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October 09, 2008 11:26 ET

Get a Deep Insight Into the Opportunities in Premium Personal Care: Trading Up Trends

LONDON, UNITED KINGDOM--(Marketwire - Oct. 9, 2008) - Reportlinker.com announces that a new market research report related to the Personal care industry is available in its catalogue.

Opportunities in Premium Personal Care: Trading Up Trends

http://www.reportlinker.com/p095757/Opportunities-in-Premium-Personal-Care-Trading-Up-Trends.html

Introduction

Growth opportunities in premium personal care are most apparent in Asia Pacific. In particular, double-digit year-on-year growth has characterized the Chinese and Indian premium personal care market from 2002 to 2007. Though starting from a low base, this is indicative of how the emerging markets can help offset difficulties that are likely to be encountered in the next 12-18 months

Scope

- The first in a series of three sector specific reports designed to help FMCG companies capitalize on consumers' desire to trade up

- Asia Pacific, Western European and US consumer wealth group data and premium personal care spend data by category and country

- A comprehensive analysis of how consumers form their perceptions of what constitutes a luxury/ premium proposition

- NPD analysis and detailed recommendations offering practical strategies based on the trends and insights uncovered throughout the report

Highlights

The rise of the so-called global middle class has been a major factor in facilitating trading up (or premiumization) across the globe. From 2002 to 2007, Hong Kong, China, and India witnessed the highest growth in the number of Mass Affluent Individuals. The latter two nations are also showing the most growth in premium personal care products

Perceptions of what is considered to be a luxury/ premium brand are dependant upon five key factors which make up what Datamonitor refers to as the 'Premium Price Index'. By using this as a reference, personal care manufacturers and retailers can show consumers that their goods represent value for money in more than just price.

Consumers will increasingly ask questions about what brands/ products stand for and how they match their own values. Basing a campaign around a strong ideological belief held by a target audience can be effective in building brand relevance and increasing shoppers' willingness to pay (WTP) a price premium

Reasons to Purchase

- Mitigate the threats posed by an uncertain economic environment by understanding how consumers perceive and judge upscale beauty brands

- Access unique consumer wealth and premium personal care data spanning Asia Pacific, Western Europe and the US

- Understand the most pertinent opportunities to drive brand and market growth in the personal care sector


