-white. Troplowitz also began to internationalise at an early stage. In 1892 the company started to sell its products in the United States, imported via New York. From 1898 it made regular deliveries to Vienna, or Austria-Hungary, in 1906 it established an office in London's Idol Lane. By the beginning of the First World War there were also production facilities in Buenos Aires, Copenhagen, Mexico, New York, Paris and Sidney. However this internationalisation process was repeatedly interrupted by the world wars, Troplowitz laid the foundations for Beiersdorf as a global player. Today Beiersdorf's products are sold in nearly every country in the world, by more than 90 affiliates, distribution and licence partners. It achieves 70 per cent of the sales outside Germany.
Beiersdorf's mission statement: to increase people's well-being and make their life a little better every day.
The combination of brands and people accounts for Beiersdorf's success. Beiersdorf focuses on the continuous development and care of a few global brands. The centre of its activities is always people: consumers and the dedicated and experienced employees. The company has more than 17.500 employees around the world.
3) Beiersdorf's Brands
Beiersdorf owns 11 different brands : NIVEA, 8x4, atrix, Eucerin, Labello, la prairie, JUVENA, FUTURO, tesa and the plaster bands Hansaplast and Elastoplast.
The characteristic features of Beiersdorf's brands are: reliable quality with a high degree of benefit for the consumer, at a reasonable price. The company is constantly working to develop and improve these brands and their product ranges.
4) Research and Development
Beiersdorf places a high emphasis on research and development and pursues the ongoing development of brands and concentrates on the three competence fields: cosmetics/personal care, wound care/health and adhesives technology. In 2001 the company spent 2 per cent of its sales (92 million euro) on R + D.
In the personal care, the latest techniques are used to develop future technologies for innovative, high-performance active cosmetics. They are using new plaster production technologies to develop innovative products for the consumer goods industry. The tesa AG focuses on successful processing of solvent-free adhesives and coating processes.
5) Environmental Protection and Safety
The two main principles for Beiersdorf are: "conserve the environment" and "maximum safety for all employees". The company's environmental and safety strategy is integrated in all business workflows. It consists of three stages:
* Product development
* Production process
* Environmentally sound waste management.
Beiersdorf's products are sold in nearly every country in the world by more than 90 affiliates, distribution and licence partners. It achieves 70 per cent of the sales outside Germany.
Group sales (in million Euro) Group profit after tax (in million Euro)
Source : the annual report of Beiersdorf in 2001
As the graphs show, the sales have been increasing from 1999 to 2001 (+24.85%), as well as the group profits after tax (+62%) : the group has known a huge growth.
After this brief overview of Beiersdorf, we are going to focus on the group internationalisation process, trying to evaluate the company's behaviour as an international player.
As we have seen, Beiersdorf is an international group that sells its products almost in every country in the world, and 70% of its sales are done outside of Germany (for instance, the group achieves 9.3% of its total turnover in France). But how has the group reached this? What is the internationalisation process of Beiersdorf ?
1. Beiersdorf AG - Beiersdorf : a transnational group which sells global brands
First, Beiersdorf focuses on developing a few global brands in order to fully respond to people's diversified interests and wishes, it invests in a small number of strong consumers brands. This constant work to develop and improve the brands and their products range enables to offer reliable quality products at a reasonable price, so that consumers trust the brands.
Consumers are really the central concern of Beiersdorf and the groups clearly defines it in its mission statement : its aim is to increase people's well-being and to "make their life a little more pleasant every day".
According to Beiersdorf, "a brand can only be successful worldwide if it is successful locally". Consequently, the group works in order to meet the local needs of people, so that the brands will be successful locally, and the global success and strength of its global brands come from their local strength. In other words, we can say that Beiersdorf brands have a global success throughout the world, but the group keeps a consumers-driven orientation that enables it to meet regional needs and to adapt to each country. Beiersdorf wants to understand and to respect the different cultures that exist throughout the world and this strategy led it to success.
Now, we can raise a new question : how does Beiersdorf deal with its internationalisation in order to reach its objective (i.e. to develop global brands that meet local needs)
The group's head office is in Hamburg (in Germany) and there are 100 affiliates worldwide, with a centre of production, a marketing and sales department, a R&D department, etc...For example, in Thailand, there is the second largest manufacturing base of the group in Asia, with a production capacity of over 62,000 tons and 180 employees. This important base has both administrative and production facilities, it provides support, supervises production and inspects the affiliates throughout the Indo-Chinese peninsula.
