Yuxian Wang Professor Carin Wightman The Savannah College of Art and Design
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Table of Contents Abstract..............................................................................................................................4 Primary Research Design and Analysis................................................................5 Secondary Research - Company Overview and Industry.............................12 *
Introduction...........................................................................................................12
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Company Overview..............................................................................................12
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Products and Pricing.............................................................................................13
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Channels of Distribution......................................................................................15
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Strategy and Advertising.......................................................................................17
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Values and Mission.................................................................................................19
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Customer.................................................................................................................21
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Future Outlook.......................................................................................................22
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Current Competitors.............................................................................................23
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Industry Analysis...................................................................................................25
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Future Industry Outlook.......................................................................................25
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Industry Leaders.....................................................................................................26
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Mega Trends Driving the Industry......................................................................30
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Factors Affecting the Industry..............................................................................32
Secondary Research - Market and Consumer Overview............................33 *
Market Research.....................................................................................................33
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Overview..................................................................................................................33
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Product Research....................................................................................................37
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Distribution Channels Research..........................................................................39
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Promotion and Advertising Research.................................................................42
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Consumer Research...............................................................................................47
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Demographics, Psychographics, Lifestyles and Preference.............................47
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Buying Habits..........................................................................................................51
Key Findings......................................................................................................................55 Identify The Customer...................................................................................................57 Fully Developed Initiatives, applications and corresponding collateral ....................................................................................................................................61 •
Initiatives Calendar................................................................................................61
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Product Assortment ..............................................................................................63
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Distribution Plan....................................................................................................64
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IMC Plan.................................................................................................................68
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Financial Plan.........................................................................................................75
Conclusion.........................................................................................................................80 Works Cited.......................................................................................................................81
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Abstract If there is one thing that cannot be shaken, even in a fragile economy, it is consumer’s spending on beauty products. China will become the world’s largest market for cosmetic products, with the growing demands for good quality cosmetics. China has a large population and market, and China’s people have a higher acceptance of foreign brands and a huge purchasing power. This great potential of the Chinese market is attracting cosmetic companies, retailers, and investors to enter into China. The lack of local cosmetic brands in China leads to the great desire and demand of consumers for foreign cosmetics, as more and more consumers buy makeup and skincare items while traveling abroad or shopping online. Kim Kardashian has now undeniably established herself as one of the most inf luential beauty gurus, dictating trends with a simple self ie or snapchat video. K launched her own make-up brand, KKW Beauty, on June 21, 2017. KKW’s products cover the makeup and fragrance categories. KKW Beauty is known for heavily contoured face makeup, which is a technique of using different shades to create the appearance of more defined features. Kim Kardashian has built her beauty empire in a short time and gears up for international expansion in Asian and beyond. China is undoubtedly the best choice for brand expansion. Kim has a huge fan base, high social media exposure, and great inf luence in China. At the same time, China has a large population, a large market,and people have higher acceptance of foreign brands and great purchasing power. More importantly, KKW beauty meets the Chinese consumers’ needs as well as fills the market gap. In conclusion, it is imperative for KKW beauty expanding in China, which is also a crucial step into the Asian market.
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Primary Research Design and Analysis In this technologically driven world, for businesses and organizations to make informed decisions, they need highly validated information. Hence the need for good data collection techniques in case of primary research analysis. Primary methods used to collect data in this research are: 1.Ex per ts Inter v iews 2.In-store Obser vat ion 3.Focus g roup 1.Experts Interviews: Objectives of the experts’ interviews: The managers, employees, and makeup artists of beauty brands are the bridge between brands and customers. With the help of these experts’ interview, we will understand the current development trend of China beauty industry and consumer demand. The beauty experts also know well the brands and products that are most suitable for the Chinese cosmetics market, and their expertise is critical to the brand entry into the Chinese market. These experts include: •
The cosmetic store managers with their employees
•
The makeup artists.
Cosmetic store managers and employees Location: Shanghai K11mall Interviewees: Michelle Li, Bobbi brown’s manager with 16 years’ experience Sunny, Bobbi brown’s employee with five years’ experience Mani Zhang, Nars’ manager with eight years’ experience Wenjia Wu, Nars’ employee three years’ experience Interview question and answers: a）How is the development of the Chinese makeup market? Makeup is an essential part of the beauty industry, and the development of the makeup market is also very rapid. There is an increased consumption rate, changes in people’s consumption habits, and the enhancement of consumption concepts which ref lect the huge market demand of the Chinese beauty market. The huge population of
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China and the improvement of service consumption levels also provide sufficient development space for the beauty industry. b）What are the most popular makeup products among consumers? Top 3 The three most popular products are the lipstick, foundation, and eye shadow. c）s there any change in the consumer buying trend compared to the past few years? Consumers are moving from multi-colored to less color trends, and there is more attention driven to the concealer and contouring. d）What factors are most likely to inf luence Chinese consumers to buy makeup products? •
The celebrity effect.
•
Social media platforms, such as webcast by internet celebrity or social inf lu-
encers. •
Brand advertising also plays a huge role in inf luencing consumers to buy
makeup. e）Do makeup consumers like to try new products? Consumers love buying new products and trying them to see if they work out for them. f）What are the kinds of cosmetics brands the most competitive in the Chinese market? International brands dominate and play a leading role in the development of the industry chain of the domestic beauty market and are the most competitive in the Chinese market. g）What do Chinese consumers care more about cosmetics? Brand awareness or price? Since they prefer high-quality products and to them, high prices equal better quality o the product, hence are willing to spend more for the better quality. h）Who are the main consumers’ groups? Millennials generation has become the absolute leading consumer group of China’s cosmetics industry. Makeup artist •
Location: Shanghai Jiuguang mall
•
Interviewees: Kelvin Liu, MAC’s chief makeup artist with ten years of ex-
perience, he has worked with shows, celebrities, and models on behalf of the brand many
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times Interview question and answers: a）What is the makeup trend? *
Glass skin:
The most popular trend that’s here to stay is glowing, glass skin, which you can achieve by slathering a mixture of moisturizers, cream highlighters, and oils to beam your face up. *
Fresh Skin and Accent Inner-Corners:
Keep your makeup fresh by focusing on clean skin and a neutral eye. Then, add a pop of color to the inner corners of youreyes. Adding color in the tear duct of your eyes is just enough edge to make your makeup pop. *
Glitter and Crystals:
*
Less Powder, More Contour
b）What kind of makeup is popular in China recently? People pay more attention to highlighters, which emphasize their best feature for exquisite makeup. c）From a professional point of view, what products can make Chinese girls look more beautiful? Contouring and highlighters. d）What color department makeup look suits the Chinese girl? Light colors and nude. 2.IN-STORE OBSERVATION: *
Objectives:
In-store observation is fundamental as it is practical to visit competitors’ stores for gaining insights from shoppers in a retail environment and benchmarking. Also, in-store observation can get straight answers about consumers’ thoughts, feelings, and associations with the products they buy and a richer understanding of consumer behavior and category dynamics. *
Location:
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Fenty beauty retail store, Bobbi brown retail store, Nars retail store and MAC retail store in Shanghai; Sephora in Shanghai *
Interviewees:
Random shoppers found in stores. Interview question and answers: a）Do you prefer foreign or domestic makeup brand? Foreign brand 84%. Domestic brand 16% b）How do you usually get information about makeup products? Social media 80% Advertising 60% Friends’ recommendation 30% c）What’s your favorite channel for buying makeup? Retail store 60%, Online shop 35% Overseas: 5% d）What are your essential daily beauty products? Lipsticks and foundation. e）Do you know Kim Kardashian? Will you buy the KKW beauty products if the brand comes into china? 85% Know her, 15% don’t know her. 90% will buy. 10% won’t buy. 3.Focus Group: *
Objectives:
The focus group has 16 people who are different nationalities such as Chinese, American, Korean, and Japanese. They are all experienced beauty enthusiasts living in China and have their insights into the beauty industry. This focus group research provides more depth and gets closer to what people are thinking and feeling about the topic. By collecting and researching feedback and suggestions from participants, we can better analyze the brand and develop a targeted plan more clearly.
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*
Participants:
Cai Ning, China
Kaixi Zhang, China
Danqing Pan, China
Wanwan Wang, China
Shiqiao Chen, China
Yinjie Chen, China
Elly Lin, China
Tina Liang, China
Monica Yoo, South Korean
Rachel Kim, South Korean
Masumi, Japanese
Satoumi, Japanese
Mioko, Japanese
Mandy Johnson, American
Kelly Williams, American
Lauren Green, American
Research Topics: •
What is missing in the Chinese beauty market?
High-tech, environmental friendly, and natural makeup products. •
What is the demand of the Chinese beauty market?
More diversified, more unique and more professional makeup products. •
What kind of beauty brand can attract Chinese consumers most?
The brand focus on Contouring and highlight. •
What kind of beauty brand is the most competitive in China?
Unique, professional, and has a huge inf luence. •
What channels do Chinese consumers know about beauty brands?
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What do Chinese consumers care more about cosmetics? Brand awareness or price? Since the consumers prefer high-quality products and to them, high prices equal better quality o the product, hence are willing to spend more for the better quality. What role does the celebrity effect play in brand promotion in China? In China, people give a lot of attention to stars and celebrities. Of course, it’s not the case for everyone, but even if someone doesn’t follow a personality, as long as he or she has a little popularity, the person will hear about the star. Branding with celebrities is especially true in China. It could be a little bit strange, but this is one of the ways to market in China. The society is based a lot on idols’,stars, celebrities’ inf luence, who are particularly followed by the Chinese millennial generation. The traffic and number of leads they can bring are sometimes beyond your imagination. Therefore, to increase the sales of their products, many companies don’t hesitate to spend vast sums of money to engage celebrities in their campaign. What are the most popular beauty shopping platforms for Chinese consumers? Tmall, JD, and JUMEI are the leading platforms in the Chinese market for purchasing cosmetics and getting detailed info of products. The most popular brands have all built official off line stores on these platforms. Summary and Analysis Reasons why KKW beauty company needs the China market: •
Kardashian has a huge fan base in China-
Although many western inf luencers lack a genuine connection with people from the Chinese Market, Kim Kardashian has a huge fan base that feels a real connection with her. If KKW takes this to an advantage, it will easily penetrate the Chinese market. •
High social media exposure in China-
Social media is a massive impact in China since the mainstream media is highly controlled. Hence having high popularity in china’s social networks means having significant inf luence on the Chinese. Kim Kardashian has a very high social media exposure in China, and this would help her KKW company to penetrate the Chinese market easily. •
The celebrity effect has a huge impact on Chinese female consumers.
In China, female consumers are obsessed with their idols or famous celebrities. Kim Kardashian has the celebrity effect that inf luences many Chinese Female consumers
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hence would easily convince them to buy and use the KKW products. •
Lastly, China has a large population-
With a huge population, China offers a large market. People in China also have a higher acceptance of foreign brands and great purchasing power; hence KKW will be highly successful if it will be able to break the Chinese market. WHY CHINA needs KKW Beauty? •
Meet the consumers’needs & Fill the market gap.
China is one of the largest economies in the world, and meeting the consumer’s needs for the diverse market is not easy; that is why there are market gaps to be filled, especially in the beauty field. The market gaps need to be filled, and that is where foreign companies like KKW come in. •
The aesthetics of makeup have already changed in China.
Over the years, beauty as a concept has undergone huge changes alongside the whole beauty industry. There is a constant shift on what is considered acceptable, fashionable or beautiful at the current point in time.
Most of these changes are mostly
due to the celebrity inf luence; hence China needs KKW Beauty to keep up with the current trends. (Beauty-magazine.co.uk, 2020) •
The product collection of KKW Beauty is perfect for Asian skin.
