Tapping into the consumer psyche is now an important part of new product development and marketing. Beauty Focus, held from 26-27 February 2007 at the Congress Centre in London, has been created by Wilmington Events, in association with ECM and SPC magazines, to help brand owners and marketing teams talk through the issues facing today’s consumer market
The first edition of Beauty Focus, a two-day conference designed to broach the most pressing issues currently facing the C&T industry, provided an invaluable insight into what the industry thinks about a number of issues, and the numerous opportunities for debate on the floor opened up further thought provoking discussions among the delegates.
Valuable contributions were made by a variety of speakers from across the spectrum. Representatives from design consultancy Pearlfisher, market research expert Mintel, the China-Britain Business Council, Organic Monitor and AOL. among others, spoke on subjects ranging from emerging markets, to natural and organic products and internet retail.
The definition of beauty has, for a long time in the industry, appertained to physical appearance but only in recent years, with the idea of wellness and the emerging interest in spas and health resorts, has the concept begun to widen. Setting the tone for the day's discussion, Jonathan Ford from Pearlfisher opened the conference by giving his opinion on the world of beauty. As founding partner and designer at the international consultancy company, he stated that the idea of holistic beauty incorporates the external as well as the internal. “A lot of beauty is about how we look. But I am shocked by the contrast of ugliness and beauty seen in the world, for example in India. What impact are we having on the environment? What is the ethos behind your brand?”
Bright future
Sustainability, organic, ethical and green are all current buzzwords, but can the industry put its money where its mouth is? In order to illustrate the direction in which the industry appears to be heading, Amarjit Sahota of Organic Monitor outlined the competitive developments within the industry since the organic movement started to gather momentum.
In 2006 alone, L'Oréal acquired both The Body Shop and Sanoflore, Colgate acquired Tom's of Maine and Hain Celestial added to its portfolio with Avalon Natural Products and Jason's Natural Products. If these events are anything to go by, the cosmetics industry is undergoing a major overhaul. New product development is showing a trend towards the substitution of synthetic ingredients and a heavy emphasis on traceability. Fair trade and certified organic products are in high demand and are gaining space on shelves in both specialist and mainstream retailers while more brands are being developed to take advantage of this organic swing.
But with consumer adoption rates expected to rise in the coming years with widespread distribution and a wider variety of products on offer, there are still challenges ahead. Sahota showed that organic C&T still only accounts for 2% of the total European market and growth could be slowed down due to a lack of national or EU regulation and insufficient research on natural products.
Ashwin Mehta of Healthquest, brand owner of Earth Friendly Baby and Organic Blue, contributed to the organic debate by suggesting that the lack of a standardised organic or natural benchmark is causing confusion among consumers and some of this appears to be intentional. Consumers are no longer waiting to be guided by brands but are taking a proactive approach by carefully selecting with whom to spend their hard earned cash.
And what the modern day consumer puts into, as well as what they put onto, their bodies is becoming increasingly important. James McCoy, senior consultant at Mintel, spoke on the obvious correlation between the food and drink and cosmetics industries.
With the likes of products from topical face yoghurt from Thailand to edible cosmetic yoghurt from Danone Essensis, available in individual doses and already available on the French market, the crossover between the two industries is clear. Other products on the market with a distinct food theme include honey milk body moisturiser, coconut lip butter and body truffles and ingredients such as pistachio nuts, cocoa beans and vanilla.
McCoy said that if there is one trend to look out for in the coming months it is the rise of the goji berry. The berry has become popular on the health food market, hailed as a member of the super food category along with blueberries and pomegranates. The fruit is meant to be cellulite busting and cancer fighting and his belief is that it is only a matter of time before the fruit makes an appearance in C&T.
And just as in the food industry, organic is becoming big business. The increase in organic claims on global C&T product launches significantly increased in 2006 and is set to soar this year.
An overview of the facial skin care market using a Mintel study shows there are still key differences between the European markets. Women in France for example, are bombarded with new launches, with 5129 new products launched onto the French market in 2006, compared to just 2787 in Germany. Sales of facial cleansing wipes are highest in Britain, suggesting that convenience is of key importance to the UK consumer and it is Spanish women who are the most concerned with maintaining their tan throughout the winter, with the least interest registering among British women. A one size fits all approach will clearly not solve the problems that the ageing European markets are currently facing.