The internationalisation of Beiersdorf is based on this principle : the head office in Hamburg gives a globally oriented marketing strategy based on uniform international rules, and the affiliates implement locally this global marketing strategy in order to satisfy the regional requirements. Consequently, Beiersdorf's messages reach their target and are understood equally well everywhere.
That is why, for instance, French people think that NIVEA is a French brand, people in Italy are convinced that NIVEA is an Italian brand. The originality of Beiersdorf is that it develops global brands (like NIVEA) but people, from very different countries, consider them as their own local brands and this partly explains the success of the group worldwide.
Subsidiaries are quite "free", the power is not centralised in the German headquarters. They can launch products adapted to meet local needs and are free to launch a communication campaign which also fits the local needs. They are organised according to category management, that is to say there is a manager for each category of products (a manager for NIVEA Beautï¿½, a manager for NIVEA Visage, a manager for Labello, a manager for NIVEA Sun, etc...).
==> In conclusion, Beiersdorf is a transnational group, not a global group, that thinks globally but acts locally.
But how does Beiersdorf generally expand internationally?
Its expansion strategy is based on two aspects. The first aspect is the gradual expansion into new countries. Most of the times, when entering a new country, Beiersdorf first launches some NIVEA products (generally the crï¿½mes because they are the most famous products); then, it launches more NIVEA products, then, it launches some LABELLO products and other products from other brands, and so on... Beiersdorf gradually expands into new countries by gradually launching its different brands and products.
The second aspect of the strategy is investing in the individual countries. For instance, in 2001, the group built a last up-to-date cosmetics factory in Poznan, in Poland. This investment represented a capital expenditure of 22 million Euros and it is a big commitment of the group in Poland.
Now that we know that Beiersdorf is a transnational group, it would be interesting to look closer at the relations within the group.
Thanks to the Intranet, there is a permanent communication between the German head office and the affiliates. Moreover, internationalisation is promoted in the company, there is a high rotation of the employees between the affiliates, the transfers increased by 30% in 2001. All this enables a transfer of experience and knowledge between the employees of the group and this contributes to make Beiersdorf be a real international group.
2. Internationalisation strategy of Beiersdorf - Two dimensions
The international strategy of Beiersdorf relies on two dimensions : opening up in new countries and opening up in new market segments.
When opening up in new countries, the group decides to break into a new foreign country to sell its products.
When it wants to open up in new market segments, Beiersdorf develops new markets step by step, in countries where it has already broken into, in line with their strength. It does so to make "the right decision in the right place at the right time". For instance, the group rolls out the different NIVEA categories (first, it launches NIVEA Crï¿½me, then NIVEA Bath care, and so on...); in other words, when opening up in new countries, Beiersdorf uses gradual expansion as we have seen before.
Sometimes, Beiersdorf makes some acquisitions to strengthen its current position in the market. For example, in France, it bought Onagrine and Nobacter to enter the French pharmaceutical market. Another example is the acquisition of Elastoplast, the plaster brand, that enabled the group to use the business "know-how" of the acquired company and to become a global leader in the plaster market.
3. Illustration of Beiersdorf's strategy - NIVEA
NIVEA is the "star" brand of Beiersdorf : invented in 1911 in Hamburg, this nowadays global brand, traditionally symbolised by the blue logotype, reached worldwide sales of over 2 billion Euros in 2000 (four times the amount of sales reached in 1990 !).
NIVEA is an umbrella brand that offers, under the same brand name and with the same "promise", products belonging to the same universe of consumption. In consumers' mind, the brand NIVEA insures quality products.
As the years go by, NIVEA has expanded its position as the world's greatest skincare brand through organic growth. 20 years ago, it broke into the Asian market thanks to a successful joint venture with a Japanese chemical company (Japan's Kao Corporation). And today, NIVEA is the top-selling skin-care brand in the world, holding 15% of the world market in skincare products (source : AC NIELSEN 1999).
Why is NIVEA so successful worldwide ? Because it always orientates its marketing towards consumers; it invests in Research and Development and is leader in terms of marketing policy because it always tries to proactively anticipates and satisfy the needs of consumers.
But also because its international development enables it to reach many consumers worldwide and in the following paragraphs, we will focus on the international strategy of NIVEA.
First of all, how does NIVEA choose to enter a market ?
