David Blecken
Dec 15, 2016

Nerium hopes Japan will buy its ‘anti-aging marvel’ pitch

Nerium International, a controversial US direct sales skincare brand, is betting aggressively on Japan as a driver of its business in Asia. Will consumers bite?

Jeff Olson
Jeff Olson

Texas-based Nerium launched its anti-aging product range in the US five years ago and has seen considerable success, turning US$100 million of revenue in its first year. It has generated cumulative revenue of $1 billion over the past four years. The brand claims to be “rooted in science”, with the power to “change lives” by defying the aging process.

Perceptions in the US are polarised: some describe it almost as a miracle antidote to aging, while others denounce it as little more than snake oil. It has also drawn criticism for the use of a potentially toxic ingredient, NAE-8, in its products. The ingredient is not present in its Japan product lineup, according to Jeff Olson, the company’s founder and chief executive.

On a recent trip to Tokyo, Olson outlined the company’s plans in the market. It opened for business in Japan in July 2016 with an investment of $12 million and the appointment of Peter Dale as chief executive. Olson said he sees an opportunity to replicate the company’s achievements at home. That seems a tall order in one of the world’s most advanced and discerning skincare markets, but Olsen is unfazed.

“Everyone’s been waiting for us,” he claimed. “People have been bringing our products over here for years. Good news travels. When we came here there was pent-up demand; we didn’t do anything but open our doors.”

Still, he says some budget is “set aside for advertising”. But as a multilevel marketing company, the focus will be on building word-of-mouth advocacy and investing in individual salespeople, known as ‘brand partners’. “We try to put them in a position to be sharers, not sellers,” Olson said. “Most people don’t know how to sell, but they can share. So all that [marketing] money, we put into supplying brand partners with the tools they need to share videos and information on the product.”

Olson said Japanese celebrities are among Nerium’s brand partners, but did not disclose names. “From a marketing perspective, our model here is almost identical to how it is in the US,” he said, adding that almost everyone is a potential target customer. Japan has so far attracted a relatively large male demographic—around 30 percent of all consumers. Olson said Nerium has also built appeal among younger buyers than elsewhere.

One important consideration from a PR perspective, though, is the importance Japanese consumers place on science when it comes to anti-aging products. “We put the science out there to look at,” Olson said. “I think it makes people feel comfortable that there really is science. People know that with a lot of products, there is more marketing than there is science...A lot of people are in relationship marketing because of the experience they’ve had with the product.”

Not everyone is as positive. The approach of Nerium partners to signing up further sales representatives on social platforms like LinkedIn has been aggressive. “It felt like a scam,” said one Tokyo-based observer who was targeted, who works in the marketing industry but did not wish to be named. “It was very pushy. I’m not sure the North American approach will work in Japan.”

Kaori Yatsu, head of planning at BBDO Japan, said she sees a good market for foreign anti-aging products like Nerium, despite the strength of domestic brands. She noted that De La Mer and Estée Lauder have seen relatively good uptake, but said consciously targeting consumers in their 50s and 60s would be sensible for Nerium based on spending power and market volume.

At the same time, Yatsu suggested Nerium would need to work to overcome inherent scepticism towards the multilevel business model. Nerium is not cheap: a ‘starter pack’ retails at 112,000 yen. But according a US income declaration by Nerium for the period September 2012 to February 2013, 88 percent of those who bought into the program earned less than $370, and 43 percent earned no commission.

“Many Japanese people have a negative image towards multilevel marketing or pyramid selling,” Yatsu said. “I also have the image that it sometimes makes the company successful, but brings big trouble to the distributors.”

Source:
Campaign Japan

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