No claim to fame
In the US, a worryingly low 17% of the 2000 adults asked agreed with the statement that skin care products generally fulfil their claims while 41% thought that good skin is primarily genetic. These findings suggest that cosmetics companies are probably not getting their message across to consumers. Yet there is clearly still potential for the sector. In another survey, only 7% admitted to relying upon doctor endorsements and just 1% go by celebrity endorsements to buy their facial skin care products.
There are already some specific trends emerging in 2007 with organic and ethical products being an obvious contender. Edible cosmetics could stretch this area further. At the other end of the scale, skin lightening products are picking up momentum within Europe. In April last year, Biotherm launched White Detox C and at the beginning of this year both Galénic Ombellia and Guerlain Perfect White C appeared on shelves. From France, the colour pink is making a comeback, not only in packaging but in make-up too. Natural, rather than stark, pink tones will echo what is already available in beige tones and will offer a more natural and subdued look.
McCoy also described a rising fragrance dichotomy with niche brands such as Juliette has a Gun offering tradition with a contemporary twist. Such brands are unique and original and therefore create a feeling of individuality along with exclusivity, even though the scent's composition relies on well established notes.
The fragrance market is also reaching out to different demographic groups. For example, The Body Shop's Rougeberry MTV and Escada's Sunset Heat are positioned carefully to portray a cutting edge image, aligning themselves with a contemporary, rock and roll vision rather than the elegant and feminine positioning of more traditional female scents.
A stronger private label presence is also on the increase. Boots has recently widened its portfolio to include the Expert range along with the well established No7 and 17 brands. Asda, Superdrug and Morrisons have all launched own label cosmetics ranges and continue to expand. McCoy stated that these retailers are investing heavily in this area, taking care that their products and packaging can compete with brands sitting next to them on the shelf. Sephora, CVS, Résonances and Auchan have all developed extensive private label offerings. “Private labels are moving towards being brands in their own right,” he said.
The environmental impact of the C&T industry is a growing issue that requires careful consideration but also action. Richard Ellis, managing Corporate Social Responsibility (CSR) at Alliance Boots, spoke on the growing role of CSR in the health and beauty industry.
Trust is crucial to the Boots brand and its values can be interpreted through its four main CSR areas, said Ellis. Boots takes its influence on the market, the community, the workplace and the environment seriously.
Due to these values, the company is involved in a variety of ethical schemes. Giving support to the SunSmart skin cancer charity by supplying packs of its sun care range, using recyclable materials and reducing CO2 emissions by introducing a new distribution system has actually proven to be a win-win strategy. “Being green is not only an ethical choice but makes sense commercially too. Boots has been given coverage of its CSR credentials largely by association. It hasn't marketed itself on this. Boots is trying to do the right thing when no one is looking,” Ellis said.
The company is continually looking at ways to minimise its use of packaging. As Patrick Poitevin of COSi highlighted, the constant innovation in packaging is inspired by the surrounding environment and therefore a more natural approach should be taken.
Emerging trends
With the rise of the internet and increasing globalisation, the world certainly appears to be getting smaller. The influence of emerging economies and the effect they have on western markets will no doubt bring change – both positive and negative – to the markets we know today. The second day of the conference addressed various issues surrounding emerging markets.
