How to do a Beauty Product Loyalty Analysis in 5 steps

How many brands or products are you loyal to? Would you believe it’s in the hundreds? While you may only name a handful of brands that you feel loyal to, your buying behavior is at least as important as your feelings.

This article outlines how to analyze the competitive loyalty landscape before launching a new consumer product. The results indicate a strategy to win trial adoption and consumer loyalty.

Attitudinal Loyalty

If you like Starbucks, Ikea, and BMW, you have some degree of attitudinal loyalty towards those brands. You prefer them over alternatives for reasons other than cost or convenience. Brands work hard to build attitudinal loyalty for obvious reasons: it’s a powerful way to build repeat business, and a competitive advantage.

Behavioral Loyalty

So why do you actually visit Dunkin’ Donuts, shop at Walmart, and drive a Toyota? Behavioral loyalty describes what people actually buy, which often involves cost and convenience considerations. While you may enjoy shopping at Ikea, they sadly don’t sell bread and milk, yet.

You can dislike a brand and still exhibit behavioral loyalty: you may not love your telecom provider, but you still pay the bills. You can also have attitudinal loyalty without buying anything: you like Tesla, but won’t buy one until the price drops to meet your budget.

How Loyalty Matters to New Brands and Products

Introducing a new product into a competitive category requires breaking, and then winning the loyalty of customers. To create a loyalty-winning plan, it’s important to understand what kind of loyalty customers have, why they have it, and exactly what it would take to break it and win it.

How to Assess Loyalty in Your Target Market

The best way to assess loyalty is by asking consumers using surveys. That’s because buying behavior can be seen in standard market research reports, but the reasons driving that behavior and how consumers might react to a new product can only be estimated by asking them. The techniques below were developed by HIT Laboratories to assess competition and loyalty for new health, beauty, and cosmetics products.

Step 1: Similar Product Usage

Loyalty is only an issue if your target market thinks your product competes with what they currently use. In the below example, 43 percent of respondents don’t use a product similar to the one tested. That reduces the marketer’s challenge for that large segment to conveying the product’s value, rather than breaking existing loyalty.

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Step 2: Product Comparison

For the remaining 57 percent who already use a similar product, how does the new product compare? If it doesn’t appear to be at least slightly better, it has a slim chance at replacing it. In this example, a combined 57 percent thought the new product was better overall than what they already use.

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Step 3: Know your Competition

What exactly is the target market currently buying? Below is an excerpt from hundreds of actual responses. Sometimes respondents will cite a product that doesn’t appear to be competition. But what we think is irrelevant; it’s competition if your market thinks it is.

new_product_market_loyalty_research_3

Step 4: Competition-Loyalty

Now that the competition is known, how loyal is your target market to those competing products? Behavioral and Attitudinal loyalty can be separately assessed by asking respondents questions about their feelings and purchasing history.
new_product_market_loyalty_research_behavioral_attitudinal_loyalty

Step 5: Loyalty Quadrant

Possible marketing strategies become apparent by plotting the attitudinal vs. behavioral loyalty. While this is a complex topic, we can generally say that if there is low behavioral loyalty, consumers are frequently trying alternatives, possibly swayed by new product offerings, discounts and coupons, or variety-seeking behavior. This suggests it may be easy to acquire trial purchases, and focus should be put on programs or features that drive loyalty to retain customers.

If there is low attitudinal loyalty for competing products, there may be an opportunity to create a brand with more personality or other likable attributes. This strategy has been clearly visible among North American telecom providers over the past decade, as they’ve attempted to infuse their brands with distinct personalities.

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Other Product Marketing Considerations

After assessing the nature of loyalty among the target market, examine the specific ways a new product could gain and hold customers. This is beyond the scope of this article, so these considerations will only be summarized below.

Competition-Loyalty Reasons

Respondents who use a similar product are asked why they buy it rather than any other product. These reasons can help in designing a strategy to gain market share.

Switching Potential

Respondents are assessed for how likely they are to switch to a new competing product for a trial duration. Even very loyal customers may be open to a free product trial, depending on the product type.

Switching Incentives

Respondents indicate what specific incentives would cause them to buy the new product over their current one on a long-term basis. This can indicate the best basis of competition.

The above Loyalty Analysis is a standard component of the Cosmetics Assessment Standard (CAS) study, which assesses the appeal of new health and beauty products and provides actionable product improvement and marketing insights.

How to Test Your Product Idea Using Concept Validation Surveys

Getting early market feedback is crucial for consumer product development. While this is widely known, the different available methods can be confusing for inventors and marketers.