NIVEA uses the export market selection tool to evaluate opportunities prior to select foreign markets to compete in. The brand is proactive in its export market selection process, that is to say it actively seeks business in foreign markets and is not passive.
Before entering a foreign market, NIVEA realises studies to know the characteristics of this market and of the consumers. If there is an obvious gap in a moving, dynamic market with high growth level and if NIVEA has the products to meet consumers' needs, to fill in this gap, therefore it breaks into the market. For instance, in Ireland, there was a gap for quality shower and deodorant products, and NIVEA was able to offer these kinds of products, so the brand broke into this market.
A more traditional method consists in launching products in a country very close (geographically, but also culturally, economically and politically) to another country where these products are already available, in order to make economies of scale. In this case, we can say that NIVEA uses an expansive method because it builds markets based on similarities in the environments between existing markets and potential new markets, it uses the nearest neighbour approach. For instance, NIVEA used this expansive method with the UK and the Irish markets. To realise economies of scales, NIVEA Ireland usually prepares a parallel launch when NIVEA UK introduces products on the UK market, because many British advertising media are available in Ireland and the main feasibility study is done in the UK.
Secondly, how does NIVEA choose to launch a new product in a foreign country ?
When NIVEA wants to launch new products in a foreign country, they are often products which currently exist in the NIVEA product portfolio, that have already been launched in other countries and are considered as "suitable" for introduction to other markets, with maybe some modifications to do to meet local consumers' needs.
NIVEA collects as much information as possible about the segment it wants to target (e.g. the Spanish males) and produces a product that will attract this target. Then, it does a feasibility study, develops a prototype if the feasibility study is positive, and implements a test marketing (based on observation and discussion with the targeted consumers) before beginning mass production. If this test is positive, the marketing team can launch the product into its own local market, has to create a financial plan and communication strategy for its local market.
Now, we will look closer at the way NIVEA promotes its products.
Beiersdorf has its own marketing approach, its own style of advertising, totally different from L'Oreal's marketing approach, for instance.
The group thinks globally but acts locally also in its way of advertising. Indeed, the local subsidiaries can adapt the promotion means to the country, but they have to respect some general international guiding lines, some codes that enable consumers to identify the brand NIVEA. For example, they have to use soft colours for their advertising supports, the models on the picture must be an "unknown" model, not a famous actress or singer, so that consumers can identify themselves with this model (contrary to L'Oreal's philosophy); the colour blue must be present in order to remind people the traditional NIVEA Crï¿½me famous all around the world, etc... Generally, the model present on the advertisement for one category is the same in all countries (for example, the model that represents NIVEA Beautï¿½ products is the same in France, in the USA, in Germany, etc...) except in Asian countries : in Japan, the models on the advertisements are Asiatic people, so that consumers can really identify themselves with the models.
Moreover, it seems that NIVEA uses the same commercials in Europe : for instance, the TV commercial for one product of NIVEA Deodorant was the same in France, as in the Netherlands, as in Hungary; some weeks ago, NIVEA Visage launched a new product, "crï¿½me d'ï¿½nergie" and the same poster was used on the bus stops in both France and in the Netherlands, at the same time (of course, the language was adapted). NIVEA uses the same advertising support for countries that are close to each other, from a cultural, social point of view.
But, on the other hand, the different subsidiaries can implement a local promotional strategy to meet local specificities, especially for the sales promotion. For instance, they can offer samples in magazines or in shops, they are free to create original gifts offered when consumers purchase a certain product (manicure sets, necklaces, etc...).
In conclusion, NIVEA advertising strategy is a mix of global directives and local specificities, and it is loyal Beiersdorf's philosophy : thinking globally but acting locally.
To end with NIVEA, we would like to present some results which show how successful is the strategy used by this brand all around the world.
NIVEA has increased the number of international markets where it is the market leader and it has become the world's largest skin and personal care brand (with an amount of total sales of 2.5 billion Euros in 2002). The brand's sales have increased by 17% and the growth is especially strong for some categories (NIVEA Hair care, NIVEA for Men, NIVEA Beautï¿½ and NIVEA Deodorant) as well as in Eastern Europe.
As far as the skin care sector is concerned, NIVEA has the leadership in Australia and in Turkey for the first time in 2002. NIVEA Deodorant became leader of the market for the first time in 2002 in Bulgaria, Poland, Portugal and Turkey; and so on with the other categories.