Value Proposition of beauty and cosmetic companies

Prof. Damien CHANEY

16th November, 2014 Market Value Proposition

Shiwangi

DAS Susmita

GUPTA Ankit

KANAPAKA Manohar

KAUR Janmeet

KUMAR Ranjan

RAMIREZ GARCIA Antonio

Submission By:

Table of Contents Introduction ................................................................................................................................................... 2

Study 1: Qualitative Research ........................................................................................................................ 3

Study 2: Quantitative Research ...................................................................................................................... 6

Conclusion ..................................................................................................................................................... 8

References ................................................................................................................................................... 10

Appendix A ................................................................................................................................................... 11

Appendix B ................................................................................................................................................... 18

Introduction

The objectives of this report include: to understand the cultural reasons for the selection of

cosmetics and how cosmetic industries leverage these facts into their products, marketing

strategy and communications.

Companies in this space don’t just sell make-up – they sell lifestyle ideals; glamour, confidence,

and style. So, to create a strong USP, there is a need to examine the profile of the perfect

customer and then market the products in a way that shows them that company can meet their

needs.

Secondary research suggests that rising consumer income and changing lifestyles are driving the

global beauty market. The cosmetic producers face strong challenges and obstacles in their

expansion in these emerging markets as the needs of people in these emerging markets are

different from those in developed markets. The needs vary as widely as desire for home remedial

ingredients in cosmetics in Indian market to the demand of organic ingredients like Dead Sea salt

in western market.

The study conducted by the group used the methodology as described below:

The group decided to take two countries as subject of the study- France and India

The group interviewed people in both the countries

This preliminary insight into the responses of these interviewees gave the structure to

our questionnaire

Further we floated the form through internet and gathered the responses of various

people from the two countries of research

The questionnaire probes into frequency of purchase, influences in buying decision

making, ingredients preferred, place of purchase, factors effecting adoption of foreign

brands and so on

The responses are analyzed in one of the sections of the following report

The insights obtained from this analysis are used further to define the importance of

various attributes that the consumers look for in the cosmetic products

The next step was to analyze where the cosmetic companies can further add value to the

customers

Study 1: Qualitative Research

Method: Semi-Structured Interview with consumers of French (In-Person) & Indian (Telephonic

or Video Call) Nationalities

Goal: Identify the difference in usage and purchasing behavior for cosmetic products

Sample size: French Interviewees – 8 and Indian Interviewees - 8

Questionnaire:

1. Which cosmetic products do you use?

2. How do you feel after applying cosmetic products?

3. Role of price in your purchasing decision?

4. Describe your Decision making Process while buying a cosmetic product? (Here we

briefly explained our interviewees what a ‘decision making process’ is.)

5. What attributes do you look for in a product?

6. How much the country of origin of a brand matter in selection of a particular product?

Results:

1. The key categories of cosmetic products identified by the interviewees were skin care

(body and face), hair Care, color cosmetics, fragrances and toiletries.

a. France Interviewees: All the five categories were found to be very relevant.

b. Indian Interviewees: Skin care, hair care and color cosmetics were found to very

relevant. Also color cosmetics were found to have traditional and cultural

importance, mainly for married women.

c. Fragrances seemed an integral part in the lifestyle of French interviewees and

they showed affection for specific brands of perfumes. While Indian interviewees

mentioned to apply perfumes on special formal or informal occasions mostly.

2. Consumers of both nationalities seemed to have similar response that cosmetics boost

their confidence levels. It symbolizes glamour, confidence, and style.

3. For Price Considerations: French consumers prefer brand over price. They mostly

preferred high end brands. For Indian consumers, price is an important consideration.

People here preferred medium to low end products for daily use with high end brands

reserved for use during special occasions.

