Henkel's Persil Branding Strategy

Essay, Pages 14 (3497 words)

Views

506

BACKGROUND

Henkel, a multinational company founded in Germany in 1876, is a leading firm with international recognition and is ranked among the Fortune Global 500. The organization produces many leading products and brands such as Persil, Schwarzkopf, Loctite, Pritt, Sellotape and Right Guard. It operates in three business areas: Laundry & Home Care, Cosmetics/Toiletries and Adhesive Technologies. As shown in Figure 1. (see Appendix), Adhesive Technologies represent 48% of total sales, followed by Laundry & Home Care with 29% and Cosmetics/Toiletries at 22%. In 2010, Henkel achieved annual sales of €15,092 million and a net income of €1,143 million.

Don't use plagiarized sources. Get your custom essay on

“ Henkel’s Persil Branding Strategy ”

Get custom paper

NEW! smart matching with writer

The company operates in over 125 countries across five continents. Henkel has a workforce of more than 48,000 employees, with 80% located outside of Germany. Figure 2. (see Appendix) shows that the majority of sales are in Growth regions (41%), followed by Western Europe (36%) and Northern America (18%) (Henkel 2011). Henkel serves both industries and households, creating customized campaigns for organizations like laundries, hospitals, and parlors, as well as targeting individual households.

Henkel (2011) states that a significant portion of their cosmetic products, laundry and home care products, and consumer adhesives are tailored for women.

The company's strategy centers around three key priorities: maximizing business potential, prioritizing customers, and strengthening the global team. The primary goal of this strategy is to improve competitiveness and foster a sustainable winning culture (Henkel 2011).

Persil, a renowned brand of Henkel, was initially introduced in 1907 as the revolutionary "self-activated" laundry detergent. It quickly gained popularity and established itself as the leading brand in Germany. Currently, Henkel distributes Persil products across multiple countries including Germany, France, Spain, Mexico, and China.

Moreover, Persil is recognized by various local names in these regions: LeChat in France, Dixan in Greece, Italy, and Cyprus; and Wipp in Spain and China.

Two main factors contributed to the success of Persil. Firstly, it was the first brand to revolutionize the detergent market, setting it apart from its competitors. Secondly, Persil's unique product presentation and packaging resonated with European consumers, creating a sense of identification. These key advantages have resulted in a large and devoted customer base across various countries where Persil is available. This essay will examine Henkel's strategy for the Persil brand and offer recommendations.

2. Branding Strategies

When developing a marketing strategy, brand strategies play a vital role. These strategies encompass three essential elements: brand reach, brand positioning, and brand architecture (Homburg, Kuester, and Krohmer 2009, p.141). Brand reach pertains to the geographical and vertical coverage of a company's brand. Brand positioning involves establishing a distinct position for the company's brand in customers' minds. Lastly, brand architecture focuses on the organization and connections between brands within the company.

The brand's reach has two components: geographical and vertical. Geographical reach pertains to the extent to which the brand covers an area, and Henkel's brand redesign will encompass all countries in which they sell. Vertical reach, on the other hand, addresses the brand's use throughout the value chain. There are two possible approaches to vertical reach: ingredient branding and processing branding.

Ingredient branding refers to the utilization of brand materials across the entire value chain, such as Intel processors being used in various computer brands. Conversely, processing branding occurs when the brand is not visible during or at the end of the production process. A prime instance of this phenomenon is observed while purchasing a car, where buyers are aware of the car brand itself but remain unaware of the airbag manufacturer. (Homburg, Kuester, and Krohmer 2009, p.142)

Brand positioning is an important component of brand strategy, comprising of three parts for analysis. The first part is the brand core, which represents the company's identity and mission statement. In the case of Persil, their brand core is focused on being the pioneer of first active-agents in the detergent market.

The second part of the brand-positioning model is brand benefits, which outlines the advantages and offerings of the product brand to its customers. Persil's laundry detergents provide the general public with a convenient solution for washing clothes and a wide range of product options. Consequently, this leads to an enhanced quality of life.

Trustworthiness, authenticity, reliability, and resilience are among the traits that fit Persil's brand personality and are integrated within the overall brand personality. The brand image is the impression of the brand's total personality in the customer's mind. A closer alignment between the brand image and brand personality leads to greater brand success (Homburg, Kuester, and Krohmer 2009, p.143). Figure 3 in the Appendix illustrates this concept.

When analyzing brand positioning, it is important to consider the relationship with competitors' brands. There are two types of positioning in branding: differentiation and similarity positioning. Differentiation involves placing your brand in a unique area that distinguishes it from others in the market. On the other hand, similarity positioning involves placing your brand in a similar area as existing brands. To highlight similarities and differences, a product map can be utilized. In the laundry detergent market, Persil chose to differentiate itself by being the first to introduce active-agent detergents.