Overview 1
Catalyst 1
Summary 1
CONTENTS 2
Table of figures 2
Table of tables 3
THE FUTURE DECODED 4
INTRODUCTION: A number of factors are influencing premiumization
 in personal care 4
TREND: Economic conditions and the growing 'mass class' have a major
 impact on trading up and luxury purchases in personal care 5
Favorable conditions have led to considerable up-trading in personal
 care among mass market consumers 5
Many countries have seen economic growth but personal care products
 have not fully benefited 7
The Number of High Net Worth Individuals (HNWI) is growing steadily
 worldwide and is a driving force behind high-end luxury personal care
 purchases 8
There are more Mass Affluent Individuals but the rate of growth is
 slower than among HNWI 10
Higher income shoppers are less likely to shop on a budget 13
But it is important to not be complacent even if you are targeting core
 luxury shoppers 14
Key takeouts and implications: a growing economy has facilitated
 premiumization in personal care, but the current downturn threatens
 to limit growth 14
TREND: The search for value is widespread especially as luxury/ premium
 products have become more accessible 15
Luxury/ premium is becoming more relevant to mass-market consumers
 leading to higher expectations 15
Additional access to better quality products has created a sense of
 entitlement among many consumers 17
Price-led value is a hugely important factor in purchase decisions and
 store selection and will become increasingly influential in personal
 care 17
Bargain hunting gives consumers a sense of satisfaction and increasingly
 has status value 19
Rapidly declining consumer confidence will further re-enforce the
 allure of 'good value' but doesn't necessarily equate to wholesale
 changes in FMCG consumption 20
Key takeouts and implications: industry players will have to work
 harder to convince consumers that price premiums are worth it amid
 a strong desire for good value and declining consumer confidence 23
TREND: The importance of image and appearance is a key premiumization
 driver in personal care 24
Consumers' considerable interest in looking and feeling good is heavily
 tied to self esteem enhancement 25
Consumers' interest in looking good is arguably exacerbated by modern
 society 28
'Personal branding' and the growing industry supporting this concept
 exemplifies the emphasis that individuals place on image 28
The growing proportion of individuals having cosmetic surgery, or
 considering and having cosmetic surgery, reflects an image conscious
 society 29
Consumers' interest in glamour has assured the longevity of advertising
 with 'beautiful people' 30
Attitudes to looking good vary by country across Europe, North America
 and Asia Pacific 31
Key takeouts and implications: image conscious consumers create
 premiumization opportunities for manufacturers and retailers even in
 the context of a difficult economic environment 34
TREND: Premiumization in personal care is expected to continue to drive
 market value especially in the emerging markets 34
The recessionary environment will make mid-market positioning even
 more precarious 35
Emotionally involving personal care categories will see less down-trading
 if recession occurs because consumers will pay more for a product of
 service that they are passionate about 36
An increase in private label personal care purchases is also expected
 in the years ahead 38
Consumers are more likely to revert to home personal care solutions
 products if recession hits 39
The emerging markets will offer protection against potential weaknesses
 in market performance in developed western markets 40
Consumers already have established patterns of buying premium fragrances 41
Consumers are looking for multiple benefits from make-up products and this
 has facilitated additional prestige in the category 43
Consumers' trading up in haircare is influenced the growing popularity
 of professional products 46
Skincare is an emotionally involving category for many consumers and is
 becoming synonymous with premiumization 47
Premiumization in personal and oral hygiene is less established than
 other categories 50
Key takeouts and implications: consumers are still willing to spend
 premiums for products that make them look and feel better 52
INSIGHT: Premiumization is influenced by the consumers' emotional
 involvement with the product and a number of important product
 characteristics 54
Premium is still a high price related to extraordinary factors perceived
 and experienced by consumers 54
Consumers are skeptical of the product quality benefits offered by
 premium/ luxury brands 55
Key takeouts and implications: establishing a luxury/ premium positioning
 involves a strong understanding of how consumers perceive brands
 according to five key criteria 56
INSIGHT: Packaging is the most pertinent extrinsic quality cue and
 can significantly impact consumers' quality judgments of personal care
 products 57
Color is an important intrinsic and extrinsic attribute shaping
 consumers' quality judgments 57
Packaging creates and enhances product positioning and creates
 preconceptions of quality standards 57
Product appearance judgments can also be influenced by the retail outlet
 from which it is purchased 59
