KSM CATEGORY INSIGHTS
Beauty
Category Insights: Beauty
When the going gets tough, women turn to lipstick to make themselves feel better, right? Surprisingly not. Despite belief to the contrary, the beauty market is not recession proof. Like many product categories, the beauty industry and prestige brands specifically are impacted by the economy. Prestige beauty sales in the U.S. dropped 6% in 2009 vs. 2008, but early signs of a post-­‐recession rebound offer reasons to hope. The overall cosmetics and toiletries market in 2011 is expected to be up 3.1-­‐3.6% over 2010, with the prestige market accounting for a significant portion of the growth with 8-­‐10% increases in sales (Kline & Company, Inc.). What this means for beauty brands is that consumers purchase beauty products in good times and bad, but their behavior is influenced by the economy. Given the current economic volatility, brands should be mindful of this when developing their marketing plans. The opportunity exists for beauty brands to generate sales in hard times by targeting the right audience with the right message at the right price point. Through KSM’s planning process, we are able to uncover consumer and brand insights to inform our media plans and meet client’s marketing objectives. The following category brief will provide an industry overview, snapshot of the beauty consumer and an analysis of the current advertising landscape. Finally, KSM will detail key insights and opportunities for beauty brands to grow their market share and sales in today’s economy. Industry Overview While beauty has two faces – prestige and mass – both segments are showing signs of a post-­‐recession rebound. Total U.S. beauty sales in the prestige and FDM segments trended similarly in first quarter 2011, up 5% and 4%, respectively (NPD Group). Key Insights • Overall cosmetics and toiletries market is expected to be up 3.1%-­‐
3.6% in 2011 vs. 2010 • 74% of U.S. women currently wear makeup • Beauty industry accounted for nearly $3 billion in reported advertising spending in 2010 Prestige vs. Food/Drug/Mass
Within the prestige makeup category, all segments (Face, Dollar Percent Change (First Quarter 2011)
Eyes, Lip, Sets, Other Color and Nail) posted healthy sales Category
Prestige
Food/Drug/Mass
gains, with trends in dramatic eyes, soft lip shades, and Total Beauty
+5%
+4%
bold and bright nail colors contributing to the increase. The Total Makeup
+5%
+6%
biggest growth in the prestige makeup category came from Total Skincare
+6%
+3%
the smallest segment. The total nail category grew 57% in Total Fragrance
+6%
Flat
dollar sales in January through May 2011 vs. the same Sources : The NPD G roup & S ymphonyIRI G roup
period in 2010 (NPD Group). Despite the growth, consumers continue to be cautious about beauty spending. According to Mintel, a leading research provider utilized by KSM, 38% of female makeup users only buy makeup when they run out of something (strictly replacement purchases). 25% only buy makeup on sale. Only 31% have not changed their makeup buying behavior as a result of the slow rate of the economic recovery (Mintel). 1 Category Insights: Beauty
The Beauty Consumer As 74% of U.S. women wear makeup, the potential consumer base for beauty brands is significant. However, as the demographics and psychographics of consumers vary considerably within the category, it is important for brands to have a full understanding of their consumers. To help discover this knowledge, KSM has access to a full suite of syndicated and proprietary research tools that assist our media strategists in uncovering consumer insights and opportunities that deliver on marketing objectives. To illustrate the distinctions between consumers, KSM conducted a target audience analysis for three different beauty consumers – the mass, prestige and teen beauty segments. Among the adult segments, the prestige beauty consumers were more affluent and educated, while the mass segment was in line with national averages. Further, the prestige consumers were more likely to reside in urban areas in the Northeast and West regions, while the mass and teen beauty consumers were more evenly distributed across the U.S. All segments showed interest in fashion, but the prestige beauty consumer expressed the greatest desire and necessary means to purchase the latest beauty products. From a media perspective, the prestige beauty consumer is best reached through magazine and digital, but it is important to utilize a more diverse media mix for the mass and teen beauty consumers due to their varied media usage. As the teen beauty consumer looks to TV to know what’s in fashion, TV could play an important role for advertisers. Source: Experian Simmons: 2011 Spring NCS / NHCS Adults 2 Year, 2011 Spring Teens Full Year. Numbers reflect indices. Consumer Purchase Behaviors 2 Category Insights: Beauty
