Companies & Industries

The Issue: How P&G Brought Back Herbal Essences


It updated a stale mass-market shampoo to appeal to younger Gen Y and Millennial women

When Procter & Gamble acquired hair-care company Clairol in 2001, it inherited a floundering shampoo brand. By 2004, Herbal Essences, at the time nearly 35 years old and a mass-market hair-care brand for women, was in a "long-term decline," reports Chairman and CEO A.G. Lafley. Marketed to all women (or at least those who wash their hair), the line had gone stale, with little distinction from the many competitors it shared on the drugstore shelf.

By 2006, Lafley and P&G's beauty business chief, Susan Arnold, knew something had to be done with the tired brand. "We had three choices," Lafley says. "Abandon it, divest it, or frankly, reinvent it and resuscitate it." Arnold chose the third, putting together a small interdisciplinary team of R&D, marketing, and design managers to help revive the hair-care line.

At first, it wasn't clear what could be done to give Herbal Essences back some shine. "It turned out the brand around the market had just grown older, and it was a broader 'every woman' target," Lafley says. "We thought the target group was interested in natural and herbal ingredients, and we took that a little too literally."

Jump-Starting Innovation

To find the right new, smaller target market for the brand, Arnold and her team turned to Clay Street, an immersion program for P&G managers to jump-start innovation. There, the team came up with a new target audience for the brand—Generation Y. "In the case of Gen Y, there really wasn't another hair-care brand that was really meeting their needs," says Lafley. "The question was: 'Can Herbal do it?'"

Arnold's team bet yes. They redesigned the packaging of the product to "fit" this more tailored market: The shampoo and conditioner bottles are curved so that they literally fit together on the shelf. The nesting shape not only helped Herbal Essences stand out from others on the shelf but also encouraged more young women to buy both products, driving up conditioner sales.

To appeal to Millennials, the team also updated the language on the packaging. The ho-hum "dandruff" reference gave way to "no flaking away." Names for different hair styles were changed to more youthful phrases such as "totally twisted" or "drama clean." "We totally reframed the proposition," says Lafley. While P&G doesn't break out sales figures on specific products, the company reported in a conference call soon after the shampoo was relaunched that the brand was growing again, with sales growth rates in the high single digits.

P&G made Herbal Essences more relaxed and more quirky, all in the language of young women

Procter & Gamble is one of the biggest, most powerful companies in the world, and it really wrote the book on how to market, develop, and innovate in the whole area of fast-moving consumer goods. It's a company watched by marketers and retailers far and wide. But every day, it's faced with change—markets changing, consumer habits changing, and indeed the whole way people buy changing. What's important in retail today could be redundant tomorrow. What's important in the shampoo market today could be irrelevant by the end of next week.

Herbal Essences is a classic example of a brand established around the notion of being a little more natural, amid a range of products seen to be highly chemical. Its consumers had grown older and more affluent, and had started to migrate to more expensive products.

So what should P&G do? It comes down to: innovate or die. The questions for P&G become "What is innovation?" and "How far should I go?" Is it about breathing new life into a shampoo or conditioner brand, or is it about finding a whole new way of creating a franchise around a brand like Herbal Essences?

What do I mean by that? I think if you put every single innovation in every single market sector around the world onto a spectrum from evolution to revolution, you can fit everything on it, from the personal computer to the motor car to the wheel. So P&G first of all had to consider what its opportunity was and what its brand is, what its relationship with customers is, and how to think about developing it.

Evolutionary Step Forward

The route chosen is to give Herbal Essences an evolutionary step forward. One of the things P&G does absolutely brilliantly—it's a company hallmark—is to start with the customer, to understand the customer's relationship with that category, its products, and the way they're purchased. It understands how products are used, how they appear in the store, and what those products mean to customers' lives and their psyche.

The first thing the Herbal Essences team discovered was that they needed to reset the "who," as P&G would call the target consumer, to be Generation Y. That then sends you off in a clear direction. As a result, Herbal Essences is going to change the way it speaks to its customers. It's going to change the way it appears to customers, and it's going to change the way that it might position itself on the shelf compared to its competitors. It has to stand out and be clearly for that group of people—those women, those customers who want to feel they're part of that generation.

When you start from that point, it's clear how they ended up where they have. They looked very carefully at the form of the bottle, they understood that women like to buy shampoo and conditioner within the same [brand], and they've made that even more evident by making the bottles fit together on the shelf. They've thought carefully about the kind of person they're speaking to. They've used tone of voice, as we would call it, brilliantly. The way the products are named, the little things that are written on the back of the bottle—it's very quirky, very relaxed.

What they could have done was turned the whole thing on its head. They could have actually said Herbal Essences the brand might be our equivalent of The Body Shop. So then, this is no longer just about shampoo or conditioner. It's actually about a franchise. It's about a way of buying, a way of living your life. It could be as much to do with a retail experience as it is about the next time you wash your hair.

One of my observations would be that with every single evolutionary or revolutionary innovation process, it never stops. You're always looking at the next step forward. I suspect the team working on this would learn certain things are working harder, and perhaps the shelf standout could be slightly higher. Perhaps that notion of putting the bottles together could have worked a little harder. Perhaps their branding needs to stand out a little more powerfully. But overall, Herbal Essences is a great example of breathing new life into a brand.

McGregor is BusinessWeek's management editor.

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