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Oct 6, 2011

The State of Cosmetics in 2011 With Exclusive Commentary About Becoming a Socially Conscious Spa

Re-write from :

With the cosmetics industry earning record revenues, with niche sectors, such as “men’s” and “organics” rapidly gaining market share, and with social media, eco-consciousness and cause-based consumerism greatly impacting product purchasing decisions, the cosmetics industry is an ever-changing behemoth that’s become integral to the national economy. But, what makes this insatiable industry tick, and will it continue to thrive amid consumers' collective quest to remain youthful, attractive and self-confident?
Veteran cosmetics executive Edward Schack, principal of EES Cosmetics Solutions, Inc., offers insight on past and current personal care industry trends and how the beauty industry has become far more than skin deep.

Buoyancy of the ‘beauty bubble.’ Despite an ailing recession, the U.S. cosmetic and toiletries sector generated more than $10 billion in revenue last year from 13,000 beauty-centered stores nationwide, according to Ibis World Reports. How will the industry remain recession-proof?

The burgeoning men’s cosmetics sector. American consumers spent $4.8 billion on men’s grooming products in 2009, according to market data firm Euromonitor International. In 1997, the figure was half that—$2.4 billion. The fastest-growing men’s segment is skin care (nonshaving products such as facial cleansers, moisturizers and exfoliants), with the category growing more than fivefold during the period, to $217 million from $40.9 million. A 2009 report by market research firm Packaged Facts also expressed optimism for the men’s cosmetics sector.

Role of ‘emotional bond’ in consumer loyalty to cosmetic brands. Cosmetic brands scored high on a Brand Keys “Loyalty Leaders” report, which found that, even in a bad economy, consumers stick with their favorite premium cosmetic brands alongside cheaper ones, also noting that the emotional connection forged with cosmetic brands is due to impact on self-image.

Why cosmetics top the list of shoplifted goods. "Health and beauty care items" accounted for 20% of all items stolen from supermarkets in 2008, according to a survey from the Food Marketing Institute, with Oil of Olay skin creams topping the list of swiped items.

Youth and cosmetics. According to The NPD Group Inc., in 2005 the average age a woman began using beauty products was 17; today it is 13.7. Experian Market Research shows that 43% of 6- to 9-year-olds are already using lipstick or lip gloss, 38% use hairstyling products and 12% use other cosmetics (J. Bennett: Newsweek article “Generation Diva”).

Cosmetic buying habits related to perceived health and safety concerns. According to Datamonitor, 28% of consumers currently deliberately avoid certain cosmetics or toiletries because of fears about certain ingredients, and 39% are somewhat or extremely concerned about parabens or petrochemicals used in beauty product formulations. U.S. Food and Drug Administration statistics confirm that cosmetics are one of the safest categories of products used by Americans: With more than 11 billion personal care products sold each year, only 150 adverse experiences (mostly skin rashes or allergies) have been reported.

How being ‘green’ affects consumer spending in the cosmetic category. According to Grail Research, a full 93% of consumers feel that a company being green is important to their purchase decision, with 80% of consumers citing “natural” as the most important green attribute for cosmetic/toiletry products. According to the U.S. Census Bureau's 2008 Annual Survey, manufacturers of beauty products consumed less than a third of the kilowatt hours of electricity relative to the average of other U.S. manufacturers. However, most are either not aware or cannot recollect companies' green initiatives.

The importance of socially conscious business practices. Consumers also value brands that support causes—85% of Americans have a more positive image of a product or company when it supports a good cause. The cosmetics industry is very involved in philanthropy and contributes twice as much to charitable causes than any other industry. Each year, beauty companies donate more than one million individual products and raise more than $2 million for cancer patients through the Look Good... Feel Better Program.

Schack tells how can a company be socially conscious as well as make their clients aware of its social consciousness? First of all, the spa must genuinely have a heart for social consciousness. You can’t fake caring about the world around you and not just profits. When companies try, it’s usually quite evident and often fail miserably. In the realm of cause-driven commerce, actions speak louder than words and ultimately lead the way. It’s a way of thinking, and all staffers must be on board as social consciousness is a company culture, not a marketing strategy. Whatever the socially-driven mission of the company and no matter the cause being supported, it must be known to staffers at every level of the operation—from the CEO down to the receptionist—and implemented on a daily basis. 

A company’s social consciousness often starts quietly, behind the scenes. Spas should be engaged in the community that they are in while maintaining the bigger picture as well. They should be seeking opportunities to give back and looking for areas of need that, in this economic climate, are seemingly endless. The most successful social companies today typically send a portion of their profits to charities of their choice—something consumers are now monitoring closely. Consumers want to feel good about where their money is being spent and are even willing to justify higher expenditures in kind.

Some of the best ways for a company to convey its socially conscious values is to weave information about its efforts into applicable marketing vehicles: websites, brochures, spa menus and the like. Spas can also tactfully use elegant signage highlighting the charities they contribute to and events they have supported, as well as ways they are specifically safeguarding the environment. For example, “We use all natural, organic products.” It’s also effective for spas to teach their staff members to engage this type of discussion in their conversations with the clients. Clients will sense the pride staff members have in being a socially conscious business, and clients will soon share that pride in frequenting a spa with charitable, cause-conscious values.