Consumers' perception of 'premiumness' can also be influenced by the
 provision of product information including word of mouth 60
Numerous examples illustrate personal care brands leveraging 'intrinsic
 and extrinsic quality' cues to facilitate a more premium positioning 62
Key takeouts and implications: industry players must establish whether
 the intrinsic and extrinsic quality attributes of brands/ products
 are perceived favorably, especially in comparison to competition 65
INSIGHT: How consumers use and experience personal care products has
 additional weighting especially as luxury becomes 'experiential' 66
The experience of scent is extremely powerful in shaping perceptions
 and forging an emotional connection with personal care consumers 66
Product efficacy is an vital route to premiumization in personal care 69
Though consumers expect convenience as a matter of course, it can still
 be a route to premiumization 71
Consumer trends indicate that more emotional, rather than material forms
 of consumption may be emerging as consumers become more pre-occupied
 by experiences 72
Numerous examples illustrate personal care brands offering 'experience
 quality' based benefits to facilitate a premium positioning 74
Key takeouts and implications: experience based quality will become even
 more important in creating a luxury/ premium positioning 77
INSIGHT: Credence quality influences trust, involvement and willingness
 to pay for premium personal care products 77
Details surrounding ingredients and production methods are particularly 
important because of the crossroads characterizing personal consumption 
 trends more generally 77
'Professional quality' and 'professionally recommended' credentials are
 linked to efficacy and therefore an enhanced willingness to pay price
 premiums 80
Alternatives to cosmetic surgery are becoming increasingly credible to
 attract luxury/ premium consumers 81
Regionalism, origin and authenticity form a basis for premiumization in
 personal care 83
Socially responsible personal care products have the potential to command
 price premiums 84
Numerous examples illustrate personal care brands offering added value
 'credence quality' benefits to facilitate a premium positioning 85
Key takeouts and implications: 'credence quality' reflects a myriad of
 consumer trends impacting consumer markets in general - and not just the
 personal care industry 90
INSIGHT: Many consumers will pay more for products satisfying status
 needs 90
Product conspicuousness is related to two similar but distinct patterns of
 consumption: 'status consumption' and 'conspicuous consumption' 91
Ethical/ sustainability led consumption behavior increasingly has status
 value 93
The cult of celebrity has imbrued many personal care brands with added
 status and popularity 94
Numerous examples illustrate personal care brands offering status
 enhancing benefits for appearance and brand conscious personal care
 shoppers 94
Key takeouts and implications: status conscious shoppers are more willing
 to pay premium prices so industry players need to understand what status
 means to a target consumer 95
INSIGHT: Uniqueness and specificity is equated with quality and brand
 cachet as well as the emerging needs of 'Generation C' 96
Premium personal care consumers want products that are unique and evoke
 a feeling of individuality 97
'Premium fatigue' is a threat as consumer expectations continually
 increase in line with market dynamics 97
A commonplace way to ensure uniqueness in any product market is to raise
 prices 98
Individuals are looking for more customization possibilities and
 opportunities for self-expression 98
Numerous examples illustrate personal care brands providing unique
 benefits, especially through personalization/ customization benefits 100
Key takeouts and implications: enhancing the exclusivity of certain
 premium personal care products is another way to encourage consumers to
 believe in the value proposition on offer 103
INSIGHT: Hedonism is a major driver of trading up which means brands
 must leverage hedonic benefits of personal care product usage 103
Pleasure is highly linked with emotions and emotions are linked to loyalty
 and WTP price premiums 104
Satisfying personal care consumers' desire for enjoyment and pleasure is
 best served through multi-sensory marketing tactics 104
Research indicates that consumers associate higher priced products
 with additional pleasure 105
Consumers may seek to de-stress from financial pressures with premium
 personal care products 105
Numerous examples illustrate personal care brands providing added
 sensual benefits to appeal to hedonistic consumers 106
Key takeouts and implications: linking beauty products with escapism
 and indulgence adds another dimension to products especially in a
 recessionary environment 108
INSIGHT: Consumers are more likely to pay a premium for brands
 re-enforcing their self identify 109
Consumers' desire to choose products that reflect their self identity
 is particularly relevant to personal care 109
A consumers' self concept is multidimensional and will be heavily
 influenced by cultural differences 111
Consumers use natural and ethical personal care consumption as a means
 to express their values and beliefs 112
Key takeouts and implications: the health and beauty industry is