With the company’s wide range of products that make an Asian skin to look perfect, KKW Beauty has a huge chance of penetrating the China market because the females, especially the millennials would widely use the products. The company’s huge focus on contouring and foundation is the most popular product at the moment, and The brand is also known for its nude color collection, which is a huge win for them to the China market.
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Secondary Research - Company Overview and Industry Introduction In order to fully implement strategic objectives of the project, secondary research is critical. This Research provides a detailed analysis of current state of KKW Beauty company and makeup industry. It collects data from as many sources as possible, which can then be compile and analyze to draw valid conclusions. Company Overview If anyone can be said to embody the American Dream, it’s Kim Kardashian West. Though critics continue to scoff at how Kardashian West originally clinched her notoriety (by now, we all know the origin story), she’s laughing all the way to the bank. There is her Kim Kardashian West Official App; the mobile game Kim Kardashian: Hollywood; and Kimoji (a set of Kim-themed emojis and GIFs that expanded into physical products). There are her modeling campaigns for brands such as Balmain, and her role as the permamuse for her husband’s fashion line, Yeezy. There’s her newly launched cosmetics line, KKW Beauty, which sold out its first wave of contour and highlighting kits in less than three hours, and a fragrance, slated for release next month. And then, of course, there is the never-ending fascination—fed via Instagram, Twitter, and Snapchat—with her bronzed, impossible beauty. As Kardashian West herself says in conversation with Janet Mock,‘Not bad for a girl with no talent.’ Kardashian West recently got on the phone with the writer, journalist, and trans rights advocate to discuss what it’s really like to be the most famous woman in the world (‘Kim Kardashian West.’ Interview Magazine). The selfie era has birthed a new centimillionaire: Kim Kardashian West. The social media queen has parlayed reality television into a real fortune by selling her followers a mobile game, emojis--and now, cosmetics. Kim Kardashian has now undeniably established herself as one of the most inf luential beauty gurus, dictating trends with a simple selfie or snapchat video. Kim launched her own make-up brand, KKW Beauty, on June 21, 2017 (Robehmed, 6 June 2019). KKW Beauty is her most lucrative exploit yet. Known for heavily contoured face makeup, a technique of using different shades to create the appearance of more defined features. The original contouring and highlighter kits sold out within minutes, as did all the products that followed. To bring KKW Beauty products to the market, Kardashian West works with Seed Beauty, a privately held company based in Oxnard, CA (Baron, 2Apr. 2019)
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Products and Pricing KKW Beauty now has a full line of products, covering the makeup and fragrance categories. The KKW Beauty products all come in nude-colored packaging with stripped-back designs reminiscent of Kanye West’s Yeezy designs or even Kylie Jenner’s Kylie Cosmetics products. The ‘KKW Beauty’ logo is embossed in capital letters onto all products, making for a simple, discrete and cool packaging look. The perfumes, on the other hand, are more extravagant, held within crystal-shaped bottles. The full list: •
06/21/2017: Cream Contour and Highlight Kit, consisting of a contour
stick, a highlighter stick and a double-ended applicator (sponge and brush), $48
(Tucker, https://www.bustle.com/p/kim-kardashians-kkw-beauty-contour-tutorialwill-show-you-how-she-uses-the-kit-68727).
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•
08/22/2017: Powder Contour and Highlight Kit, consisting of a four-shade
contouring palette and a double-ended applicator (sponge and brush), $52 •
12/01/2017: Ultralight Beams Collection, consisting of five lip glosses and
five powders, $160 •
12/01/2017: Ultralight Beam Duo, consisting of one lip gloss and one pow-
der,$32 •
02/16/2018: Cream Contour and Highlight Sticks, consisting of 16 sticks at
$18 each The KKW Fragrances The official announcement came on September 14, 2017, when Kim Kardashian launched her first perfumes, KKW Fragrance, as part of her KKW Beauty line. The collection counts three crystal-inspired scents: Crystal Gardenia, Crystal Gardenia Citrus and Crystal Gardenia Oud. The first has water-lily top notes, whereas the second mixes this with f loral notes and orange and pink peppercorns. Finally, the third is inspired by the Middle East and delivers captivating scents of bergamot and lavender. •
11/15/2017: KKW Crystal Gardenia, KKW Crystal Gardenia Citrus and
KKW Crystal Gardenia Oud: 30ml, $30, and 75ml, $60 •
01/22/2018: Kim Kardashian launches a new collection of heart shaped Ki-
moji perfumes just in time for Valentine’s Day: Bae, Ride and Die. They are available now on KKWFrance.com Each product launch breaks another record: •
The cream contour and highlight kit sold out in less than three hours
•
The powder contour and highlight kit sold out in less than 24 hours
•
The KKW fragrances brought in $10 million in 24 hours (Baron, 2 Apr.
2019).
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Channels of Distribution 1.Official website Kim Kardashian’s beauty products are exclusively available online at www.kkwbeauty.com. Just one of the three perfumes were sold for a limited time at the L.A. concept story The Violet Grey. To keep on top of the products’ release, you need to check her Instagram accounts regularly (www.instagram.com/kimkardashian and www.instagram.com/kkwbeaut), where the star announces the release dates and times for her site (Baron, 2 Apr. 2019). 2.Ultra In order to expand its distribution channels, Kim Kardashian West launched KKW Beauty in the Ultra store in the fall of 2019. Users will be able to ‘try before they buy’, which has previously not been possible due to its web-only retail channel (Prance-miles, 5 Sept. 2019). 3.Pop-up store 1)June 20 to July 27, 2018 at the Westfield Century City in Los Angeles KKW Beauty pop-up boasts a number of firsts for Kim Kardashian West’s signature beauty brand. Kim stocked her most popular products including the contour and highlighting sticks, nude lipsticks, and concealers. There were also other Kim-related paraphernalia like her KKW fragrances, some of which are shaped like her body, her Kimoji x Lumee collection, and some other limited-edition and sold-out items. KKW fans have the opportunity to shop previously sold out products and limited-edition collections from both KKW Beauty and KKW Fragrance (Barbour, 15 June 2018). 2)Dec. 4, 2018 to Jan.1, 2019 at the Orange County shopping center in Los Angeles This is Kardashian’s second pop-up at South Coast Plaza and the installations are heavily consumer/fan focused. KKW Beauty and Fragrance products have been transformed into custom displays to add an element of fun while immersing guests into the aesthetic of the brand (Kim Kardashian West’s KKW Beauty) The pop-up is home to the entire KKW Fragrance collection as well as Kimoji x Lumee merchandise and the all-new KKW Beauty tool range which includes the sponge, puff and cosmetic bag. But it’s more than just a boutique to try and buy products. It’s also home to KKW Beauty’s most Instagrammable space yet. The pop-up’s en-
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trance features Kim’s long-awaited crystal maze. The pathway, lined with holographic, music-themed crystals (modeled after the KKW Fragrance Crystal Gardenia collection), leads to a tunnel lined with over-sized Flashing Light loose powder pigment tubes. In the center, all KKW Beauty products are available for fans to sample. Every nude lipstick and palette is faced open to swatch on yourself to ultimately help you decide what to buy. Staff is also available to assist in matching you to concealers and contour sticks. Stop by the pop-up shop to test each product before buying.
(KKW Beauty Launches, https://www.southcoastplaza.com/stories/2019/02/kkwbeauty-launches-red-1-lipstick-lipliner/)
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Strategy and Advertising Luckily for Kardashian West, overheads are minuscule: Marketing is done by her for free on social media, where she pushes out promotional images to her 205 million crossplatform followers. Manufacturing and packaging is outsourced to Seed Beauty, a private-label producer in Oxnard, California, that also makes Kylie Cosmetics, while sales go through online outlet Shopify. Kardashian West gets to pocket the profits, which run to the tune of 40% in beauty. KKW Beauty marks the latest evolution in the fame game. Rather than pocketing an upfront guarantee or taking home a royalty payment, celebrities are able to start their own companies by outsourcing production, selling online--and advertising to their giant followings (Robehmed, 6 June 2019). Starting with Kim and Kylie who both own businesses via ecommerce, these two sisters have decided to leave the marketing aspect of their businesses up to Instagram. Kylie has launched ‘Kylie cosmetics’ in 2016 and has created a projected value of 1 billion USD by 2022. Kylie’s main strategy is to launch a picture on her Instagram of each product. From there, she moves onto snapchat where she will include a quick video of her swatching all her new products. Kylie typically has music playing in the background of each video, music that is new and would catch the attention of the audience. In terms of Kim’s ‘KKW Beauty’, she primarily follows the same marketing strategy as Kylie. However what Kim did differently was that she threw a launch party in which she invited all the most popular YouTube beauty gurus so that they can come test out her products before they were launched to the public. Kim was extremely smart in doing this since she realized that the main demographic of people who support her and will most likely purchase her products are teens who follow her on social media, and who also follow beauty vloggers on YouTube. She was able to narrow down who her target audience is and find a way to cater to them in order to ensure that they will purchase her products. Kim doesn’t stop there, she also goes as far as to film herself being glammed with her products by some of the guests at her party. Both Kim and Kylie will send out free samples of their products to YouTubers in return for those beauty gurus to post a review of the product on their channel (Nicol, Alicia, 15 Apr. 2018). As soon as her name is mentioned we’ve already created an image in our mind of her and everything she represents — which is the very definition of a strong and power-
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ful brand. Kim runs her brand using the following rules： 1.Be visible: KKW does an amazing job of this —— she’s not only on social media sharing what she’s up to; what she’s wearing and give us an insight into her day in the life…She’s also got her app where she shares more behind the scenes and exclusive content; of course her popular TV show giving an even deeper insight into her life; and on top of all this — she actually gets in front of her fans at events and conferences. 2.Show up, consistently 3.Be authentic 4.Be bold and challenge the status quo: “People don’t buy what you do; they buy why you do it. And what you do simply proves what you believe”. 5.Don’t be afraid evolve (Gadiel, 26 Mar. 2018).
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Values and Mission
Mission and Vision: Beauty Dupes (Short for duplicate, and refers to cheaper products that are comparable to a more expensive, often higher end products) The mission and vision of the company website is unclear as the focus of the website is mainly on the product and e-commerce. Therefore, it may be presumed that the mission of the company is to sell products. Although, Kim Kardashian (2017 cited by Perkins 2017), has previously stated that the purpose of the product is to show the consumer how easy sculpting and contouring can be, using simple techniques and the right product. Therefore, this may suggest, that the vision of the company is to produce products which are easy to use and provide excellent quality for the consumer. Bra nd Ident it y : As t he bra nd was lau nched as a n ex tension of K i m Ka rdashian-West’s own brand, the associations of Kim are, also, applied to the brand. KKW Beauty’s branding is simplistic using neutral tones and nude colors which links to the formula and uses of their products. Kim Kardashian (2017 cited by Abelman 2017) mentioned that she wanted the focus of her products to be on skincare rather than a large colour cosmetics range, she wanted her products to be hybrid between skincare and makeup, which is clearly presented by the house style and typography on her web-
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site (Georgia Jones, 4 Nov. 2017). KKW Beauty is complexion-focused products, “[Contouring] transformed my face when I saw my nose totally change into a smaller nose — and I was hooked from then,” Kim told WWD, adding that she opted to start with this particular set of products first “because I know that no matter what look I’ve been doing — whether it’s a heavier makeup look or light makeup or smoky or color — contour has always been constant. I feel like I have been known for contouring.” Of course, Kim also addressed the question of how her kits will be different than her younger sister’s now infamous Kylie Jenner Lipkits from Kylie Cosmetics. Aside from not launching any matte liquid lipsticks -- which put the young Kardashian family member on the map -- Kim says her collection will be more in line with what an older audience is looking for, namely “less splashy color palettes” and makeup infused with anti-aging skincare properties, as well as full sets of products to create a look, not just one-off pieces. It’s like a collection of cream contours. So, get ready to be contoured (Skinner, 19 June 2017).
