Professional Beauty in France

Vive la différence – Professional Beauty in France

professional beauty franceLa belle France, a country with a strong aesthetic tradition, widely admired for its taste in style, luxury, and beauty, and where those with an eye for professional primping à la Française continue to pamper themselves – albeit with notable moderation finds our research on professional skin care, beauty devices, and salon hair care markets in France.

When it comes to professional skin care, the discerning French bon vivant is right at home in the largest market, with France accounting for over 20% of skin care product sales in Europe. This figure has remained stable through 2012, save for incremental growth of 0.9%. Ongoing challenging market conditions have seen Guinot, the country’s largest professional skin care brand, which enjoys a loyal clientele, suffer a drop in sales. Conversely, Clarins and Sothys both experienced growth in this period.
France’s aging but vibrant population remains the most vigorous consumer market, with anti-aging products accounting for over 43% of take-home face care sales.

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From Cracks to Crankshafts: How the shale gas boom is shifting natural gas conversion and lubricant base stock manufacturing

From Cracks to Crankshafts: How the shale gas boom is shifting natural gas conversion and lubricant base stock manufacturing

art shale gasThe boom in shale gas resource acquisitions and development in North America over the past three years has brought a formerly niche play into the spotlight. Once primarily the province of under-capitalized independent producers who refined horizontal drilling and hydraulic fracturing technology to tap into the once-marginal tight gas reservoirs in Appalachia, the Central U.S. and Western Canada, the massive reserve has now sparked attention from the major industry players. ExxonMobil, through its acquisition of XTO Energy in 2010, other supermajors, and a host of gas-short Asian players have since taken positions in the U.S. and Canadian shale gas play, with total capital commitments exceeding $100 billion.

Some of the best success stories today are of companies that are aggressively pursuing ownable ways to grow their businesses in markets characterized by intense competition, if not spirited rivalries. For example:

While the long term strategic merits of this massive inflow of capital remain unclear, the short-term effects have been profound. The focus of North American natural gas production has shifted to developing shale gas resources at a frenetic pace, with U.S. shale gas output growing from 1.5 TCF in 2007 to 7.8 TCF in 2011, inflicting massive change on the landscape of the North American gas industry.

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Mastering the M&A Dance

Mastering the M&A Dance: How to Turn “No” Today into “Yes” Tomorrow

kmc handshakeThe M&A scene has become increasingly fickle. Evolving priorities, global market trends, and industry threats and opportunities can change on a dime, leaving growth-driven companies scrambling to align their strategy with the latest developments.

With companies accruing hordes of cash in the wake of the market crash, private equity continuing to raise more money, and companies scratching at every opportunity to gain a competitive advantage, most companies approach M&A candidates with an immediate need to strike a deal while the iron is hot.

Under intense pressure to meet aggressive growth objectives and lock up deals with the hottest prospects before their competitors do, most companies aim to expand their portfolio with new business that will accrete value now, or at least in the very near term within two to three years. If their offer is declined or rebuffed by a potential candidate, most quickly move on to find another target with high-growth potential. They simply do not have the time to continue the courtship, and most fail to revisit those prospects after some time has passed.

Few realize that this tendency to walk away and never look back is a fatal flaw. Assuming that “no” means “never” effectively slams the door on a potential future deal, and flies in the face of everything we know about the market. The fact is, things change—a stern “no” today could become “yes” tomorrow, given the right conditions. For example:

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Change and Uncertainty in the Global Lubricants Industry

Change and Uncertainty in the Global Lubricants Industry

kmc energy change mainFirst published in Petroleum Review April 2013 Licensed for print and electronic distribution to Kline Management Consulting and sites owned by Kline Management Consulting exclusively.

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In the global lubricants industry, 2012 can be defined as a year of change as well as a year of continued uncertainty, writes Geeta Agashe, Senior Vice President – Petroleum and Energy, Kline Management Consulting. 

In the past year, continuing financial turmoil – notably in the Euro Zone and the US, but not just confined to these regions – has had a significant impact on the performance of several industries (including construction, mining, primary and fabricated metals, transportation equipment and general machinery, on highway and marine transportation). There has also been a significant slowing down in the star economies as China, India, Brazil and Russia all see challenges to what is sometimes seen as inexorable and guaranteed growth rates. 

