Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
Finding the Winning Formula to Unlock the Thai Beauty MarketDefining the right marketing mix to tap into the growing Thai premium beauty and personal care market
ME.A Newsletter2015 July
ME.A Newsletter
July 2015 Page 2 © ME.A
Premium Beauty & Personal Care
Finding the Winning Formula to Unlock the Thai Market
Southeast Asian markets are the current hotspot in Asia offering a once-in-a-lifetime
opportunity to tap into this dynamic growth story. The potential for Western premium
beauty and personal care brands is particularly attractive in Thailand. Despite the recent
political turmoil growth expectations are robust as a growing Thai middle class becomes
more sophisticated demanding more premium quality products. Finding local target
customers and tailoring a marketing mix around their needs is key to a successful
market entry.
With the advent of the ASEAN Economic Community (AEC) scheduled for December
this year the ASEAN region lately gets frequent press coverage and increased attention
from European business and beyond. Although the AEC is just at a starting point far
from a common market – let alone a single currency – export oriented Western
companies seem to realise that there is more beyond the giant Asian markets China and India.
Indeed, the ten ASEAN member states* with a combined population of more than 630m
people generating a total GDP of USD 2.5 trillion offer dynamically growing market
potential. Were AEC a single country today it would be the 7th largest economy growing
to number 6 by 2020, in five years from now only.† By then 670m people 50% of whom
will be living in cities are expected to spend USD 2.3 trillion annually on consumption.
Thus, consumer spending will effectively double by the end of the decade. Until 2020
more than 60m new consumers will emerge in the region able to purchase items
beyond their subsistence for the first time. At the same at the upper echelon, 37m newly
affluent consumers move to higher-income tiers getting access to premium product categories.
* Brunei Darussalam, Cambodia, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam † For more detailed data on Southeast Asian markets refer to our ME.A Compass 2015, a pocket guide to 19 countries in Asia-Pac. Order your personal, electronic copy today on www.me-a.com/compass
ME.A Newsletter
July 2015 Page 3 © ME.A
Fast growth, a rising middle class combined with a growing appetite for consumer
goods create a compelling opportunity to tap into. Ensuing more sophisticated
consumer needs around beauty, well-being and status create a vibrant market environment for premium personal care brands.
Among the ASEAN markets at least three reasons make Thailand for personal care
manufacturers a particularly attractive option to explore. One, more than ten per cent of
the region’s population live in Thailand. Second, the Thai per-capita-income of ID
14’136‡ is amongst the highest in Southeast Asia and represents the median
purchasing power in Asia§. Third, Bangkok features a highly developed retail landscape
making it one of the leading shopping destinations in Southeast Asia. A city of more
than 6m people its sophisticated upmarket malls serve both a broad and rising middle
class and an increasing number of affluent consumers. Q4.13 and Q1.14 saw Thailand
plunge into political turmoil which was effectively ended by the military coup in May of
that year. The military managed to restore stability, yet economic growth was adversely
affected. Real GDP in 2014 grew by a meagre 0.7 per cent. However, the IMF expects
a marked rebound in 2015 and the economy to grow at 3.7 per cent. For the
subsequent years until 2020 the IMF forecasts an average annual growth rate of around 4 per cent (see chart 1).
Meanwhile in 2014 the Thai market for beauty and personal care products recorded
sales of THB 156bn or roughly CHF 4.4bn (EUR 3.6bn)**. Though the political unrest in
late 2013 and early 2014 dampened consumer sentiment and negatively affected tourist
arrivals growth of the beauty and personal care market still outperformed GDP growth.
The compound annual growth rate (CAGR) 2008-2013 was at 7.4 per cent. Yet, future growth is expected at 3.7 per cent (CAGR), more in line with GDP growth forecasts.
‡ International Dollars, per-capita-income at purchasing power parity (PPP) 2014 § Source: ME.A Compass 2015 ** See chart 2, source: Euromonitor, ME.A analyses; based on average THB/CHF and THB/EUR exchange rates for 2014
ME.A Newsletter
July 2015 Page 4 © ME.A
Chart 1: Real GDP growth Thailand, 2010-2020, %
Source: IMF, 2015; Note: Estimates (E) from 2014
Chart 2: Overall Beauty and Personal Care Market, Thailand, 2008-2018, THB million
Source: Euromonitor, 2014; Note: Estimates (E) from 2014
Going forward fastest category growth by far is expected in sun care followed by colour
cosmetics, men’s grooming and sets/kits (see chart 3). The mass-market is expected to
grow at 3.9 per cent (CAGR 2013-8) while the premium segment lags slightly behind at an expected 3.4 per cent growth rate.
