Beauty in the East

An Interesting article from Korea

The article looks at how beauty marketers are trying to bring the store experience online to drive trial/purchase in new interesting ways beyond couponing.

Also blogs continue to be an untapped opportunity for beauty marketers to leverage consumer insights and reach out to their key influencer audience directly.

Business implications: The digital space is becoming increasingly competitive as beauty marketers begin to tap into social media and build interactive tools to drive preference in-store.

http://www.clickz.com/3635018
By Lisa Lacy, ClickZ, Sep 18, 2009

Mary Kay Cosmetics, Avon, and Rimmel have all licensed virtual makeover application Makeover Studio, above.
Buying beauty products is a very hands-on experience, which can make it tricky for marketers in the online space. But these days brands can't afford to ignore sites like Facebook and Twitter even if their customers can't try out products there.
"People usually do not buy beauty products online -- they replenish online," according to Jennifer Walsh, CEO of Behind the Brand Media. "If people see others talk about a product online or on TV, nine times out of ten, those people will go to the store."
So, besides inundating customers with free samples, what's a beauty product company to do to market itself on the Web?
Plenty, it turns out. From offering virtual makeovers like the new Makeover Studio from Daily Makeover to leveraging entire online communities such as the recently launched E.L.F. Beauty Network, makeup and skin care companies are finding ways to create their own hype and to use existing buzz to their benefit.
Over 60 beauty brands, including Mary Kay Cosmetics, Avon, Maxfactor Clairol, and Rimmel have licensed the virtual makeover application Makeover Studio, which launched last month from Daily Makeover. According to the company, Makeover Studio makes "the online experience more like a department store beauty counter experience."
That's because Makeover Studio includes new rendering and visualization functionality as well as face-tracing capabilities and a large range of makeup finishes, Daily Makeover says.
Even with these advances, challenges remain. One of Mary Kay's independent beauty consultants, Lorraine Kinslow, has a virtual makeover tool on her Web site as well as an extensive customer base that frequently orders online. She notes, "I have established 90 percent of these customers first by having them try the products in person. Then they continue to reorder online."
In cases like this, makeup companies can also allay fears by appealing to customer pocketbooks. Social media sites are an increasingly popular way to distribute discount codes, sale news or special offers to loyal followers. One company doing so is skin care line Lather. Company rep Lori MacGregor recently started a Facebook page where she posts items about upcoming events, promotions and new products. She also uses Lather's Twitter feed to follow beauty bloggers, which she says has allowed her to introduce Lather to them and their readers.
E.L.F Cosmetics, which recently launched the E.L.F. Beauty Network, offers another example of how brands are utilizing user-generated content. This site is an upgrade to the company's old site -- AskELF.com -- and includes discussion groups, forums, beauty advice, recommendations and other ways for customers to interact with the E.L.F. brand.
E.L.F. Chief Marketing Officer Ted Rubin said the company's many fans are vocal on YouTube, Twitter and blogs. So, E.L.F. decided to capitalize on this chatter and create a single space where all of the content could be aggregated along with content the brand produced itself. That site debuted in January.
But, according to a recent study from Grail Research, beauty product companies could perhaps do a better job of utilizing at least one form of user-generated content: blogs.
The Grail study focused on women's skin care and blogs and found there are over 26,000 beauty blogs in existence. These provide often untapped information on women's behavior and attitudes toward skin care. The study found that it's possible to analyze blog comments in a quantitative fashion and that companies can use that information to learn more about customer preferences.

Ruder Finn Asia, part of Ruder Finn’s international network, one of the world’s largest independent public relations firms, together with Albatross Global Solutions, one of the leading market research companies on the luxury industry segment throughout Asia, today jointly released their 2009 China Luxury Forecast. The report shows that theglobal economic downturn has had limited impact on Chinese luxury consumption and that there is widespread confidence in the future among Chinese luxury consumers.

The 2009 China Luxury Forecast interviewed 1,000 luxury consumers with an average annual income of RMB 240,000, from a total of 21 cities including Beijing, Shanghai, Guangzhou, Hong Kong and 17 tier-2 cities in East, South, West and North China. The survey was conducted during April and May this year. By analyzing consumer confidence and purchasing power, purchasing behavior and intention as well as the information channels that influence decision making, the report aims to help marketers better understand the prevailing behaviors among Chinese consumers and foreseeable trends in luxury consumption over the next year.

In Greater China as a whole, more than half (50.3%) of respondents claimed they will not let the global economic downturn affect their purchases of luxury goods; nearly nine out of ten (89.3%) of respondents said they will not change their preferred categories during the crisis. Tier-1 cities showcase their strong sense of consumer optimism, with 58.9% of respondents claiming that price has little impact on their purchasing plans, against54.6% in tier-2 cities, which is only slightly behind. Beijing expressed the highest optimism among all the surveyed cities, with 44.8% respondents feeling “confident” to “very confident” about their future purchasing power. However, in Hong Kong, luxury consumption and consumer confidence are most affected and consumers maintain a cautious approach compared to mainlandcities. Only one out of ten respondents from Hong Kong was confident that his/her purchasing power would likely increase over the next year whilenearly half said they would maintain a cautious attitude. The remaining 40%expressed pessimism about the future.

