NEW YORK — Physicians Formula has written the right prescription.

Retailers nearly pulled the plug on the once-ailing beauty line only four years ago, when space was needed to let the then-new Olay and Neutrogena color lines in. History shows that anything can happen. Neutrogena has secured a questionable niche and Olay has been discontinued, while the least likely to succeed of the three, Physicians Formula, has been growing at double digits for the past three years.

For the 52 weeks ended May 18, retail sales were up 34 percent to about $40 million, excluding Wal-Mart, according to Information Resources Inc. The sales gains come at a time when the total mass cosmetics market is weak, logging increases in the low-single digits. And the company’s sales team, led by Jeff Rogers, has been seizing the opportunity, asking retailers to expand its space allocation to foster more growth. From drugstores, Physicians Formula is angling for a four-foot slot and at mass merchants, six feet.

The recent sales figures don’t reflect the July addition of Rite Aid stores to its distribution, which brings it up to some 20,000 doors.

Physicians’ good fortunes have been derived through a combination of factors: new products, a new TV campaign and a refreshed store display that was unveiled earlier this year.

“We are very lucky to be growing,” said Ingrid Jackel, vice president marketing, the brand’s chief creative force, who noted that the unstable economic climate has made it even tougher to succeed in the already highly competitive cosmetics market. But, she observes, it can be done, “if you have the right product offer, the right positioning and the right price.”

But as Physicians Formula becomes visible on the radar screen, other marketers are starting to take notice, and some me-too items have been cropping up in competitors’ lines. Five years ago, with its core in concealers and color correctors, the Physicians Formula was too uninteresting to be copied. However, it is now a favorite of retailers at the annual National Association of Chain Drug Stores Marketplace meeting where the brand is one of a handful from which they expect to see something new each year.This spring, the brand’s Retro Glow collection made its debut. The group of colorful powders, eye shadows, blushes and mascara and eyeliners were inspired by the 66-year-old brand’s early packaging, which Jackel unearthed while rummaging through old company closets. The concept, which has been a hit, will be expanded in spring 2004 with new illuminating face powders. Meanwhile, the brand’s Pearls of Perfection items continue to be among its best sellers.

Still, Physicians has remained loyal to its basic business of concealers and correctors and has continued to innovate in what is typically a bland segment. Next spring it will unveil Magic Cubes, concealers in clear Lucite blocks.

The brand also possesses a leading market share in the bronzer segment and hopes to further develop that business with the addition of baked eye shadows and baked bronzers, next spring. Also coming is Star Perfection, a shimmery face powder with a laser image of Marilyn Monroe.

In its first TV campaign ever, which made its debut in February and runs through November, Physicians Formula departed from the standard product-model formula, from which most beauty brands are fearful to break. Instead, it took the consumer to the drugstore wall. In the spots, created by Looney Advertising of New Jersey, a young woman is shown shopping in a drugstore beauty department. “We took a very different approach, instead of fast music and a top model; we just wanted something much more pragmatic and unique,” said Jackel. “To make sure we were sending people to drugstores, we shot a drugstore ad.” The campaign will be continued next year, either with the same spot, or with a tweaked version of the original.

The brand has not yet dabbled in nail polish and has only offered lip products on a very limited basis. The emphasis remains on face and skin care, and is expected to continue in that vein for the foreseeable future. Physicians is also sticking with a premium positioning for mass, keeping its price points in a range of $10.95 to $12.95 for face powders and foundations; concealers, from $5.95 to $6.95; and eye makeup items from $5.95 to $6.95. Although for fall, there will be increased emphasis on value-oriented promotions, including gift with purchase and buy-one-get-one events.To synchronize a message across its segments, it has also introduced a brand slogan: “Your Eyes Won’t Believe Your Face,” which is used in advertising, packaging and in-store displays. “We can’t believe our eyes when we see our IRI data,” quipped Jackel. “It is very exciting.”

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