Finding Perfect Coverage in Skin Care and Beauty
LOCATION: United Arab Emirates
Existing marketing expertise or operational economies of scale are limited when a company sells completely different products or services to shoppers with whom they have no experience. Middlegame tools are regularly deployed to evaluate horizontal diversification where organizations acquire or develop new products to complement the equity of the existing business.
SITUATION REVIEW
High-Performance Beauty Solutions that Draw the Eye
A cosmetics manufacturer anticipated that further geographical expansion across the Middle East was no longer a viable strategy. Acquisition of several start-ups in adjacent beauty care categories was suggested. Management assumed that their current distribution network would immediately translate into growth opportunities that the target brands would take a decade or more to achieve. However, changing technology was disrupting the barrier to entry and the “democratizing” route-to-market. As a result, the client shifted focus to a more flexible diversification approach that could scale in any market setting.
OPPORTUNITY ASSESSMENT
Revitalizing Response for Radiant Skin Solutions
The marketing team initially conducted a study with multinational market research firm Ipsos across six markets to investigate consumer acceptance of their main brand as a beauty care proposition. Several new brand concepts as well as existing regional and multinational brands competing in the categories were also measured for benchmarking. Key performance Indicators (KPIs) were collected for each brand, including association with memorable, dynamic, affordable, youthful, trustworthy, and innovative indicators. The flagship brand performed well on these as well as willingness to buy, but the analysis was not a true picture of shopper response. Survey respondents assumed constant pricing and distribution across brands. A more comprehensive understanding of market dynamics was required.
SCENARIO DEFINITION
Determining the Right Make Up of Products
The Middlegame approach offered the needed market dynamics to produce a new product forecast. Middlegame first accessed the syndicated retail tracking data and selected United Arab Emirates as a test market, using NielsenIQ information for the bath soap, shampoo, conditioner, moisturizer, and skin cleanser categories. Initial CIA® results defined the contribution of existing assortment, merchandising, and pricing in each category. Moisturizers and skin cleansers were the most accessible to new entrants with minimal reliance on price discounting. A series of SKUs were planned for both the flagship brand and the most attractive new brand concept along with a price architecture, distribution build, and promotion calendar.
EXPECTATION ANALYSIS
Skin and Beauty Opportunities with Precision Definition
Testing the scenario in CIA® revealed that the overall impact on shopper The KPI values from the previous Ipsos survey for the client’s existing brands were incorporated with the attraction scores from Middlegame’s CIA® modeling engine to impute values for the main brand and the next most attractive brand concept. Middlegame combined these imputed values with the launch plan to produce individual SKU estimates of the projected sales as well as their incrementality versus transferred demand. After careful review of the results for hypermarkets versus supermarkets, the launch team decided to introduce the flagship brand as a new entrant into moisturizers and skin cleansers. Several different pricing and promotion simulations to support the new SKUs were also estimated to share with the trade.
CLIENT ACTIONS
The Look of a Flawless Finish
The new line of moisturizers and skin cleansers under the flagship brand was presented to the buyers at Spinneys, an Arabian multinational supermarket chain, as an exclusive offering. The higher-end positioning versus value-base stores in the country, such as Carrefour or Unions Coop Supermarkets, as well as the existing relationships with the retailer were part of the selection. Middlegame’s incrementality and transferred demand projections helped justify the client’s mutual growth opportunity of 3.42 million dirham (local currency) per year. After evaluating the proposal, Spinneys ordered a trial-run of about half of the line in both categories with availability in all stores. Middlegame is continuing to help evaluate the post-launch as retail data becomes available This information will enable the client to expand into other retailers, and then additional markets, with confidence.