As new consumer values shift towards more meaningful consumption, priorities are being reassessed, paving the way for new “luxury” attributes beyond a higher price tag and other traditional premium perceptions. With both mass and premium brands looking to adopt new aspirations for ethical, experiential and authentic qualities, the lines between the two segments continue to blur and the ‘masstige’ space is further reinforced. Over recent years the industry has witnessed premium growth outpace mass as the trend towards premiumization centred on heightening exclusivity and the polarity between the two worlds grew. But figures from last year show mass rapidly picking up pace to narrow the growth trajectory gap between the two segments, as the sophistication in mass intensifies.
Euromonitor’s Global Consumer Lifestyles Survey shows that some consumers are turning their backs on branded goods and instead paying closer attention to quality and efficacy. For example, in 2015 22% of Chinese respondents claimed to strongly prefer branded goods to non-branded alternatives, whilst in 2017 this figure had decreased to just 16%. In-line with the notable decline in the power of “the brand” players began to reassess their marketing collateral. The concept of a brand didn’t become redundant it was just replaced with new models of aspiration. Naturally, in order to appeal to these new aspirations, building a brand from a clean slate is easier than reinvention.
By either challenging the pricing status quo or generating new appeal through more compelling stories and experiences, these newcomers (often digitally native vertical brands) can tap into new values, no questions asked, or scepticism induced. Some brands do this by consciously disrupting the mass segment with perceived value at low prices, pushing other mass brands to innovate fast or reduce prices further.
Deciem’s The Ordinary (which makes up around 70% of its business), maintains mass price points but harbours attributes of premium competitors namely transparency along with a credible story and a tight distribution strategy. The company’s founder, the late Brandon Truaxe, built the brand on the premise that price points are irrelevant and that ultimately luxury means for the consumer not to be taken for a ride. Since its launch in 2013, Deciem has become a trailblazer for transparency and became the gold standard for new launches such as The Inkey list, who’s USP is to simply name the products after the ingredients included within them. Evidence in favour of trust and transparency is mounting, and in 2017 55% of US consumers report only buying from brands they completely trust, compared with 47% in 2016.
Meanwhile, acquisition or incubation are the preferred tools for legacy players to compete and they increasingly view the industry fragmentation as an opportunity rather than a threat. Along their reinvention curve, these companies will need to adopt a more meaningful approach to projecting the status and aspiration that beauty has typically been associated with. Unilever incubated its first new beauty brand in 20 years with the help of external “social innovators” and the range, Love Beauty and Planet, has rapidly carved its own identity tapping into numerous ethical zeitgeists including vegan, recycled and recyclable, whilst remaining clearly mass in price.
Decoding the semiotics of branding is merely par for the course when it comes to understanding the what and how of premiumization. The why remains a question mark; it’s not that consumer appetite for quality, value, aspiration or status has diminished, it’s that how we expect these qualities to manifest, has changed.
Hannah Symons will be speaking on ‘Redefining the premium beauty segment’ at in-cosmetics Global: 3 April, 15:00 to 15:45 at the Marketing Trends Theatre.
Ensure you space at the session by booking your priority seat in advance at in-cosmetics.com/register
You can also pre-register to secure your copy of Euromonitor’s report “Skin Health: The Evolving Landscape of Dermocosmetics” at Euromonitor.com