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Why is cosmetics going up?
DATE:2019-11-23   VISITORS:555

It is reported that in recent years, certain raw materials for cosmetics, such as surfactants and menthol, have increased significantly, causing great cost pressure on enterprises. However, some experts believe that raw materials only account for less than 20% of the cost of cosmetics. The impact is not very large. At present, marketing expenses account for 50%-60% of the cost. The increase in promoter fees and the surge in advertising costs are the main reasons for the increase in marketing expenses. As more and more big brands enter China and there are many high-end products, it is necessary to have good marketing and promotion in order to enter the ranks of luxury goods. Many brands will spare no expense in this respect, and the increase in competition costs has become an important price increase factor. .

It is reported that Chanel’s advertising in the second quarter of 2012 alone is about 200 million yuan. In the prospectus issued in June 2012, Appropriate Materia Medica clearly showed that the cost of new product promotion, advertising production, spokesperson and brand promotion of the 700 million yuan raised was as high as 200 million yuan. Shanghai Jahwa (600315, shares it) in 2011 marketing expenses as high as 940 million yuan, while net profit is only 360 million yuan.

In addition to the cost of pushing hands, many cosmetics companies are expected to increase their prices in 2013, and choose to increase their timing at the beginning of the year. In the peak season before the Spring Festival, people have a strong desire to buy, and in recent years, the price of commodities has increased every holiday before the holiday. It has become a habit, and consumers will accept it more. Second, the company will adjust its price at the beginning of the year, which will help to increase the cost pressures that may be encountered in the new year.

From the analysis of some experts, the reason for the rising price expectations is that the continuous and unlimited monetary policy of the developed economies such as Europe, the United States and Japan has led to the proliferation of global liquidity. The risk of rising international commodity prices still exists in the future. Inflationary pressures may re-emerge; second, structural inflation factors such as rising labor costs, resource price increases due to resource price reforms, and rising land costs due to urbanization will exist in the medium and long term.

Counter-marketing psychology

In the face of this round of cosmetics price increases, most consumers responded by complaining while continuing to buy.

“Cosmetics itself is a luxury. The price increase will not change people's consumption concept. According to the usual experience, the price increase has little effect on sales. The higher the product, the less sensitive consumers are to price adjustment.” Feng Jianjun, deputy director of the China Cosmetics Marketing Research Center, analyzed.

“Customers who come to buy are used to our brands, and this part of the consumer group is not sensitive to price fine-tuning. Even if it is a few hundred yuan, it doesn’t matter, it will not change brands easily. Therefore, the general price increase is not Will have an impact on sales." A large-name cosmetics counter sales staff also said.

Consumers' respect for foreign brands has become the driving force for these big brands to increase prices. This is where the big brands dare to raise prices. Many brands also use high prices to maintain high-end positioning. It is understood that the domestic market share of foreign brand cosmetics has been increasing in recent years, and its sales accounted for about 80% of all cosmetics sales in the market. “The sales of big-name cosmetics in China are very good, and the consumer dependence is too high, so the brand will take the initiative to raise prices. Now, the price increase of high-end foreign cosmetics has become an annual routine, in addition to hedging the rising market. Competitive cost, the main purpose of price increases is to highlight its high-end status." A marketing expert said.

Even if some brands did not have a price increase plan, their prices will increase after the price of similar products rises. “Price hike is a kind of anti-marketing psychology. Many people think that there is no good goods at a low price, and good goods are not cheap.” said Yu Hongyan, former vice president of Jumei Youpin.

Let the "old goods" shake back again

Obviously, it is necessary to reverse the trend of importing large-scale cosmetics prices in a few rounds a year, waiting for the real rise of domestic brands. At present, among the top 10 skin care brands, only Nature Hall and Herborist are local brands. There are less than 30 domestic cosmetics companies with annual sales exceeding 100 million yuan. In contrast, L'Oreal's sales in China in 2011 exceeded 10 billion yuan.

In fact, in the online forums such as Tianya and Douban, you can find out that there are many netizens including 80s and 90s, and some traditional domestically produced old-fashioned cosmetics such as Friendship Cream, Baique Ling Moisturizer, and Pien Tze Huang (600436, stocks) , bee flower shampoo, oyster sauce, etc. have a deep love. Those products that have been popular for decades and have a memory of several generations and a strong cultural heritage are actually more suitable for the skin of the oriental people, and they are cheaper and better. On the online forum, posts about recommended domestic cosmetics can be seen everywhere. Netizens have also set up a special national skin care discussion group to discuss the fun of using domestic products. Some domestic websites are also very hot. Many netizens are sharing skin care products with good price and sharing their skin care experience. There are thousands of net posts about skin care every day.

The Internet is bringing opportunities for the re-environment of these domestic products. For the domestically produced cosmetics with relatively low price, it is necessary to imitate the extensive distribution of imported cosmetics to build a marketing network. The strength may be worse. However, domestic cosmetics can stimulate people's desire to purchase through word of mouth, and the network is the word-of-mouth marketing. The best place.

Word of mouth marketing plays an important role in the online shopping market. According to the 2009 China Online Shopping Market Research Report released by the China Internet Network Information Center, 41.1% of netizens watched user reviews before purchasing each item, and 26.0% of users would look at most items before purchasing. The external information that users are most concerned about when making online purchase decisions is online buyer reviews (43.3%). The research report on the cosmetics industry in the third quarter of 2012 released by Baidu Data Research Center also shows that when netizens search for cosmetics-related information, the word-of-mouth evaluation of products has surpassed the brand to become the most concerned content. In the choice of cosmetics, netizens have a high degree of recognition in word-of-mouth evaluation, which makes word-of-mouth evaluation an important reference for netizens to choose cosmetics.

Of course, the re-excavation of old brands is just one of the alternative paths for the rise of domestic cosmetics. Nostalgic psychology can arouse the prosperity of domestic products, but it is not a long-term solution. In order for domestic products to truly break through in international competition, Chinese cosmetics companies need to make another effort in technology research and development, product quality assurance, and brand maintenance.

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