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SWOT Analysis - Axe
Axe's strong brand appeal, a wide range of grooming products and an extremely powerful connection with the youth are its key strengths. The company has, however, been involved in some controversial and sexist advertising in the past and lost market share in recent years. The growing organic deodorant market and the use of AI in the deodorant industry are some opportunities that the brand can look forward to leverage. Below is the detailed SWOT analysis of the company.
Strengths
- AXE has a unique value proposition in the market and is the #1 men’s fragrance brand in the world.
- It is among the few brands positioned as a lifestyle brand that appeals to both boys and girls through unique experiences, unlike any other brand.
- One of the key strengths of the company is its wide range of products. It provides a full line of grooming products including body sprays, deodorants, antiperspirants, body washes, shampoos, and styling products, thereby making it a go-to solution for the youth.
- The brand has been in existence for over 34 years and is present in over 90 countries across the globe, thereby providing it with a wide reach and an extensive market.
- The brand is associated with Ann Gottlieb who is a popular international fragrance developer and creates all fragrances of Axe. This makes the company's products stand out among its competitors, thereby adding on to its strength.
- Axe is an HUL brand and thus enjoys an extensive distribution network and a fantastic brand recall. It is distributed parallel to all other products of HUL.
- The company's attention-grabbing youth-centric advertisements and branding are its other key strengths and stand out features. Its ability to effectively connect with the youth through social and digital platforms has helped the company become the most favored 'Body Spray Brand' in the majority of the markets it operates into.
- The brand to effectively connect with teenage boys and build on its strengths has taken to influencer advertising and has collaborated with the DJ and influencer Martin Garrix, whose videos regularly get upwards of 900 million views.
- In addendum, as part of its marketing efforts to teen boys, the company recently renewed its #AXEpressYourself campaign for a second year to urge teenage boys to feel confident about their appearance. It engaged "Stranger Things" star Gaten Matarazzo for the campaign.
Weaknesses
- One of the key weaknesses of the company is its limited target market. The brand primarily caters to the age group 16-25, which restricts the sales growth and market expansion opportunities for the company.
- The company's advertisements and promotions are primarily targeted towards urban youth and lack appeal for the rural youth which again stymies the growth potential and connectivity for the brand.
- The company's market share globally has been on a declining spree. According to the Nielsen data, the company's market share fell to 8% during January-September 2018 from 8.9% in 2016.
- The company has been involved in some controversial advertising campaigns including negative and sexist advertising. This has impacted the company's brand value, thereby compelling the brand to overhaul its marketing strategy.
Opportunities
- The proliferating global market for antiperspirants and deodorants presents a colossal expansion opportunity for the brand. The global deodorant market is expected to grow at a CAGR of 4.12% between 2018 and 2024, primarily driven by the youth population, where the brand has a strong foothold.
- The organic deodorants market presents a potential diversification opportunity for the company. The global organic deodorant market is expected to grow at a CAGR of 14.1% from 2019 to 2025 and hence Axe can focus on introducing organic deodorants to tap the consumer’s preference for chemical-free hygiene products.
- The companies operating in the fragrance market have started exploring AI for product compositions and discovering new ingredient combinations with machine learning. Such advanced and disruptive technologies present an excellent growth opportunity for Axe.
- The company also has an opportunity to tap the limited edition deodorants and perfumes segment akin to some of its global competitors like Fogg. This will also enable the brand to garner a premium positioning.
Threats
- The deodorant space is highly competitive and the company faces threat from the various established global brands such as Burberry, Old Spice, etc as well as new local entrants such as Fogg. In addition, several ensconced brands like Adidas, Reebok, Nivea etc have also diversified into the deodorants segment adding on to the competition.
- The seasonal and cyclic nature of the deodorant business also presents a revenue threat for the company. Since the industry sales tend to go up during summers and wane during other seasons, the company is faced with the threat of irregular cash flows and working capital challenges.
- Deodorants have been linked with adverse health effects, which could have a detrimental impact on the antiperspirants market. Consumers are becoming aware of the impacts of chemicals on human skin and are opting for organic products.