In particular, China witnessed a significant contraction in demand in 2012, including that for finished lubricants, additives and baseoils, as the government tries to re-align the economy from being export- and investment-driven to an economy focused on domestic consumption and services. However, as labor wages grow in the emerging economies, we are also seeing trends such as re-shoring – where companies elect to bring manufacturing closer to the home markets, with increased wages in the emerging markets and increased productivity in the developed markets contributing to this phenomena. The Arab world has also changed considerably after the advent of the Arab Spring; and not enough can be said about the growth opportunities in what could be called the last frontier for the lubricants industry – Africa.

Volatile oil prices, currency fluctuations, product shortages and overages, changes to oil-derived products and petrochemical flows and a continuing emphasis on energy efficiency, the environment and sustainability are all factors that present challenges to the baseoil and lubricants industry. However, there are also many opportunities – and we have an industry infrastructure that is fit to rise to these challenges and continue to provide good earnings for stakeholders.

Shell began blending its new gas-toliquids (GTL) basestocks into its line of branded finished lubricants and the synthetics category as a whole is showing significant growth in many parts of the world given the tightening of original equipment manufacturer (OEM) specs on both the industrial and automotive side, as well as significant barrels of API Group III baseoils gushing into the marketplace. Refinery and Group I base oil plant shut-downs continue in the mature economic areas and investment east of the Suez regions is increasing as refiners seek to reshape their strategic footprints for the new world.

We are seeing national players in the rising economies flexing their wings and demonstrating regional and global ambitions – in our industry and the automotive industry.Mergers and acquisitions (M&A) seems to be the vehicle of choice – eg Gulf Oil purchasing Houghton International and Petromin (this is a joint venture purchase along with the Dabbagh Group), Brazil’s Cosan acquiring the UK’s Comma Oil and Chemicals, and Tidewater India acquiring Castrol’s Veedol brand. National and regional oil companies are expanding, with recent examples including Lukoil’s plans to build a lubricant plant in Kazakhstan and SK exporting its ZIC finished lubricants brand to many countries outside of its home market of South Korea. We are also seeing continuing legislation on fuel efficiency driving new lubricant and hardware solutions, and the beginning of an industry that looks beyond petroleum and gas toward fluid products made from renewable and sustainable raw materials.

Key developments

Narrowing down to the specifics of our industry, 2012 was certainly not a strong year for finished lubricants demand growth as originally expected – given the ongoing economic conditions in Europe, lackluster growth in the US economy, a significant six-month demand contraction in China and a slowdown in industrial activity in Brazil. Despite these issues, the global lubricants market remained essentially flat in 2012, as compared to 2011 from a volume standpoint. However, one cannot be complacent given the flat growth as many opportunities and threats are bubbling at the surface.

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These key developments can be illustrated under the following broad parameters:

Emerging growth patterns

Clearly, from a volume standpoint, the Asia-Pacific region continues to be the growth engine of the finished lubricants industry. Rapid industrialisation, a growing middle class with increased purchasing power and improved infrastructure has led to strong growth in new vehicle production and sales. China, India, Japan, South Korea, Indonesia and Malaysia are the leading consumers of finished lubricants in the region. Similarly, Brazil, Russia and Thailand offer significant growth opportunities from a decent base. However, one cannot be fooled by the sheer size of these markets, and it is very important to understand addressable demand for multinational suppliers. The reason is a certain portion of the market is satisfied by using baseoils with no additive content that are sold as finished lubricants, while another section of the market uses very poor quality products in many instances, such as adulterated and counterfeit oils.

Moreover, the risk potential to the major branded suppliers of counterfeit products can be very high, upwards of 25%of sales volumes. Certain industries, especially government-owned, prefer to steer their business to other state owned or nationalized oil companies. Having said that, the quality of lubricants consumed in these markets is rising rapidly. Mono-grades continue to be phased out of the passenger car engine oil market, replaced by multi-grades as older vehicles are scrapped and new vehicles enter the car PARC. We are seeing a rapid shift from the heavy multi-grades, such as the 20 W and 15 W grades, to the lighter grades, including 5 W. In fact, we see a leap-frogging of viscosity grades, which are jumping from a 20 W grade straight to a 5 W grade due to tightened OEM requirements. The point is that the growth market is expected to continue to be a high volume market, but slowly and surely a high quality market as well.

