(Report Producer/Author: Guohai Securities, Lu Guanyu)
1. The significance of large items: strengthen the brand tone, both traffic and profit
1.1. Excellent large items can strengthen the brand tone and occupy the minds of consumers
An excellent large item can strengthen the brand tone and occupy the consumer's mind. The product is the embodiment carrier of the brand, and the excellent large items can clearly express and strengthen the brand tone and concept:
1) Estée Lauder is positioned at the high end, and in the early days, it won the recognition of some consumers through excellent product strength + card slot high-end channels + quality services. In 1982, the company launched the first generation of small brown bottles of large single products, using the scarce bifid yeast + hyaluronic acid at that time, and the marketing end took the lead in proposing the concept of "Now begin from skin care to skin repair" cell repair, sleep beauty, etc., which strengthened the brand's high-end, anti-aging and other image positioning;
2) Lancôme started with high-end perfumes. Lancôme pioneered the concept of "essential oil skincare" when launching the grand collection, reinforcing the brand's rose-based image. In 2009, the company launched another major product "Small Black Bottle", which focuses on ingredients such as split yeast and puts forward the concept of "gene maintenance", which enhances the brand's scientific and technological strength and strengthens the company's high-end positioning.
1.2, as the core pillar of the brand, large items have both traffic and profit
Large items combine traffic and profit, which is the pillar supporting the long-term steady growth of cosmetics brands. Large single products often originate from explosive models, but looking at large single products in a long-term dimension is a "cash cow" product with both traffic and profit, which is one of the cores supporting the long-term and stable growth of the brand. Taking Estée Lauder as an example, in 2011/2013, it strategically proposed to attach importance to the "core product line" / focus on creating "Hero Product", and established the core position of the small brown bottle series / Double Wear series in the skin care line / makeup line. This large single product strategy has proved to have achieved remarkable results, and since 2010, the small and medium-sized palm bottle series has contributed to the growth of its skincare business in all years, and the repurchase rate is much higher than the overall, with both traffic and profit.
Due to the stronger attributes of fast fashion, the certainty of the contribution of large items to the growth of makeup revenue is less than that of skin care products, but it is still the core pillar of growth in the long-term dimension. Estée Lauder's doublewear foundation was launched in 1997 and has since contributed to the growth of the make-up industry in the fiscal years 1998-1999/2007-2008/2012/2017-2019. Compared with skin care products, due to the stronger fashion attributes of makeup and more changeable consumer needs, the contribution of large items to them is relatively unstable. But in the longer term, big items are still an important driver of the long-term growth of makeup brands.
2. Barriers to the development of large items: test the comprehensive capabilities of research and development, marketing, digitalization and organizational structure, and differentiation and innovation are the key to the latecomers
2.1, small brown bottle: R & D and sales as the spear, digitalization and organizational structure as the shield
Product quality is the foundation of cosmetics brands, and the effectiveness of ingredients is the basis for large items to stand out. Although cosmetics are highly dependent on marketing, the quality and efficacy of the products are the foundation of the brand. Brand R&D Barriers are mainly reflected in the research and development of raw materials and formulas, taking the Estée Lauder small brown bottle as an example:
1) At the raw material end, the bifid yeast was first developed by clerical and Dr. Martin Kludas, and the company keenly found that the ingredient has a strong role in alleviating inflammation and skin dryness, repairing DNA damage, keratin metabolism, etc., and signed an agreement with the CLR earlier and obtained a more favorable purchase price. In the early 1980s, few cosmetic companies applied bio-fermentation technology and yeast extracts to cosmetics, and the company pioneered the use of ultra-9% bifid yeast extract in the first generation of small palm bottle extracts, in addition to the use of hyaluronic acid as a moisturizer for the first time, which was extremely expensive at that time.
2) At the R&D end, the first generation of small brown bottles adopts an innovative microemulsion formula, creating a translucent liquid formula that can be quickly absorbed, and its skin feeling is significantly different from the previously popular creams, creating a category of serum.
Refined marketing capabilities are essential for cosmetics, relying on digital capabilities and sensitive organizational structures. Estée Lauder is continuous and firm in its digital strategy, which can be roughly divided into the following three stages:
1) Establishment of internal digital systems (before 2000). By 1997, the company's sales analysis system had been able to track 95% of the data of the U.S. and Canadian points of sale, and to formulate product development, production and marketing strategies in a timely manner based on the data. In 1997, 70% of the company's U.S. orders were issued through the automated replenishment system.
2) Promote the e-commerce strategy (2000-2009). Clinique, the company's core brand, launched its own website in 1996, and in 2000 the company acquired gloss.com website and redeveloped it to promote its core brand products. In 2000, the company developed an Internet system to enable consumers to track their order information, and in 2006, the company implemented the SMI modernization strategy, mainly to promote the interconnection of data and technology between brands, sales subsidiaries and other data. By 2009, 16 of the company's 19 brands with marketing websites had e-commerce capabilities.
