A Discussion of the Merits of House &‘House of Brands’ Strategies

May 24, 2007

The Brand Architecture & Portfolio Structuring of Clairol

The House that Babe Built…

“The way a team plays determines it success. You may have the greatest bunch of individualstars in the world, but if they don’t play together, the club won’t be worth a dime.”

Babe Ruth

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Objective of Discussion

To determine what is the role of Clairol with regard to the individual brands within itsportfolio, essentially the four brands that are its core - NNE, Natural Instincts,Herbal Essences, and Hydrience.

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Background and Contextual Relevance

A corporate focus on creating a mega brand with the hair colorant portfolio, mostnotably NNE, and now Natural Instincts (Hopscotch), allows our brands to extend itofferings.

The focus of our communications has been on the individual brands themselves,especially NNE and Natural Instincts, and therefore not intentionally building Clairol(House).

Herbal Essences is intending to become a mega brand by merging color with hair care.

2006 equity scan results demonstrate that there is potential for Clairol Clairol and L’Oreal both stand for “expert” in hair color as well as “industry leader”

Clairol represents more functionality than beauty - ‘a company with hair colorheritage’, and ‘providing helpful advice in hair color’.

L’Oreal is more strongly associated with ‘expert in beauty’, ‘make you feelglamorous’, and ‘in tune with today’s woman’.

Strategically since the acquisition Clairol has simply been considered a signature.

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Two Difficult Questions we must Answer

The question is what should the relationship be between Clairol and its individualbrands and the brands with respect to Clairol?

How should these relationships be expressed in communications and messaging?

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Brand Relationships within a Portfolio

There are three generic relationships between a master brand a sub-brand:

Single Brand Across an OrganizationThese brands use a single name across all their activities and this name is howthey are known to all their stakeholders – consumers, employees, shareholders, etal.

House (Endorsed) BrandsThe endorsement of a parent brand can add credibility to the endorsed brand inthe eyes of consumers. This strategy allows companies who operate in manycategories to differentiate their different product groups’ positioning.

House of BrandsThe individual sub-brands are offered to consumers, and the parent brand getslittle or no prominence. Other stakeholders, like shareholders or partners, know thecompany by its parent brand

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Brand Relationships Spectrum6

Brand Relationships Spectrum

Chanel

Kelloggʼs Chappʼs(RL/Polo)

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Client - Agency ExercisePlace each of the following in the appropriate box based on your understanding of the House and House of Brands relationships. 1) Clairol, 2) NNE, 3) GreySolutions (NNE), 4) Natural Instincts, 5) Herbal Essences, 6) L’Oreal 7) Excellence (L’Oreal), 8) Garnier, 9) Nutrisse (Garnier), 10) Revlon, 11) Color Silk (Revlon), 12)Colorist (Revlon).

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Questions to Consider What makes these “Parent” brands cohesive and complementary with their “offspring”?

What is the role of Parent to offspring and offspring to Parent, and what is the duration of this relationship? How does it evolveover time? Does the child eventually ‘end up’ supporting the parents?

How does Clairol relate to its individual brands? Actually, should the individual brands stand alone, distinct from Clairol?

If no, then what is the appropriate role for Clairol to fulfill?

If yes, what is the appropriate role for Clairol to fulfill? Current role simply leverages its historical and functional credibility and substance

If Clairol owns the equity of X (fill in) and our goal is to build future beauty credentials, what is it exactly we need to do? Current Clairol relevancy to beauty is anemic, keeping us in the functional world of hair color. Because the individual

brands (within the portfolio) have such strong personalities by themselves, it further fragments what our communicationand messaging is literally saying about Clairol. If current brand behavior continues Clairol might find itself not standingfor anything

What are the implications for how we treat the Clairol name ‘moving forward’, if our goal is to transition from functionally-drivento more beauty-driven?

Longer term, if the only expression of Clairol derives from four distinctively different brands, what are the implications for Clairol,and subsequently what does it stand for?

We’ve established “Surprising color genius for a more sparkling you”, what have done to bring this element to life in themarketplace?

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Ipsos: House Brand Equity 200610

Agency POV

Clairol must led the way, evolving to a beauty-lead portfolio from (functionally-led) haircolorant portfolio.

If we continue to use Clairol simply as a signature two things are evident if notimminent: Clairol’s current equity will become diffused, weakened, and marginalized. The individual brands will become greater than Clairol itself

Clairol isn’t informing the individual brands nor are the individual brandsinforming Clairol. Erosion or inertia is probable if alignment is not achieved asClairol and/or the individual brands expand further into other areas of beautyexpertise

We can actively build the Clairol brand equity by either… Reinforcing what it represents and stands for currently or… Reconstruct the equity to be future-proof and extend into beauty

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Recommendation(s)

Actively build the beauty credentials of Clairol as the Parent, so it can be the powerfulengine driving the individual brands.

The individual brands must also adhere to a higher beauty standard, becoming morebeauty-focused and relevant to new and existing users. Such a strategy will strengthenthe overall portfolio - relationship between Parent and offspring - thus making the wholegreater than the individual brands.

By strategically aligning and associating Clairol with culturally relevant and beauty/fashioninitiatives, the entire Portfolio will benefit from a more modern positioning. 7th on Sixth Annual televised award shows and programming (e.g. Red carpet events) Sponsorship of beauty-focused publishing/books (e.g. “Confessions of a Beauty Editor”) Underwriting grants and scholarships for ‘up and coming’ at top tier design and fashion

institutions (e.g. FIT, Pratt, etc.) Alliance with notable fashion designers to create unique color palettes Investment in Clairol specific brand communications and messaging Development of original programming in partnership with credible beauty authorities

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Appendix: Gillette Master brand

“The way a team plays determines it success. You may have the greatest bunch of individualstars in the world, but if they don’t play together, the club won’t be worth a dime.”

Babe Ruth

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