Quality evolution

Passenger car motor oils (PCMO) and heavy duty motor oils (HDMO), and industrial lubricants are undergoing reformulation and quality upgrades primarily driven by:

  • The need to increase fuel economy.
  • The need to increase engine oil durability.
  • Compatibility with emission control devices.
  • Compatibility with bio fuels (ethanol and biodiesel).
  • Industrial equipment shrinking in size while handling the same or increased power – as a result, oils are running hotter for a longer amount of time, and the focus is on increasing thermal stability.

All of these drivers are clearly pointing to increased consumption of API Group II and III base oils in automotive applications. Group II baseoils are also finding a home in industrial applications, such as turbine oil. Having said that, Group I baseoils continue to be the workhorse of the industry today. We also see increased opportunities for Group IV (PAO) baseoils as the full synthetics category is growing, and select marketers are trying to position and differentiate their products from a performance and raw material perspective. Biodegradable grease and vegetable oil-based grease, including soy-based grease and oleic vegetable base stock-based grease, are also enjoying growth, albeit from a small base.

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Changing raw material requirements As a result of the above mentioned changes, API Group I baseoils are slowly but surely exiting from automotive applications, and the market space for basestocks is becoming more diffused.

Significant growth in the synthetics category Propelled by OEMs with factory fill and service fill requirements for SAE 0Wand 5 W viscosity grades for mass market vehicles (eg Toyota and Honda), which in the past were only recommended by the luxury auto OEMs, combined with the greater availability of high performance Group III base oils, significant growth has been seen in the synthetics category.


In the past, synthetic products were primarily offered by the global multinational oil companies who had access to high quality base oils and the most advanced additive packages. Today, with the growing availability of Group III base oils marketed by merchant suppliers who promise availability of tested and approved additive packages in their base oils, many lubricant blenders have developed an ability to formulate synthetics. This has led to a growing commodification in this category and new competitors entering the space including retailers, distributors and equipment OEMs offering their own branded product lines. To curb this, some marketers have resorted to a ‘good’, ‘better’, and ‘best’ strategy in their line of synthetics. Will customers be confused? Will the retail stores, mass merchandisers, and do-it-for-me chains give the additional shelf space? These questions are not yet answered. Certainly, synthetics are expected to grow much more strongly than the demand for conventional lubricants.


The top 10 global lubricant marketers currently account for 50%of the market place. However, as noted earlier, national players in the rising economies are looking to secure larger market share in the lubricants sector, both regionally and globally. Meanwhile, on the automotive side, China, India and others are beginning to take on the lead global vehicle manufacturers.

Looking ahead

In conclusion, we as an industry have done very well – but how do we push the envelope and come up with new ideas? How do we surpass ourselves? Nolan Bushnell, the founder of Atari Games, said: ‘Everyone who’s ever taken a shower has a brilliant idea. It’s the person who gets out of the shower, dries off and does something about it who makes all the difference.’ So, I say, ‘Shower often and dry off often.’ Companies that draw winning strategic plans and, more importantly, execute them to perfection, will be the winners in this race.

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Brand Building for Industrial Lubes: Lessons from Consumer Marketers

Brand Building for Industrial Lubes: Lessons from Consumer Marketers

kmc energySkyrocketing crude oil prices. Increasing standardization of product attributes. Significant overlap among product offerings. As these forces converge to create a perfect storm driving commoditization and competition in the industrial lubricants market, lubricant marketers are beginning to rethink their once-effective product-centric sales approach.

Seeking new strategies to differentiate their company and their products to maintain market share, many lubes marketers are finding that brand building isn’t just for tennis shoes and soft drinks anymore.

What is branding–– branding is that invisible yet powerful force that drives consumer behavior, sometimes unbeknownst to the consumer. Bombarded with brand messages nearly every minute of every day, many consumers may not even realize the influence these messages have on their day-to-day purchasing decisions. Yet many industrial lubricant marketers are struggling to determine the importance or relevance of brand management to their products.

However, in an industry where (not unlike tennis shoes and soft drinks) product attributes are becoming more standardized and significant overlap among competitive offerings is developing, branding can be an extremely efficient and effective competitive tool in the industrial lubricants market space.

While there are fundamental differences between industrial and consumer markets, the branding concept remains the same: determine the best brand message and communicate this to all audiences, both internal and external. When a product-centric approach becomes ineffective, a high-impact branding strategy can lead to significant competitive advantages (including internal benefits) for those with a well-defined, well-articulated, and well-managed brand strategy.