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Customers The major difference is that Kim’s products will be“complexion-geared hybrid makeup, with antiaging components and less-splashy color palettes.”Meaning they’ll be geared around the Kim’s current “natural” vibe. On that note, Kim mentioned that the impetus for her contouring and highlighting line came from a place of transformation. She told the outlet that “[contouring] transformed my face when I saw my nose totally change into a smaller nose—and I was hooked from then,” and she opted for a cream formula for its natural finish. Kim said that regardless how her look has changed over the years, contour’s been a constant; anyone who’s found their ideal confidence-game-changer product can probably relate (Nussbaum, 19 June 2017). Although contouring, (a makeup trick that slims the face without surgery) was discovered before Kim’s introduction, it took the makeup world by storm after she showed off some before and after pics of her face. Along with her sisters, this adopted makeup trend has birthed their own aesthetic, It’s now emulated by countless makeup users, and is known as the” Instagram face” across social media platforms (“Here’s the Difference”, 5 July 2018).
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Future Outlook Reality television star and lifestyle mogul Kim Kardashian has her sights set on the Chinese market with plans to open a pop-up store. Kardashian, whose rapper husband Kanye West brief ly lived in China as a child, recently launched her makeup brand KKW Beauty and told China’s official news agency about her plans to do business in the world’s second largest economy. “China has the best make-up, and I would love to explore more of it,” she said from Los Angeles in the interview published Friday. Having “great interest in Chinese culture”, Kardashian said she would like to film part of her reality TV show in the country. She has even set up accounts on Chinese social media sites Weibo and Little Red Book (“Keeping up with China”, 7 Dec.2018). Kardashian West recently strode into the Chinese inf luencer market by joining a local social media platform called Xiaohongshu, or Little Red Book. The app is used by more than 100 million Chinese beauty fans to discover international cosmetic brands and purchase their products. Analysts suspect she joined because she plans to sell her KKW Beauty line direct to Chinese consumers using the app’s native e-commerce functionality (Whaley, 13 Nov. 2018). THE WHAT? Kim Kardashian West starred in a livestream broadcast to China to promote her KKW Fragrance range ahead of Singles’Day. THE DETAILS The reality star used an Alibaba broadcast to mark the arrival of her namesake perfume to Tmall Global. “I love beauty from so many different cultures so I was so proud that there are so many amazing inf luencers in China,” Kardashian West told viewers. Indeed, China’s top livestreamer, Viya, called in during the spot, helping Kardashian West to sell half a million units during the broadcast. THE WHY? Even one of the world’s top inf luencers needs the right platform to sell into China (Calewell, 18 Nov. 2019). Kim Kardashian West didn’t manage to break the Chinese internet in her first attempt to connect with online consumers in the country. Kardashian West showed up for about an hour from New York during a live stream hosted by marketplace Tmall on Wednesday night to promote her perfume line KKW Fragrance. (Tmall is owned by Alibaba, which also owns Inkstone.) The live stream got about 30,000 views on KKW Fragrance’s channel and 189,000 views on an official channel of Tmall (Zhou, 7 Nov.2019).
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Current Competitors Rihanna and Kim Kardashian both stepped into the world of beauty last year and launched their own cosmetic lines. Both lines were highly anticipated and f lew off the shelves. Rihanna released Fenty Beauty, a line that is celebrated for its inclusivity and offers 40 different foundation hues. Kim’s KKW Beauty is praised for its contour and highlight stick. Fans and beauty bloggers say it’s easy to use and great for everyday wear (“Best Celebrity Cosmetic”). According to the list, Fenty Beauty products will range between $20 and $39 per product. The super covetable Match Stix, which are cream highlighting sticks, will come in 10 shades and cost $28 a pop, while the Gloss Bomb “universal lip illuminator” comes in one “universal” shade and will cost $20 (Karsen, 8 Sept. 2017). Fenty Beauty, the make-up label founded by singer Rihanna, has launched a f lagship store on Tmall Global to mark its entry into the world’s second-biggest beauty market. The move is part of Fenty Beauty’s retail distribution expansion across Asia. To mark the launch, Fenty Beauty will also roll out a Tmall Global Super Brand Day promotional campaign on Sept. 20, featuring special offers for new members. The brand expects the new store to “make Fenty Beauty even more accessible to its digitally savvy Chinese consumers whilst staying true to [its] 100% cruelty-free commitment,” as well as serve as a “high-quality storytelling platform” to convey its brand messages to more consumers, it said in a statement (Chou, 24 Sept. 2019). The two-year drama of when Rihanna will release her makeup to the masses is finally coming to a close. The singer announced on Instagram that her cosmetics line Fenty Beauty will arrive in Sephora and Harvey Nichols stores September 8 (Weatherford, 1 Aug. 2017). Fenty beauty has many strengths, among those being what the brand stands for you which is unity and inclusion off all people regardless of race, religion, and age. This beauty line is centralized around uniting beauty around the world no matter what shape or form it comes in. Due to the unique opportunities in the cosmetic industry launching this product right before the holidays was smart business move. It gives the product enough time to get used and recognized enough for more holiday marketing. There really are not many weaknesses for this company. The brand is already notorious and with a face and founder like Rihanna heading the whole company it’s easily liked and recognizable. The main weakness in this company at the time is that its brand
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new and just getting started so they cannot compete on the same level as some other major cosmetic companies (Ward, 16 Nov. 2017).
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Industry Analysis Future Industry Outlook China is set to become the world’s largest market for beauty products, with burgeoning demand for premium cosmetics that knows no borders. Companies, retailers and investors are taking notice. If there’s one thing that even a tenuous economy can’t shake, it’s consumer spending on beauty products. The global beauty industry has grown at a steady 5% rate annually over the past decade—even through the past recession. While steady progress is certainly enviable, the rise of China’s consumer class has presented something even more promising for beauty brands and their investors: a massive, fast-growing market of people who increasingly want to buy expensive products. China is on pace to become the world’s largest beauty market this year, according to a recent Morgan Stanley Research report. And the companies that can offer premium brands sold via online channels stand to capture the hearts and wallets of these discerning beauty-product consumers. Beauty brands, retailers and investors around the world have taken notice and are trying to figure how they can tap into the growth from this promising demographic (“China’s Booming Beauty Products Market.” Morgan Stanley)
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Industry Leaders The beauty industry is a multi-billion-dollar industry which is known to stay strong even in times of economic strife, while the following top 10 cosmetics companies are leading the global cosmetics market for decades. Research studies conducted on the cosmetic industry highlight that the cosmetic market fared well even during the Great Recession of 2008. L’Oréal: As one of the largest cosmetics companies and top beauty brands in the world, L’Oréal began its journey in the cosmetic industry more than a century ago in 1909. Today, L’Oreal generates over USD 30 billion as annual beauty product sales. Its product range includes color cosmetics, skincare, hair care, sun care products, and fragrances. Its most important brands include L’Oréal Paris, Garnier, Maybelline New York, and Softsheen. The company also sells luxury brands such as Lancôme, Giorgio Armani, Yves Saint Laurent, and Kiehl’s. It specializes in professional hair care products such as Kérastase, Redken, Matrix, and Pureology and owns beauty product distributors such as The Body Shop. Unilever: Unilever is among the largest consumer goods companies in the world. The company has also managed to carve a place for itself in the cosmetics industry with popular cosmetics brands such as Axe/Lynx, Dove, Lifebuoy, Pond’s, Close-Up, TRESemmé, Suave, Sunsilk, and Vaseline. In 2017, Unilever announced the creation of a new company, Unilever Cosmetics International to extend its global portfolio of prestige beauty and fragrance brands. Estée Lauder: Estée Lauder is one of the world’s leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products. The company provides prestige makeup, skin care, fragrance and hair care with a diverse portfolio of 25+ brands sold in 150 countries. Since its inception in the 1940’s the company has been engaged in leaving an indelible mark on all aspects of the beauty industry. Today, Estée Lauder continues to push boundaries in the global premium cosmetics market, making it one of the world’s most popular cosmetics companies. Proctor and Gamble: Located in Cincinnati, Ohio, USA P&G holds a significant position in the skin care and hair care business with several well-known brands including Aussie, Gillette, Head & Shoulders, Herbal Essences, Ivory, Olay, Old Spice, Pantene, Safeguard, Secret, Crest, Oral-B, Scope, Art of Shaving and more. The
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company offers a wide range of beauty and personal care products for all men, women, as well as babies and kids. •
Coty: Coty is a New York based company that has built up its beauty busi-
ness through acquisitions in recent years. The company is a big player in Fragrance, professional hair care and color cosmetics. The compa ny ow n bra nds such as Ad idas, Clairol, CoverGirl, David Beckham, Katy Perry, Max Factor, Rimmel, Sally Hansen and Wella. They also own luxury brands such as Marc Jacobs, Calvin Klein, Chloé, Gucci, Hugo Boss, and Philosophy. •
Shiseido: Shiseido was founded in 1872 in Ginza, Tokyo, as the first West-
ern- style pharmacy in Japan. The name Shiseido incorporates the founder’s desire to discover and create new value, a desire that has endured for over 140 years to build the companies unique heritage. This Japanese company makes all types of personal care products including skincare, fragrance, hair care, sun care, body care and makeup. Some of its popular brands include Shiseido, Za, Senka, Anessa, Sea Breeze, Nars, and Bare Essentials. •
Beiersdorf: Beiersdorf has been caring about skin for more than 130 years.
They have a wide range of personal care products including skincare and body care brands. Some of their most important brands include Nivea, Eucerin, Labello, Florena, and La Prairie. The company caters to all sorts of needs and operates across different markets including the mass market, dermocosmetics, and the premium cosmetics market. •
Johnson & Johnson: Despite being a pharmaceutical company J&J has be-
come known for its beauty products across the world. This includes products for baby care, skin care and oral products. It’s most famous brands include Johnson’s Baby, Neutrogena, Aveeno, and Listerine. In fact, several baby products such as oil and shampoo have become synonymous with the name Johnson and Johnson. The company generated a revenue of more than USD 76 billion in 2017. •
Amore Pacific: Amore Pacific is a beauty products company based in South
Korea. The company launched its cosmetics brand AMOREPACIFIC in 2002. The company which focuses primarily on developing natural beauty products has slowly made a name for itself in the beauty industry, benefitting from the K-beauty trend in recent years. The company is growing at a rapid pace with increasing demand for some of its most popular brands including Sulwhasoo, Laneige, Mamonde, Innisfree, Etude, Lolita
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Lempicka, Annick Goutal. Kao corporation: Kao cosmetics is listed in the Forbes ranking as a USD 34.4 billion company. Kao cosmetics company which is headquartered in Japan sells products in all cosmetic categories including color cosmetics, skincare, facial and body cleansers and hair care. Popular brands from this company include BiorÊ, Jergens, John Frieda, and Goldwell (Nick, 9 Oct. 2019). Battle of the beauty divas: which diva rules the makeup world online? From Kylie Jenner to Rihanna, some of the biggest pop culture divas are segueing their talents into makeup. While buyers of the brands Kylie Cosmetics, KKW Beauty (Kim Kardashian West), Fenty Beauty (Rihanna), and Kat Von D represent only 12 percent of cosmetics category shoppers, they account for 29.2 percent of cosmetics category revenue (Miyahira, 16 May. 2019) Fenty has been one of the breakout cosmetics brands of 2017, and is the diva brand whose buyers have the highest dollars spent per buyer in the cosmetics category. Fenty buyers spend $437.32 per year on makeup, compared to an average of $82.62 for shoppers who didn’t purchase any diva brand products. The Kat Von D shopper base spends $364.93 per year in the cosmetics category; KKW buyers spend $317.43, and Kylie buyers spend roughly $197.80 per year in the category ((Miyahira, 16 May. 2019). Fenty Beauty buyers spend five times more than the average online cosmetics buyer
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KKW buyers embrace other diva brands: Slice Intelligence data indicates that when it comes to cosmetics, KKW buyers are the most experimental among the competitive set--only 35.4 percent are exclusive to the brand compared with much higher numbers for the other diva brands. Kylie Cosmetics has the largest number of brand loyalists withpercent of buyers that are exclusive to the brand. Fun fact for our Kardashian fans out there--60.1 percent of KKW buyers are also Kylie Cosmetics buyers, while only 7.1 percent of Kylie shoppers are part of the KKW shopper base (Miyahira, 16 May. 2019).
