out solely on product, service or price. Differentiation and
preference are built on a combination of emotional factors
and supported by the more functional attributes that satisfy
customer needs. Brand relationships that provide customers
with confidence and trust are highly valued and most likely
to become long-term partnerships that serve each partner in a
profitable manner.
Lorne Lucree, VP, Innovation at Luxury
Brand Partners presented Innovating for the
Luxury Beauty Consumer. The premium beauty
market grew 6% in 2016. In the hair care
category, only 11% of the total market size
was generated by premium products, but half
of consumers express premium preferences.
Expectations are shifting from status-driven
purchases to those that are more result-driven
and individualized. Weekly premium beauty buyers tend to
have more extensive grooming regimens and use an increasing
number of products.
Consumer demand for more sophisticated packaging and ingredients
with added value is exponentially stronger. A strategy
to upgrade consumers to the premium tier requires portfolio
extensions with distinct and targeted product benefits that
integrate sophisticated packaging.
The most recent product customization innovations have included
new product formats, textures and functions. Specialty
retailers provide more selection and many new and innovative
brands not available on the mass market. They also encourage
experimentation, which is a crucial part of the shopping experience
for Millennials, who are more likely to try new brands.
32 Spray May 2018
Premium consumer values are shifting toward ethical credentials,
authenticity and connection with the brand’s story and an ultimate
personalized experience. Niche brands have the advantage of a more
personalized offering, unique features and benefits and being highly
specialized in their focus categories. Big beauty brands are now
aiming to capture demand for “niche” markets via acquisitions of
strongly performing niche brands.
Kyle Muskoff, VP of Product & Professional
Services, BuyerQuest presented eCommerce 101.
Single site e-commerce is dying. All the major
“sites” now used are really platforms, and, of
course, there is the one big one lurking out
there—Amazon.com. A platform is a business model
that facilitates the exchange of value between two
or more user groups, typically a consumer and a
producer. There are many different types of platforms ranging from
services to products. Some are commoditized (think Amazon) and
some sell unique items (think Etsy).
The nature of networked growth and the low marginal cost of production
in platforms mean that expenses typically don’t grow as fast
as revenue does. The costs of a linear business will always continue
to rise as it grows, while the costs of a platform’s growth tend to level
off logarithmically. Thus, the potential market size explodes.
As more industries become integrated with connected technology,
platforms will take over more of the global economy, including
traditional industries. Successful platforms have strong moats in the
form of their networks and operate at a scale that positions them to
dominate their industries. It’s no wonder, then, that platforms are
worth more than linear businesses.
Platforms offer new opportunities and the impetus to act now is
Lucree
Muskoff