 particularly well placed to capitalize on consumers' desire to choose
 products reflecting their self identity 113
INSIGHT: Aging consumers have become important consumers of premium
 personal care products but premiumization is a trend with broad
 demographic reach 113
Older consumers have considerable personal wealth which makes them a
 potentially important target group for premium products 114
Younger consumers are also an important driver of trading up in personal
 care 115
Key takeouts and implications: the desire to trade up to premium personal
 care has broad demographic relevance which creates targeting challenges
 but broadens the market opportunity 118
ACTIONS 119
ACTION: Research to determine how much of a discretionary purchase your
 brand is and make preparations in recognition that some people are
 currently trading down 119
Use Datamonitor's Premium Price Index (PPI) to help frame your market
 and consumer assessment 120
Embrace new strategies in recognition that some beauty consumers are
 going to trade down 121
ACTION: Adopt to a 'no-compromises' approach to product quality
 through formulation and positioning of a premium brand 121
Use the best, most effective ingredients to elevate functionality using
 natural and technologically advanced formulations 122
Adopt a 'tiered' approach to branding in order to meet demand for both
 natural and technologically advanced ingredients 123
Protect the long term growth opportunities by making credible
 functionality claims 124
Source natural ingredients/products from a guaranteed specific area to
 boost authenticity credentials 125
Leverage heritage and tradition credentials wherever possible 125
Retailers should embrace a more holistic approach to beauty merchandizing
 and the development of product lines 127
ACTION: Ensure that a luxury/ premium brand has an identity that is
 consistent with a target consumers' self concept 128
Embrace the philosophy of 'lifestyle/ attitude branding' to empower
 premium brands and promote the idea of 'expressive beauty' and self
 confidence 128
Give consumers opportunities to express their self concept through
 products and services 130
ACTION: Emphasize the experience associated with a brand's premium
 credentials 130
Encourage consumers to consider a premium personal care product occasion
 as a special time 131
Sell consumers the idea of time 132
ACTION: Continually explore avenues for emphasizing the uniqueness of
 a premium proposition 133
ACTION: Maintain marketing spend, especially in the current recessionary 
environment, to justify premium prices 134
Maintain advertising efforts to help maintain differentiation of premium
 branded personal care products 135
The nuance of the premium personal care product advertising message might
 have to change during this period of economic uncertainty 135
Be wary of over-reliance on price reductions 136
Maintain a strong focus on innovation and R&D during times of economic
 uncertainty 136
Use Datamonitor's strategic reports outlining the key innovation
 opportunities that arise from consumer mega-trends 137
ACTION: Look for opportunities to extend pre-existing or launch new
 premium products into emerging markets 138
Explore opportunities for basic market entry, store expansion and
 distribution expansion in the emerging markets 139
Use acquisitions and alliances as a means of improving local
 market understanding 140
Do not assume emerging market consumers to be a large homogenous group 141
Use local personalities as brand spokespeople when expanding into the
 emerging markets 142
Release products in smaller sizes with correspondingly smaller price tags
 to target the lower incomes apparent in the emerging markets 144
APPENDIX 145
Definitions 145
Methodology 146
Further reading and references 147
Ask the analyst 152
Datamonitor consulting 152
Disclaimer 152
List of Tables 
Table 1: Per Capita GDP, Constant, (US$), 1995 prices by country, Asia
 Pacific, Europe and US, 2002-2012 6
Table 2: Personal care spending as percentage of Gross Domestic Product
 (GDP), by country, Asia Pacific, Europe and US, 2002-2012 7
Table 3: Personal care spending as percentage of Private Final Consumption
 Expenditure (PFCE), by country, Asia Pacific, Europe and US, 2002-2012 8
Table 4: High Net Worth Individuals (000s) (HNWI)(i) by country, Asia
 Pacific, Europe and the US, 2002-2012 9
Table 5: High Net Worth Individuals (HNWI)(i) as a proportion of overall
 population by country, Asia Pacific, Europe and the US, 2002-2012 10
Table 6: Mass Affluent Individuals (000s) (MAI)(i) by country, Asia Pacific,
 Europe and the US, 2002-2012 12
Table 7: Mass Affluent Individuals (MAI)(i) as a proportion of overall
 population by country, Asia Pacific, Europe and the US, 2002-2012 13
Table 8: The percentage of consumers who seek discounts and express
 satisfaction from value, by country 19
Table 9: Premium fragrance(i) market (US$ millions) in western Europe,
 Asia Pacific and the US, by country, 2002-2012 43
Table 10: Premium make-up(i) market (US$ millions) in western Europe, Asia
 Pacific and the US, by country, 2002-2012 45
Table 11: Premium haircare(i) market (US$ millions) in western Europe, Asia 
Pacific and the US, by country, 2002-2012 47