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Mega Trends Driving the Industry •
What’s Next in the Beauty & Personal Care Industry?
Cosmetic brands are embracing new trends be it the development of male personal care & gender-neutral makeup or the introduction of high-tech beauty devices. Over the years, beauty brands large and small have introduced an assortment of high-tech beauty devices. These devices offer consumers new ways to integrate their personal care routines into their homes using technology. 3D scanning technologies can aid in personalized skincare regimens in the home and on-the-go. For instance, Neutrogena recently revealed the Neutrogena Skin360, a sensor-based skin scanning device with an accompanying app to measure a user’s skin over time. •
What are the Top Makeup Products and Makeup Trends?
The latest trend in the cosmetics industry is the use of premium products. The premium cosmetics market is expected to grow to USD 160 billion by 2022. The premium cosmetics segment accounted for more than 23% of the global beauty and personal care market in 2017. According to Technavio’s report, multifunctional cosmetics are set to be a game changer and trendsetter over the next few years. There is an increase in demand for multi-functional premium cosmetics as these products allow consumers to obtain the maximum value for the most expensive makeup brands. Moreover, these products are developed by makeup companies keeping in view the increasing need for convenience amidst the busy schedules of the modern consumer. These products offer a rapid solution to the multiple needs of customers while catering to their busy lifestyle. •
Cosmetics Industry Market Forecast: Future Trends of the Top Cosmeti
Companies Consumers in the beauty and personal care (BPC) products market are extensively demanding for innovative and multifunctional beauty products. Manufacturers seek to cater to this demand and expand their product portfolio with organic and inorganic products. Technavio’s market study identifies the introduction of innovative ingredients and technologies as one of the key trends that will lead to the growth of the probiotics cosmetic products market in the coming years. Our market research analysts estimate that this market will grow steadily at a CAGR of almost 8% by 2022 (Nick, 9 Oct. 2019). •
Sustainability and ethical conduct
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Individual expression
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•
Health and wellness
•
Smart and connected
•
Evolution and the wider environment
•
Easy to use and affordability
•
Experiential and sensory engagement
•
Comfort and safety
(Pitman, 24 June 2019) 6 Beauty Industry Trends in China Brands Must Know •
Chinese brands are seeing positive momentum: China’s cosmetics market
is progressing because consumer preferences are constantly changing, and local brands have an edge in understanding consumer needs. Thus, international brands need to show an ongoing commitment toward excellence and innovation in the beauty market. •
The male segment is seeing unprecedented growth
•
The rise of new aesthetic trends (and the fall of K-beauty): In fact, the South
China Morning Post mentions that the popularity of America’s West Coast aesthetic has been on the rise in China. This change in consumer trends strongly relates to a search for authenticity, and consumers now want products that allow them to express their identity and individuality rather than the uniformity promoted by K-beauty. •
Livestreaming is the new norm in the beauty industry: China’s beauty in-
dustry is pioneering new technologies that have helped brands better engage with their followers, such as VR exchanges to AR shopping features. •
Minimal-ization: According to research by Mintel, Chinese consumers
“are pursuing color cosmetics products that come in smaller packaging or are effortless in their application.” Mini lip palette and lip gloss sets that include various shades and are sold in smaller packs, sample-size eyeshadow, and travel-size cosmetics kits are now prized products. •
The rise of partnerships, acquisitions, and mergers between multinational
brands and domestic players: Multinational beauty brands still dominate the Chinese market but the winds of change are forcing these companies to revise their business strategies and seek out critical alliances to improve their positioning and speed up growth (Achim, 8 Oct. 2019).
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Factors Affecting the Industry •
POLITICAL FACTORS: STRICT GUIDELINES
•
ECONOMIC FACTORS: A RECESSION-RESISTANT INDUSTRY
•
SOCIAL FACTORS: BRAND LOYALTY
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TECHNOLOGICAL FACTORS: 24-HOUR ACCESS
•
LEGAL FACTORS: Ingredients in the beauty industry are tricky. They can
be FDA-regulated without also being FDA-approved. The Federal Food, Drug and Cosmetic Act (FD&C Act) and the Fair Packaging and Labeling Act (FPLA) are the leading laws in which the beauty and cosmetic industry must follow. •
ENVIRONMENTAL FACTORS: AN ATTEMPT IS BEING MADE, BUT
THE EFFECTS ARE SMALL (“PESTLE Analysis” 30 Mar. 2018). •
The Online Factor: “The Internet has put tremendous pressure on every
category of business,” Adams says. Whether it’s shaving products or deodorant,customers often want products that can be sent directly to them, which means that personal care companies have to make sure they can compete with prices online. •
Environmental Impact: More and more shoppers are reading labels and
thinking about the environmental effect of the products they’re using. Which means that buzzwords like “sustainable” and “organic” are growing in popularity. •
The Ethical Component: Customers are also looking to make sure that
products they use were not tested on animals. •
Effectiveness: “Whether it’s a fragrance or skincare, it has to do what it’s
advertised to do,” Adams says. •
Wellness: Customers are asking themselves: How are the products being
manufactured? What’s in the packaging? How will that impact them? From concerns about BPA to phthalates, customers are looking to make sure products won’t adversely affect their health (Parrish, 31 July 2018).
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Secondary Research - Market and Consumer Overview Market Research Overview The growth color cosmetics industry increasingly rides on the back of favorable changes in lifestyles of populations, world over. Over the past few years, the adoption of new trends in the overall cosmetics industry has been punctuated by changes in various aspects of beauty and fashion. New products in the color cosmetics market with tall claims and large purported benefits, especially relating to skin care and aging. The color cosmetics market has started evolving since the beginning of this decade and progressed to new heights along the trajectories as new macro-trends emerged. The large strides taken by the entertainment industry further brought color cosmetics to the fore for worldwide consumers, majorly women, looking to benefit from this wave of beauty brands. These strides have been punctuated by several beauty trends in social media platforms (“Color Cosmetics 2017 to 2022”). New York, NY, Aug. 21, 2019 (GLOBE NEWSWIRE) -- Zion Market Research has published a new report titled “Facial Makeup Market by Product Type (Face Powder, Facial Foundation, Facial Concealer, Face Bronzer, Blush, and Others), by Price (Economic and Premium), and by Distribution Channel (Supermarket/Hypermarket, Pharmacies, Health & Beauty Retailers, and E-Commerce): Global Industry Perspective, Comprehensive Analysis, and Forecast, 2018–2025”. According to the report, the global facial makeup market was USD 8.91 billion in 2018 and is expected to generate around USD 13.4 billion by 2025, growing at a CAGR of around 6% between 2019 and 2025 (Zion Market, 21 Aug. 2019).
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(Size of the global color cosmetic make-up market from 2012 to 2025 (in billion U.S. dollars) * This statistic depicts the estimated size of the global make-up market from 2012 to 2024. In 2024, the global make-up market is estimated to be worth about 85 billion U.S. dollars (Shahbandeh, M, 4 July 2019). The global color cosmetics market size was valued at USD 57.2 billion in 2018. Rising spending on personal grooming, changing lifestyle, and improved purchasing power among women are among the factors driving the market. Countries such as U.S., Germany, China, India, and Brazil are some of the key markets.
(“Global Color Cosmetics”) China has already been the world’s second-largest cosmetics consumer market only behind the United States, with the retail sales rising by 4.2% year on year to RMB261.9 billion in 2018. Spurred by urbanization, people’s higher income, and mature consumer education. Chinese cosmetics market witnesses the burgeoning online sales. The penetration rate of online cosmetics has been on a rapid rise in China since 2009, hitting 25.3% in 2018, far above the levels of UK (12.1%), the United States (10.9%) and Japan (9.2%). China’s online penetration rate of cosmetics will range at 31.4% in 2022 (“China Cosmetics”, 21 May 2019). China is on pace to become the world’s largest beauty market this year, according to a recent Morgan Stanley Research report. And the companies that can offer premium brands sold via online channels stand to capture the hearts and wallets of these discerning beauty-product consumers. Beauty brands, retailers and investors around the world have taken notice and are trying to figure how they can tap into the growth from this
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promising demographic.
(“China’s Booming Beauty Products Market.” Morgan Stanley) So far, foreign-funded enterprises still play a dominant role in China’s cosmetics market, an 86% share of the total retail sales. To cater to the demand of Chinese cosmetics consumers and gain more market shares in China, L’Oreal, Estee Lauder, Procter & Gamble, Shiseido, and other foreign companies have constantly adjusted the brand strategies and intensified the building of channels. Meanwhile, Chinese companies led by Jahwa and Marubi are also stepping up the layout of the cosmetics market. Japanese, Korean, European and American brands have long dominated the cosmetics market in China. In 2017, only 3 Chinese brands ranked among the top ten cosmetics brands in China, namely Shanghai CHICMAX (sub-brands: KANS, One leaf, etc.), Shanghai Pechoin (sub-brands: Pechoin, Sansen, etc.) and JALA Corporation (subbrands: CHANDO, MAYSU, etc.), while the rest were foreign brands (“China Cosmetics”, 21 May 2019). To sum up the Cosmetics Market in China •
China is the most promising Market for cosmetic in the word.
