Friday, February 3, 2023

Why China Is a Hero Products Market… and That’s Not a Bad Thing

China’s beauty market is known to be driven by a love of Hero products. China’s beauty super-consumers take to the social platform Xiaohongshu to share their carefully curated beauty regimes—creme de la mer—with emerging brands like Augustinus Bader and 111Skin. Even mature brands use hero strategies—on Tmall, Shiseido’s best-selling SKUs sold twice as much as their second most popular product last month.

There are many reasons for the enduring fascination of hero products, including some super catalysts for this trend that are unique to China.

First, China is the most competitive global beauty market, accounting for 50% of total sales online, easing barriers to encouraging sales through cross-border e-commerce, and rapidly growing C-brands such as Florasys and Colorki. There are beauty brands. This translates into rapidly rising costs – some platforms have seen CPAs around key retail moments up to 120%+ year over year.

Second, digital channels are less scalable than advertising via Meta or Google in the West. Word-of-mouth channels like Livestream have a huge influence, and top talent like Austin Lee selects less than 1% of the products presented to them. Their selection is driven by success, measured in global sales, or evidence of potential, measured in marketing budgets.

There are potential pitfalls in this environment, but they can be managed. Maintaining pricing is a challenge, and overdelivering can devalue the product. Conversely, understating sacrifices leads to hard wins and threatens profitability. Both can be mitigated with proactive monitoring and a strictly implemented channel strategy.

The first step is to quickly and accurately identify your heroes. This requires considering your own data and global strategy, as well as adapting to the market and competition. Next is building a marketing plan, with extensive and deep product seeding being a key pillar.

As brands mature in China, they can diversify their heroes, and take advantage of this to broaden their range. The right channel strategy accelerates this; For example, leveraging the credible audience of innovation-loving social commerce channels whose GMV exceeded $360bn in 2020.

Emerging trends like mono-brand governance kits can loosen the grip of heroes over time, but for now, choosing a hero is a supercharger for China’s success.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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