Without it, industrial lubricant marketers could be leaving money on the table by failing to maximizing the investments made in developing superior products.

Build-a-Brand Budget
One barrier to brand building and management in the lubes market may be the perception that it’s a costly and cumbersome process. But in reality, branding doesn’t have to be exorbitantly expensive, since many of the mechanisms for brand communication are already in place.

As with any product, a customer’s perception of an industrial lubricant brand is mostly based on day-to-day impressions: interaction with sales, customer service, accounting, technical service staff, and others. Certainly, exhibition displays, public relations efforts, write-ups in trade journals, OEM recommendations, trade advertising, and other factors also play a role, but more so with non-customers.

Lubes marketers already incur all of these costs, whether they have a strong brand strategy or not. Therefore, the only additional cost is the investment of time it takes to develop a sound and effective brand strategy that validates the overall core business strategy and that can be clearly communicated to all internal and external constituents.

Low Costs, Big Benefits

What exactly does a lubricant manufacturer stand to gain through branding?

Brand equity
Far more than just a logo stuck on a 55-gallon drum, a brand can be one of a company’s most valuable assets. It communicates the established values of the company it represents and carries with it promises for quality, service, innovation, and performance.

Formulating a sound brand strategy requires careful consideration of the number of brands in the market and in the pipeline, and their value to the overall business strategy. It also requires assessing the potential for new brands to fill positioning gaps and the buoyancy effect that the discontinuation of old, nonperforming brands may have on market position.

For this reason, formulating a sound, logical brand strategy is likely to eventually cost less than having no brand strategy at all by providing a mechanism for tossing dead weight overboard.

Better management of complex businesses and internal consistency
A well-planned brand management strategy creates a more consistent and unifying corporate culture. Identifying core values and reinforcing them throughout an entire operating system with an eye toward brand equity can have a direct correlation to overall profitability for the enterprise.

For the industrial lubricant marketer, this approach enables integration and cohesiveness of all brand-related activities around a common vision on a global scale. For some of the industrial lubricant powerhouses that have merged over the past decade, such as BP-Castrol, Shell-Pennzoil-Quaker State, Exxon-Mobil, and Chevron-Texaco, a strong brand strategy has proven to be the most effective way to coordinate a large, complex, global business.

With the recent acquisition of Shell’s food business by Fuchs and its metalworking fluids business by Houghton/Gulf, thought leaders inside those companies are surely grappling with brand management issues. Which brands should be retained and nurtured? Which brands should be discontinued? Should region, technology, or application play a role in the branding strategy? Can branding help fill some of the positioning gaps?

A solid brand can outlive the products. Thanks to instant customer recognition, top-of-mind awareness, and the ability to communicate an inherent set of values, a well-developed brand can generate stronger customer loyalty, and even customer referrals, which can have a positive impact on sales.

It can also potentially slow down the degree and rate of commoditization. Competitive pricing and quality notwithstanding, it is clearly harder for a competitor to dislodge a brand from a particular account than it is to dislodge a product.
Certainly the high-impact, slick brand marketing tactics of the consumer products industry, with its massive doses of advertising, celebrity spokespeople, and promotions, will not play well in the industrial lubricants marketplace. But the underlying tenets of branding do rightly apply:

  • Build a strong brand message based on inherent core company values.
  • Ensure that the brand message permeates all communications and interactions, both internal and external.
  • Foster and protect brand equity to drive profits, gain competitive advantage, and stave off commoditization.

On the other hand, if you can manage to get Tiger Woods (especially today after his recent win) to endorse your hydraulic oil or metalworking fluid, I say “Just Do It.”

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Integrated Pricing Strategy: Achieving a Sustainable Advantage

Integrated Pricing Strategy: Achieving a Sustainable Advantage

dollar sign manAchieving a sustainable pricing advantage is becoming progressively difficult, yet increasingly more important as global economic pressures, depleting resources and raw materials, energy price volatility, and regional anomalies cause major shifts in the value chain economics across all industries.

The problem is that mastering a sustainable pricing strategy to achieve competitive differentiation requires any organization to adopt a dynamic and integrated approach. However, the complexities of this concept force some two-thirds of all manufacturers to cling to a cost-plus strategy, despite its well-known shortcomings as a reactive posture that leaves money on the table and ignores market and customer dynamics.