•
Above all, it will be the biggest market in the world for almost every beauty
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Products •
Almost every product category, demand is increasing
•
The best market for Foreign Brand. 80% of the market is dominated by in-
ternational Brand •
Chinese girls Consuming power increase year after year
•
Make-up is becoming more and more popular among women
THE BEAUTY MARKET IS JUST IN ITS EARLY STAGE IN CHINA
(“Cosmetics in China: Top Marketing Strategies to Succeed.” Marketing China, 2 Jan. 2020)
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Product Research The term make-up refers to cosmetic preparations, such as powder or creams, which are designed to enhance the appearance of the body, especially the face, by application. Make-up comes in a broad variety of products. Lipsticks, concealers, foundations, bronzers, mascaras and eyeliners are decorative products that are commonly used by women to boost or cover their facial features (Shahbandeh, M, 4 July 2019). Facial makeup products are used to enhance one’s facial features. They can be applied over foundation and makes the skin color even and gives the impression of smoother skin. Facial makeup products are a subset of cosmetic products, which are usually applied on the face to enhance and highlight various facial features. Moreover, they also aid in concealing apparent imperfections like blemishes, pores, freckles, dark spots, and wrinkles. Facial makeup products even provide anti-bacterial, moisturizing, antiseptic, and anti-inf lammatory properties. These factors are estimated to fuel the global facial makeup market over the projected timeframe. The rising awareness among global consumers regarding the detrimental effects of synthetic ingredients used in facial products is predicted to fuel the demand for organic and natural makeup products for the face over the last few years. However, stringent government regulations regarding usage and approval of materials in facial makeup products may hamper the facial makeup market in the upcoming years (Zion Market, 21 Aug. 2019). Facial products held the largest share of more than 25.0% in 2018. Growing demand from working class women population is a key factor for the segment growth. Facial foundation, concealer, powder, and bronzer are among the popular products in this category. While face powder and foundation are the leading products, the demand for concealer is growing rapidly on account of its increasing use for overcoming ageing effects by masking dark circles, age spots, and large pores. Lip products are expected to register the fastest CAGR of 7.0% from 2019 to 2025. Increasing purchasing power in emerging economies including China and India has resulted in promoting the consumer spending on premium personal care products. Moreover, growing women working class population is expected to drive demand in the near future (“Global Color Cosmetics�). Market Drivers Over the recent years, consumers have become conscious about their physical ap-
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pearance due to which they are preferring products which can help them enhance their inherent beauty and highlight certain features. This has contributed in boosting the overall growth of the global face makeup market. Rising consumption of BB and CC creams across the globe is another major trend providing a thrust to the market growth. These creams offer multi-functional benefits, therefore reducing the time and effort required for skincare. The inf luence of social media and the emerging trend of selfie has led to an increase in the interest of consumers for face makeup products, particularly amongst the young population. Moreover, constant product innovations by manufacturers coupled with aggressive promotions have contributed to the growth of the market. Growing trend of highlighting as well as contouring has created a positive outlook for the face makeup products, especially in the developed regions. This can be attributed to the fact that contouring helps in slimming down the chin, nose, forehead and other parts of the face, while highlighting aids in providing a healthy glow to the skin (“The 2019 Face”,12 July 2019). To understand the future of the beauty industry, context is key. Consider the beauty industry in the context of broader cultural shifts. For instance, in Japan, the resale market is even hitting cosmetics — indicating the global impact of sustainability.
Beaut y
is taking notes from the streetwear space, with beauty brands increasingly leveraging tactics common in street culture such as limited-edition products and collaborations. Clearly, localization will continue to play a big role as beauty brands take cue from adjacent sectors. And of course, look towards regulation and company initiatives to promote transparency — the underlying trend powering areas such as “clean” beauty and “natural” products. Expect to see major implications for cannabis-based beauty. On the tech side, keep an eye out for new — or improved — technology applications in the beauty industry. On the theme of personalization, Mink resurfaced to make the world’s first 3D portable makeup printer available for pre-order earlier this year. And so, the beauty industry is increasingly becoming tech-enabled. Technologies including AI, 3D printing, and perhaps even blockchain, will continue to make the beauty product lifecycle more efficient and personalized for consumers. Between these short- term pressures and long-term changes, the beauty industry will be an exciting space to watch in 2019 and beyond (“15 Trends Changing”).
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Distribution Channels Research The distribution channels of cosmetic product include supermarkets, pharmacy & drug stores, department stores, direct selling, specialty stores, internet retailing, beauty salons, and others. The geographic segmentation includes market value and volume for the key countries in North America, Europe, Asia-Pacific, and Rest of the World (ROW). The off line channel dominated the market, accounting for over 85.0% share of the global revenue in 2018. Hypermarkets and specialty stores are among the popular retail outlets in the off line distribution channels. These stores stock a wide array of brands available at different price points. Avon is one of the largest direct sellers of personal care products in the world. It follows the door-to-door selling marketing model for the distribution of its products (“Global Color Cosmetics”). The beauty industry has seen enormous innovation and entrepreneurship in the last several years. Countless new brands have been created and an endless array of new ingredients have been developed. But one thing that has changed in almost every other sector of retail has not yet disrupted the beauty industry: beauty products are still sold primarily as they always have been, in stores. Sure, there are replenishment sales on Amazon, and Glossier has an exceptional online business, and there are some other sites selling beauty direct-to-consumer as well. But for the most part, the traditional mode of going to a store to try out a product in order to learn about it still dominates. Unlike many other types of retail, online purchasing of new products has not caught on in the beauty business yet. Industry experts will tell you it’s because it’s hard to see if a product works for you without using it yourself first and that’s stores’ big advantage. Beauty products are particular to each user so it’s among the last industries to adapt to online. That’s starting to change. The latest crop of new brands are taking a different approach to developing their businesses. They are focusing much more on selling directto-consumer and less on selling in retail stores. Although they haven’t eliminated traditional retail completely, they are doing it more strategically either to build awareness or to generate revenue to get to scale faster. What we’ve seen in other sectors of retail is that the companies that are founded to include selling direct-to-consumer in their structure, what’s now called “digitally native,” are the ones who are able to disrupt legacy retail store selling. The development of these direct-to-consumer businesses are an important sign of change in retail for beauty and a challenge to established retail channels.
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There are numerous challenges for a beauty brand to sell directly to consumers without involving a retailer. The biggest challenge is getting consumers to be aware of and interested in the brand without spending all your investors’ money. The way these new brands do it is by identifying a market that has been overlooked or taken for granted by larger, more established companies, targeting their promotion at consumers whoseneeds haven’t been addressed. Those consumers are very receptive to the brand’s entreaties because the messaging is focused on what they’ve been looking for. And that is how the beauty industry starts to transition away from stores and increase direct-to-consumer retail sales. It had to happen; beauty is not immune to the forces affecting all retail. The beauty industry is now, finally, starting to see how it could be threatened by direct-to-consumer sales from brands. That isn’t going to go away, it’s going to accelerate and we know that because every other retail sector is seeing is that acceleration (Kestenbaum, 5 Sept. 2019). DISTRIBUTION IN CHINA •
EXCLUSIVE DISTRIBUTOR
Most of the time, it is complicated to deal with an exclusive distributor in China. Once they get the certification and the authorization to represent a brand in China, they start to change their way of dealing with their Supplier.
•
MULTI DISTRIBUTORS
The Brand is controlling the Distribution process. Deal directly with distributors, agents, and resellers. It allows a presence in China, its own registration and strong
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branding.
Registration: the brand needs to have a legal presence and have the certification of the products. Strong Branding: because having a strong Brand open every gate in China. Negotiations are easier, shorter and better. That is how most of the Chinese local Companies use to develop their business in China. In other words, no branding, no distributors. •
DEVELOP YOUR OWN DISTRIBUTION
Control and develop your own distribution is a must in China. A lot of Consumers get information in physical Stores and then buy Online. Therefore, having your own Store in a Shopping mall is also a great way to increase awareness. Shopping is a widespread hobby in China. •
E-COMMERCE
Usually, the E-Commerce part is the most profitable and easiest way of selling beauty products in China (“Cosmetics in China”, 2 Jan. 2020). China’s e-commerce market is the largest in the world, with 2019 sales tipped to reach $2 trillion, more than triple U.S. sales of $600 billion, according to eMarketer. China’s strength in e-commerce might be exemplified by the cosmetic sector. A recent report produced by market-research firm Kantar for Tmall indicates that annual online sales of cosmetics, skincare, and personal-care products in China grew at a sizzling 46%, 40%, and 37%, respectively, over the past 12 months, outpacing the overall consumer goods category, which increased by 34% (Lavin, Frank, 20 May 2019).
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Promotion and Advertising Research High investment on advertising and marketing initiatives including promotions on social networking platforms and endorsements by celebrities have increased brand awareness and visibility among the consumers. Expansion of the digital marketing has been an important driver of this industry. Manufacturers are collaborating with the socialinf luencers for their marketing and press strategies. This strong digital campaign has been shifting the shopping behavior of the consumers towards the e-commerce portals. Instagram, YouTube, Facebook, Twitter, Pinterest, and the Beauty Blogs are the main digital marketing channels, which are inf luencing the consumers to try new cosmetic products. For instance, the Google search for “foundation for me” has been doubled during 2013 to 2018. Thus, the digital platform is a crucial marketing tool for the producer, where they directly interact with the consumers (“Global Color Cosmetics”). 5 marketing trends in the beauty industry •
Digital disruption: The beauty sector has long understood this new reality.
From Facebook to YouTube, to Instagram, they are ahead of the curve when it comes to social media marketing adoption. According to Statista, 96% of beauty brands already have an Instagram profile.
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In Facebook’s official survey, 80% use Instagram to decide whether to buy a product or service. It makes sense — Instagram is like a consolidated review platform and it’s now a crucial part of the buyer’s journey. •
Inf luencer marketing: With consumers today craving for authenticity and
inclusivity, beauty brands are collaborating with inf luencers to better reach and interact with their target audience. Inf luencers typically have a well-curated network of followers that trust their opinions and relate to their stories. Just like how you trust a friend’s advice.
One of the main drivers of this shift is the growing number of ‘digital-born’ consumers, also referred to as Generation Z. With 65% of this group relying on social media to discover and select beauty products, these expectations have in turn impacted the type of content (and inf luencers) that brands use. User-generated content: In the beauty space, makeup reviews and tutorial videos are probably the most popular type of user-generated content. Here’s an example of the type of engagement user-generated content has created for Benefit Cosmetics 16k in engagement and 190k in potential reach.
