Engaging Affluent Chinese Through Beauty Products
For affluent Chinese customers, Beauty is the portal into luxury goods. This is due to the fact that they are less expensive and more widely available. Consequently, they are purchased by young Chinese female students, who often hold competitions with their friends to see who can collect the most coveted brands.
While the definition of beauty has become homogenized due to the globalization of media, cultural and societal differences affect how women in different countries view and use beauty products. Our recent survey of Chinese beauty consumers resulted in findings which pointed out how Chinese women differ from that of American women. While ever so subtle, these findings can help global beauty companies leverage their Chinese business.
Not surprisingly, Chinese women are much heavier users of skin care products. Skincare holds a 70% share of beauty consumption. In contrast, American women’s usage of skincare, color cosmetics and fragrances is fairly evenly divided.
Chinese women’s skin ages differently than that of their American counterparts. As a result, they require different product attributes. While Western complexions show their age through fine lines and wrinkles, Asian skin ages through dark spots. As a result, Chinese women are demanding that their skincare products lighten these spots and even out their skin tone.
Beauty is still relatively new to Chinese women, so education is key. Mao forbade the use of cosmetics until the 1980s. Therefore, beauty information, until then, was virtually non-existent. While today’s Western woman generally is initiated into the beauty ritual by her mom, Chinese women are dependent on outside sources for their beauty information.
Beauty companies have stepped in to fill the void and offer training and education programs to their consultants and the customers. For example, Amore Pacific has a “lunch and learn” program targeted toward secretaries. And manufacturers have invested in training their beauty consultants and product tie-ins with Taiwanese beauty-related television programs. The payoff from these programs is evidenced by the fact that Chinese women are more likely to use all the products recommended to them. Toner use is particularly high (75%), whereas it is much lower among U.S. women.
Chinese women value a radiant, glowing complexion. Unlike their American sisters, they understand that using effective products early in life can positively impact their skin. Our study showed that good skincare habits start early. Forty-three percent of our panelists reported first using skincare products before 17 years of age, with 16.5% using skincare products under the age of 15. As a result, global beauty companies need to position their skincare messaging to the tweens and teens. With the exception of acne products, their current their communications strategies are targeted to an older population. Skincare is a loyal category. When women find something that works, they generally stick to it. Therefore, speaking to women in their early teens will increase market share through increased trial and (hopefully) continuous repurchase.
While skincare use starts at an early age, color and fragrance usage is delayed until a Chinese woman enters university. Color cosmetics and fragrance usage is frowned upon by a girl’s family. It not considered seemly for a “nice girl” to wear these products until she at least finishes high school. Her family wants her to focus on her studies and not be distracted by extraneous influences. It is important to them that she gains entrance into a top university. Eighty-four percent of our panelists reported first using color cosmetics between the ages of 18 and 25. And 74.8% of panelists reported first using fragrance between these ages.
Unlike the U.S., in China, mass and prestige brands live in the same environment. Due to the need for service and information, brands such as Maybelline, L’Oreal, Crème de la Mer and Estee Lauder live side by side in Chinese department stores. This phenomenon is due to the fact that the department store environment is well suited for education and training. Beauty is relatively new to Chinese consumers so education is essential to trial. In fact, over 50% of our panelists reported purchasing their skincare, color cosmetics and fragrance products in department stores.
While beauty brands may share the same channel, they are segmented by age and income. Our study showed that prestige consumers are concentrated in Shanghai. They are older and tend to either own their own business or work in middle management for an State Owned Entity or a multi-national corporation. In contrast, mass users are primarily students.
Friends and family are the primary source of information used to find out about beauty products. The power of word of mouth is huge as 40% of respondents cited friends and family as their primary source of information. Many mainland Chinese prefer to keep their thoughts, opinions and personal information private. They find it difficult to trust outsiders because of their long history and previous experience where information was used against them. Chinese culture is centered on the family, and many find it difficult to trust those outside this inner circle.
Interestingly, in limited cases, medical advice is also valued in selecting items such as toners, moisturizers, anti-aging products, foundation and mascara. When asked why they used a particular skincare or color cosmetics product, 20% of our panelists said that it was because a doctor advised them to use it. As doctor brands dominated the U.S. market over the past 10 years, we believe that doctor-created or -endorsed brands have great potential in China.
Unlike Western women, who like to experiment with small, indie brands, the Chinese beauty consumer prefers to use large, well-known global brands. Shiseido was the most used skincare brand by our panelists. This is due to the fact that Chinese believe that Japanese technology is the most cutting-edge. They also believe that Japanese skin is close to theirs, and that Shiseido has the best understanding of their skincare needs. However, we believe that its strong global brand image is a big reason for its success. For example, Amore Pacific, which is the top-selling brand in Korea, has not been able to make in-roads into the Chinese market. We hypothesize that this is due to its low brand awareness in both the U.S. and in Europe. In contrast, Shiseido is well known and respected in these areas.
Maybelline was the most-used color cosmetics brand by our panelists. This was not surprising as Maybelline has aggressively focused resources on all elements of the marketing mix. Specifically, sharp pricing, innovative promotions, heavy advertising featuring global and local celebrities and models and constant innovation resulted in driving market share. That being said, we wonder how long they will be able to sustain such heavy investment.
And with fragrances, the Chinese clearly prefer designer products as
evidenced by the huge popularity of Chanel No.5, which was the most-used fragrance by our panelists. Our panelists hugely admire the Chanel franchise
and consider it an honor to have Chanel No.5 adorn their dressing table.
In summary, the Chinese market is big and growing with a lot of opportunity for continued double-digit growth. While skincare use begins at a young age, color cosmetics and fragrance consumption doesn’t begin until the user enters university.
Since beauty is still relatively new to Chinese consumers, beauty companies need to focus on training and education. Young Chinese women use mass products as students and then “graduate” to prestige products once they get older. Grassroots marketing is even more so as “friends and family” word of mouth is the number one source of information. Global brands dominate. Shiseido holds the number one skincare position because Chinese consumers believe that Shiseido provides the best products for their skin. Maybelline’s commanding leadership position in the color cosmetics category is due to its focus on all elements of the marketing mix. And Chanel is the top fragrance brand due to its strong luxury goods image.