Other highlights of the report:
· The gap between tier 1 and tier 2 luxury markets is smaller than anticipated. Consumers in tier 2 cities are becoming more mature in areas such as consumer perceptions, behaviors and the use of information channels
· Traditional media remains an essential communication tool for the Chinese luxury market but the increasing use of internet technology is changing the rules. How to leverage various internet applications to strengthen the “word-of-mouth” effect to enhance and maintain brand reputation has become one of the crucial considerations for decision makers in luxury brands.
· International luxury brands such as LOUIS VUITTON, CARTIER that tapped into the Mainland Chinese market as early as the 90’s, remain in the top positions today despite facing a more competitive market. They have benefited from their long-term, localized and mature marketing events and promotions. The tables below show the preferred brands of respondents in different cities: While Hong Kong remains the main luxury hub in China, with 43.2% of respondents selecting the Special Administrative Region as their favorite destination to purchase luxury items, Shanghai is becoming a luxury hub in its own right. This is especially true in East China, where the city is chosen by 33.3% of tier-2 cities respondents. Because of the strong purchasing power of consumers in this region, we anticipate that Shanghai’s position as a hub for luxury consumption in Mainland China will only increase in the future

Latest research shows that there has been a significant rise in the market for premium facial care products in China as the country's booming economy continues to fuel consumer spend.
Most significant is the fact that purchases of deluxe facial care products that exceed RMB800 (€74) rose by 31 per in the second half of 2007, against a 28 per cent rise in the first half, according to latest figures by market research provider NPD Group.
Equally impressive is the rise in the number of sales for the premium skin care segment - products with a retail value of more than RMB1500 - which in the first half of 2007 represented 10 percent of total sales for the market for facial skin care and 15 percent for the second half of the year.
Purses at the ready!
"The Chinese consumers are ready to spend money to maintain a more youthful appearance," said Edward Wang, manager NPD Group.
"Chinese women believe that there is a direct correlation with the price and the reputation of the brand and the effectiveness of the product," he added.
Skin care is by far the biggest category in the China beauty market, accounting for 70 per cent of total sales. Of this figure three out of every four products are said to be facial skin care products.
Skin care dominates
Putting these figures into perspective, the NPD Group's research shows that currently the second largest beauty category in China is make-up, which accounts for 17 per cent of sales, while fragrance comes in as the third largest category accounting for 13 per cent of sales.
But Wang believes that if the current market conditions prevail, the high growth for the China beauty market will be maintained, with growth in the premium facial skin care category continuing to be a major driving force.
"There are more and more advertisements for premium anti-ageing products in both magazines and on television," said Wang. "These adverts play a major role in the education of Chinese women and influence their spending patterns for skin care."
China facial skin care mirrors US
The evolution of the Chinese skin care market also bears a resemblance to that of one of the most developed markets in the world - the US.
The NPD data points to the fact that in the US the premium facial skin care category grew by 11 per cent in 2007, contributing to a sustained double digit growth over the past 5 years. However, with the US retail market already showing distinct signs of a slow-down and many financial analysts predicting that this might have global repercussions, whether growth in the China premium facial skin care category can be sustained remains to be seen.

By Katie Bird

Anti-ageing and whitening products drive China's prestige beauty industry whilst colour cosmetics may prove to be the sector to watch in 2008.
Skincare accounts for over 70 per cent of 2007's prestige beauty sales in China, and although makeup accounts for only 17 per cent of the market it is tipped to expand according to market research company NPD Group.
Of the skincare products it is anti-ageing formulations that lead the category with the average price standing at 687 RMB ($92) say the group.
"In China, women are willing to pay a premium for anti-ageing skincare products and we are watching this category very carefully because we see it as the driver of the prestige beauty industry here" said the manager of the Chinese beauty division of NPD Edward Wang.
Likewise whitening products are an important category reflecting a wider trend across the Asian markets.
According to Wang the use of whitening products starts at a young age and continues throughout adulthood making it a particularly powerful category.
"This is a product that is more popular in Asia and we see this trend continuing to grow and gain strength in the coming years," he said.
The market research company has also highlighted makeup as an area of growth in the coming year, although at present its share in the market remains fairly small.
Wang notes that historically Chinese women have not been big consumers of makeup and colour cosmetics products, but increasing Western influence is leading to growing interest from Chinese consumers.
"More and more department store counters have enlisted sales people to help women use and try makeup, and it's been well received. We believe there is a lot of growth in this emerging market in China," he said.
In contrast, the prestige fragrance industry is in its infancy according to NPD and Wang notes that cultural habits may be stalling the industry in a similar way to the makeup sector.
"Culturally Chinese men and women don't wear fragrance; it's just not a priority" he said.
The release of the report follows a similar study by NPD Group stating the importance of the prestige market in the US.
According to the report the prestige beauty sector continues to out-perform an otherwise flat market, with spending for the first nine months of 2007 standing at $5.9bn representing 4 per cent growth from the same period in 2006. However, unlike China it is makeup that is leading the sector accounting for 42 per cent of the total sales, with skin care, the sector leader in China, only making up 30 per cent of sales.