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— over
•
Localization: Clearly defined brand values coupled with an in-depth un-
derstanding of your target customer make up for a great foundation for your local digital strategy. From there you can localize your campaigns & content, collaborate with local inf luencers, and prioritize social channels where you can best reach your audience. •
Experiential marketing:Consumers today are looking for dynamic and en-
gaging experiences with brands. Just as with any other trend, beauty brands are quick to capitalize on experiential marketing. Creating new touch points as they marry retail and digital into an omnichannel approach. We’re talking pop-ups, immersive events, direct SMS text services, and installations that are extremely social-media-worthy. In 2018, Japanese beauty brand SK-II launched the first Smart Store in Singapore transforming the shopping experience for consumers. Giving them a way to learn more about their skin and discover the right product for their needs. Last year, we also saw brands like Glossier, Benefit, and L’Occitane open their beauty-themed pop-up cafes. The idea here is for a beauty brand like L’Occitane to showcase their brand story and take their audience through that French-style sensory, from within Singapore (Christian, 4 June 2019). WHAT ARE THE TOP 4 MARKETING KEYS FOR COSMETICS IN CHINA? •
CHINESE E-COMMERCE CHANNELS: Tmall / Taobao& JD
These Platforms provides usually a lot of useful information for Buyers such as long and detailed product pages. To have a presence on these platforms is an absolute necessity for large Brands and far too expensive for small Medium Brand. However, tmall has just released a new service that targets small and mi size brand; It is called TOF or tmall oversea fulfillment; To have a presence on these platforms is an absolute necessity for large Brands and far too expensive for small Medium Brand. However, tmall has just released a new service that targets small and mi size brand; It is called TOF or tmall oversea fulfillment. •
Weibo is the number one platform for Beauty KOL, cosmetics bloggers. It is the place where all Cosmetics Superstar starts to build their community. Most of them keep publishing on Weibo because it allows them to reach their fans and to get the virality of their posts. (Not the case of Wechat) In addition, Female consumers usually follow several beauty bloggers because they like tutorials,Brand review and think it is a trustworthy
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source of information. •
BAIDU
The Chinese Search Engine is still very efficient. Why? Because, as we mentioned earlier, consumers are looking for third party information. It is ultra-easy to make research on •
RETARGETING WORKS
Remarketing or Retargeting visitors to your website is a good strategy to get awareness. It is a Cost-Effective budget to increase the number of apparitions of the brand in front of users. Smart business redirect clicks on Tmall or E-commerce platforms. After 7-10 visuals contact with a brand, Chinese consumers will be more willing to buy their products. They will also found it reasonable to click on ads with discounts and make the purchase on Tmall – a platform they trust. •
WECHAT: THE PERFECT TOOL FOR A NEWSLETTER
Consumers will be inf luenced by their friends, by the conversation that they can have on WeChat, or discussion that they can follow on groups. The moment system is the best way for them to get personal feedback about Brands, but usually, they do not publish Brand Reviews. Groups are a better source of discussion. Peoples discuss Brands, Solutions to solve their problems or product recommendation. Some Wechat Accounts are also followed by a large number of people. •
LITTLE RED BOOK
Purchase sharing App like little Red Book is getting extremely popular in China, especially among Chinese women. Xiaohongshu has a focus on cosmetics and beauty and 80% of the users are women. They have good purchasing power and love international cosmetics brands. The platform content is mainly created by its users (UGC) via“buying notes”. It is a great platform for Kols to develop themselves and create a community. Working with these KOL is beneficial for any brand. You basically buy their follower base as well as their credibility. In RED, you also have the possibility to create an online store within the App and ads hyperlink to your other online store (“Cosmetics in China”, 2 Jan. 2020). China’s cosmetics market is constantly evolving and the bar for attracting attention is being raised every day. Brands should connect with third parties, take advantage of cultural trends, and develop customized and limited-edition products to capture consumers who love a story along with the products. •
Intellectual property marketing: IP marketing involves collaboration with
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original content such as movies, novels or animation. From hashtags alone, this tends to generate the greatest digital buzz in the Chinese cosmetics market. For example, L’Oréal Men recently launched a limited-edition product line when the movie Avengers: Endgame was shown in China. In addition to promotions on social media platforms (Wechat, Weibo, LRB and Douyin), L’Oréal Men launched pop-up stores in major cinemas and advertised on digital ticketing channels. More than 100,000 units of limited-edition products were sold on Tmall during the movie’s release. Other brands have not been slow to adapt to this marketing technique. Collaborating with the TV show National Treasure, L’Oréal launched a line of lipstick that evoked colors from ancient China, connecting both culture and history. Cross-category marketing: Cross-category marketing refers to branded collaboration with art and cultural events. Many brands have launched limited-edition items in collaboration campaigns with museums. Perfect Diary, one of the more successful Chinese cosmetics brands in the past two years, collaborated with the British Museum, to launch two “Fantastic” eye shadow kits. The eye shadow shades, one of warm colors and the other cold, were inspired by Italian Renaissance “maiolica” art. Both kits came with tote bags and a maiolica-shaped pair of earrings. Besides the glimmering, localized look of the kit, a large volume of branded articles and short videos posted by inf luencers helped drive sales and affinity. Education on maiolica art and Renaissance history were also provided on social media platforms, with content “Provided by Perfect Diary.” This series of marketing tactics turned the kit into a top-ten product on Tmall. The collaboration generated $1.3 million during Single’s Day sales, bringing f lagship store sales to almost $5 million (Lavin, 20 May 2019).
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Consumer Research Demographics, Psychographics, Lifestyles and Preference The Contemporary Cosmetics Consumer:
It’s no surprise to see that women are the biggest cosmetics consumers, regardless of category. What is instructive, however, are the variations across cosmetic categories. While prestige and mass cosmetics both attract a fair number of men, niche cosmetics trails those categories by a significant amount. That’s likely due to niche cosmetics brands’ limited product offerings, which may not be designed to attract a broader audience. This breakdown is likely due to multiple factors: Prestige brands like Chanel have courted male consumers by creating product lines for them. On top of that, prestige and mass cosmetics are also the best-known and most established brands, making them doubly likely to gain attention from men.
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Niche cosmetics skew toward younger consumers (17-24 y/o). That makes sense, because many niche cosmetics brands market themselves as the latest thing. Equally important is the consideration that younger consumers have yet to develop strong brand loyalty, and therefore try new products on a more consistent basis than older consumers. In contrast, prestige cosmetics are especially popular among 25-54 year-olds. Not only are these consumers more able to afford higher-end brands, they’re also more conscious of concerns like sun damage and wrinkles and may seek out cosmetics with quality ingredients that complement their skincare regimens.
What’s remarkable about the mass cosmetics category is the relative lack of agedriven skew. The volume of conversations about mass cosmetics overall indicates this isn’t due to a lack of popularity, but instead points to mass cosmetics’ ubiquity. Simply put: mass cosmetics have mass appeal. Our data points to African American and Hispanic consumers as the most passionate about cosmetics generally, a finding that’s perhaps more telling than the category breakouts. The other notable finding here is that there isn’t much variation within any race/ ethnicity’s lowest percentile and its highest. This is indicative of the demographic groups’ degree of involvement in the market. Their commitment to their beauty regimen holds true regardless of the level of prestige, although it may be inf luenced by product type, benefits and concerns, and so forth. However, when looking at race/ethnicity, keep in mind that the brands within each category may vary wildly from the categories themselves. For example, while the prestige cosmetics category as a whole skews toward African American and Hispanic consumers, Shiseido skews Asian (94th percentile) and white/Caucasian (88th), whereas NARS
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skews African American (81st percentile) and Hispanic (78th).
Let’s take this one from the bottom up. While it seems obvious that higher income consumers would be more aligned with prestige cosmetics—which often come at a higher price point—that’s not necessarily the case. Rather, prestige cosmetics don’t show a strong skew toward any income level. One possible explanation for this is that consumers may view prestige cosmetics as splurges, making them highly desirable but limited additions to their makeup bags. In the middle-income range, we see solid representation in niche and mass cosmetics, with relatively less affinity for prestige brands. Still, most of the variation here is splitting hairs, not meaningful skew. Finally, lower income consumers lean toward mass and prestige brands. Mass makes immediate sense—these cosmetics are readily available and are often at attainable price points. But what’s the deal with low income consumers’ embrace of prestige cosmetics? Again, we might be able to chalk this up to aspirational consumption. Consumers may invest in some high-end products, supplementing them with more affordable mass cosmetics (The Contemporary, 25 Feb. 2019). Cosmetics Consumers in China From the perspective of Chinese cosmetics consumers, people born in the 1970s1990s are the leading force whose consumption accounts for nearly 90%, of which nearly
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40% is contributed by those born in the 1980s. In addition to traditional gifts such as f lowers and chocolates, imported cosmetics, especially lipsticks, have become a new option for gifts, with the sales volume soaring by 76.5% year on year. In recent years, people born between 1995 and 2000s have a growing demand for cosmetics as they enter colleges, universities, and society. Compared with other age groups, they are featured as follows: They are keen on online shopping with changing demand, diversified brand preference and focus on both high-end and affordable brands They are brought up in Chinese and foreign cultural turmoil, but they have more confidence in Chinese culture Amid the prevailing fandom and participatory culture, they like to try cyberstar products and new products. Changes in demographics, consumption upgrades, skincare and makeup habits will be crucial to the future Chinese cosmetics market (“China Cosmetics Market�, 21 May 2019). In cosmetic: Higher Prices = better Quality
A survey (of OG&C Consultant) explained that 58% of Chinese People claimed that they want a more expensive product, while 36% of Chinese Consumers upgraded to more premium brands. 39% of Chinese Beauty Consumers explained that better ingredients and better functionality were the key reasons for their switch to premium brands. LUXURY COSMETICS IN CHINA ON THE RISE For consumers in China, social status is very important. The average Chinese con-
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sumer use luxury Brands or expensive products as a way to show off their wealth. Chinese are “new Consumer”, as a result, they tend to prefer higher-priced items because Higher is better. Top Beauty Brands are benefiting from this strong appetite for “Cosmetics” and popular Products are anti-aging treatments (even to young ladies). INTERNATIONAL BRAND FIRST For many Chinese girls, foreign brands are “more attractive”. There is a kind of “premium selection ” that comes with French brands that makes them a favorite among shoppers. International branding is key to catch this segment of the market. •
French & European Brands are seen as Innovative and High End.
•
Japanese Brands have also a good image in this Premium market.
•
Korean brands, Asian brands, and US brands have more mass-Market posi-
tioning. THE PROBLEM OF BRAND-LOYALTY IN CHINA It is well known that consumers in China tend to have No-loyalty to brands, often trying a different brand however once they find one they like, they will stick to it. At the same time, Chinese Female Consumers are “very brand-conscious” – buying from “famous brands” as they believe higher prices equate to higher quality. Chinese consumers are now very focused on getting the best Product for Value and always comparing brands, so consumers’ feedback has a huge impact on their decision. MAGIC KEYWORDS FOR COSMETICS IN CHINA: NATURAL, GREEN & ORGANIC In Asia and especially in China, the population is concerned about Scandals and pollution. Consumers have started to think about the outcome of the pollution on their health and skin. This growing awareness has been particularly beneficial to air purifiers companies and skin care brands. Meanwhile, the increasing awareness of envi onmental issues is pushing consumers to turn to more eco-friendly products labeled organic and natural (“Cosmetics in China”, 2 Jan. 2020). Buying Habits Buying habits are changing. Digital technologies enable consumers to experience brands in entirely new ways. The modern consumer expects a two-way conversation and
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nowhere is this more the case than in the cosmetics industry. Suzy Ross, senior advisor at Accenture, explains “Brand owners today have a direct relationship with customers. Brands who put their customers at the heart of the product and the product experience will beat those who don’t”. Cosmetics is undergoing massive disruption and as technology evolves, there are new challenges, opportunities, risks and rewards opening for brands and marketers. As Ukonwa Ojo, senior VP at CoverGirl, explains: “New technologies make it easy for beauty lovers to access trends, looks, content and experiences. Shopping behaviours have shifted towards e-commerce and specialty versus traditional bricks and mortar. And it is no longer just about beauty basics like mascara, foundation and lipstick. People want to try liners, contouring and highlighting products, shadows, glitters, glosses and so much more. The range of choice within brands has expanded as dramatically as the number of brands themselves.” Social media has completely disrupted the way brands connect with consumers, but also ushered in a totally new business model. Instagram and YouTube have changed the way consumers interact, becoming marketing channels, and indeed sales channels, in their own right through PR, digital advertising, paid-for inf luencer marketing and organic inf luencer behaviour. Stephane Berube, CMO at L’Oréal, talks about his company as both manufacturer and service: “Our consumers are at the heart of the business and we work tirelessly to offer products and services they want and need. They are now in the driver’s seat – they are no longer going to be told what to do or what do buy. They know what they want and they will interact with brands how they want to.” Cosmetics brands have quickly moved from a product-based model to an experience-based model. It is no longer just about the product. As Suzy Ross says, “consumers are looking for a fully interactive experience with their cosmetics brands becoming part of their lifestyle”. Big brands are responding to this, for example, L’Oréal now allocates 30% of its media spend to digital channels. A significant initiative from the company has been its ‘Beauty Squad’ campaign, where a number of inf luencers created YouTube videos and articles for both L’Oréal’s website, social channels and their own channels, tapping into a combined inf luencer reach of 5.5m. It meant that L’Oréal had created the kind of content users are searching for – mainly beauty tips, advice and tutorials. Here are three major consumer trends:
