Value cosmetics will be key to beating the economic downturn

With word out that consumers are increasingly focused on value for money, providing personal care products that fulfill this criteria is now the big challenge facing manufacturers.

And perhaps the biggest problem in this equation is trying to gauge exactly how to provide consumers with the value they are so keen to secure without making it feel like they shifting towards inferior products.

When times were good and consumer spend was high the quest for more effective, more luxurious products was almost insatiable, which meant many people in developed markets traded up to more expensive personal care products.

Trading down is difficult for consumers​

If the individual has the spending power, trading up is what consumers aspire to. They feel they have worked hard so spending their money on better personal care products is a means of rewarding and pampering themselves.

Trading down, however, does not illicit the same response with the consumer. In fact it is a prospect few consumers are going to embrace with any enthusiasm.

The fact that consumer spending power is diminishing, no one will deny. What consumers would like to ignore is the fact that they might not be able afford to buy the same products they have become accustomed to.

This means that cosmetic and personal care providers are going to have to devise intelligent and strategic means of helping to cushion the blow.

Consumers still willing to pay higher prices​

A recent survey by Brandkeys found that in the current climate consumers are still willing to pay a higher price if they are getting what they perceive to be good value for money.

The study also revealed that, rather than targeting the cheapest product, consumers are looking for brands that are well made and consequently offer better value.

This reasoning is likely to see consumers change from the more luxury orientated brands to mid-range and private label brands in order to make their budgets stretch further.

Indeed, the world’s largest cosmetics company, L’Oreal, has said that it intends to introduce cheaper products to its ranges in order to help stem the flow of consumers swapping to less expensive brands.

The company, which announced a drop in like-for-like sales for its most recent fourth quarter, said it would introduce cheaper products for its mass premium brands, Garnier and L’Oreal Paris.

CEO Jean Paul Agon said the move was part of efforts not to overlook any consumer segment and ensure that all its brands are ‘accessible’.

Smaller-sized products might not be the solution​

In line with this philosophy the company also plans to introduce smaller sizes for luxury brand products, to ensure that these ranges remain amenable to consumers who have experienced reduced spending power.

Analysts have been quick to criticise this strategy, fearing it is not a radical enough solution to the problem.

With specific reference to L’Oreal’s plans to introduce smaller sized luxury products, one analyst at Bernstein Research said the move would be unlikely to appeal to consumers because it does not tap into the crucial value element that consumers are now prioritizing.

The writing appears to be on the wall: cutting corners in order to give the illusion of value is unlikely to fool anyone, while giving consumers genuine value for money should hit the spot.