The Homa Files

Excerpted from AdAge “Small Brands Could be J&J’s Next Big Thing ” by Jack Neff, October 6, 2008

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Selling big, heavily extended brands at large retailers has been a cornerstone of success for the personal-care marketers for most of the decade. But as that business model shows signs of fraying, $61 billion Johnson & Johnson increasingly is trying something a lot more entrepreneurial.

In the past year, J&J has quietly ramped up a major assault on direct-response skin-care powerhouse Proactiv with the SkinID brand. The Neutrogena subbrand offers customized acne-fighting and other skin-care products and is sold online…

Clearly, J&J has benefited from the big-brand, big-retailer model up to now. Information Resources Inc. data reported by Deutsche Bank shows the company gaining share in key categories such as acne products, facial moisturizers and cleansers in recent quarters. With global sales estimated by people familiar with the company at $2 billion to $2.5 billion, Neutrogena is neck and neck with other global megabrands, such as Procter & Gamble Co.’s Olay and Unilever’s Dove.

Yet both of those rival brands have slowed within the past year and begun losing share, at least in tracked U.S. channels. And even the biggest brand behemoth in mass, L’Oréal…has begun losing share in cosmetics and hair colorants in the past year…to smaller P&G brands Cover Girl and Clairol…

Should the same fate befall Neutrogena, at least J&J has skin in another game. J&J launched SkinID by “Neutrogena Dermatologics” on a limited basis in April, then ramped up spending behind infomercials featuring former “American Idol” contestant Katharine McPhee starting in May…

As with Proactiv, the products are customized assortments available only by phone or online, but Neutrogena ads bill SkinID products as “twice as effective as Proactiv.” The tack appears to be working, with traffic to skinid.com running at around half the level of traffic to proactive.com after only a few months of all-out effort by J&J…

“We’re revolutionizing skin care through questions to our consumers,” said Cal Schmidt, VP-sales and marketing for J&J unit McNeil Nutritionals, referring to the early stages of SkinID in a talk at an Advertising Research Foundation forum in April. “We are offering our customers specific products tailored to them… And then you have this ongoing dialogue.”

Not to mention ongoing sales. What likely makes the proposition most attractive to Neutrogena is automatic replenishment, which keeps consumers buying and prevents the switching common at a retail shelf…

Edit by SAC

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The SkinID brand isn’t J&J’s first attempt at skin-care products for specific skin types.  The company has had success with another smaller brand, Ambi, since it acquired the brand in 2004.  The Ambi brand includes skin-clearing and skin-tone evening products to specifically meet the needs of African, Asian and Latin woman.  As with SkinID.com, the product website, ambi.com also provides skin care advice for consumers and helps them find the product to best meet their skin-care needs.

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Full article:
http://adage.com/article?article_id=131485

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