Brand architecture is the final component of brand strategy and focuses on the organization and connections between all brands within a company. It highlights the overall structural choices for a company's collection of brands rather than individual brand decisions. When considering brand architecture, there are three branding strategies to think about: single branding strategy, single umbrella branding strategy, and multiple umbrella branding strategy (Homburg, Kuester, and Krohmer 2009, p.145).

The single branding strategy involves assigning unique brand names to each product within a company. For example, Henkel markets its products like Persil under distinct brand names instead of using the overall Henkel company brand. Conversely, single umbrella branding entails utilizing one brand for all products or services. Multiple umbrella branding combines elements of both strategies.

Henkel is unique in its ability to effectively maintain the distinctiveness of various brand names, unlike other companies. A prime example of this is Persil, a laundry detergent brand that Henkel has successfully promoted as an independent entity for over a century. It would not be wise to alter the names of Henkel brands like Persil due to potential negative consequences for the company. Customers have become accustomed to these distinctive brand names and may not respond favorably to a transition to unfamiliar ones.

The product mix consists of three main components:

Adapting products is essential for organizations to stay competitive and meet customer needs in a dynamic market. The product mix plays a vital role in maximizing an organization's potential, encompassing the full range of products offered at a specific time (Homburg, Kuester, and Krohmer 2009, p.133). Expanding the product mix and achieving an optimal portfolio can be achieved through three main methods: product variation, product differentiation, and diversification (Homburg, Kuester, and Krohmer 2009, p.134).

Product variations refer to modifications made to an existing product on the market while maintaining its core functions (Homburg, Kuester, and Krohmer 2009, p.134). These modifications can be implemented in various ways but commonly involve altering the aesthetic properties (such as shape and color), physical-functional properties (such as quality and material), or symbolic properties (such as brand image and name) of the product. It is important to note that product variation involves changing an already existing product rather than creating a completely new one. Examples of product variations include giving a car a new "face lift" design or developing a new packaging design for a product.

Product differentiation, as defined by Homburg, Kuester, and Krohmer (2009, p.135), involves an organization introducing new product variants to an existing product. This strategy allows the organization to gain a competitive advantage by distinguishing its product from competitors.

Homburg, Kuester, and Krohmer (2009, p.72) state that organizations have two options to differentiate their products: emphasizing superior product quality or developing stronger customer relationships. Product differentiation involves offering the original product alongside modified versions that are no longer available in the market. MasterCard demonstrates product differentiation by providing a wide range of payment solutions.

Diversification, as defined by Homburg, Kuester, and Krohmer (2009, p.136), is the incorporation of products into an organization's product mix that are not directly related to its existing portfolio. The goal of diversification is to enhance profitability by generating higher sales volume through the introduction of new products in new markets (Homburg, Kuester, and Krohmer 2009, p.76). Despite being a potentially risky strategy, diversification also offers significant opportunities. McDonald's successful implementation of its "McCafe" concept serves as a prime example of a prosperous diversification move.

Henkel, at its beginnings in 1907, employed a strategy of product differentiation. The company successfully brought a new and innovative laundry detergent formula to the market, becoming pioneers in this category. By implementing this superior formula, Henkel was able to gain a competitive edge and differentiate its brand from competitors.

Henkel stands out in the market with its extensive range of products. The company is the top provider of laundry detergent, catering to a diverse customer base. Their product offerings are designed for various washing categories, including low temperature washing, premium market washing, detergents for allergenic individuals, and environmentally friendly washing.

Henkel introduced a new product called Somet in 1962, which focused on washing dishes instead of clothes. This diversification by the company proved to be successful, as it integrated a dishwashing detergent into its product mix and entered a new market. This move resulted in increased profits through higher sales volume.

In recent years, Henkel has shifted its strategy for product offerings to place more importance on product variation techniques. The company acknowledges the necessity of adapting existing products to remain competitive in the current dynamic market. A notable example of product variation is seen in Henkel's ability to modify the visual packaging of their laundry detergent products. Over time, Henkel has made multiple successful changes to the design of their detergent packages. Recognizing the significance of presentation for potential customers, Henkel places a strong emphasis on this aspect.

4. ALTERNATIVE APPROACHES

Henkel aimed to assure customers that Persil remains just as effective as other laundry detergents on the market. To achieve this, Henkel implemented changes in its product decisions through product variation. The company introduced new concepts for its existing products by enhancing formulations and creating a clearer differentiation among different product categories to attract new customers. Henkel conducted pre-tests to assess customer feedback, revamped its website, and executed promotional activities like the Persil Future Ship tour, which traveled across 18 German cities to showcase the new campaign. Additionally, Henkel made a €1,000,000 contribution to the Project Futurino initiative.