4. Decision Making Process:

a. Identify the decision to be made: According to the respondents, the decision to

make a new cosmetic purchase is not impulsive. Usually the next purchase is made

when the existing product gets used up, is lost or gets expired. However, if a new

product is launched in the market, having some unique features, then customers

accepted to try the same out of curiosity.

b. Gather Relevant Information: The main sources of gathering information as cited

by the interviewees are: through newspaper and TV advertisements, friends and

family suggestions, suggested by specialists, online through social media and

beauty blogs, fashion and lifestyle magazines and cosmetic stores

c. Identify, Weighing and choosing alternatives: A number of factors decide whether

a brand would go in the decision set. For the Indian interviewees, price played an

important role in choosing a product. The other factors were the brand, the

benefits it promises and the key ingredients. Indians accepted being more inclined

to the products based on herbal ingredients which promise to make their skin look

fairer and radiant. For hair care products, they opted for products which offer

benefits such as “long and strong”.

The European responded that they don’t mind much the price of the product as

long as it is a good brand. Buying a luxury cosmetic brand was not uncommon.

“Fair and radiant” skin is not what they look for in a product. On the contrary,

many accepted using products, which gives their skin a natural tan. For hair care

products, color protection seemed more important to them.

Also, in color cosmetics, French respondents opted for more bold colors as

compared to the Indian respondents, with Red being the favorite color for most

of the French respondents.

d. Based on these specific needs and likings, the respondent claimed to identify the

different alternatives. They then weigh their pros and cons, and choose the best

alternative.

e. Take Action: Normally on the basis of the steps followed above, they buy the

product to which they have narrowed down to. If they still have confusion, they

do take the advice of the store assistants.

f. Review Decision and Consequences: The purchased product is highly scrutinized

during its use. Since the product is directly related to the appearance of one

person, any mismatch between the benefits promised and actually delivered, is

not accepted by the consumers. In such a case, they don’t hesitate to switch to a

different brand when making the next purchase of the product.

5. Key Attributes looked for in the product: There was a trend towards product with herbal

ingredients. Organic products are gaining popularity in both the markets as people have

recognized the side effects of harmful chemicals. However the ingredients’ preference

differed among the regions. Indians preferred Ayurvedic herbs whereas French people

cited ingredients such as sea minerals and special oils.

6. Importance of country of origin in selecting a brand: People gave a mixed response to this

question. Some people said that though not a deciding factor; it does raise the willingness

to pay a premium if the country is famous for the product. They mostly give more

importance to the communication by the brand in deciding for a product. However, some

people admitted that perception about a country does make a difference. While choosing

a product, they would prefer something ‘Made in France’ or ‘Made in Italy’ over

something ‘Made in Bangladesh or China’.

Study 2: Quantitative Research

Method: Structured Survey form filled by consumers of French & Indian Nationalities

Goal: Validate the findings of the Qualitative Research

Link to the Survey: https://esctroyes.az1.qualtrics.com/SE/?SID=SV_8k6w9i2NuKmljoN

Sampling Method: Convenience Sampling (Non-Probabilistic)

Survey Method: Survey form shared through email and social media platforms

Sample Size: 69

Demography of sample

Age group: 19 years to 34 years old

Nationality & Gender:

Male Female Total

French 20 10 30

Indian 23 16 39

Results

1. In our survey, 81% of the respondents claimed to be using cosmetic products.

2. Skin Care, Hair Care and Fragrances were the most commonly used categories of

cosmetics. The Toiletries market seemed smaller in India with only 10% claiming to use

them.

3. 82% of the respondents claimed to be using the cosmetic products daily. The result was

similar for both India and France.

4. Selection of brand: The respondents seemed divided on this question. While it became

clear that consumers did not believe in Celebrity Endorsements for choosing a product,

with only 4% of the respondents agreeing to it. They all relied on personal

recommendations. 35% of the respondents were influenced by friends or families while

selecting a brand. 33% relied on specialists’ recommendations. Nationality wise: Indians

relied more on Friends’ and relatives’ advice (41%) as compared to French people who

relied more on Specialists’ advice (47%).

https://esctroyes.az1.qualtrics.com/SE/?SID=SV_8k6w9i2NuKmljoN

5. 65% of the respondents claimed to be checking the ingredients for the product they buy.

