Mobile-focused millennials create new challenges to the dominance of established personal care brands
L’Oréal Paris remains the most valuable personal care brand in the 2016 BrandZTM Top 100 Most Valuable Global Brands ranking, released today by WPP and Millward Brown, with a 1% rise in value to $23.5 billion.
The company has retained its leadership position on the back of new products such as Infallible Matte foundation by L’Oréal Paris as well as a new platform, Makeup Designer/Paris (http://www.loreal-paris.co.uk/make-up), and an app Makeup Genius (http://www.loreal-paris.co.uk/make-up/makeup-genius). It has also successfully made the move to digital, with a quarter of marketing spend now on online.
Colgate climbed one position to no.2 with a 2% rise to an $18.3 billion valuation, helped by rising market share in both toothpaste and manual toothbrush sales in North America and Latin America.
Despite these successes, however, the established personal care brands face a tough battle to retain their scale with the total value of the Top 15 remaining static in 2016 compared with the previous year.
Three key challenges have emerged to disrupt the status quo: the ability of smaller niche brands to use e-commerce to drive distribution scale, the power of mobile access to give millennials rapid access to new brands, and the shift of traditional female focused brands into the male space.
Although the smaller challenger brands have yet to appear in the Top 15 personal care listing, e-commerce platforms are giving them massive reach, wider distribution and greater appeal than ever before.
Half of the personal care sales on Amazon are from smaller brands and subscription services such as Birchbox and Beauty Box are also using e-commerce as a means to pioneer new forms of personal care.
All brands, whatever their size, have also had to adapt to a more concerned consumer, one who worries about what they put on their skin. A major trend for 2016 has been the move to become much more transparent about the ingredients they use.
“Big legacy brands have a unique opportunity to hit back at younger rivals and retain their relevance for the new consumers coming into the personal care market,” said Doreen Wang, Global Head of BrandZ. “They have the scale and resources to develop easier mobile based purchasing solutions but they need to combine this with greater differentiation, catering to the specific needs of the widest possible range of consumers.”
Two success stories from this year’s listing are new entrants Pantene Pro-V at no.11, with a valuation of $3.9bn, and Shiseido, with a valuation of $2.4bn.
Pantene’s recent "Strong is Beautiful" campaign, designed to help girls and women to build their confidence, has been a particularly powerful, while the Japanese company has focused on a premium strategy with products such as Maquillage and Elixir Superieur offering a highly differentiated range that appeals to all consumers.
Summary of the main global stories
· Google is the world’s most valuable brand. Continual innovation, increased revenue from advertising, and growth in its cloud business helped to boost its brand value 32% to $229.2 billion. Apple has moved into second place after its value dropped 8% to $228.5 billion.
· Disruption is a catalyst for value growth. The categories that increased in value were all either shaken up by challenger brands founded on a unique and meaningful proposition, such as Under Armour and Victoria’s Secret in the apparel category (+14%), or innovated to a high degree in response to a new trend, such as the brands in the fast food category (+11%) which successfully responded to global demand for healthier products.
· Innovation is the main growth driver – but it must be seen and felt by consumers. The brands that are the strongest innovators have increased their value the most over the 11 years of BrandZ Top 100 rankings. However, to have an impact on brand value, innovation must be clearly communicated and delivered through the brand experience: the brands that are perceived as innovative by consumers – which include Disney (no.19) and Pampers (no.37) – grew nine times faster than those seen as less innovative.
· Strong emotional connections are boosting local brands. With a clear understanding of their consumers’ needs, local brands are gaining market share at home and, with improved functionality and marketing, are also winning share in new regions. China’s Huawei (no.50, +22%), for example, has rapidly globalised and taken market share from both Apple and Samsung.
· Apparel is the fastest growing category, rising 14% to $114bn. There is an emphasis on high performance, with brands including Nike (+26%) and Under Armour (a new entry) launching specialist premium lines, incorporating technology such as heart monitors into their clothing, and integrating sportswear with free apps to provide a total consumer experience.
NOTES TO EDITORS:
The full global and personal care ranking is available from www.millwardbrown.com/brandz
About the BrandZ™ Top 100 Most Valuable Global Brands Ranking
Carried out by WPP's marketing and brand consultancy Millward Brown, the BrandZ™ Top 100 Most Valuable Global Brands ranking is now in its eleventh year. It is the only study to combine measures of brand equity based on interviews with over three million consumers globally about thousands of global ‘consumer facing’ and business-to-business brands with a rigorous analysis of the financial and business performance of each company (using data from Bloomberg and Kantar Worldpanel) to separate the value that brand plays in driving business and shareholder value. Consumer perception of a brand is a key input in determining brand value because brands are a combination of business performance, product delivery, clarity of positioning, and leadership. The ranking takes into account regional variations since, even for truly global brands, measures of brand contribution might differ substantially across countries.
About Millward Brown
Millward Brown is a leading global research agency specializing in advertising effectiveness, strategic communication, media and brand equity research. Millward Brown helps clients grow great brands through comprehensive research-based qualitative and quantitative solutions. Specialist global practices include a leading Digital practice (focused on digital effectiveness), Firefly Millward Brown (a global qualitative network), a Neuroscience Practice (using neuroscience to optimize the value of traditional research techniques), and Millward Brown Vermeer (a strategy consultancy helping companies maximize financial returns on brand and marketing investments). Millward Brown operates in more than 55 countries and is part of Kantar, WPP’s data investment management division. Learn more at www.millwardbrown.com.
WPP is the world’s largest communications services group with billings of US$73 billion and revenues of US$19 billion. Through its operating companies, the Group provides a comprehensive range of advertising and marketing services including advertising & media investment management; data investment management; public relations & public affairs; branding & identity; healthcare communications; direct, digital, promotion & relationship marketing and specialist communications. The company employs 194,000 people (including associates and investments) in over 3,000 offices across 112 countries. For more information, visit www.wpp.com. WPP was named Holding Company of the Year at the 2015 Cannes Lions International Festival of Creativity for the fifth year running. WPP was also named, for the fifth consecutive year, the World's Most Effective Holding Company in the 2016 Effie Effectiveness Index, which recognizes the effectiveness of marketing communications. In 2016 WPP was recognised by Warc 100 as the World’s Top Holding Company (second year running).