Premium brands are under threat
Research company UnityMarketing examined the sector of premium cosmetics in the global market. As it turned out, though this part of the beauty industry remains relatively stable, but in the long term it threatens the reduction of positions due to certain socio-economic factors.
First of all, analysts point to the fact that buyers of premium goods tend to change their models of consumer behavior. In addition, they often deliberately limit the impact on a marketing campaign.
One thing is certain: young consumers with high income Europe, North America and increasingly in Asia behave very differently than previous generations. A few decades ago, the principle, the more expensive the better, was one of the predominant culture of consumption. Today, situations have changed dramatically. This also contributed to the growing awareness about environmental issues, which led to a reduction in consumer interest in premium products.
No less important is the fact that society became aware that the number of truly wealthy individuals is only 1-2% of the population. So buyers prefer to hide their financial capabilities to avoid disapproval from others. Thus, marketers increasingly difficult to correctly estimate consumer potential customers and calculate what they’re really willing to spend money.
For example, analysts of the world market indicate that Millennials are increasingly interested in how to spend their money on travel, cultural events and outdoor activities, and not on expensive things: luxury cars, premium vehicles or cosmetics. It also has a serious impact on the overall cost structure.
On the market there are consumers of the new formation – HENRY (High Earners Not Rich Yet – the literal translation is “a well-earning man, but do not possess the wealth”). Young wealthy consumers are becoming more insular, and therefore become a difficult task for experts on branding and marketing.
Along with this, many of the most expensive luxury brands remain true to their traditions, believing that consistency and brand identity enough. But increasingly it appears that it is not, as in other categories, such items as environmentally friendly package, ethical standards and improved the sensor elements also play an important role in the development of high quality products, especially in trying to attract HENRY.
One of the clearest examples of readiness to change can serve as a way of communicating with customers. Thus, the Calvin Klein brand, owned by Coty, in 2019 completely switched to digital advertising, many companies also pereorientirovanija digital media to a certain extent, when the traditional premium brands have become one of the latest advertisers that have made this transition.
For many premium brands, the cost of ignoring new models of consumer behavior can be high. Indeed, some experts believe that the brand, do not want to adapt to new conditions in any degree, may be faced with an aging consumer base and the very real possibility of losing its relevance in the future.