Ad Agency Trend : Talent / Crowdsourcing

 Re-write from Florrie Cohen on the report titled : Ad Agency Trends and Forecasts

At this year’s 4As Transformation Conference recruiting talent was one of the main points of discussion. Three holding company chiefs – Interpublic’s Michael Roth, WPP’s Martin Sorrell, and Omnicom’s John Wren – agreed that the industry needs to do a better job at recruitment. And, getting young people fired up about advertising is an issue. In fact, WPP’s Martin Sorrell called it “criminal neglect.”

While recruiting talent is a concern, retaining talent is also a challenge. Consider that Alex Bogusky (Crispin Porter + Bogusky), Gerry Graf (Saatchi & Saatchi) and Eric Hirshberg (Deutsch) all left their creative jobs last year. This movement among executives is a trend that is likely to continue as the market recovers.
To further drive home the challenge of employee retention, a survey by Arnold Worldwide and the 4As found that “30% of the collective agency work force will be gone within 12 months.” And, 96% felt they could easily get a job, partly due to the recovering economy.

Since digital is at the forefront, many agencies are turning to students for their digital knowledge. For example, WPP’s direct marketing unit Wunderman has apprenticeship agreements with over a dozen schools globally whereby students work a three-to-six month stint for Wunderman, receiving stipends and sometimes college credit in return. WPP’s JWT last year had a reverse-mentor program where children (aged 9-14) of JWT executives worked on specific client projects, under the assumption that kids have a better understanding of the digital world than much of the workforce. Meanwhile, Publicis’ Leo Burnett has a group called “energy pool,” which consists of 35 US young adults, many right out of ad schools and digitally savvy, who go into different accounts as needed. And, just recently, Campbell Mithun used Twitter to choose six summer interns, a way to interest students in an advertising career.

And, many agencies are ramping up their training programs to train both current staff and new recruits. Training was an area that went by the wayside during economic difficulties. JWT North America’s CEO, David Eastman, says the advertising industry now knows that training is “critical.” Currently, big agencies are said to spend some $750,000 to $1.5 million on training programs – many having formal online and in-house workshops with classes in social media marketing and mobile marketing, and others send executives to take classes at digital ad schools. JWT and Leo Burnett are two agencies that are making digital training mandatory for most employees, and Burnett is rolling-out full day or week-long “digital boot camps” for many executives.
And what about crowdsourcing? It’s here to stay was the conclusion at the 4As Transformation 2011 conference. It’s a way to gather a variety of ideas for a lot less money. In fact, some see the agency of the future as being small but garnering support from many external people.

Future of Agency Relationship

Marketing Leaders Must Shift Their Expectations Of Their Agencies

Beyond “digitization” of media, the impact of the Internet on the way people communicate, absorb content, and interact continues to evolve.2 Forrester believes that these changes will drive us into the next phase of marketing, which we call the Adaptive Marketing era:
A period in which marketers must become more adaptable as new channels and constructs for interacting with consumers flood the market that must be tied to the overall brand promise.
In the Adaptive Marketing era, marketers’ new reality — and consequently those of marketing partners — is a world in which the ability, desire, and pace of change are constant, supported by a shift in focus:
· From outbound to surround. Consumers tell us that the marketing that they are exposed to is irrelevant to their interests3 And now consumers can opt out of telemarketing, direct mail, and email; they skip TV ads; and they will publicly blow the whistle on unacceptable advertising practices. Marketers recognize this problem: 62% believe that their TV advertising is less effective than two years ago.4 As Larry Flanagan, CMO of MasterCard, points out, his organization is now “moving from decades of push strategy to a more holistic 360-degree consumer strategy” in order to keep consumers engaged.
· From campaigns to experiences. In an Adaptive Marketing era, the old campaign mindset has to be put out to pasture, but most marketers and agencies still organize, sell, and service from a campaign mindset. The advertising ecosystem is ill-equipped to capture, analyze, and use insight about how to engage best with customers to improve their ongoing experience with the firm. As the former CMO at a global car rental company pointed out, “As media fragmented, agencies approached each channel the same way: as a new means of bombarding the consumer with our message. We found the quality of work declined over time while agencies floundered to layer on skills that just weren’t native to them.”
· From segmented “audiences” to individuals. The days of reach and frequency as effective advertising metrics are on their last legs. But most agencies still apply broad segmentation strategies to new channels. Consumers don’t want to be “targeted” as an audience — they want to participate. Yet most marketers and agencies have a long way to go to fully embrace the notion of customer participation. As one senior marketer commented, “We’re keen to embrace social media, but there’s also a part of me that thinks that anyone with a keyboard is dangerous.”

Most marketers say that they will always need to outsource work for a variety of reasons. But as marketing challenges become ever-faster and more complex, marketers must rethink how, why, and to whom they outsource their marketing needs. In the Adaptive Marketing era, Forrester believes marketers must tap outsiders for (see Figure 3):
· Ideas: emotional connections that can be adapted to all touchpoints. The big ideas behind the “Mad Men”-era campaigns remain relevant because brands must still connect emotionally with their consumers. But digital experiences adapt faster. Consumer control and media fragmentation will require new approaches that help the message hang together wherever they are encountered.
· Interaction: ever-changing dialogue between brand and consumers. As marketing shifts to focus on pulling in customers, marketers need to rethink the interplay between paid, owned, and earned media.6 This requires marketers to find firms that can stay on top of the conversation wherever it is happening.
· Intelligence: real-time insight into customer behavior. The volume and interdependency of data gathered in multiple fragmented channels provide an opportunity for marketers to learn more about their customers than at any time in the past. The challenge is to gather, analyze, and create actions as these insights materialize.