Few things compare with concept surveys for speed, validity (statistical power), and depth of results. The main purpose of this early-stage survey is to benchmark the appeal of a new product idea against similar alternatives that are already in the market. If the product scores higher than the alternatives, it’s a good sign of potential product viability. If not, the results will show where the concept is weak, and may suggest improvement ideas.

CAS-exerpt1

An excerpt from a new product concept survey report. The tested product’s viability metrics are compared against those of benchmark products. The study type shown is for testing the viability of new beauty products.

Various study configurations are common, but they all typically employ 200 or more respondents, are conducted through online questionnaires (which significantly improves speed and cost).

Respondent recruiting is an important issue, and targeting criteria will depend on the purpose and stage of the survey. A “mass-market” sample (which is representative of the general adult population) can help identify the product’s target market by reporting which segments have the greatest interest in buying the product.

demo-response1

Example demographic response to a new invention idea, used to help identify the target market.

If the target market is already determined, the survey sample can be recruited from that specific population (for example, “US women age 18 to 24”, or “dog owners age 50+ in Florida”). From that population, different product variations (“concepts”) can tested to determine which has the best sales metrics.

geographic

The purchase intent for a new product is displayed by region, indicating where the best region to launch the product may be.

Some early-stage developers choose to conduct their own informal surveys, which can help determine consumer preference or critical product flaws. Professional research can be a worthwhile investment because do-it-yourself surveys may not pass the Investor Test. If you conduct your own surveys, be sure to address these important issues:

  • Questionnaire design: it’s easy to write questions that are confusing, leading (causing bias), or can be interpreted in several ways. The manner and order in which you ask questions can also significantly affect the responses.
  • Benchmarking: if you learn 50% of respondents “like” your product, is that good or bad? Without a database of other results, or running benchmarking surveys, the results are inconclusive.
  • Sampling: finding respondents who represent your target market is always a challenge.

CO-exerpt

An excerpt from a new product concept selection survey. The results for one concept variation are shown, which would be compared to other variations also tested.

How not to launch a product: A $4 Billion Marketing Lesson in 2 Minutes

When is a product launch a “sure thing”? How about when you’re the market leader, employ an army of marketers and designers, enchant the media, and invest four billion dollars?

Ford had every advantage, and the result was disaster. What went so wrong?

It was the mid-1950s, and Ford needed a new medium-priced model to round-out their line. They invested heavily in marketing research to determine what consumers wanted in a new car. They meticulously analyzed the competitive landscape. They designed genuine innovations that would later be copied by other manufacturers. In short, they did everything one would think sensible and prudent.

Yet the launch was a complete flop. Manufacturing was halted within three years — long before reaching break-even sales — and the “Edsel” brand became synonymous with monumental failure.

If they did such excellent planning, where did it go wrong? How can we avoid making similar mistakes with our own product launches?

1. Ford paid lip-service to their customers’ preferences, but disregarded them on key points. For example, they produced an incredible list of 6,000 name ideas ranked by consumer reactions and expert opinion, but top executives couldn’t pick a winner. The puzzling “Edsel” brand (a low-ranked name in their research) was chosen by the chairman of the board to break the debate. As John Brooks’s concluded in his 1969 essay on the topic,

“Although the Edsel was supposed to be advertised, and otherwise promoted, strictly on the basis of preferences expressed in polls, some old-fashioned snake-oil selling methods, intuitive rather than scientific, crept in.”

2. It’s hard to believe that in a $3 billion development budget ($250 million in mid-50’s), basic test marketing was never conducted. This can be done from a very early stage in the form of concept testing: showing a finished concept to the target market and getting feedback. Done quantitatively, several concept variations can be compared to determine the best one. In a later stage, consumers can try prototypes. Ford took the opposite approach: keeping their Edsels literally “under wraps” and hidden from public view until the grand unveiling.

edsel_1958

3. Watch people shop for as much as a toaster, and it becomes obvious that pricing is crucial. The Edsel’s pricing was confusing, overlapping with other product lines so consumers didn’t know where it was supposed to stand. Furthermore, the positioning was unclear: highlighting innovative features that could only be considered “premium”, while lacking features common to other premium cars.

4. For over a year the Edsel was slowly revealed to the public in what some called and “automotive striptease”. It was hyped through stunts and ads like no other car had been, so expectations were naturally high. But after release, the only sensible media story remaining was “does it live up to the hype?” With such an intense spotlight, minor problems typical of any new model became national headlines, fueling a devastating negative news cycle.

Key takeaways:

  1. Apply your marketing research at each stage of development and marketing.
  2. Test market early and often to avoid launching an “Edsel”.
  3. The consumers’ purchasing decisions consider the competition, so you should too: position clearly.
  4. Don’t build unrealistic expectations or over-hype your product: it invites piercing scrutiny.