Just after the Spring Festival, international beauty giants invariably started a collective price increase mode. For example, Shiseido Baiyou Cream has more than 13% of ***, while CPB Skin Key has been adjusted across the board. The Estée Lauder Companies has upgraded about 1,500 products** from its brands such as Estee Lauder, La Mer and Origin, with an average increase of 10% to 30%. LVMH Group's Givenchy, Guerlain, Dior Beauty, etc., announced price increases, among which Guerlain perfume prices have increased significantly, and the price of different versions of "Imperial Water" cologne has increased by 1,000 to 4,000 yuan.
Among them, L'Oreal Group said that the price adjustment is a normal market strategy adjustment. The counter sales of L'Oreal's brand YSL told The Paper that under normal circumstances, brands will closely follow the price increase trend of other brands every year, so the price adjustment time is not uniform every year. 3CE's counter sales said that there will be a unified national price adjustment every year, and the time is not fixed.
It is worth noting that domestic beauty brands have not generally followed suit and increased prices.
What's going on here? Could it be that the price increase of international beauty brands is a harvest of IQ tax?
Price increases are a common marketing strategy used by international brands
After the epidemic is lifted in 2023, international brands have risen in a wave**. According to China Youth Network, 40% of high-end cosmetics in the Japanese market will be adjusted in 2023, and the average suggested retail price will reach 11,128 yen per item, which is 7% higher than in 20227%。According to Japanese media reports, the perfume category that is most affected by raw materials is 84%。In contrast, the smallest "makeup" category, 62%。This price increase is also a common increase in the price of cosmetics brands in the Japanese market.
According to a recent report by the Financial Times, Ye Hongmu, CEO of L'Oreal Group, said that the annual growth rate of global cosmetics before the new crown epidemic was about 5%, but the annual increase has increased to about 8% in the past three years. The driving force behind cosmetics is the rising cost of raw materials and chains. However, Ye Hongmu expects that as the cost of the follow-up chain tends to stabilize or decline, the rise of cosmetics will slow down this year.
It can be seen that the price increase of foreign beauty brands is indeed caused by factors such as rising production costs and raw materials. Especially in countries with incomplete industrial chains such as Japan and South Korea, the ** of some raw materials may be affected by fluctuations in the global market, which will lead to an increase in production costs, which in turn will push up the price of products.
At the same time, due to the Russia-Ukraine war and the Red Sea crisis, the increase in transportation costs may also lead to product ***, especially when the global ** chain is impacted.
However, not all international beauty brands are produced abroad, and many products are also produced in China, and these products have also increased in price. The reasons for the price increase of these international brands are not exactly the same, and the products that have increased in price are also different. For example, Estee Lauder counter sales said that the price increase belongs to the price adjustment at the group level, and the increase is generally about 50 yuan, which belongs to the normal price adjustment category twice a year. The 3ce counter sales said that in general, the older brands that have not been adjusted are all new, and the price of new products has "increased".
It can be seen that the increase in international beauty prices is not all caused by the rise in raw materials, transportation and other costs, and marketing strategies or market strategies have also become an important driving force for international beauty price increases.
Many international beauty products have been successfully listed, and global performance is an important factor for them to consider.
For example, in 2023, in terms of the Chinese market, L'Oréal will grow by 5 in Chinese mainland4%；Shiseido's net sales in China decreased by 4% year-on-year due to the impact of Japan's nuclear sewage incident. Estee Lauder's revenue in the Asia-Pacific region fell 8% year-over-year.
According to the normal operation of these companies, it is not to reduce prices to increase sales, on the contrary, most of them will increase the selling price to increase sales.
In the face of these international beauty price increases. Some people believe that the reason why the beauty products of the big international brands can be sold** is because they bring consumers a sense of psychological satisfaction and make them feel that they are using high-end, high-quality products. This psychological effect may make consumers willing to pay more**, even if there is no significant difference in the actual effect of the product.
There is also another group of people who believe that the constant price increase may be a kind of "IQ tax". The gross profit of these international brands is already very high, usually with the help of well-known celebrity endorsements, as well as the so-called core ingredients and laboratory data, to enhance the brand image, consolidate their high-end brand positioning, and even follow when they see others increase prices, never letting go of any reason for raising prices, but in essence they are not much better than domestic cosmetics.
Domestic brands do not have the habit of following the trend and raising prices
Compared with international brands, domestic beauty brands have shown a relatively cautious attitude towards price increases. Although some international brands such as Estee Lauder and L'Oreal have raised prices almost every year for various reasons, domestic beauty brands have not generally followed suit. Qing Yangjun believes that it may be mainly due to the following reasons:
1. Fierce competition: The domestic beauty market is very competitive, with many brands, few mid-to-high-end brands, and low consumer loyalty. If the price increase may affect consumers' willingness to buy, it will lead to consumer loss, which will have a certain impact on sales and thus lose market share.
2. Cost control: The domestic industrial chain is complete, and domestic beauty brands usually have better cost control capabilities and can effectively cope with the fluctuations of raw materials, and many enterprises do not have much R&D investment, and the overall cost is low, so they are unwilling to make up for the increase in costs through price increases.
3. Brand strategy: Some domestic brands may choose to attract consumers by raising the price of new products through new product research and development, optimizing product lines, and improving product quality, rather than simply increasing the price of old products to obtain higher profits.
4. Consumers can't afford to offend: As consumers become more and more rational, they pay more attention to the cost performance of beauty products. If a brand frequently raises prices, it may make consumers think that the company is insatiable, and thus lose some consumers.
Generally speaking, domestic beauty brands are relatively conservative on the issue of price increases, hoping to win the love of consumers by improving the research and development of new products and the quality of services, rather than relying solely on the price increase of old products.