Brand & Value: Your Two Keys to Winning in this Recession
In our monthly survey of consumer spending, 51% of TotalBeauty.com readers said they've cut $10 to $50 or more per month on beauty products since the recession started. Our focus groups last week echoed that -- readers are trading down, applying less product, depleting existing products in their homes, looking for better deals. Still, many beauty companies reported solid Q4 sales (see chart) and we're finding that even in a recession, value, not just price, is a key driver for consumer beauty purchase decisions.
Getting priced out of certain beauty products and services is just a fact of life when millions of consumers lose their jobs; in addition, those still employed have gone into money-saving mode. For proof, look at the chart -- Estee Lauder sales were down 6%, L'Oreal Professional and Luxury down 2.2% and 6.3% respectively, and P&G Professional Hair Care down mid single digits. The silver lining here is mass brand manufacturers P&G, J&J, Unilever, and Alberto Culver have reported sales were flat to up. (Since flat is the new "up," then up must be the new "killed it.")
So what's the learning here? Companies that "killed it" are getting not only the value equation right, but their brands are connecting with consumers better.
This is a very dangerous time -- and yet simultaneously a fantastic opportunity for beauty brands. Right at this moment, millions of consumers have given themselves a license to experiment with brands that provide better value or simply speak to them better. And that means market share is there for the taking.
Higher-priced brands have the most to worry about, granted. And while mass brands must be careful not to lose consumers to private labels, they have technology as good as luxury brands', and tons of money in the advertising coffers,which nets an opportunity to permanently capture those luxury consumers who are trading down. But the biggest opportunity of all? It's the smaller brands and private labels, who in the past may not have gotten the glance they now will from consumers.
No matter what the type of brand, connecting with consumers functionally and emotionally -- demonstrating they understand their needs and wants, and showing they got the value equation right -- are going to be the keys to winning in this recession. And that makes branding and getting your message out more important now than ever before.
- Emrah Kovacoglu, Founder and CEO, Total Beauty Media, Inc.