83% of the French and 66% of the Indians claimed to be checking the ingredients.

6. 59% of the respondents of both the countries answered that product containing herbs

and sea minerals are their preferences while buying cosmetics.

7. The most important attribute while selecting a brand were the Brand name (50%) and

Problem solving Attribute of the brand (50%) for French respondents. For Indians, Price

also is an important consideration with 38% of them agreeing to the same. The next

important attribute for the Indians is Brand (24%).

8. Place of Purchase: The preferred place for purchase for French is e- commerce websites (40%)

and Specialists/ Brand Outlets (33.33%). The Indians preferred Supermarkets/ General Stores over

exclusive outlets. One reason could be the availability of products at discounted rate at these

stores in comparison to Branded outlets which offer products at fixed price.

9. Nearly 74% of the respondents buy foreign cosmetic brands. The percentage is almost same for

both France and India.

10. The choice of a foreign brand is based on Brand Awareness for French Respondents (47%). For

Indian respondents, recommendation from friends and families is important in choosing a foreign

brand.

11. The country of origin does not matter much for both Indian and French respondents.

12. French respondents preferred a particular foreign brand if that country was famous for that

particular brand. Indian respondents preferred brands recommended by acquaintances.

Conclusion

Thus from the Qualitative and Quantitative research carried out, these are the key differences

identified in Customer Perception and Buying Behavior:

1. The focus on cosmetics in Indian market is on providing a radiant and glowing skin. In

French market, the focus is on looking either natural or tanned.

2. Demand for organic and herbal products are on a rise in both the markets

3. Innovation in products could lead to product trials, as consumers accepted that they

usually go with one brand, and may try a new brand if some new features are introduced

with its product.

Based on the above analysis, we propose the following ways to the cosmetic brands to add value

to their products in the respective markets (Indian and European):

French Market:

o Consumers showed a high inclination to specialist’s advice/recommendation, so

they play a key role in decision making. Beauticians/hair dressers should be

included as prominent actors in designing communication plan.

o With reference to above point, specialty brand outlets/stores are preferred over

general retail store. Basically someone to advice or expert opinion is needed while

making heavy/costly cosmetics. Well-trained shop assistant is necessary.

o Organic products are preferred over advance research Hi-Tech formula products.

As seen through qualitative study, natural salts/minerals containing cosmetics are

given priority and decision is mainly linked to cultural aspects.

o Country origin of a brand does not influence the decision but if it does in some

cases, consumers decide whether to use or not based on brand awareness. Global

brand communication is necessary.

Indian Market:

o Product: The stress should be on herbal products based on Indian Ayurvedic herbs

on which Indians have a lot of trust.

o Place: Supermarkets and General Retail Stores should be major targets.

o Promotion: Instead of focusing on celebrities for endorsement, the stress should

be on building personal relations. Since Indians give a lot of importance to advice

given by friends and families, focus should be on developing networks amongst

customers. Special promotions based on referrals or loyalty programs can be

encouraged.

o Price: It should be moderately low price for every day-use cosmetics. As special

occasions – marriage, festivals, anniversaries, etc. influence cosmetic usage and

usage intensity too, so special cosmetic packs based on occasion can be

introduced with premium pricing.

Global Market:

o Men consumers prefer to buy products mostly online. E-Commerce option for

cosmetics can be a very good value proposition for products fulfilling needs of

male.

o Organic/natural product is preferred over advanced researched products. But, the

culture specific to the country defines what natural ingredient consumer would

like.

References

“The influence of culture on cosmetics consumer behavior”, 1Mrs.

