While economists debate the shape of the coronavirus recession, beauty brands are already experiencing shifts in consumer behaviors that differ from past recessions. Consider the “lipstick effect,” named for the phenomenon that shows consumers continue to spend on small indulgences in a recession. The eponymous product declined in popularity this year as many of us work from home, and when consumers go out, they wear a mask.
The most important lesson of 2020 is that brands need to remain alert for changes in the environment, positioned to pivot in order to keep their brands relevant.
Here are four important ways you can recession-proof your beauty brand to be ready for the next downturn.
1. Make sure your brand benefit is as relevant as possible in the COVID-19 environment.
Previous patterns of consumer behavior are no longer applicable as a “new normal” sets in; your consumers are spending their time in different places (e.g. staying more at home instead of out and about) and prioritizing different behaviors. Their expectations and needs from brands, including yours, are shifting. Because of this “new normal”, business owners need to remain alert to these changes and prepare the brand to meet these rising needs and expectations.
One of the best ways to do so is by building into the existing trust that your consumers have for your brand. At a time when everything is uncertain, consumers want to trust the familiarity your brand can provide. But you shouldn’t stop there. You also need to accompany your consumers as they navigate this entirely new environment, shift your brand message, and recontextualize your value proposition.
Pat McGrath Labs’ Mask and Lash Duo
In the beauty industry, a perfect example of this is Pat McGrath Labs’ Mask and Lash Duo. With the current situation necessitating the use of masks, make-up has taken a backseat. But Pat McGrath Labs deftly adapted to this situation by combining their Dark Star Mascara with their Mask Majorness 001 into a bundle, implying that you can still do your make-up and look good even with a mask.
2. Analyze which channels are available or viable for your brand to use.
Another aspect you need to pay attention to is the delivery of your modified brand benefits. The channels that you have used before may not be entirely viable or available during the recession. During this current pandemic, for example, consumers continued to flock online, and e-commerce increasingly became their first choice for their shopping needs. Failing to adapt into this situation will be detrimental to your brand’s survival.
One easy way to ensure you’re meeting your consumers’ needs in this space is to optimize your product detail pages with all the relevant details consumers will need when making a selection.
Consumers are also watching more YouTube videos and spend more time on Instagram. Relying on beauty influencers more during this pandemic compared to the usual marketing channels is a viable strategy to reach more people.
3. Make sure your brand’s price is within a category-relevant pricing corridor.
When brands experience the brunt of a recession, often, business owners will try to lower the prices as a knee-jerk reaction to the sudden drop of purchases. Some think that slashing product prices is the only way to maintain market share and retain their consumer base. However, as shown by previous recessions, this strategy is shortsighted and can even prove fatal to the brand.
Cosmetic products are highly elastic consumer goods, which means consumers are sensitive when it comes to changes in pricing. Any reactive move such as slashing your lipstick prices without any sufficient basis can inevitably lead to demoralizing the consumer, eroding their trust in the value they once placed on your business, and make it hard to recover on the other side of a recession.
Before taking drastic measures, you should first ensure that your brand’s price is within a pricing corridor that is relevant to your category. This will differ depending not just on your place within the current market (e.g. market leader vs market follower) but also on your core differentiated benefit and consumer trust.
Looking back at what correlates between sales performance and price vs your competitors will inform you at least on that pricing corridor, e.g. 10% premium vs private label. Tracking that and then coursing correctly – especially when “pricing is at the sole discretion of the retailer” – is of no small importance. And that price corridor may be different by segment.
For example, a lower priced make-up variant may have a different pricing sensitivity than a higher priced variant with perhaps higher loyalty. Most importantly, a pricing corridor should serve as guidance that can adjust with current market conditions.
4. Harness user-generated content to be more agile and capture actionable insights to win.
One major differentiation between the 2008 recession and the approaching recession is that brands have greater access to their consumers’ insights at a faster rate. Real-time feedback, offered willingly and without motivation, comes in the forms of social media conversations and interactions, comments and reviews: in short, user-generated content or UGC.
UGC in the beauty industry is virtually limitless and will only increase further. New research commissioned by Nosto found that 44% of beauty shoppers bought more skin care and cosmetic products online than in-store this year. The same report specifies that consumer reviews are the primary motivator for 74% of all shoppers and 80% of female shoppers.
This newfound availability of UGC illuminates how your brand is performing, what values are most embraced, what problems ought to be handled and corrected, what emotions your consumer is unconsciously evoking when talking about your brand, and how your competitors compare, among other valuable insights.
Natural language processing (NLP), machine learning and emotional lexicon analytics (ELA) offer the benefit of uncovering insights often found in focus groups, at scale (quantitatively and qualitatively) but faster and without the bias of groupthink or respondents telling a moderator what they think the moderator wants to hear. Using NLP and ELA, you will be able to understand the words that your consumers use in the content they create in their product reviews and feedback, analyze their usage and trends, and derive meaning from their intentions – all to derive actionable insights on your consumer and your competitor’s consumer.
How does using NLP and ELA relate to pivoting and recession-proofing your brand? NLP and ELA provides a new dimension to your brand performance and lets you understand how your value prop manifests in reality, far more effectively than the traditional methods of research. You may then apply the “trust words” that you gather towards enhancing your communication with your target market using language that resonates with them.
One specific application of harnessing UGC through NLP and ELA is the optimization of your product detail pages (PDP). In the e-commerce side of your cosmetics business, for instance, the PDP presents a detailed description of your product offerings such as size, color, price, shipping information, reviews, and other relevant information consumers may want to know before making a purchase. A well-optimized PDP uses the right keywords that increases search engine ranking and entices consumers to click through. Leveraging the consumer language from USG and the drivers enable the right priority of communication. And leveraging NLP and ELA, which were not around in the last recession will enable your brand to win with the right value equation.
The Takeaway for Beauty Brands
Value has by and large always been a priority for consumers. Recession-era spending habits reinforce its constant importance, and this recession is no different. But there are things that brands must do. Some of those are tried and true e.g. making sure that your benefit is relevant and being in a pricing corridor. In a recession brought on by a pandemic, what’s different is that the benefits that consumers expect from many brands are changing. The good news is that with access to our consumer through UGC, we’re able to understand those shifting expectations in real time and more accurately with tools such as NLP and ELA. The brands that thrive through this recession will be agile enough to leverage those capabilities to act quickly on insights while also adhering to the fundamentals of maintaining the right value equation as consumers shift the expectation on value.
Mark Jeffreys founded 4Sight in July 2019 after founding, growing and later selling Mobile Agent Now – a review response company. Mark spent the previous 17 years at Procter & Gamble driving profitable growth on brands ranging from Pampers and Always to Clairol and Gillette as well as leading brand management capability across P&G.