Moving away from a cost-plus strategy to an integrated approach requires cultural change—an organization must be ready to let go of old, familiar practices and embrace more complex processes. Companies that have successfully transitioned away from a cost-plus pricing blueprint, have done so by executing the following three key steps:

  • 1. Establish a robust database comprising data on market demand, capacity, price elasticity, product substitution, switching costs, customer and product profitability, as well as quantifiable insights on what your customers value. This solid baseline of validated market data will enable you to optimize the pricing of your product and/or service offering, based on internal and external demand drivers.
  • 2.  Clearly define pricing ownership, and expand beyond the top management team to include broader institutional input, and ensure that competitive value offerings and segment positioning are included as part of the pricing strategy.
  • 3. Develop or procure a predictive model that enables you to leverage near-real-time known market data to adjust pricing, based on ever-changing critical factors. An effective statistical algorithm paired with an inherent knowledge of the market can give your organization a competitive advantage to stay ahead of the market with a proactive, intelligent pricing response.

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Sustainable Growth in B2B Markets

Know Thy Customer: Five Ways to Use Customer Insights to Build Sustainable Growth in B2B Markets

businesstobusinessIt’s been called the first Commandment of Marketing: know thy customer. Few would argue that understanding your customer is critical for driving sustainable growth. While it’s a driving force in the B2C market, far few companies in the B2B environment are known to live by this principle, and as a result, many are perpetual “victims” of market forces, struggling to keep their heads above water amid rough seas.

Even in the B2B space, creating meaningful, effective, and intimate relationships with customers is the key to fueling sustainable growth. Why? Customer needs are at the very heart of identifying growth opportunities. They are alpha and omega of every industry: key customer needs create demand, unmet needs drive innovation, and changes in preference and technology influence market maturity and eventual decline.

Getting to know your customer better than your competitors is incredibly valuable for gaining an upper hand, and it can only happen if it is given strategic priority, supported by appropriate investments. Knowing your customer must go beyond periodic reviews; it must be embedded into organizational systems, culture and behavior, and even compensation policies, to ensure real-time monitoring of the key value drivers and timely development of business strategy.

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Multifunctional Professional Beauty Products

A Swiss Army Knife in a Tube – Multifunctional Professional Beauty Products

pro beauty productsMulti-functionality has its beauty. The consumer has demanded versatility, and beauty product marketers are responding. Borne out of both an economic impetus with consumers seeking to reduce their expenditure and the simple pragmatism of retailers optimizing finite shelf-space by rationalizing their inventory, the market’s embracing of mass non-professional branded multi-functional beauty products is attracting a growing number of professional brands keen to remain competitive.

Categories more readily adapted to consumers’ cautious spending, such as hair styling or skin care cleansing products, were among the first targeted by professional beauty manufacturers to propose multiple-benefits. The multiple-benefit product trend has been gradually expanding to encompass a wider range of professional hair care and skin care products. Since 2011 and following their notable success in the mass market, tinted moisturizers and more recently BB (Blemish Balm) creams have been making their way into the professional skin care market. For example, in early 2013, Algotherm (Groupe Batteur) launched BB Marine Cream, claiming to treat dark spots and skin imperfections while hydrating and offering 30 SPF protection against UV rays.

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Ownable Space: "The Other White Space"

Ownable Space: “The Other White Space”

phoneslgFinding sustainable and profitable growth opportunities remains the Holy Grail for all companies – whether in highly developed and competitive markets in Europe, or developing, high growth economies like India. While finding the white space – that untapped terrain in a market – is a common approach to figuring out where to play, a better way to win is to focus on “ownable space” opportunities.

Ownable space centers on a company’s right to win in a given market, grounded in “heritage” competencies or competencies you purposely go after. There are three basic approaches that can be utilized to identify your ownable space opportunities:

  • Claim your ownable space: going after unmet customer needs or market areas that are underserved, using your right to win as the competitive lever
  • Create your ownable space: use your competencies to drive and build market opportunities in a way that uniquely leverages your core strengths
  • Capture your ownable space: stretch and extend the limits of your capabilities to take market share away from competitors

Some of the best success stories today are of companies that are aggressively pursuing ownable ways to grow their businesses in markets characterized by intense competition, if not spirited rivalries. For example:

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