7.8
0.1
6.5
2.9
0.7
3.7 4.0 4.1 4.0 3.9 3.8
0
1
2
3
4
5
6
7
8
2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E
0
20'000
40'000
60'000
80'000
100'000
120'000
140'000
160'000
180'000
200'000
2008 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E
ME.A Newsletter
July 2015 Page 5 © ME.A
Chart 3: Overall Beauty and Personal Care Market, Thailand, Expected Category Growth, CAGR 2013-8, %
Source: Euromonitor, 2014
The Thai premium market for beauty and personal care products in 2014 generated
sales of estimated THB 27.2bn or CHF 765m (EUR 632m)††. Thus, the premium market
size is almost six times smaller than total beauty and personal care sales. Yet, despite
the limited size the premium segment does offer attractive potential. Future growth is
fastest in the bath and shower category, followed by sun care, colour cosmetics and hair care (see chart 5).
†† See chart 4, source: Euromonitor, ME.A analyses; based on average THB/CHF and THB/EUR exchange rates for 2014
0 1 2 3 4 5 6 7 8
Sun Care Colour Cosmetics
Men's GroomingSets/Kits
Baby and Child-specific ProductsDeodorants
Skin CareFragrances
Bath and ShowerOral Care
Oral Care Excl Power ToothbrushesHair Care
Depilatories
ME.A Newsletter
July 2015 Page 6 © ME.A
Chart 4: Premium Beauty and Personal Care Market, Thailand, 2008-2018, THB million
Source: Euromonitor, 2015; Note: Estimates (E) from 2014
Chart 5: Premium Beauty and Personal Care Market, Thailand, Expected Category Growth, CAGR 2013-8, %
Source: Euromonitor, 2014
0
5'000
10'000
15'000
20'000
25'000
30'000
35'000
2008 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E
-4 -2 0 2 4 6 8
Bath and Shower
Sun Care
Colour Cosmetics
Hair Care
Sets/Kits
Fragrances
Skin Care
Deodorants
Baby and Child-specific Products
ME.A Newsletter
July 2015 Page 7 © ME.A
Market characteristics and drivers
Beyond these impressive sales figures, what are the underlying characteristics of the Thai beauty and personal care market and what factors drive future growth?
Robust consumer sentiment – The political crisis at the end of 2013 and in early 2014
negatively affected overall demand for beauty and personal care products in Thailand.
Yet, despite the slow down demand remained relatively robust throughout particularly in
colour cosmetics, fragrances and facial treatments. For one, Thai consumers
increasingly driven by beauty consciousness seem to be prepared to spend on personal
care products. Secondly, against the economic downturn leading brands aggressively
marketed their products to stimulate demand.
Growing demand – Expected robust economic growth will improve disposable incomes
and, thus, spur the willingness of consumers to upgrade and spend more on beauty and
personal care products beyond mass-market, every-day items. Plus, the rapidly aging
Thai population – the United Nations expects the share of Thais older than 65 years to
grow from 6.6 per cent in 2000 to 22.9 per cent by 2035 – bolsters demand for both premium skin care and anti-aging products.
More sophisticated consumers – The growing middle class and high-income
consumers become increasingly demanding asking for multi-benefit products or
additional value functionality in beauty and personal care products. Greater
sophistication means further changing consumer needs with the trend of natural and
organic ingredients as a clear sign of that. Moreover, consumers tend to enjoy shopping
for premium products in upmarket malls and department stores. Compared to
hypermarkets – the leading channel for mass-market products – these retail formats offer greater choice, more convenience and specialist advice.
Men as new targets – Greater consumer sophistication also brings with it that men
become increasingly beauty conscious. Men’s grooming products are a fast growing
category both in the mass and premium segment. Thus, men’s bath and shower, hair and skin care products are expected to experience dynamic demand growth.
ME.A Newsletter
July 2015 Page 8 © ME.A
Marketing online – Social media are hugely popular in the Thai society. Thus, leading
premium and super-premium brands leverage aggressively online communication to
reach target customers. Yet, despite this growing importance of online media Internet retailing plays a minor albeit growing role in terms of value share.
Strong competition – A generally fragmented market, the arrival of new brands and
incumbents’ forceful marketing strategies lead to an intensifying battle for target
customers’ share of wallet. With expected growth in beauty and personal care to slow when compared to the 2008-13 period competition in the Thai market will be up.
Unlocking the Thai market potential
So, with the opportunity in the Thai market for beauty and personal care products
clearly being there and growing what is the winning formula to successfully tap into its attractive potential?
