Steffen Seifarth will be presenting at InnoCosmetics Europe on October 7 2010 on Emerging markets of BRIC: identifying and penetration new growth markets for prestige brands, exploring and quantifying new market opportunities, developing the right organizational setup to be successful, designing the right product portfolio to meet local market needs, minimizing risks.
We have recorded a short interview with him before the event:
What brings you to the cosmetics industry? How did you get to where you are now?
I started my career with P&G 15 years ago where I actually did start in the cosmetics industry and that was inside the beautiful brand of Old Spice. I worked as a junior brand manager, and then I spent a couple of years at P&G working in different categories: in the tissue and towel business, in the paper business, as well as in the sales department. After that, moving onto media where I worked for Bertelsmann in an Internet branch. Having gained some experience in the media, I finally decided to go back to some of the more traditional bricks and mortar business, which brought me to Coty, where I joined eight years ago as an international vice president for trade marketing, and then became the general manager for Germany in 2004 and I had this position for five years before becoming a regional vice-president responsible for the area of Germany, Austria, Switzerland and Eastern Europe.
And what is the most enjoyable part of your job?
The fact that there is no routine at all. I love being confronted with new questions, new situations, or challenges regularly and this is what indeed I find here in the diversity of this job, and that’s what I really like about it.
What aspects are the emerging markets playing on this? Is this part of what makes it so much fun?
It adds the spice to my portfolio of countries. If you look at Germany, then Coty Prestige (and Prestige is the branch of Coty that I’m working for) is a clear market leader in Germany in prestige fragrances with a market share of something like 23-24% whereas in Russia, we have just started up a new company 15 months ago. For me, to have on one side a well-established company with market leadership position and a startup on the other side, where we’re trying to bring business forward, to set up an organization, to establish initial market shares, relationships with retailers and logistic systems in a real start-up environment, is the kind of breadth of tasks that I really enjoy.
If you look at the cosmetics industry, in general, what would you name one of the most significant innovations until now, which really brought forward this whole industry, which is maybe also inspiring to you?
I would like to quote something from the history of my own company here: it was the vision that Francois Coty had when in the early 20th century, he not only developed fragrances that were really new to the market, but also had the vision of producing perfumes in a way that they would be affordable to a large number of women and still beautiful and aspirational enough to fascinate every woman and every man to buy them. So in that sense, he has done for the fragrance industry what Henry Ford has done for the car industry.
What would you think is your vision of a future for the cosmetics industry? What do you think would really move it forward?
It is a very general question and there are numerous of answers I can give, one of them will be: It’s striking a good balance between the continuous globalization of markets and brands that we see and regional differences in user’s preferences, which leads to finding the balance between giving people what they like and know, and at the same time allowing them to experience and indulge in new things that are a bit exotic
Do you think it’s possible for a company to stay inside one country, unless it’s a big country like the US or something like China or India? Or will companies definitely have to go international and think international to stay successful?
I think one of the interesting and nice features of this industry is that there are and always will be a lot of niches, which allow it to new and small companies to enter the market and to bring new ideas and new impulses to it. So in that sense, it will always be possible to act as a local player, as a niche player as well. At the same time, whoever wants to grow the business significantly will have to look for international, if not global expansion. And that even more so today than in the past.
Is this something only big corporations will be able to do in the future to grow globally because it involves so much knowledge, so much information they have to gather?
An expansion across the European Union today is quite simple and involves relatively little cost from an organisation point of view. The really expensive things in this area are the mistakes that one will easily make. Big companies regularly do it, but they can afford it. I think one of the key things for any organisation is to look out very early and very consequently for local know how and local partners and prepare these expansion steps very, very thoroughly. That’s the very general advice I can give here.
Yeah, that’s probably one of the factors, which you mean by minimizing the risks.
Correct. The difficult thing is you don’t know what exactly the issues will be and when they will come. That is something you can’t avoid. You can only accept it and by setting up your organization or your project team in a way that issues and problems can be identified and handled properly. Keeping this in mind you may realize that with the project scenario that looks a bit costly and cumbersome in the beginning, you’re doing a lot of good for yourself and it is very likely to turn out as the more successful and less painful one at the end.
Yeah, pay cheap, pay twice.
Voila
What are the biggest challenges the cosmetic industry is facing at this moment?
Because the cosmetics industry has many differentiated categories: fragrances, skin care, color cosmetics, et cetera, all of which face their specific situations, I would say reaching in the next ten years the appropriate way to still fascinate consumers in a saturated market in the way that we were able to do it in the last two years. Because in a certain way the cosmetics industry runs the risk to lose a bit of its status appeal and high image versus technology gadgets like smart phones or so. We need to find the way to make a fragrance or a lipstick as intriguing and as fascinating to the new generations as it was to our fathers and mothers.
And at the same time, to find the appropriate products and offers for the billions of people in emerging markets that are today not part of the cosmetics world, simply because they’re just coming to this stage where they have the disposable income that allows them to tap into this and to find the right offers for those people and to give them the benefits and the joys of using cosmetics and toiletry products in a way that caters to their economic situation and to their cultural predispositions.
If you look at your industry, in general, your experience with your colleagues and also especially with the local markets, do you think they are prepared that there is now a new wave of consumers and they’re taking basically their parents with them with iPad and other gadgets coming. Do you think that these new waves are something the industry is prepared for? Or are they more rustic in their traditional ways how to sell?
I think we’re coming to that step basically now. And it’s also the right moment as Internet and mobile Internet are really reaching a stage where they become mass communication channels, and I see in the area of Facebook, of blogs, but also of the famous apps for the iPhones, et cetera, a lot of new things that in the area of cosmetics provide information and are able to transmit that kind of fascination that people have in the brick and mortar way where they stand in front of a shelf. If this fascination can be brought to live also in the virtual world and in the virtual communication, that is great for our industry because we are very visual industry. And in fact, it is something that we are very actively working on also for the future, as these tools allow us to reach out to more people more quickly and have more global presences. So they are very helpful and they also bring local or regional things and make them visible more easily and provide this kind of exotic experience, which was much harder to find when we just had the perfumery shop around the corner 20 years ago.
You mentioned the poster child, currently bridging that gap is Old Spice. The campaign which was done in the US for the US market has transcended throughout the world because everybody loves the Old Spice guy, shares the videos and watches the videos. The market share actually has gone down before they actually did it, but I think that for a company like P&G in general, they are social karma or the social media capital has gone up so significantly that although “it’s Old Spice” it will have a far-reaching effect on how people start to look at cosmetics and it’s going to be a challenge if companies still stay in their old traditional medium. I still think you have to really go for the store because that’s probably the still the main area where you want to market to, but basically the world in itself has changed. So I take your answer that you think your industry per se for this market is prepared to take on even the virtual world.
Yes, and we’re taking advantage of it. I’ll give you another example. We’re launching a new Calvin Klein fragrance in Germany in October and especially the Internet and the virtual world allow us to create a buzz and an excitement around that already for months prior to the launch, so we had Diane Kruger who will be the testimonial for that fragrance in Berlin for the fashion week in July, and basically started the marketing and the communication around this new fragrance already in July, even though it will hit the stores only in Germany in October, and this is something that with traditional media would have, theoretically, been possible, but far too costly for us to execute, so there are a lot of opportunities here. Of course, I mean, we need to very actively work with them, but again, a lot to discover and a lot to develop and it’s very exciting.
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