Henkel had multiple options to enforce its new strategy. In terms of product decisions, Henkel could have expanded its product mix through product differentiation or diversification, as mentioned earlier. These methods have been employed by Henkel in the past and could be utilized again. Additionally, Henkel could have pursued synergies, decreased its product range, or focused on brand management activities.

When considering the establishment of synergies, Henkel had two options to consider: product bundling and product platforms. Product bundling involves selling multiple separate products together as a bundle for a single price. This approach can encourage cross-selling and lower costs. For Persil, this could have been a beneficial strategy as many customers may buy multiple products. However, because individual customers have different needs and preferences, extensive research would have been needed to determine the best bundles that cater to a wide range of consumers. Moreover, customers may not use the bundled products equally, which means they would still need to make individual purchases.

Instead of establishing product platforms, Henkel could have also considered the option of producing individual products using common standardized product components (Homburg, Keuster and Krohmer, 2009, p.137).

While implementing this approach may reduce expenses for Henkel and enhance the brand recognition of Persil products, it could also complicate the task of distinguishing between different Persil products for customers. To ensure success, Persil would need to ensure that their products remain easily distinguishable from one another. However, considering Persil's goal of achieving a clearer differentiation among their diverse product groups, pursuing this strategy may not be advisable.

Henkel could have considered product elimination as a means of demonstrating its commitment to quality and effectiveness. By removing less popular products from the market, Henkel can show customers that it only offers the best. However, this strategy could also result in losing the customer base that relied on the eliminated products.

Henkel could have chosen to engage in brand activities as an alternative. This entails expanding into other product categories while maintaining the same brand name. This strategy can be highly successful if there is already brand loyalty, as is the case with Persil. According to Kotler et al. (2009), brands serve as a signal of quality, enabling satisfied customers to easily select the product or service again (p.428).

The fact that Readers Digest has voted Persil as the most trusted brand in its category for nine consecutive years demonstrates Henkel's strong customer relationship and brand loyalty. If Henkel had ventured into a completely different market, unrelated to laundry detergents and home care, it could have attracted a new segment of the market. This expansion could have resulted in an overall increase in profits for the company. Additionally, Persil's extensive experience in the market means they already possess a significant amount of consumer information. This advantage puts them in a favorable position against new competitors, potentially leading to great success.

Henkel could have explored other areas for improvement including pricing decisions, communication decisions, and sales decisions. They could have considered lowering prices, revamping communication methods, or devising new sales strategies, such as introducing new distribution channels or launching a fresh advertising campaign to instill customer confidence in the effectiveness of the Persil brand.

Although all of these options have their own advantages and benefits for Henkel, we believe that focusing on product variation is the most suitable choice for the company's strategy. This choice helps to ensure customers that Persil is just as effective as any other laundry detergent available in the market.

5. PRODUCT INNOVATION In order for companies to survive in the long term, they must continuously develop new and successful products. This is especially important as the life cycle of many products is becoming shorter. Generating innovative ideas is the first step for companies, which can come from both internal and external sources.

According to Homburg, Kuester, and Krohmer (2009, p.115), company-internal sources of information include the input from employees in the R&D department, the field sales force, and customer service/service hotline. This input may also include employee complaints and suggestions. By utilizing this source of information, the organization can access more readily available information that considers the knowledge of existing products and resources.

On one hand, information from sources outside the company can come from customers, competitors, market innovation in other markets, technological developments, trends, market research institutes, business consultants, and advertising agencies (Homburg, Kuester, and Krohmer 2009, p.115). By gathering these external sources, the company can benefit from thinking "outside the box" and generate more creative ideas (company-external information sources tend to be more innovative). In particular, customers can be an invaluable source of information for product innovation.

Utilizing various creative methods can help generate fresh ideas for products. These methods foster and inspire creative thought by fostering collaboration, such as in cross-functional project teams. Examples of creativity methods include brainstorming, brainwriting, and the morphological box (Homburg, Kuester, and Krohmer 2009, p.116).

Our suggestion is for the company to utilize internal sources of information. By doing this, the company can take advantage of its extensive employee base, many of whom are also customers. Using internal sources can provide Henkel with more direct and cost-effective information. However, in order to prevent any biased perspectives, it is recommended that the company also hire an expert in the specific field to obtain an outside opinion.

