The growth of the Asian cosmetics market slowed in 2009, yet the year still tells a story of expansion. Markets grew in the big two - China and India - as well as Indonesia, Thailand and Vietnam. While Japan's growth is flattening, due in part to the country's aging population, it is still the world's second-largest market and the sector took more than US$20 billion last year.
Dave McCaughan, regional strategic planning director for McCann Worldgroup, points to the rapid growth of luxury retail formats over the past year, with new malls opening in Singapore, Jakarta, Bangkok and China. There was also a boom in outlet malls, especially in Japan, but also in China and Singapore. Add to this the growing trend for online and direct sales of premium products and advertisers were presented with a market in which they had to work harder than usual to compete.
"Asian women are now able to access more, better quality, products," McCaughan says. "This in turn is forcing innovation at a lower price in order to compete."
According to Simone Zhang, strategic planning director for Euro RSCG in Shanghai, to ensure effective targeting, marketers should divide the sector into three categories: prestige, products used by make up professionals, and products with mass appeal. Even then, such definitions are further nuanced because prestige brands are developing sub-brands to attract younger consumers, and new brands are targeting low-income groups in the hope of lowering the entry-level.
In addition, while skincare and cosmetics have always been closely linked, with the latter often taking cues from the former, cosmetics firms have recently gone a step further, with brands such as L'Oréal's Maybelline and shu uemura launching their own skincare ranges.
While TV remains critical to achieving nationwide awareness for mass-appeal brands such as Maybelline and Za, top names like Dior, Shiseido and Armani require something more intimate.
"Prestige brands need premium and aspirational support, not necessarily through the mass media, but through celebrity endorsements or PR buzz," Zhang says. "Targeted fashion magazines are a good way to build the brand's image and gain endorsement from celebrities or category experts."
Zhang says that the majority of Chinese consumers are heavily influenced by celebrities, whom they look to as style role models.
Looking to others for advice and a desire to share new looks has been a significant factor in the rise of digital, which is now also a vital part of the advertising mix.
"The internet has played a key role in unlocking variety of choice," Zhang says. "Even if a brand is not directly available in China, people are eager to know about it and try it."
The internet also supports those in developing markets who are getting to grips with make-up trends. Zhang says that online instruction videos that offer guidance on how to apply make-up are popular in China. The rise of fashion and beauty blogs is also offering increased opportunities for word-of-mouth-based initiatives.
Given the market clutter, McCaughan says brands have to constantly look for innovation to reach their target audiences. "L'Occitane has been a major change agent in Japan and other markets as it developed it's retail formats in a huge variety of locations," he says.
In addition, while customers may go to stores for information and demonstrations as they always did, in the actual purchases sometimes happen elsewhere. "This is most prevalent in developed markets," says McCaughan. "One big trend in Japan is for women to use department stores and websites to gather information, then fly to Korea to buy premium cosmetics at much cheaper prices."
Top 10 cosmetics
8 Esteé Lauder
This article was originally published as part of the 2010 Top 1000 Brands report.