Do your homework – First and foremost, you need to realise that entering the Thai
market – as with any other market – is not a matter of simply getting your brand and
existing products into the shelves of local retailers. And the assumption that a product
that sells well in (Western) core markets will automatically do so in Asian markets is at
best naïve. Market entries based on this are more than likely to fail. Particularly in the premium beauty and personal care segment such approach will ultimately backfire.
Rather than trying to ship container loads of your products to some foreign land hoping
for a decent top line and profit contribution you need to understand the Thai market and
find your local target customer. Key to the success or else of your venture is to assess
your market potential based on a thorough understanding of the customer needs your product is supposed to serve.
No need to reinvent the wheel, necessarily. – The good news is you do not need to
start from scratch. Your starting point is your brand and existing product (portfolio).
Next, the key to a successful market entry in the Thai beauty and personal care market
ME.A Newsletter
July 2015 Page 9 © ME.A
is to define a winning marketing mix. Use a pragmatic, straightforward framework to guide you. In what follows we will use a 5 P marketing mix
Chart 6: 5P Marketing Mix
Customer | Find your target customer – A good starting point to find the right target
customer for your products is the target customer profile in your home markets. Join
forces with a local market research firm to probe whether or not this consumer profile
can be found in Thailand too. If not or if the target segment turns out too small find out
to which customer (groups) your products allude. You need to get a clear picture of who
your Thai target costumer is. Define a detailed profile along set criteria such as sex, age, income, education, residential area, purchasing behaviour, etc.
Once you have gained sufficient clarity about whom you target you need to understand
respective customer needs, preferences, shopping behaviour, consumption pattern, etc.
when it comes to beauty and personal care products. This will give you valuable first
insights regarding the market potential of your products.
A structured focus group methodology can then be used to see how your Thai target
customers perceive both your brand and your products. The latter should be analysed
Product
Positioning
Promotion Place
Price
Customer
ME.A Newsletter
July 2015 Page 10 © ME.A
along all defining dimensions, such as quality, fragrance, haptics, benefits, design,
packaging, size, etc. This process is key to the success or else of your market entry.
Depending on the outcome you might review your existing products and adapt them to local customer preference and needs.
As an illustrating example you might take a body lotion for women. The focus groups
might reveal that the fragrance of the lotion is much too heavy for the liking of your Thai
customer. They prefer lighter senses. In addition it might turn out that the haptics of the
product it too oily and finally the package size might be too large for the aimed for
premium positioning.
Such revelations are invaluable ingredients for your winning formula. They help you to
get your offering right for the Thai market. Make sure that you again test adapted
products until customer feedback is where it should be. This iterative process might take
time and requires resources yet compared to the cost of a failed market entry these
efforts are small.
Positioning | Refine your positioning – The focus groups will also allow you to refine
and adapt the existing positioning of your brand and products. What are the core
promise of your brand and the unique selling proposition (USP) of your products for the
Thai customer? What makes your value proposition to the Thai customer different from
competing premium beauty and personal care brands? It is essential to understand that
a positioning built on "Swissness" alone will not suffice. Though the label does stand for
positive product qualities such as product safety, high quality, advanced features,
reliability and trustworthiness it should not be more than the icing on the cake to wrap your value proposition.
Again it is crucial to test your refined positioning with Thai target customers because it is
their, and only their perception of your brand and products that is all decisive. Finally,
the targeted perception with your Thai customers, the positioning greatly impacts the remaining three Ps, i.e., price, place and promotion.
ME.A Newsletter
July 2015 Page 11 © ME.A
Price | Get your prices right – Calibrating the price points for your products is crucial.
If they are too high you might price yourself out of the market. Should they be too low
they do not support your positioning. In addition prices are a key input for the business
plan any serious market entry should be based on. As such prices will also determine whether or not marketing your products in Thailand is a commercially viable option.
To find the right price points a thorough understanding of the relevant market (segment)
is essential. You need to analyse the brands competing for the same target customers,
their respective positioning and their pricing. Comprehensive price comparisons
including discounts, rebates and promotions are helpful to get a clear understanding of the relevant market segment.
Place | Get products to your customers – To effectively market your beauty and
personal care products in Thailand you need to determine how best to reach your
targeted consumers. It is their preferences and shopping habits that determine the most
promising route-to-market. Will your products best sell through shop-in-shop solutions in
department stores or upmarket malls? Are drug stores or rather boutiques the right
channel? Which retail locations are best to both strengthen the positioning and reach
your target consumers? What role – if any – does online retailing play in your product
category?
