Firms Comb Hair-Care Market for Growth

Some consumer products companies are working themselves into a lather to rid the world of bad hair days.

Industry giants like Procter & Gamble, Avon Products Inc. and Estee Lauder are trying to tap into higher growth by introducing new premium-priced hair care products into the market this year.

Although hair care is a fiercely competitive business with untold numbers of products on the shelves, companies are appealing to baby boomers’ sense of vanity — and using scientific developments — to charge a little bit more for the promise of beautiful hair.

If successful, the payoffs could be substantial, say analysts.

Companies See ‘Big’ Hair

Sales of mass-market hair care products like shampoos, conditioners and home coloring kits reached $5.5 billion for the year ended May 21, according to Information Resources Inc.

With premium shampoos often selling for more than twice the $2.75 average price of their mass-market counterparts, the profit margins are much more substantial.

“Companies have realized that hair care is a big area and consumers will pay for different attributes,” says William Steele, consumer products analyst at Banc of America Montgomery in San Francisco.

“The typical shampoo section used to be 6 feet wide. … Today it’s 25 feet,” notes James Parr, vice president of research and founder of Advanced Research Laboratories a Costa Mesa, Calif.-based company that develops beauty and hair-care products such as Citre Shine and Zero Frizz.

“It just amazes me that companies can sell so many products that don’t even have that much of a distinction, but I think that’s what companies are doing: trying to make a distinction,” Parr says.

P&G Works on Its ‘Physique’

P&G, for instance, introduced its Physique hair-care line earlier this year and plans a re-launch of its Vidal Sassoon brand this fall.

Although a P&G spokeswoman would not comment on sales figures, the company cited strong sales of premium hair-care initiatives such as Physique as one of the main factors behind a 7 percent sales increase in beauty care products for the January-March quarter.

The line, which retails anywhere from $4 to $10, features special formulas designed to give hair anything from more volume to tamer curls.

P&G officials say the premium products are meant to solve some of women’s biggest hair-care complaints. They aren’t concerned that the line will cannibalize the company’s other hair-care brands such as Pantene, Head and Shoulders and Pert Plus.

“There are so many consumers with different needs out there and each line brings a different technology,” says Tracy Long, supervisor of public relations for Procter & Gamble hair care. “Three out of four women aren’t getting the style they’re looking for, and that led us to Physique.”

No More Frizzies

Another initiative comes from Avon, which is also using scientific developments in a new 22-product hair-care line called Advance Techniques, which will hit the market this September.

The line features patent-pending technology called Balancing B2 Complex, which Avon claims is the first-ever weather-responsive formula. The products will sell for $2.99 to $4.99, slightly higher than mass-market hair-care products.

Advance Techniques will replace Avon’s Techniques line as its only U.S. hair-care line. Including other global hair-care brands, Avon expects to achieve $300 million in hair-care sales by 2002.

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