In addition to examining the demographic and psychographics characteristics of consumers, it is also important to focus on their purchase behaviors. Using our research tools, KSM is able to determine what product attributes are most important to women, motivations for purchase and where they shop. Importance of cosmetic product attributes Despite the proliferation of advertising messages touting environmentally-­‐friendly or charitable claims, women are most impacted by actual product features. Topping the list are noncomedogenic (76%), clinically tested (68%) and hypoallergenic (64%) (Mintel). Motivations for purchase Similar to other product categories, unbiased recommendations have the most impact on a shopper’s decision to try a new beauty product. The most commonly used sources are friends and family (42%) followed by beauty blogs (16%). Among “biased” sources of recommendation, in-­‐store sampling (8%) and consultations (8%) have the greatest impact, representing an opportunity for brands to grow their consumer base through in-­‐store programs (Mintel). 3 Category Insights: Beauty
Where women purchase beauty products With the average U.S. woman spending $144 annually on beauty, the beauty market spans all retail channels (Women's Wear Daily, 2011). Mass merchandisers (57%) and drug stores (45%) are the most popular channels, likely due to pricing and product selection. Department stores (23%) and Sephora (12%) are the most frequently shopped channels for prestige beauty products, with consumers purchasing both in-­‐store and online (Mintel). As online shopping continues to increase, it is important to recognize the role it plays for both product research and sales. BIGResearch found that among women who purchase skincare and cosmetics at least once a month, 43% regularly conduct online research before making in-­‐store purchases; 54% do so occasionally. Only 4% never research products online (Mintel). Although many of these women may end up purchasing the products in a physical store, many are converting online, at increasing rates. Online shopping for makeup increased 3 percentage points in 2011 vs. 2009, rising to 37% (Women's Wear Daily). Media Landscape 4 Category Insights: Beauty
Not surprisingly given the size of the market, the beauty industry accounted for nearly $3 billion in reported advertising spending in 2010. Top advertisers included L'Oreal Paris, Maybelline New York and Cover Girl, with each accounting for 8-­‐9% of the overall spending (Kantar Media). Magazine spending represented 58% of the category ad spending, which equates to $1.6 billion (Kantar Media). While it’s likely the ad spending numbers are somewhat inflated due to reporting methodologies, the influence of magazines in consumer beauty purchases cannot be denied. The most frequently used magazine genre was Women’s Fashion & Beauty, with Allure, InStyle, ELLE and Glamour nabbing the most advertising pages (GfK MRI Starch Advertising Research). As consumer media habits continue to shift to digital, magazine publishers are developing new ways of retaining readers and encouraging engagement, such as tablet editions, apps and QR codes. As of August 2011, 62% of Publishers Information Bureau (PIB) member publications offer an app, and this number is rapidly growing (MPA). Within the TV properties, the networks received 42% of the spending, with national cable close behind at 34%. Cable networks receiving the most spending were Lifetime, MTV, E! and VH1 (Kantar Media). Even though beauty brands are still allocating the majority of their budgets to traditional offline media, they are increasingly turning to digital, mobile, social media and search to drive interaction with consumers. While advertising spending for these vehicles is difficult to project, they are playing a larger role in beauty marketer’s media mixes, especially as mobile devices continue to gain in popularity. Innovative beauty brands are increasing their reach by targeting consumers through relevant devices. Since women love to engage in conversations about beauty products, social media such as Facebook, Twitter, Google + and blogger programs merit strong consideration for beauty advertisers’ media plans. Typically, sponsored messages from beauty brands are more accepted than other categories, so advertisers can use this to their advantage to encourage engagement with consumers. As the average beauty brand has 373,639 “Likes” on their U.S. Facebook page (eMarketer), the potential reach of social media is considerable. Impact of Print Positioning on Ad Effectiveness 5 Category Insights: Beauty
Recognizing the importance of magazine advertising for beauty marketers, KSM examined the impact of unit type, ad positioning and media selection on print ad effectiveness for the Eye, Face, Lip and Nail Makeup categories. By looking at the print effectiveness scores, KSM is able to determine which placements and media properties deliver the most efficient results for clients. Among all unit types, 2nd Cover insertions had the highest Noted scores, with 83.1% of readers noting the ads. While larger and/or higher impact ads usually received the highest Noted scores, this pattern did not extend to Actions Taken. Despite lower Noted and Associated scores, unit types that typically include a strong call-­‐to-­‐action or coupon such as cards and fractionals garnered the highest response rate among readers. Interestingly, the lowest performing insertion type was run-­‐of-­‐book gatefolds, despite the larger unit size. This is likely due to readers bypassing the ad completely, instead of taking the time to open the fold and see what is inside. Even though there was not the same degree of variance in scores as insertion type, another key influencer on ad effectiveness was an insertion’s position in the magazine. Insertions positioned within the first 25% received the highest Noted and Associated sSource: cores. G
