Improved quality, the addition of active ingredients and the emergence of new consumer groups are driving growth of the prestige cosmetics and toiletries sectors after half a decade of poor performance.
According to the new Datamonitor report, Marketing prestige cosmetics and toiletries, the traditional segregation of prestige and mass-market products is changing, creating new sub-sectors and consumers.
Changing consumer behaviour is one of the most important factors driving this growth, as it has created new consumer groups increasingly interested in their own lifestyles, fuelled by the popularity of lifestyle magazines.
The Datamonitor study identifies a new group of “ascetics” – consumers who have a moderate outlook rather than a taste for decadence. They favour minimalist packaging, pale colours and simple ideas.
“Therapeutics”, another new group, emerged during the mid-Nineties as consumers became interested in stress relief. It consists mainly of young, often professional, females who are concerned about their emotional and physical well-being.
The inclusion of active ingredients, which have a tangible, biological effect on the skin, is also proving central to market development in all categories.
In the fragrances sector, changing fashion trends have seen unisex fragrances lose popularity, to be replaced by “duos” of joint male/female fragrances, such as the Emporio Armani Him/Her duo.
Consumers are increasing the number of different fragrances they use. Functional fragrances offer additional or novel benefits, for example oil-based or low-alcohol fragrances which are kinder to the skin. Prestige sports-oriented fragrances have become popular as interest in fashion, sports and health has merged.
In the skincare market, ingredients have driven growth, with manufacturers developing products that offer anti-ageing and age-reversal benefits. The growing over-55 age group will drive sales of these products even further.
Datamonitor also predicts male consumers will use a significantly greater number of skincare products as they become more accustomed to looking after their skin.
The inclusion of active ingredients in make-up has given products more skincare benefits. In particular, suncare benefits have been a key factor behind growth.
Improved product quality and more price conscious consumers have made the traditional mass and prestige market segmentation irrelevant. Two new market segments exist. “Super-premium products” offer the most advanced product functions available in the over-the-counter market. An example is Estée Lauder’s CrÃÂ¨me de la Mere.
The second segment is the mid-market or “masstige” sector, consisting of high-quality, non-selective distribution products. This sector has emerged as a result of the decreasing time taken for product innovation to trickle down from the prestige market to the mass market. It includes products such as L’Oréal’s Vichy and Nivea Visage Anti-wrinkle Cream Q10.
The mid-market has also benefited from consumers becoming more aware of the relative prices and benefits between market segments. This has encouraged manufacturers to offer functional products at lower prices.
The ability of the “masstige” sector to provide good value for money means that consumers will only trade up to the prestige market when there is a tangible benefit in doing so. But the ability of the prestige market to offer sufficient incentives to trade up varies by product category.
With skincare, product function is key – although the availability of active ingredients in the mid-market makes it competitive with the prestige segment. The masstige sector also provides a threat in colour cosmetics, another area where there is considerable focus on the inclusion of active ingredients. The fine fragrances market faces little threat, however, because of the high cost in creating brand equity and the fashion status of fragrances.
As the mid-market high-quality toiletries and cosmetics sector expands, competition will become more intense. To benefit from these growth opportunities, the correct marketing mix is essential.