“Being green is not only an ethical choice but makes sense commercially too. Boots has been given coverage of its CSR credentials largely by association. It hasn't marketed itself on this. Boots is trying to do the right thing when no one is looking,” |
Richard Ellis, Corporate Social Responsibility (CSR) at Alliance Boots |
Todd Rossuck, a business advisor at the China-Britain Business Council, a government-funded agency providing British businesses with useful information and advice, spoke on the current market in China and from where future growth is likely to come. China is the the fastest growing economy worldwide and the fourth largest economy globally, though second largest when measuring purchasing parity. As the economy has grown, companies are focusing on urban consumers who are more affluent and have a higher disposable income. The rising middle class is typically between 25-44 years old and yet are the biggest savers in the world. The
economy's dramatic change means that the Chinese will continue to spend a high amount of money on education, housing and health care, leaving almost 10% of urban disposable income for personal products. But one of the biggest obstacles facing China's future is that a mere 1% of the population is in possession of such funds. Other problems lie in the structure of Chinese society and include a high level of blue collar workers, geographical dispersion of the population and the proliferation of imported, and therefore expensive, goods. Rossuck also drew attention to cultural differences still very much apparent in the younger generations, citing the influence of Confucianism as a prevailing force. Rossuck suggested a number of solutions to these problems. By cleverly targeting new products to the right audience and repositioning brands already on the market as well as multi-tier branding, a greater demographic can be reached.
Facing up
While there are certainly difficulties on entering the Chinese market, strategy is key. Peter Kelly of Taxi London Cosmetics decided to launch his niche brand on the Asian market and was faced with many challenges concerning issues such as licensing, ingredients and distribution. Kelly advised those thinking of launching in Asia to consider the implications of such a venture. After showcasing his brand at Cosmoprof Asia in Hong Kong in 2005, interest from Japanese clients meant that in April 2006 he was able to secure distribution in the country, a long and arduous process for a small, independent company. Admitting that many had questioned his plans along the way, as well as his sanity, he stated that sheer tenacity and confidence in his brand had allowed him to make it this far.
Robert Calcraft of Ren Skincare is also a man with strong belief in his brand. Speaking on the proliferation of new products on the market, he listed reasons why he thinks that only a few products succeed. Space on shelves, the extent to which PR can carry the product, along with trade and consumer interest, are all limited. “How many products are really new or interesting, distinctive or relevant? New isn't new anymore, it's just another choice.”
Calcraft reflected on some honest and key questions a brand should ask itself before investing in NPD. Arguing that NPD is an art not a science, he highlighted the balance between brand development and brand dilution. Asking why you launch the products you do and whether you have enough products already is not common practice in the industry as it means watching others moving on while you seem to stand still, losing the race.
The important question then is, are your new products really worth launching and what else could you do with the time, money and effort? Much valuable time is lost in chasing the competitor, when re-evaluating and consolidating what you have could be the answer to increasing turnover or market share. Often the dilemma is doing what you believe in versus what you think you should do versus what you think people want you to do, he said. “If you're a colour brand, why would you branch out into skin care? New product development is an application of brand values or a development of them. Have a clear sense of your brand rather than just a business plan.”
Looking towards trends in 2007, Calcraft pointed to the rise of the specialist and a change in distribution. In the past ten years there has been a shift, with the traditional apothecary type establishment becoming
increasingly popular. The rise in prices for raw materials means that bigger is no longer better or even possible. Calcraft argued that this also does nothing for the consumer. The commoditisation and oversupply of products has cheapened the beauty buying experience and today's well-informed customer is ever aware that she holds purchasing power. Demanding authenticity and claims that stand up to the test are basic consumer requirements, says Calcraft. “Yet consumers still want glamour. In fact, consumers want everything – and why not?”
Retailing challenge
The ability to offer glamour as part of the shopping experience is something that increasingly concerns major retailers. Philip Moore, trading manager for Health and Beauty at retailer Morrisons, spoke on the changing face of retail and how it is having to adapt to modern buying habits.
Over the past 20 years, a blurring of boundaries has meant that segmentation is no longer a clear weapon retailers can employ to gain the interest of their customers. Consumer expectation has changed to the extent that on walking into a Boots store, for example, a customer is also able to buy food and drink, while equally a visit to Tesco can result in a new face care regime. Due to the sheer growth of retailers, this has led to more opportunity for businesses.
Establishing an own brand can reap great rewards. One of the success stories in this area is Boots which has several private labels in its repertoire. Soltan, its sun care brand, is now the leading brand in its category. Moore stated that this obviously makes for an increase in competition. Competing in someone else's space is difficult, especially when they have a successful private label, he said.