HemaPatil,2Dr.BBakkappa, 2012, IOSR Journal of Business and Management (IOSRJBM)

“Global beauty industry trends in the 21st century”, Aleksandra Łopaciuk, Mirosław

Łoboda, Active Citizenship by Knowledge Management & Innovation Management,

Knowledge & Learning Conference 2013

http://www.in-cosmetics.com/Online-Press-Centre/Normal--Industry-

articles/MarketingTrendsReview2014/

http://www.in-cosmetics.com/Online-Press-Centre/Normal--Industry-articles/MarketingTrendsReview2014/

http://www.in-cosmetics.com/Online-Press-Centre/Normal--Industry-articles/MarketingTrendsReview2014/

Appendix A

Initial Report Last Modified: 11/15/2014

1. Do you use beauty/cosmetic products? # Answer

Response % 1 Yes

57 81% 2 No

13 19%

Total 70 100%

Statistic Value Min Value 1 Max Value 2 Mean 1.19 Variance 0.15 Standard Deviation 0.39 Total Responses 70

2. What kind of products do you use? # Answer

Response % 1 Skin Care

54 95% 2 Hair Care

51 89%

3 Color Cosmetics

36 63%

4 Fragrances

40 70% 5 Toiletries

30 53%

Statistic Value Min Value 1 Max Value 5 Total Responses 57

3. How often do you use cosmetics? # Answer

Response % 1 Daily

47 82%

2 2-3 Times a Week

9 16%

3 Less than Once a Month

1 2%

Total 57 100%


4. What influences the selection of brand/company? # Answer

Response %

1 Information from Advertisement

11 19%

2 Celebrity/Ambassador Endorsement

2 4%

3 Specialist's Advice

19 33%

4 Friends or Acquaintances

20 35%

5 None

5 9%

Total 57 100%


5. Do you check for ingredients in a product before selecting? # Answer

Response % 1 Yes

37 65% 2 No

20 35%

Total 57 100%


6. You enter a store and find these product options. Which of these

you are more likely to pick? # Answer

Response %

1

A product which has 100% natural ingredient

10 23%

2

A product having Advanced Research & Hi-Tech Formula

4 9%

3

A product containing sea minerals, herbs, etc. (Inclined to Home Remedies)

