Corporations: Scalping the Competition

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In the pink jungle of the toiletries business, Leonard H. Lavin, 43, president of Chicago's Alberto-Culver Co., aims for no less than "the elimination of all competition." While such a goal seems unlikely to all but Lavin, his stalking tactics in only eight years have changed Alberto-Culver from a one-product company (Alberto VO5 hair conditioner) to a rising threat in the industry, with sales last year of $57 million from 14 national brands.

In the past month Alberto-Culver has brought out three new products: a skin lotion, a shampoo concentrate and an aerosol antiseptic spray that hardens to form a "bandage." This week Alberto-Culver begins test-marketing its New Dawn hair-coloring shampoo for fading women and Mighty White toothpaste, with toy cutouts on the box, for the children's market. Launching products is costly, but markups on toiletries are so high that Alberto-Culver last year earned 68.1% on invested capital. Profits were $2,300,000. So far this year, sales are up 48% and profits up 59% .

The Strategy. Lavin's successful strategy is to work with a small staff for the sake of maneuverability (only four top executives make the decisions) and to create products for specific markets, launch them rapidly with a minimum of expensive test-marketing, advertise them relentlessly. Creating VO5 hair spray, Alberto-Culver methodically listed 18 qualities that women said they wanted in a spray, then rated all the competitors, point by point, and set out to make VO5 score higher. Though Alberto-Culver was twelve years late in the market, VO5 now has the biggest share of it — 23%.

Almost from the moment that his chemists start to work on a new product, Lavin's advertising men are preparing saturation campaigns. Even before Alberto-Culver finished developing its Subdue dandruff shampoo, the admen had filmed the TV commercials. If test audiences respond enthusiastically to the commercials, Lavin brings out the product. At times Lavin has put more than 50% of his sales into advertising, this year will invest well over $30 million. Television will get 97% of it.

Making a Score. Lavin is the kind of restlessly imaginative salesman who probably would have done well in anything that involves going for broke in fluid markets. A University of Washington graduate ('40), he worked for a number of small companies (everything from moth cakes to perfume), directed the TV ad campaign that made Stopette the best-selling deodorant of the early 1950s. Unhappy to see someone else get most of the benefit, he borrowed $488,000 in 1955 to buy Alberto-Culver and promptly dropped 24 of its 25 small-selling products to concentrate on VO5 hairdressing, began adding a line of new hairsets, rinses and shampoos.

In today's markets, Lavin figures that almost any well-established consumer product can be toppled by a forcefully promoted newcomer. But, he says, "we realize this vulnerability cannot go on forever, so we are determined to exploit it thoroughly before the situation is corrected." Right now, another "20 or so" new products are in the works at Alberto-Culver.