Table 12: Premium skincare(i) market (US$ millions) in western Europe, Asia
 Pacific and the US, by country, 2002-2012 49
Table 13: Premium personal hygiene(i) market (US$ millions) in western
 Europe, Asia Pacific and the US, by country, 2002-2012 50
Table 14: Proportion of consumers (%) who have, "Chosen higher quality 
 food/drink/cosmetics or toiletries for extra indulgence and enjoyment" in
 the preceding 12 months, Europe and US, 2005-2006 116
List of Figures 
Figure 1: There are important drivers and inhibitors impacting
 premiumization in personal care 5
Figure 2: The 'democratization of luxury' is both an opportunity and
 a threat for luxury/ premium personal care providers 16
Figure 3: Good value for money has become the most important influence
 over grocery store choice globally while price exerts considerable
 influence in personal care purchases 18
Figure 4: Consumers use personal care products to feel better about
 themselves 27
Figure 5: Many women associate a desirable image/ appearance with
 additional opportunities and attention 27
Figure 6: Consumers feel under ever increasing pressure to adopt 
'appearance management behaviors' 28
Figure 7: Personal branding is a concept that has built momentum in
 the last 10 years 29
Figure 8: Glamorous advertising remains pervasive in personal care 
 categories 30
Figure 9: Consumer slowdown should compel personal care brands to
 reconsider their approach 36
Figure 10: Body odor is a key concern for all consumers 37
Figure 11: Manufacturers looking to capitalize of premiumization in
 personal care must excel - more than competitors - in the provision
 of factors associated with the Premium Price Index (PPI) 55
Figure 12: Premium products being offered at 'discount prices' is an
 emerging reality in developed markets 56
Figure 13: Packaging design plays a big part in shaping quality
 expectations, especially when making personal care purchases 59
Figure 14: Brands can be effective 'curators' of wellness advice with
 well-designed, informative websites 64
Figure 15: Manufacturers and retailers can manipulate intrinsic and
 extrinsic attributes to help facilitate a premium positioning and/ or
 achieve differentiation 65
Figure 16: Scent can be classified by its ambience and congruency 67
Figure 17: Offering time and effort saving benefits, combined with
 science-led and natural ingredient efficacy, can help insulate from
 the escalating private label threat add value to personal care market
 growth 72
Figure 18: There are various examples of brands offering added value
 'experience quality' through scent, improved performance and convenience
 to facilitate a premium positioning 76
Figure 19: Beauty innovation is at a crossroads between technologically
 advanced science led products and natural formulations and there is 
 increasingly a convergence between the two 80
Figure 20: Consumers will pay a premium for authenticity as they seek to
 're-connect with the real' 84
Figure 21: Products offering the combined benefits of natural and 
 technologically advanced ingredients appears to be a growing trend as
 does the proliferation of professionally positioned products 89
Figure 22: Status and conspicuous consumption are equally valid
 themes in premiumization but require different approaches 92
Figure 23: Status and conspicuous consumption are equally valid but
 require different approaches 93
Figure 24: Collaborations wit celebrities, fashion designers and co-branding
 are common routes to inflating the status of personal care brands 95
Figure 25: Four key personal benefits as well as the additional ease
 of customizing have driven the trend toward more personalized consumer
 packaged goods 99
Figure 26: Offering consumers additional possibilities by which they can
 co-create and self-customize will be more commonplace and will come to 
 be an expected product feature by shoppers themselves 102
Figure 27: Sensory attributes have a significant impact on hedonistic
 positioning 108
Figure 28: Consumers are embracing brands that reflect their self concept
 while many global women embrace the philosophy that beauty can be
 achieved through interpersonal factors, not just appearance 110
Figure 29: A consumers' self concept is multidimensional and will be
 heavily influenced by cultural differences 111
Figure 30: A consumers' self concept is multidimensional and will be
 heavily influenced by cultural 120
Figure 31: Premium image and high functionality are irresistible
 propositions 123
Figure 32: Using the best ingredients to elevate functionality
 involves resolving the crossroads between preferences for natural and
 technologically advanced ingredients 124
Figure 33: If regional links are used to position a product, the
 connection should be clear 127
Figure 34: Sunsilk's "Life Can't Wait" campaign helps to establish
 a stronger personality for the brand 129
Figure 35: Spa treatment-type products offer consumers a relaxing premium 
 personal care experience 132
Figure 36: Convenience can be incorporated into premium personal care 133
Figure 37: Situational and personally adaptive beauty solutions is an
 emerging area in personal care 134

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Opportunities in Premium Personal Care: Trading Up Trends

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