26 59%

4 No Preference

4 9%

Total 44 100%

7. While purchasing a product which attributes matters more? # Answer

Response % 1 Brand

25 44% 2 Price

5 9%

3

Problem solving message conveyed by label

26 46%

4 Consumer Offer

1 7%

Total 57 100%

8. Where do you prefer to buy cosmetics? # Answer

Response %

1 Supermarket or General Retail Stores

21 38%

2 Specialists/Brand Store

15 27%

3 Pharmaceutical Store

5 9%

4 e-Commerce website

15 27%

Total 56 100%


9. Do you use foreign cosmetic brands? # Answer

Response % 1 Yes

42 74% 2 No

15 26%

Total 57 100%


10. What influences the choice of using foreign cosmetic brands? # Answer

Response %

1 Recommendation from Friends/Acquaintances

12 29%

2 Advertisement

5 12%

3 Celebrity/Ambassador Endorsement

3 7%

4 Brand Awareness

22 52%

Total 42 100%


11. Does country origin of Foreign Brand matter? # Answer

Response % 1 Yes

17 40% 2 No

25 60%

Total 42 100%


12. The reason for which you prefer a foreign brand would be: # Answer

Response %

1 Country is famous for that kind of product

6 35%

2 Country is among developed economies

4 24%

3

Brand is famous for the product irrespective of country origin

5 29%

4

Personal Recommendation from close acquaintances

2 12%

Total 17 100%


13. Gender: # Answer

Response % 1 Male

43 62% 2 Female

26 38%

Total 69 100%


14. Age: # Answer

Response %

1 17 years old & below

1 1%

2 18 years to 22 years old

25 36%

3 23 years to 28

40 57%

4 28 years and above

4 6%

Total 70 100%


15. Nationality: # Answer

Response % 1 France

31 44% 2 India

39 56% 3 Others

0 0%

Total 70 100%

Others


Appendix B

Male Female Total France India Others Total Percentage

Yes 30 26 56 30 27 0 57 81%

No 13 0 13 1 12 0 13 19%

Total 43 26 69 31 39 0 70

Skin Care 28 25 53 30 24 0 54 95%

Hair Care 28 22 50 30 21 0 51 89%

Color Cosmetics 12 24 36 21 15 0 36 63%

Fragrances 24 15 39 29 11 0 40 70%

Toiletries 16 13 30 26 4 0 30 53%

Total 30 26 56 30 27 0 57

Daily 22 24 46 25 22 0 47 82%

2-3 Times a Week 8 1 9 5 4 0 9 16%

Less than Once a Month0 1 1 0 1 0 1 2%

Total 30 26 56 30 27 0 57

Information from

Advertisement 5 6 11 6 5 0 11 19%

Celebrity/Ambassador

Endorsement 1 1 2 1 1 0 2 4%

Specialist's Advice 11 8 19 14 5 0 19 33%

Friends or

Acquaintances 9 11 20 4 16 0 20 35%

None 4 0 4 5 0 0 5 9%

Total 30 26 56 30 27 0 57

Yes 19 18 37 25 19 0 37 65%

No11 8 19 5 8 0 20 35%

Total 30 26 56 30 27 0 57

A product which has

100% natural ingredient11 11 22 7 3 0 10 23%

A product having

Advanced Research &

Hi-Tech Formula 2 1 3 3 1 0 4 9%

A product containing

sea minerals, herbs,

etc. (Inclined to Home

Remedies) 3 10 13 11 15 0 26 59%

No Preference 4 2 6 4 0 0 4 9%

Total 20 24 44 25 19 0 44

Brand 12 13 25 15 7 0 25 44%

Price3 2 5 0 11 0 5 9%

Problem solving

message conveyed by

label 14 11 25 15 5 0 26 46%

Consumer Offer 1 3 4 0 4 0 4 7%

Total 30 29 59 30 27 0 57

Value Proposition of Beauty and Cosmetic Companies in Different Geographical Domains

Gender: Nationality:

While purchasing a product which

attributes matters more?

Do you use beauty/cosmetic

products?

What kind of products do you use?

How often do you use cosmetics?

What influences the selection of

brand/company?

Do you check for ingredients in a

product before selecting?

You enter a store and find these

product options. Which of these

you are more likely to pick?

Male Female Total France India Others Total Percentage

Supermarket or General 9 12 21 3 18 0 21 38%

Specialists/Brand Store 4 11 15 10 5 0 15 27%

Pharmaceutical Store 4 1 5 4 1 0 5 9%

e-Commerce website 12 2 14 12 3 0 15 27%

Total 29 26 55 29 27 0 56

Yes 21 21 42 22 20 0 42 74%

No 9 5 14 8 7 0 15 26%

Total 30 26 56 30 27 0 57

Recommendation from 3 9 12 3 9 0 12 29%

Advertisement 4 1 5 2 3 0 5 12%

Celebrity/Ambassador 1 2 3 3 0 0 3 7%

Brand Awareness 13 9 22 14 8 0 22 52%

Total 21 21 42 22 20 0 42

Yes 5 12 17 9 8 0 17 40%

No 16 9 25 13 12 0 25 60%

Total 21 21 42 22 20 0 42

Country is famous for 1 5 6 4 2 0 6 35%

Country is among 1 3 4 2 2 0 4 24%

Brand is famous for the 3 2 5 2 3 0 5 29%Personal

Recommendation from 0 2 2 1 1 0 2 12%

Total 5 12 17 9 8 0 17

Male 43 0 43 20 23 0 43 62%

Female 0 26 26 10 16 0 26 38%

Total 43 26 69 30 39 0 69

Gender: Nationality:

Gender:

0.0715980529785160.071598052978516,0.053771018981934,0,0.024965286254883,0.010340929031372

Where do you prefer to buy

cosmetics?

Do you use foreign cosmetic

brands?

What influences the choice of

using foreign cosmetic brands?

Does country origin of Foreign

Brand matter?

The reason for which you prefer a

foreign brand would be:

Value Proposition of beauty and cosmetic companies

Marketing

Transcript of Value Proposition of beauty and cosmetic companies