PHYSIQUE FLEXES ITS MARKET MUSCLE
Byline: Julie Naughton
NEW YORK — Four months ago, Procter & Gamble set out to prove that price is no object when it comes to hair care as it unleashed its unusually pricy Physique product line.
Was it right? Retailers and other industry executives answer with a qualified yes.
The industry has been keeping a close eye on the rollout — particularly because, at $7 to $10 per bottle, Physique hits considerably higher price points than other mass hair care brands. In effect, Physique was created to compete with salon brands by offering salon-style technologies to the mass market. It also offers educational brochures, in-store promotions and other services not often found with mass market hair care lines.
While consumers have for years willingly paid $10 and up for gray-market salon brands sold by drugstores, supermarkets and discounters, many industry sources questioned at the outset whether consumers would be willing to pay those prices for what they perceived as a mass market brand.
At least a half-dozen mass and drugstore retailers said Physique was meeting or beating expectations, although none would speak for the record. One major retailer commented, “It’s doing very solid business for us, and what’s more, it did so right out of the gate.” Others reported it was selling well and they expected it to continue to build market share. “It’s doing well, but it’s not beating the salon brands we carry,” said another retail executive. Industry sources said it seemed to be doing stronger business in discount and drugstore outlets than in food stores.
“From what I’ve heard, Physique has been successful so far, and it should begin to play an even larger role in P&G’s hair care story as they move through the year,” said Douglas Christopher, a retail analyst for Crowell, Weedon in Los Angeles. “P&G is great at establishing businesses so that they are still there 10 years down the road. Also, this line is focusing on a core business strength for P&G, which is hair care.”
Christopher added that nine of the 10 major retailers that carry Physique carry all 24 stockkeeping units, indicating its importance.
However, one retailer said it remained to be seen if the market would support all 24 sku’s — not to mention the three upcoming sku’s — indefinitely. “That’s a lot of sku’s to get behind,” said the retailer. “Some are doing much stronger business than others, and I think there may come a time when the line is winnowed a bit.” Another chain executive thought that the prices might eventually “soften” slightly. “They won’t go too low, but I could see a dollar or so coming off the suggested retail prices.”
Physique bore close watching from P&G execs for another reason: It was P&G’s first new hair care brand launch in 20 years. “In that time frame, we repackaged and reformulated several existing lines, including Pantene, but this is our first completely new hair care brand launch in 20 years,” said Jane Wildman, global general manager for Physique. “And it’s also been our most successful hair care introduction ever.”
In fact, she said, P&G is so strongly convinced of Physique’s success that it is adding more sku’s to the line this fall. Physique, which now has 24 sku’s, is currently divided into five hair-type-specific collections — Volumizing, Smooth & Contouring, Easy Styling, Intense Moisturizing and Color Bright — and one cleanse and styling collection. According to Wildman, the number-one performing regimen so far is Volumizing. A new collection, Spiral, is designed to tame frizz and will be launched in September.
Spiral will consist of four products. Three are new — Spiral Shampoo, Spiral Conditioner and Spiral Gel, all with suggested retails of $7. An existing fourth product, Spiral Cream, will be moved over from the cleanse and styling line. It retails for $9.
“As we were looking at style achievement, we saw that we had an opportunity to develop a line for curly hair,” said a spokeswoman for Procter & Gamble. “In general, consumers with curly hair — whether it’s naturally curly or chemically treated — are the least satisfied with their hair. We think that will change with the introduction of this line.”
The new collection is also designed to keep a promise made to those selling the line, Wildman said.”We’ve promised our retailers that we will continue to keep the line fresh, and we are really excited about evolving the line,” she said. “Style is not stagnant, and we do realize that.”
The line is currently in 60,000 mass market, drugstore and food store doors. “We’re delighted with the retail response,” said Wildman. “We’re definitely on track for prelaunch estimates.” While she wouldn’t comment on what those estimates were, industry sources said prelaunch that the collection would do more than $200 million in its first year.
Sales to date are estimated to have topped $50 million. Wildman wouldn’t comment on the numbers, but said, “Physique has had an unprecedented sell-in. We’re off to a great start.” Wildman said she thought that was because Physique “flips the traditional hair care concept on its head.
“Instead of asking consumers what their hair problem is, we ask them what they want their hair to do,” said Wildman. “It’s a different approach.”
Market recognition hasn’t come cheap, however: Sources estimated Physique had a $110 million advertising budget for its first year, which includes extensive network TV and print ads in major consumer magazines. Wildman wouldn’t comment on the money spent on the advertising campaign, but did say the intensive efforts would continue. “We are definitely planning to continue to support this brand very strongly with a very education-based campaign,” she said. “We will continue a broad-based advertising effort, with an increased emphasis on Internet marketing. We’ll also do more television advertising.”
One of the Internet efforts is Club Physique, which invites consumers to receive free samples and updates on the brand. According to Wildman, more than 500,000 consumers have signed up for the club. The Web site also allows consumers to enter their zip codes and learn which retailers in their area carry the brand — a list that includes Kmart, Target, Walgreens, CVS and Eckerd.
“A key factor behind the success of the rollout thus far has been the support of retail partners,” said Wildman. “They’ve really jumped on the bandwagon, using our shelf modules, handing out the educational components and promoting the brand,” she said. Physique products are merchandised together in a display fixture area called the Style Zone — a switch from most mass market hair care lines, which are usually broken down by product type in mass marketers’ planograms.
Wildman noted that Physique had been on the drawing board for “a few” years — it began appearing in test markets in 1998 — and the time gave P&G valuable insight into consumer desires.
In fact, after test-marketing the line in Wichita, Kan., and Little Rock, Ark., P&G tweaked the products before their January 2000 rollout, said Wildman.
“We took all of that learning and ended up going national with a slightly different plan than we’d originally intended,” she said. “Specifically, we ended up refining our education and our point-of-sale educational materials. Not only did it strengthen the brand’s presentation, we were able to present what we’d learned to our retail partners to show that we’d done our research. You simply cannot place a higher price tag on a product if the performance isn’t there.”