Another important change has been almost unnoticed by consumers. The barcode has played a significant role in tracking consumer behaviour, leading to more targeted marketing strategies. Retailers are now able to harness customers by offering incentives such as Tesco's Loyalty card and the Boots Advantage card.
Though Boots has started to advertise its own brands, other retailers have not followed suit. Moore explained that, with this particular exception, the day when retailers lead the market with own labels has not yet arrived and it is more important to have a secure foothold within the market.
A retailer can of course have a huge influence on the success of a product launch, or indeed brand, in terms of location in the store and prominence on-shelf, and for this reason brands need to assess the suitability of retailers in which to launch. Studying the demographic age of the average consumer at a particular store will involve less risk for brands.
Connecting with the consumer
Speaking more on the role of Morrisons in the eyes of the consumer, Moore outlined some of the problems the retailer is currently facing. Presently, the chain does not have online shopping due to the nature of customer shopping habits. The purchase of heavy commodities in bulk online does not sit comfortably with the emotive experience usually associated with the purchase of beauty products. “For us, it's more about meeting consumer expectations.” The retailer is however upgrading its stores in order to provide its customers with more appealing beauty-focused areas, taking inspiration from all around the world and assessing how this fits with the specific role and customer base Morrisons currently holds. “Buying from a supermarket will never be memorable but you can make the most of what you've got. Having a good cosmetics area in your stores is a strong statement. We want to be able to answer questions from customers on hair care queries, on skin care problems and on how to use products to gain maximum results.”
Continuing the theme of the power of the internet, Andrew Bradford, head of operational planning at AOL's Interactive Marketing division, gave a presentation using buyer behaviour research. In today's technological age the internet is hard to ignore. People, and therefore consumers, are constantly exposed to an excess of information on the web. In this way, brands can target their customers but also appeal to a wider audience in order to obtain maximum exposure of their brand.
According to the Brand New World research project in collaboration with the Henley Centre, 42% of people admitted to changing their mind about a brand they were going to buy and switched to another thanks to web-based research. Many brands, however, are slowly realising that, as well as having positive potential, the net can do untold damage. Consumers are able to click on a company's page and instantly engage with a brand. Yet even if your company does not have a site, consumers are still able to find information they require and are equally likely to click on an opinion site to find out what other consumers think of a product. If a product does not pass muster, bloggers or occasional commentators, now ordinary members of the public, will tell you what they really think. “It doesn't matter if people make the purchase on or offline, it is being used as a powerful tool in the process. In this age, privacy is effectively dead,” Bradford stressed.
Unfortunately this level of transparency is sending small panic waves through the industry, but this could actually be turned to the industry's advantage. Just as in a retail environment, the importance of a consumer/brand transaction is key to building trust and can have a strong impact on the brand. If a brand handles negative exposure wisely, this could have an even greater positive effect, as in the case of Sony which suffered bad press when a batch of its laptop computers contained faulty batteries. The company managed the fallout admirably, said Bradford, and actually gained credit from consumers who were highly satisfied with the way in which it dealt with the matter.
Businesses are having to rethink the way in which they maintain their reputation, and for many this could mean rethinking their budget. But is it necessary to employ a full time web management team or risk manager? Bradford suggested that this does not have to be the case, especially as it would be hugely time consuming and virtually impossible to trawl through the pages and pages of internet content. By reassessing and clarifying the responsibilities of employees within your company, from the marketing director to the PR agency, it is possible to reduce the potential for any negative exposure.
Linda Pilkington, founder of the Ormonde Jayne perfumery, gave her own example of negative web press when false information on her products was printed on the web. Yet despite this experience, the company has had a hugely positive response from the launch of the Ormonde Jayne web page. The design and launch of the site cost the company £1000 but this was recouped from sales in its first week. And Pilkington explained that the most frequent visitors to her site are men, usually buying gifts for their loved ones. With the ability to reach consumers all over the world, Ormonde Jayne now increases its turnover two-fold every year.
Clearly it is possible that a strong brand can withstand the mighty power of the internet, just as the C&T industry, in an exciting period of flux, should not be daunted by the days ahead but embrace the opportunity on offer.