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#1 Made for social Social media does more than channeling trends, it also creates them, and is now driving the creation of new products. Brands that have been able to react quickly have been able to unlock whole new revenue streams. For example, the desire to be “selfieready” for younger consumers who want to portray a f lawless look on social media and emulate the style of stars such as Kim Kardashian or Tanya Burr, has given rise to new camera-ready make up ranges. Almost a quarter (22%) of women aged 16-24 said they wear make-up to create a camera-ready look, up from an average of 7% the previous year. Brands are no longer in control”, says Ojo, “Our consumers demand what they want and then co-create with us. Social media enables a two-way dialogue. Marketers can stay ahead by being consumer-obsessed: constantly attuned to what fans, followers, competitive users and beauty lovers, in general, are telling us they want. And, hearing and seeing certain signals even before they’ve fully emerged. We do a lot of trend sensing through sophisticated research and social-listening techniques.” Some brands are using Artificial Intelligence (AI) to help - Berube explains what L’Oréal is doing: : “AI helps us predict and forecast market-wide trends and so serve the consumer. AI helps us connect with our consumers, allows us to personalise our approach and develop our business in line with consumers.” #2 The inf luence of inf luencers Social media is also enabling established celebrities with huge social presence to create their own direct-to-consumer brands that target specific market gaps. Kim Kardashian has become the face of contouring, regularly posting videos on Instagram with her professional make-up artist @MakeupbyMario showing users how they can‘contour just like Kim’ at home. Then there are Kylie Jenner’s lip kits: Jenner, an Instagram star, created a global online buzz around her make-up empire, Kylie Jenner Cosmetics. The company has reportedly made $420 million in retail sales in just 18 months. The first product, Kylie Lip Kits, sold out within a minute and sent prices on re-sale sites soaring. Fans took to stalking her social media accounts and app for hints on when restocking would take place and some spent hundreds buying the kits on eBay. Most brands can only dream of this type of response. The‘amateur inf luencer’has also become vital to the industry, that is people who produce YouTube tutorials with beauty application tips, making them even more relat-
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able: the consumer regular looks for expert guidance away from a physical store. Last year, according to Statista, beauty-related views on YouTube increased to 88 billion up from 55 billion in 2016 – and one billion a decade ago. “There is no average customer in the beauty market,” explains Kyra White, head of brand activation at Benefit Cosmetics. “Some feel overwhelmed and need guidance on products and techniques, others know what they want and need and are constantly watching beauty tutorials and reading the latest reviews.” This type of socially enabled expertise and on-line experience is rapidly eclipsing expensive above-the-line brand activations and in-store experiences. One of the most popular YouTube stars on the planet, Yuya, is a 24-year-old beauty blogger with over 21 million subscribers to her channel. Such environments are challenging for marketers who have little control over this socially enabled exposure of their brand. As a result, big brands are increasingly collaborating with the inf luencers and the YouTubers in an attempt to help articulate their brand promise. #3 Individual customer experiences The cosmetics industry has become much more focused on inclusivity with new products catering for every demographic, and marketing campaigns showing consumers of all sizes and ages. Brands across the industry are revamping how they speak to and listen to consumers, who largely just want to find products that suit them. Rihanna’s Fenty Beauty range has created an ultra-personalised product range. The Fenty Beauty range brings more choice to black women, its Pro Filter Foundation line, carrying 40 tones, saw the darkest sell out fastest. The company was valued at a reported $72m in the first month the products went on sale - clearly it has found a winning formula. This change is long overdue, for example, according to a 2016 Raconteur study, 61% of British women were not able to find their foundation match, and women with darker skin tones were paying 70% more for foundation from specialist ranges. Mintel research found that older women feel frustrated by a lack of information on how to care for their skin as it ages. As Suzy Ross says, “the cosmetics industry is not just about selling products, it about giving someone confidence, a feeling of wellbeing and satisfaction. That can’t happen unless there are products and experiences that suit everyone” (Simpson, 27 Mar. 2019). THE WEB: A HUGE INFLUENCE ON PURCHASE HABITS
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More than 90% of Chinese girls are inf luenced by Online Trends. They are Checking Beauty news, and actively research new Products / Reviews: •
Magazine of Beauty: inform and Give Brands News.
•
Inf luencers help to Guide consumers
•
E-commerce websites like Taobao l & JD
•
social media such as Weibo and Xiaohongshu
90% CHINESE GIRLS DO RESEARCH BEFORE BUYING COSMETICS PRODUCTS •
Generally speaking, consumers will spend hours doing researches before
purchasing a beauty/ skin care product. •
Chinese consumers spend a lot of Time comparing different type of cos-
metics and products before taking any decision. •
For instance, more than 90% of Girls admitted that they conduct extensive
research before they buy skincare products. Online certainly plays a critical role in this research. E-commerce websites such as T-Mall and JD are the main channels for browsing across brands and offerings, while social media also plays an essential role in building brand awareness and helping consumers develop product and brand knowledge. Chinese Consumers use a different way to research information than in the west. Mainly because the tool available in China are different that in the west (“Cosmetics in China”, 2 Jan. 2020).
Key Findings 1.The trend and aesthetics of makeup have already changed in China. •
move from multi-colored to less color
•
move from powder to concealer
•
pay more attention on contouring for highlight and emphasize best features
Over the years, beauty as a concept has undergone huge changes alongside the whole beauty industry. There is a constant shift on what is considered acceptable, fashionable, or beautiful at the current point in time. Most of these changes are mostly due to the celebrity inf luence; hence China needs KKW Beauty to keep up with the current trends. (Beauty-magazine.co.uk, 2020). Some of these trends include:move from multi-colored to less color, move from powder to concealer, and people pay more attention to contour-
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ing for highlight and emphasize the best features. 2.KKW Beauty focuses on a technique of using different shades to create the appearance of more defined features that currently is trending in China. KKW Beauty is known for heavily contoured face makeup Instagram inf luencers and beauty bloggers mastered the art of contouring, and everyone else followed suit. Chinese girls become keen on contouring because cheek, bones and jawlines were enhanced and made to look sharper, with everyone wanting to achieve, or at least create the illusion of achieving, that perfect face shape. 3.KKW Beauty Gear up for international expansion by E-Commerce in China. •
China’s e-commerce market is the largest in the world
•
E-commerce websites such as T-Mall and JD are the main channels for
browsing across brands and offerings •
The most popular brands have all built official online stores on E-commerce
platforms Expansion of digital marketing has been an important driver of this beauty industry.Manufacturers are collaborating with the social inf luencers for their marketing and press strategies. This active digital campaign has been shifting the shopping behavior of the consumers towards e-commerce portals. Social Platforms such as Tmall, JD, WeChat, and BAIDU usually provide a lot of useful information for Buyers such as long and detailed product pages. To have a presence on these platforms is an absolute necessity for large Brands and far too expensive for small Medium Brand. Finally, the most popular brands have all built official online stores on e-commerce platforms. 4.Kardashian has a huge fan base and great inf luence in China.
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Identify The Customer Kim’s products will be “complexion-geared hybrid makeup, with antiaging components and less-splashy color palettes.” Meaning they’ll be geared around Kim’s current “natural” vibe. On that note, Kim mentioned that the impetus for her contouring and the highlighting line came from a place of transformation. She told the outlet that “[contouring] transformed my face when I saw my nose change into a smaller nose—and I was hooked from then,” and she opted for a cream formula for its natural finish. Kim said that regardless how her look has changed over the years, contour’s been a constant; anyonewho’s found their ideal confidence-game-changer product can probably relate (Nussbauml, 19 June 2017). Although contouring, (a makeup trick that slims the face without surgery) was discovered before Kim’s introduction, it took the makeup world by storm after she showed off some before and after pics of her face. Along with her sisters, this adopted makeup trend has birthed their own aesthetic, It’s now emulated by countless makeup users, and is known as the” Instagram face” across social media platforms (“Here’s the Difference”, 5 July 2018). From the research and analysis, Let us look at Demographics, Psychographics, Lifestyles and Preference by investigating the consumer behaviour of specified customers in comparison with others. 1.Demographics •
Gender: Female
•
Age: 25-40
•
Income: 40,000 - 100,000+
•
Education: DIPLOMA, BA, BFA, MA, MFA, DOCTORAL DEGREE.
This kind of consumer has to be in the biggest consumer bracket. women are the biggest cosmetics consumers, regardless of category. What is instructive, however, are the variations across cosmetic categories.So the fact that the customer is femake makes her more likely in the 77th percentile 66th percentile or 62nd percentile niche, mass and prestige consumer categories in that particular order. The other reason for being a big prestige consumer is the age. Prestige cosmetics are especially popular among 25-54-year-olds. Not only are these consumers more able to afford higher-end brands, but they’re also more conscious of concerns like sun damage
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and wrinkles. They may seek out cosmetics with quality ingredients that complement their skincare regimens. For the income of 40000 to 100000+, she is more likely to be a prestigious consumer. Anyway, while it seems obvious that higher-income consumers would be more aligned with prestige cosmetics—which often come at a higher price point—that’s not necessarily the case. Rather, prestige cosmetics don’t show a strong skew toward any income level. One possible explanation for this is that consumers may view prestige cosmetics as splurges, making them highly desirable but limited additions to their makeup bags (The Contemporary Cosmetics ,25 Feb. 2019). To my mind, this kind of customer can be a KKW consumer since she is more likely to use prestige cosmetic products. Looking at the fact that she must have gone to college supports the claim of in recent years, people born between 1995 and 2000s have a growing demand for cosmetics as they enter colleges, universities, and society. Compared with other age groups, they are featured as follows: •
They are keen on online shopping with changing demand, diversified brand
preference and focus on both high-end and affordable brands •
They are brought up in Chinese and foreign cultural turmoil, but they have
more confidence in Chinese culture •
Amid the general fandom and participatory culture, they like to try cyber
star products and new products. Changes in demographics, consumption upgrades, skincare and makeup habits will be crucial to the future Chinese cosmetics market (“China Cosmetics Market, 21 May 2019”). 2.Psychographics and lifestyles •
Social class: middle- and Upper-class females
Middle-class women are creating new paths of consumption and spending more than ever, helping China’s consumer trend index (CTI) rise to 115 points in the first quarter of 2019, up two points from the previous quarter, according to the latest study from global performance management company Nielsen. The CTI measures perceptions of local job prospects, personal finance and willingness to spend. Consumer trend levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively.The Nielsen study notes that the index is inf luenced by three factors: job prospects, personal finance and willingness to spend (“China’S New Consumers” 2020). According to data released by the local government, the Chinese middle-income
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population of over 400 million people has been a major factor in increasing consumption and the development in the lower-tier cities is even faster in the lower-tier cities. In this article, we present a recent report on the consumption behaviour and preferences of Chinese women launched by Vipshop (an e-commerce website specialising in online discount sales) and iResearch (a market research and consulting company) to help brands to accurately assess the needs of female consumers and use these insights to achieve success in 2019 ( Ecommercestrategychina,2019). •
Geography:
Modern consumers in wealthy cities(e.g. Beijing, Shanghai) are more likely to have a high purchasing power •
Lifestyle:
The lifestyle of the consumers play a big role in consumer behaviour, for example a woman who has a youthfulness, intelligence, confidence, and a love for fashion is most likely to be keen on her beauty and luxury life. She will most likely seek a glamorous look, enjoy social actives and live for freely 3.Buying behavior Buying behaviours are changing. Digital technologies enable consumers to experience brands in entirely new ways. The modern consumer expects a two-way conversation and nowhere is this more the case than in the cosmetics industry. Suzy Ross, senior advisor at Accenture, explains “Brand owners today have a direct relationship with customers. Brands who put their customers at the heart of the product and the product experience will beat those who don’t”. Cosmetics is undergoing massive disruption and as technology evolves, there are new challenges, opportunities, risks and rewards opening for brands and marketers. As Ukonwa Ojo, senior VP at CoverGirl, explains: “New technologies make it easy for beauty lovers to access trends, looks, content and experiences. Shopping behaviours have shifted towards e-commerce and specialty versus traditional bricks and mortar. And it is no longer just about beauty basics like mascara, foundation and lipstick. People want to try liners, contouring and highlighting products, shadows, glitters, glosses and so much more. The range of choice within brands has expanded as dramatically as the number of brands themselves.” Social media has completely disrupted the way brands connect with consumers,
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but also ushered in a totally new business model. Instagram and YouTube have changed the way consumers interact, becoming marketing channels, and indeed sales channels, in their own right through PR, digital advertising, paid-for inf luencer marketing and organic inf luencer behaviour. Stephane Berube, CMO at L’Oréal, talks about his company as both manufacturer and service:“Our consumers are at the heart of the business and we work tirelessly to offer products and services they want and need. They are now in the driver’s seat – they are no longer going to be told what to do or what do buy. They know what they want and they will interact with brands how they want to.” Cosmetics brands have quickly moved from a product-based model to an experience- based model. It is no longer just about the product. As Suzy Ross says,“consumers are looking for a fully interactive experience with their cosmetics brands becoming part of their lifestyle”. Big brands are responding to this, for example, L’Oréal now allocates 30% of its media spend to digital channels. A significant initiative from the company has been its ‘Beauty Squad’ campaign, where a number of inf luencers created YouTube videos and articles for both L’Oréal’s website, social channels and their own channels, tapping into a combined inf luencer reach of 5.5m. It meant that L’Oréal had created the kind of content users are searching for – mainly beauty tips, advice and tutorials.