6. Persil Pen

In 2007, Henkel was recognized by Lebensmittel Praxis for its innovation in creating Persil Megapearls with Anti-Gray formula, naming it the "most successful innovation" in its category and one of the top 10 most successful innovations in all food categories (Henkel 2011). Henkel is dedicated to continuously innovating new products to meet the ever-changing needs of consumers. Additionally, Henkel aims to prioritize the growing "Green movement" that has been prevalent in society for the past decade. In accordance with their mission, Henkel strives for each product to contribute to sustainable development while maintaining top performance and responsibility towards humans and the environment.

To expand on this concept, our team has devised an inventive product for Henkel called the "Persil Pen." This compact pen contains concentrated detergent designed specifically for tackling stains and spills on fabrics while on the move. The Persil Pen is designed to be portable enough to fit seamlessly in a briefcase or purse, providing a convenient and prompt solution to unexpected mishaps encountered in one's daily life.

The Persil Pen will initially target professionals in the workforce, providing a discreet solution to handle minor mishaps during the busy workday. It offers convenience and reliability to a hectic and unpredictable schedule. Once establishing a market presence, we aim to broaden our reach to other demographics, including students. An alternative approach could involve partnering with restaurants to offer complimentary access to the pen for diners, allowing them to experience the product firsthand and potentially make future purchases.

Our marketing strategy involves two approaches. Firstly, we aim to reach large companies by distributing the Persil Pen during meetings, office visits, trade fairs, and conventions. This will effectively place our new product directly into the hands of our target market. Additionally, we plan to boost product visibility by offering a complimentary pen with the purchase of our new detergent brand in stores. By doing so, we can introduce our new product to the existing customer base that already purchases Persil detergent.

The Persil Pen can be promoted and communicated to the public by highlighting the rebranding of the Persil Brand. With a fresh and modern look, the new packaging for their detergent will provide a perfect opportunity to introduce Persil Pens. This will generate curiosity among existing customers and pique interest in the overall Persil brand, thereby increasing market shares.

As Henkel is originally from Germany, the initial market for launching Persil Pen will be Germany. If the launch is successful, other countries will also have the opportunity to experience the Persil brand. During the development of this product, we believe that a lower price would attract a larger group of potential customers and raise awareness about its availability. However, it is important to maintain a price that is not too low to avoid giving the impression of selling a low-quality product. Once a significant number or percentage of target customers have adopted the new product, the price can be gradually adjusted to fall within Persil's mid-range pricing.

Once the product is launched and sold, Persil can create variations on the product concept in order to differentiate itself from competitors in the market. A similar approach has been taken by "Tide," a popular detergent company, which has successfully developed and produced a product of this nature in North America. With its established brand presence in Europe, Persil can aim to dominate the European market for this innovative product, leveraging the existing brand loyalty it has already generated.

Persil's aim is to make washing easier for customers and enhance their quality of life. The introduction of the Persil Pen eliminates the need to wash an entire work shirt for just a single stain. This not only facilitates the washing process for users but also aligns with Persil's eco-friendly campaign, as it reduces water wastage when cleaning lightly stained garments. By offering this new product, Persil expects to boost customer loyalty and subsequently increase sales volume.

Henkel's conclusion is that...

Henkel, a prominent company, operates in three primary sectors: Laundry & Home Care, Cosmetics/Toiletries, and Adhesive Technologies. It effectively promotes its products under distinct brand names, such as Persil, which possess a clear understanding of their brand's coverage, positioning, and structure. Henkel continuously grows its range of offerings through various strategies like product variation, differentiation, and diversification. The company relies on both external and internal sources of knowledge to obtain crucial information (Henkel 2011).

We propose that Henkel considers exploring different strategies like brand activities, although we still believe that product variation remains the most suitable option for their current strategy. Throughout its history, Henkel has excelled in the field of innovation, as illustrated by the pioneering formula of Persil in 1907. Thus, we believe that the Persil Pen has the potential to become a successful new product. Despite the challenging global economic conditions of recent times (Henkel 2011), Henkel continues to perform well. We have full confidence in Henkel's ability to establish a solid foundation for future company success.

LIST OF REFERENCES Henkel 2011 (accessed October 1, 2011), [available at http://www.henkel.com]. Homburg C., Kuester S. & Krohmer H. (2009), Marketing Management; A Contemporary Perspective. Berkshire: McGraw-Hill Education. Kavaratzis M. & Ashworth G.J. (2005), City branding: An effective Assertion of Identity or a Transitory marketing trick? 96 (5), pp. 506-514. Kotler P., Keller K.L., Brady M., Goodman M. & Hansen T. (2009), Marketing Management. Essex: Pearson Education Limited.