July 26, 2009
The 2009 China Luxury Forecast, jointly conducted by Ruder Finn Asia and Albatross Global Solutions, shows that the gap between the tier 1 and tier 2 luxury markets is narrowing. Consumers in tier 2 cities are becoming more maturein areas such as consumer perception and purchasing power. The survey interviewed 1,000 luxury consumers with an average annual income of RMB 240,000. Respondents from tier 2 cities in East, South, West and North China accounted for nearly half of the total sample.
Consumer confidence and purchasing power
Luxury consumption confidence on par: Despite the current economic situation, consumers in tier 2 cities show a strong capacity for luxury consumption, with 54.6% saying that prices have little impact on their optimistic view that their purchasing power will increase. This is only 4.3% lower than the proportion in tier 1 cities. When asked how confident they were about purchasing power over the next year, 36.6% of the respondents in tier 2 cities expressed confidence compared to 38.9% in tier 1 cities.
Smaller gap in purchasing power: In tier 2 cities, 74.9% of the respondents are likely to spend less than RMB 20,000 a year on luxury fashion and accessory items, which is slightly more than in tier 1 cities. Almost a quarter (23.5%) said they would spend between RMB 20,000 and RMB 100,000 a year on luxury fashion and accessory items, which is only 10% less than the number in tier 1 cities. The percentage of respondents spending between RMB 100,000 and RMB 200,000 a year is nearly the same in tier 1 and tier 2 cities.
When it comes to luxury watches and jewelry, 19.1% of respondents in tier 2 cities will spend between RMB 20,000 and RMB 100,000, only 3.7% less than those in tier 1 cities.
Purchasing triggers
Luxury goods as gifts for business: More than 80% of the respondents buy luxury goods for personal use. A small number or respondents purchase luxury goods as business gifts and this is three times more in tier 2 cities (7.6%) than in tier 1 cities (2.2%).
Brand comes first when considering a purchase: The level of luxury brand awareness is narrowing between tier 1 and tier 2 cities. Among all the measured factors, “Brand Reputation” was named as the most important factor by 75.3% of respondents in tier 2 cities, followed by “Brand Heritage”. In addition, some 46.6% of respondents in tier 2 cities said that they are loyal to certain brands, which is close to the percentage in tier 1 cities (47.2%), while Eastern tier 2 cities top the national list with 51.7%. As there are fewer luxury brands in tier 2 cities than in tier 1 cities and Hong Kong, the faster brands tap into the tier 2 markets, the easier it will be for them to build brand loyalty.
Point of Sales
Luxury department stores are the main channel for getting information: 64.5% of respondents in tier 2 cities said they sourced their information on luxury goods from leading department stores, 15% more than in tier 1 cities. The highest incidence of this is in East China where 70% are more likely to obtain information from salespersons in stores. In addition, 61% of the respondents said that a salesperson’s attitude would influence their purchasing decision while 54.6% said they would make a decision after carefully listening to the advice of sales staff.
Information ChannelsUse of information channels similar: The results show that whether in tier 1 or tier 2 cities, the majority of the respondents get brand information from print media articles. Nearly 82% of tier 2 city respondents prefer to learn about new trends among the brands by reading about them in print publications, while some 20% say they get their information from television. Figures are similar for tier 1 city respondents.

http://www.ruderfinnasia.com/util/news/2009-china-luxury-forecast-shows-upward-trend-in-china-s.html

化妆品品牌密丝佛陀在中国推出了在网上的'Maxgazine'活动。
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香港李奥贝Arc Worldwide的创意总监Victor Manggunio說： “來到美妆志网站的朋友们將变身成杂志主编，编寫她们自己的化妆经验，并和大众分享。”注册用户可以上传自己的照片和内容到电子杂志里，然后链接到社交网站或通过电子邮件把杂志与朋友分享。 活动往后将发展为一个网上比赛讓用户們评论和投票出她們最喜欢的Maxgazine。数码机构Arc表示，尽管许多化妆品品牌把重点放在网上论坛或博客，少数鼓励消费者分享他们自己的想法，并提供他们一个社交圈子。随着Maxgazine，用户可以扮演专业的化妆师，建立一个与品牌的 “拥有”意识。Maxgazine將長期開放。随着时间 Maxfactor将增加网站裡的功能來继续吸引用户支持。

link:http://www.maxfactor.com.cn/maxgazine/#/maxgazine-home