Scores ipped for insertions placed within the middle sections, but the Noted fK MRI d
Starch Advertising Research and Associated scores were high for Quartile 4, likely due to strong ad performance by Cover 3 and 4 insertions. Source: GfK MRI Starch Advertising Research Source: GfK MRI Starch Advertising Research KSM always analyzes magazine genres and publications against a client’s custom media target, but also looks at the ad performance to gain additional insight on the publications. For the Eye, Face, Lip and Nail Makeup segments, the strongest performing genre was Bridal. 67% of Bridal magazine readers noted the ads, and of these, 74.9% took action as a result of seeing the ad. 6 Category Insights: Beauty
Another strong performer was the Teen magazine genre, with 73% of readers who noted the ad taking action as a result. Somewhat surprising was the performance of the Women’s Fashion genre. Despite being the most used genre, ad performance was slightly below average, possibly due to the amount of beauty advertising typically found in these publications. Accordingly, it is important for brands to have variety in their print mix to break through the advertising clutter and increase message reach. Source: GfK MRI Starch Advertising Research Insights & Opportunities Know your target • Women’s usage, attitudes and purchase habits for beauty products varies significantly. • Along with their agencies, brands should identify their consumer profile and tailor media programs to meet their needs. Focus on the consumer experience • Forge an emotional connection with consumers to build loyalty and encourage further purchases. • Instead of just focusing on getting the message out (“push advertising”), brands should create content and platforms that make shoppers come to them (“pull advertising”). o Provide information such as tips, new product descriptions, and tutorials and interactive features like blogs, shopper-­‐written reviews, and links to social media websites. • Always ensure marketing programs are consistent with the brand image. o Engagement tactics utilized by CPG brands don’t always work for luxury brands. § Standard methods such as soliciting photo submissions, running polls, quizzes, surveys, or competitions may contradict the brand image. o Customize engagement programs for your brand and consumer. Stay ahead of the trends and utilize emerging media vehicles 7 Category Insights: Beauty
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Not every platform makes sense for every advertiser, so it is important to understand the differences between them and know which ones can work for your brand. o Consider tablet editions when negotiating packages with print publications o When appropriate, utilize 2-­‐D barcodes to promote special offers or provide unique content. o Use mobile to reach consumers on-­‐to-­‐go and drive e-­‐commerce. o Create opportunities for consumers to engage with your brand online in meaningful ways through social media. When creating advertising content, plan for cross platform to reach consumers at multiple touch points with a consistent brand message. Understand the best opportunities for your print ad to succeed based on historical and competitive performance in the category • Consider genres and magazines that perform well for the category, but look to differentiate mix from competitive set to break through advertising clutter. • Evaluate impact of unit size and positioning on ad effectiveness to ensure most effective use of dollars. About Kelly, Scott & Madison Established in 1966, Kelly, Scott & Madison is one of the first and largest independent media planning and buying companies in the U.S. Specializing in every form of media, KSM fully integrates research, strategy, planning, buying, digital and promotions to help clients achieve results. 8 Category Insights: Beauty
Works Cited eMarketer. (2011, May 14). Average Number of "Likes" on a U.S. Brand's Facebook Pages, by Industry. Retrieved from www.eMarketer.com Experian Simmons. 2011 Spring NCS/NHCS Adult 2 Year. Experian Simmons. 2011 Spring Teens Full Year. GfK MRI Starch Advertising Research. (2011). Kantar Media. (2011). Kline & Company, Inc. (2011). Beauty Retailing United States -­‐ 2011 Fall Preview. Mintel. (April 2011). Beauty Retailing. Mintel. (July 2011). Color Cosmetics. MPA. (2011). Personal Mobile Devices: Tablets, E-­‐Readers and Smartphones. The Association of Magazine Media. NPD Group. (2011, August 18). Men's and Women's Fragrance Likely to Exceed 2008 Levels in Second Half. NPD Group. (2011, June 2011). NPD SymphonyIRI Beauty Cross Channel Monitor Reports a Total View of U.S. Beauty Market. NPD Group. (2011, July 27). Women Look to Dramatic Eyes, Soft Lip Shades, and Bold, Bright Nail Colors. Women's Wear Daily. (2011, September 9). The Anxiety Gap. 9