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Fully Developed Initiatives, Applications And Corresponding Collateral Initiatives Calendar
Product Assortment •
Product Selection 11/2019——12/2019
•
New Product 1/2020 ——4/2020
Distribution Plan •
Pop-up Store 1
6/1/2020——8/1/2020
•
Pop-up Store 2
10/1/2020——12/1/2020
•
Tmall Global 11/11/2020
IMC Plan •
Social Media 3/2020——12/2020
•
Private Party 6/1/2020
•
TV Show
•
Billboard and Subway Advertising 5/1/2020——6/1/2020
5/31-6/1/2020
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S C U L P T I N G G L OW FAC E PA L E T T E
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Product Assortment Product selection: When KKW beauty come into china market, first thing I need do is select product right for china’s market. KKW Beauty Products cover the makeup and fragrance categories, because all its products meet the current aesthetic and market needs of China, Consumers in china are moving from multi-colored to less color, products of kkw beauty are use earth tone and nude , so I plan to bring all product lines to china’s market. KKW Beauty Known for heavily contoured face makeup, a technique of using different shades to create the appearance of more defined features, which is meet the Chinese consumer’s need, as I mentioned in my primary research, People pay more attention on Highlight and emphasize their best features for exquisite makeup. More and more attention to concealer and contouring. Because KKW beauty is the only brand in the market that specializes in contour, which is perfectly fills market gaps. Create New Product for China: Highlight is also an Essential items makeup product in China，stay glowing, glass skin, which you can achieve by using highlight. KKW Beauty’s most powerful competitor，Fenty beauty, Their bestseller is the highlight series, which is very popular in China. In contrast, kkw beauty’s highlights are more ordinary and not very competitive. So In order to increase competitiveness and better meet market needs，I am going to create a new highlight for KKW beauty, which is Not only cater to the Chinese market, but also unique, which Can stand out from many brands of highlight products. Below shows the new product that I create for Chinese maret.
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Distribution Plan According to secondary research, KKW Beauty don’t have their own f lagship stores, it have 3 distribution channels, there are *
sold online at its official website www.
kkwbeauty.com *
two Pop-up stores in los angels
*
launched at Ulta Beauty
So in china, I am also not going to open f lagship store, I am going to have 2 distribution channels *
First one is : Pop-up stores in shanghai
I will open two popup stores. Each of them will last for three months.Compared to their previous store in Los Angeles, the exhibition time is much longer, this is because I not going to have Physical retail store in china, so I need two long time pop-up stores to attract and strengthen consumers ’attention. The first one is to promote the brand for the first time to enter the Chinese market and increase its brand awareness. The second one is to strengthen the brand ’s popularity and consumer loyalty. The in-store exhibition is based on the Los Angeles storefront and incorporates elements consistent with the Chinese market. In addition to displaying the brand’s existing products, it will focus on new products launched for the Chinese market. First pop-up store: Location: Heng Long Plaza, Shanghai Time: June 1th- August 1th, 2020 Second pop-up store: Location: k11 art shopping mall, Shanghai Time: October 1th- December 1th, 2020
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•
Second one is: Built official online stores on E-commerce platform: TMALL
global Reason: The main distribution channel of KKW Beauty is through the official website. However, Their products cannot be shipped directly to China through the official website，so Opening an online shopping platform in China is an essential strategy. the E-Commerce part is the most profitable and easiest way of selling beauty products in China.Tmall is the largest online-shopping platform in China, The most popular brands have all built official online stores on Tmall •
Tmall has a multi-level, large-volume consumer group
•
Tmall allows makeup brands to bypass China’s animal-testing require-
•
Tmall has a huge database and a strong marketing mechanism, which can
ments help brands achieve interaction with consumers and provide high-end services for consumers. •
Serve as a “high-quality storytelling platform” to convey its brand mes-
sages to more consumers •
Tmall now boasts more than 20,000 brands and aims to double that number
in three years Launch time: 11.11, 2020 ( Double Eleven, a.k.a. Singles’Day Festival is a huge online shopping festival, is a global shopping event initiated by Alibaba and adopted by other e-commerce platforms and retailers, Consumers can expect the largest discount of the year while businesses expect a significant portion of annual revenues from this oneday sales. It’s the“Singles’Day Promotion”or Singles Day Promotion (Double 11) in China. Almost every China internet user has got the invitation to this event whether being a bachelor or not.) Launch activities: Live-stream on Tmall. collaborate with Chinese most popular beauty KOL Jiaqi,Li. (Jiaqi, Li is well-known to millions of Chinese women, but he’s not a movie star or in a boy band. He’s famous for his unparalleled live-stream sales records of makeup products, such like Chinese Jefferey star). Product promotion and sales through Kardashian and Li’s live stream on Tmall ，The live stream time is 4 hours before Double Eleven, which is from 8pm to 12pm on November 10th,2020.They will try
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the each product during the live stream and fully interact with the audience. 20% discount on all products on the day of Double Eleven. Since 2019 presale Singles’ Day launch, Li has gone viral online over the past few weeks. Li’s success is a good example of how luxury brands are increasingly turning tocollaborations with popular internet celebrities in China for results. Brands cooperatingwith popular livestreaming hosts to get a share of the Chinese market has indeed been trending as it has certain advantages. Live-streaming hosts have far better promotion skills than mainstream celebrities, such as Li’s livestreaming , because he could better explain the ingredients used in a powder or which situation each of the lipstick colors would be best in. KOLs also have more time to interact with their viewers than celebrities, and their live-streaming practice usually takes around six or seven hours daily, which creates a sense of intimacy between KOL and viewers. And consumers are more likely to purchase a product once some trust is built.
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Integrated Marketing Communications Plan As the world becomes increasingly more digitized and connected, communication between consumers and businesses is changing. Consumers are shifting the power structure interacting with and inf luencing businesses more directly for an integrated marketing plan is needed to build and maintain more positive and engaging relationships between both customers and companies. In this part I am going two have two main plans. *
Multi-media marketing plan: I will use social media platforms such as Wei-
bo, Wechat , Red Little Book for promoting. According to my secondary research, Kardashian already strode into the Chinese inf luencer market by joining a local social media platform Weibo and Little Red Book. 1.Weibo, is a micro-blogging platform in China, Weibo is one of the most popular sites in China and is often considered to be a combination of Chinese Facebook & Twit-
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ter. its user base nearing 500 million users. Weibo is main platform brands commonly use for social media marketing in China. I am going to post KKW Beauty’s promotional information launch actives and products information and interact with KOLs on Weibo. 2.WeChat offers far more than any of the Western messaging apps. In terms of comparison, it can be likened to a combination of the Chinese Facebook, Whatsapp, Google News, Tinder, and Pinterest combined. its users reached 400 million and 90 percent of whom were in China. I am going to create WeChat official accounts for KKW beauty to stay in contact with their customers and post promotional information. 3.Little red book has 85 million monthly active users, who are Chinese beauty fans to discover international cosmetic brands and purchase their products. the primary demographic on Little Red Book consists of females under 30 who are interested in skin care, cosmetics, nutrition supplements, and fashion. Little Red Book is the perfect platform for people to share product reviews and hauls. Since the majority of posts on L it t le Red B ook a re a b out Western brands, this positions their users as having relatively high purchasing power. On this app I am going to focus on product detail, share h collaborate makeup models and KOLS to show audience how they use the product and what they looks after use the product. And also Post v-log that show how Kardashian uses her own brand to create her daily look, use the celebrity effect to drive consumption.
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*
I will also have launch activities:
1.TV commercials on local channel 2.Interview of Kim Kardashian, live streamed on TV and social media
3.Put the ads on department store’s Billboard and subway tunnels.
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4.Private party: celebrities and models, social inf luencers, beauty bloggers and KOL will be invited.
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*
Make budget for launch activities
Rent: According to the average rent and decoration fee in downtown, Shanghai, I got following data. Pop up store #1
$1.2/sf/day
800 sf
3months
1.2*800*90=$86400
Pop up store #2
$1/sf/day
1000sf
3months
1*1000*90=$90000
Construction: $ 85/sf
85*(800+1000)/ 153000
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TV Show: Local TV station interview live on
5/31—6/1/2020
Social Media: Advertising on Weibo, WeChat and Little red book Subway Advertising: 1 month
5/1/2020——6/1/2020
Billboard Advertising: 1 month
5/1/2020——6/1/2020
Private party: Includes one week’s travel expenses of kim in China, cost of renting a hotel venue for a party, catering expenses and cost of gift for guests.
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Financial Plan •
Allocation merchandise planning
Face products are the most important for KKW Beauty, so they account for 60%. The second place is eye makeup, lipstick is more common, perfume sales are also average, and makeup tools are auxiliary. According to the prices of other makeup brands in China, the price of all KKW’ products is 30% higher than the price on the US official website, which include the duty taxes and freight.
Comprehensive reference to the sales of other makeup brands on Tmall, and the sales of KKW Beauty on the US official website •
Sales Forecast
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The above sheet indicated the sale forecast of pop up store of 6 months since June to December in 2020. According the estimate of average of footfall per day by the conversion which definite the number of the consumer and the average value of each basket, it comes the average revenue for each day. Then, sum of a week to a month; therefore, the total of the revenue is stated. Furthermore, as the calculating of the markup is 30 percentage which means the cost of goods sold is 30 percentage of the sales revenue.
The above sheet indicated the 2021 annual sale forecast of Tmall. According the estimate of average of pageview per day by the conversion which definite the number of the consumer and the average value of each basket, it comes the average revenue for each day. Then, sum of a week to a month; therefore, the total of the revenue is stated. Furthermore, as the calculating of the markup is 40 percentage which means the cost of goods sold is 40 percentage of the sales revenue.
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•
Budget Sheets (promotion & distribution)
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•
Income statement
The following sheet is annual income statement of 2021 indicated the KKW Beauty performance including Pop up store and Tmall.
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Conclusion The clear brand image of KKW Beauty distinguishes itself from other competitors. Entering the Chinese market, and overall Asian market, is very beneficial to KKW beauty. At the same time, it can also fill the gap in the Chinese cosmetics market. In summary, there are many possibilities and challenges for Kardashian to enter the Chinese market. KKW beauty will successfully expand the Chinese market by launching a pop-up store and f lagship store on Tmall global.
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