Promotion | Get your message across – Against the background of limited marketing
budgets and aggressive marketing strategies of incumbent brands you need to carefully
evaluate how best to address your target customers, i.e., in the most effective and
efficient manner. Do you need to promote your products through TV commercials and
bill-boards and what role – given the pervasiveness of social media in the Thai society –
do online campaigns play? What do your target customers' preferences imply for your shop floor staff?
ME.A Newsletter
July 2015 Page 12 © ME.A
Approached in this way the marketing mix epitomises the necessary thorough
understanding of the Thai beauty and personal care market. The 5 Ps build the
foundation of the business model for your successful market entry.
In summary, ASEAN is the coming economic powerhouse of Asia. The ten markets
offer a once-in-a-lifetime opportunity for Western premium beauty and personal care
brands to win new consumers. Particularly the Thai market with a growing middle class,
increasing consumer sophistication and a highly developed retail environment shows attractive growth potential for premium brands.
To successfully tap into this growth opportunity you need to define a compelling
marketing mix tailored to your local target customer needs and preferences. Finding the
winning formula for Thai consumers requires some essential homework to be done
upfront plus a long-term commitment to build up your brand in this vibrant Southeast Asian.
We at ME.A can help you to decipher the DNA of local consumers and define a winning
marketing mix as a first and prerequisite step into the any Southeast Asian beauty and personal care market. ME.A. Your bridge to growth in Asia.
ME.A Newsletter
July 2015 Page 13 © ME.A
ME.A Market Expansion Asia
ME.A is a market expansion services firm offering client advice and support to small and medium sized enterprises on markets and market entries in Asia.
We give our customers access to Asian market insights, showing them in-roads into new geographies and help them grow their business in Asia successfully.
With our offices in Switzerland and in Malaysia we speak your language and are deeply rooted in Asia able to leverage our expertise to your best advantage.
ME.A. Your bridge to growth in Asia.
www.me-a.com
Asia ME.A Market Expansion Asia Sdn Bhd (1048572-D) No. 1-3A Jalan Solaris 2 Solaris Mont Kiara 50480 Kuala Lumpur, Malaysia P +60-3-203 566 88 F +60-3-203 566 89
Europe ME.A Market Expansion Asia Ltd. Muehlebachstrasse 2 8008 Zurich, Switzerland P +41-41-588 08 88 F +41-41-588 08 89 [email protected] www.me-a.com Follow us LinkedIn: linkedin.me-a.com Xing: xing.me-a.com Facebook: facebook.me-a.com Google+: google.me-a.com Twitter: @me_a_news
ME.A Newsletter
July 2015 Page 14 © ME.A
Disclaimer
This document has been prepared in good faith on the basis of information available at the date of publication without any independent verification. ME.A Market Expansion Asia Ltd. (ME.A) does not guarantee or warrant the accuracy, reliability, completeness or currency of the information in this publication nor its usefulness in achieving any purpose. Readers are responsible for assessing the relevance and accuracy of the content of this publication. ME.A will not be liable for any loss, damage, cost or expense incurred or arising by reason of any person using or relying on information in this publication.
Terms of Use
This document and all information contained in it are for your personal use on an "as is, as available" basis and may be used by you for informational purposes only. ME.A Market Expansion Asia Ltd. makes no commitment to update the information contained herein.
You may redistribute this document freely on a strictly non-commercial basis only, without altering or removing any trademark, copyright, or other notice from such material.
Reproducing and republishing any material contained in this document on a strictly non-commercial basis only you must make due reference to ME.A Market Expansion Asia Ltd. ("Source: ME.A Market Expansion Asia Ltd.").
ME.A Newsletter
July 2015 Page 15 © ME.A
Imprint
ME.A Market Expansion Asia Ltd. is incorporated under the laws of Switzerland with principal office in Zurich. The company is registered under CHE-389.270.749 in the Commercial Register of the Canton of Zurich.
Managing Director: Dr. Christoph Walser
ME.A Market Expansion Asia Ltd. Muehlebachstrasse 2 8008 Zurich Switzerland P +41 41 588 08 88 F +41 41 588 08 89 E [email protected] The value added tax identification number of ME.A Market Expansion Asia Ltd., Zurich is CHE-389.270.749 MWST.
Published by ME.A Market Expansion Asia Ltd., Zurich, Switzerland
© ME.A Market Expansion Asia Ltd., Zurich. All rights reserved.
Copyright © 2015ME.A Market Expansion Asia Ltd.All rights reserved.
Published since 2013 byME.A Market Expansion Asia Ltd.Muehlebachstrasse 28008 ZurichSwitzerland.