Cosmetic companies have been keener than ever to develop strong branding in recent times, especially in the luxury cosmetic industry. Doing this will help them to increase revenue, enhance brand equity, and strengthen their customer loyalty base. However, with building any brand, there is a challenge, and creating a luxury brand poses an even more significant challenge.
How can luxury cosmetic companies build successful luxury brands? How can they maintain appeal to the target audience, all while differentiating themselves in the industry defined by long-standing competing brands? What are the critical factors of success that allow them to dominate the marketplace?
These are all questions that both new and existing brands, trying to establish themselves in the luxury market, want answered. This article will look at five strategies, with key insights from existing marketing professionals, that CEOs, CMOs, and brand managers may follow to develop resonating luxury cosmetic brands.
Identifying a niche segment
Alejandra Rubio | Influencer and Blogger – Girl with Glam
“The beauty industry in the past few years has segmented into many niches, especially in skincare. To identify your niche in the cosmetic industry, you need to identify the points of parity. If you are looking to be in the luxury niche, then you want to make sure your products are high-quality with rich ingredients and are long-lasting. After you can decide what are your points of difference and which sub-niche such as clean beauty, vegan beauty, etc. your product fits best.”
One of the most effective strategies in developing a brand is to identify a segment that can be targeted through enticing brand positioning. Luxury brands, in particular, are built on the premise that the products or services they offer are of high symbolic value to a selective segment of the market that seeks high-status associations rather than focusing on price. Therefore, brands need to identify the niche to which their offerings can be designed.
Brand Positioning Based on Differentiation Strategy
Jaclyn Tanenbaum | Marketing Research Expert
“Regardless of the product category, successful marketing strategies start with a strong target audience segmentation and a solid understanding of the needs and wants of those various segments. The beauty category is no exception. Knowing who your customers are, what is important to them, and how your products meet their needs are essential insights for building lasting brand-customer relationships. When competing in a luxury product space, luxury brands also need to understand what drives a consumer to covet their brand, pay a premium for their brand, and choose their brand over what may be considered “functionally equivalent” alternatives that are priced about the same or lower. This all means that luxury beauty brands have an even more challenging uphill battle when it comes to building and maintaining market share among their target customers. To combat these challenges and stay ahead of the curve, luxury beauty brands must strive to build and maintain lasting relationships with its existing customers while also growing their customer base. These brands can do this by introducing their current products to a new generation of customers and developing new and innovative products to satisfy the evolving needs and wants of both existing and new customers.”
Luxury brands follow a differentiation strategy. However, rather than focusing on merely product attributes, luxury brands differentiate themselves even more powerfully and distinctly through brand experience. These luxury brands are typically characterized by high levels of customer loyalty, powerful associations, symbolic value, and key features that define them and set them apart from the general market.
Creating Symbolic Value
Danielle Wünsche | Vice President – Zahntechnique, Inc.
“Symbolic value emanates from the brand equity of the brand, which is the extent to which the brand is perceived to be elite. Symbolic value typically reflects how much a brand is endorsed and validated by the elite or the crème de la crème of customers. Where some companies have had long-standing brand equity, it has, in recent times, been disrupted by the likes of influencers and celebrities entering the space with their personal brand equity, starting their own brands, and endorsing other brands. For example, Kylie Jenner entering the cosmetic industry coming from a non-cosmetic background and creating symbolic value through Kylie Skin and Kylie Cosmetics. Brands aspiring to position themselves as luxury brands should implement strategies to emphasize their symbolic value through storytelling, niche marketing, and heritage building.”
In creating a luxury cosmetic brand, the brand must acknowledge and be able to create the perception of symbolic value for its customers. If customers feel more of the brand, feel that the brand represents them, and feel that they are a part of the culture of the brand, this will create social standing, for which the customers will not mind paying premium prices.
Perception of Exclusivity
Elizabeth G. Arencibia | Brand Marketing Coordinator – Smith & Cult
“The perception of exclusivity lives very predominantly in the luxury cosmetic and beauty industries. When branding, the terms “luxury” and “exclusivity” go hand in hand and can determine how the eyes of the consumer perceive the brand. The componentry, packaging, supply, price, and location of where the items are sold are some of the many factors that contribute to the overall perception of the exclusivity of the brand or product. For example, in skincare, the same factory that develops a drugstore cream may also be producing a high-end luxury brand cream. The formulas are the same, yet the luxury brand will be able to charge more for the product. We are living in a time where “shelfies” and “unboxing” are flooding our social feeds. Influencers are determining which brands are “cool” or relevant. Consumers are more focused on the brand of the product then the price or even performance. They are drawn to luxury brands for the status that it gives them amongst others and will do whatever it takes to be able to get their hands on these products.”
The perception of exclusivity allows the brand to be viewed as having symbolic value. Luxury brands aim to create a sense of exclusivity for its customers, usually through limited supply, geographic availability, product image, unattainable prices, and barriers to possession. These factors create a sense of demand in the eyes of the general audience and a sense of social status for those who possess it. For companies striving to build a luxury cosmetic brand, strategies, and tactics to create a sense of exclusivity must be carefully devised and implemented to achieve success.
Superior Brand Promise and Delivery
Kamal Powell | Caribbean Regional Marketing Manager – Campari Group
“To stay relevant in the minds of our customers, we must be able to deliver on our brand promise each and every time. The consideration behind a brand promise will significantly affect our customers and the dedication of all staff members in delivering that promise. Clarity is key in the conceptualization and delivery of a brand promise. With the ability to reach a wide audience in today’s society, a company must be focused on maintaining high standards and dynamic enough to respond to new trends in the market. By having a promise to offer the highest quality products to your customers, and by being able to fulfill this promise, a brand will live on in the minds of customers long after the delivery of a good or services. My guiding words, “make a promise that is clear and focused and most importantly, stick to that promise!”
Consistently delivering on the brand promises is one of the most significant challenges brands face. In the case of luxury brands, brand promises involve multiple dimensions. Luxury cosmetic brands need to deliver on the symbolic value consistently and project continuity and consistency in projects through every touchpoint. Luxury cosmetic brands can maintain their sole focus on highlighting symbolic value by enhancing and maintaining their brand experiences.
Given the niche targeting and unique positioning of luxury brands within the general mass market, luxury cosmetic brands grapple with the challenge of market newness and competing with brands that have already monopolized the space. The challenge of building a luxury cosmetic brand in the current landscape may seem daunting. However, implementing these elements in their core brand development strategies will allow CEOs, CMOs and brand managers to build new, iconic, and resonating brands.