3) Shift from e-commerce strategy to comprehensive digital strategy (2010 to present). Estée Lauder officially entered the fully digital era during this period: that is, in addition to carrying out e-commerce sales business, it also pays attention to the interaction between brands and consumers, and continuously strengthens consumer insight capabilities. In 2012, the company's brands Yuemu Zhiyuan and Zu Malong launched online consultants to enhance the consumer experience, and in 2016, the company produced "fashion expert" makeup tutorials and enhanced consumer interaction frequency and exposure through the promotion of Internet celebrity KOLs. At this time, the company has shown a leading consumer insight in the market, such as its core brand Clumber surveyed women of all ages and races in a large area, and concluded that pigmentation is the most concerned skin care problem for women around the world, so the company developed and launched Clinique EVEB BETTER whitening essence in 2010 and supplemented by a full range of marketing launches on TELEVISION and print media, and finally the product exploded and brought stable growth to the brand in the US market.
2.2, small black bottle: differentiation is the key to the later catch-up, innovation to help the brand lead the trend
Backed by L'Oréal's strong basic research capabilities, Lancôme showed a strong ability to create explosive models in the early days. L'Oréal's Basic Research Division was founded in 1963, L'Oréal published a study on the effects of ultraviolet rays and sunscreens at the World Dermatological Congress in 1997, and in 2000 it successfully registered more than 400 patents in a single year, all of which show that L'Oréal is at the forefront of the industry in basic research. As a high-end brand of the Group, Lancome also has strong product research and development capabilities: 1) the Primordiale series was launched and sold well in 1995, and the anti-aging product line of the series increased by 43% year-on-year in 1997; 2) In 1998, Lancôme launched the Vitabolic series, which was the first skin care product containing active VC, which promoted the strong growth of the brand's skin care products that year; 3) In 1999, Lancôme launched the HYDRA ZEN series of moisturizers with strong soothing functions And the RE-SURFACE series with concentrated retinol has received a good market response. (Source: Future Think Tank)
In the early days, the small black bottle quickly demonstrated its potential to become a "big item" with strong brand power + differentiated positioning. Lancôme's little black bottle was born in 2009, just when the United States is gradually emerging from the financial crisis and the US beauty market is showing more obvious signs of recovery. The small black bottle is also positioned as a large-scale anti-aging and repair track, but at the same time, it does not forget to seek common ground while reserving differences with other brand star items that have occupied the minds of consumers, forming a clever differentiation:
1) The small black bottle is the main concept of "gene maintenance", which is misplaced with the concept of "DNA repair" that is deeply rooted in the small brown bottle, and the core ingredient used is also bifid yeast to make consumers more acceptable in the early stage;
2) The small black bottle is positioned as "muscle floor fluid" in the category. The main function of the muscle floor is to help the skin absorb the essence better in the future, and it forms a certain competitive relationship with well-known essence products such as small brown bottles. Through its own big-name influence + clever differentiation positioning, Lancôme has won 65 consecutive beauty awards once launched, and continues to promote the long-term growth of Lancome's skincare business.
After several years of research and development and promotion at the group level, the small black bottle has been upgraded and gradually led the trend of micro-ecological skin care in recent years. Cosmetics R&D is usually a thick accumulation, usually requires good technology + good timing to achieve a star ingredient or product: 1) In terms of basic research, L'Oréal's brand Skin Springs launched research in the field of skin microbiome in 2011 and published 10+ papers in international journals to form scientific support. In 2017, L'Oréal Group released "An Eye on Research" and listed skin microecology as one of the four major research and development priorities; 2) On the product side, in 2017, When Helena upgraded the large single green bottle, it added "probiotic defense compound factor" to strengthen the skin barrier. In 2018, RioPasan launched the product "Effaclar Duo+", specially developed for acne skin. The continuous application and promotion of microecology at the R&D end and product end at the group level have gradually recognized and accepted the concept of "skin microecology" for consumers. In 2019, the small black bottle was upgraded to a new height again, pushing the "micro-ecological" skin care concept to a new height.
2.3, Olay small white bottle: ingredients are king + differentiated marketing strategies, renew the brand and lead the trend of ingredient party
2.3.1 P&G Group has been deeply engaged in niacinamide for 20 years and has strong basic research and development capabilities
Procter & Gamble studied the whitening effects of niacinamide earlier, forming a solid scientific demonstration process. Procter & Gamble Group began to study the whitening effect in 1994, and in 2002, it published an academic paper on niacinamide for the first time in the British Journal of Dermatology, and the subsequent group R&D members have published more than ten experimental papers on niacinamide in international authoritative academic journals, and through rigorous clinical trials, they have confirmed that its niacinamide and amide can help solve the problem that Chinese women's skin angels are more likely to be yellow. P&G constructed a scientific demonstration process in which niacinamide was perfected from theoretical mechanism (blocking melanin transfer) → actual efficacy (improving facial photoaging, repairing barriers, etc.) → effective dosage (measuring the appropriate concentration, etc.), and relied on its solid and effective product power to occupy the mind of whitening effect.
2.3.2 Big single product strategy + bet on content marketing to help the Olay brand rejuvenate
Product and channel streamlining and efficiency improvement + large single product strategy help Olay reshape its brand image. Olay is a daily cosmetics brand backed by Procter & Gamble and positioned in the public, after entering China in 1989 with strong product strength and TV advertising quickly spread in the public channel, olay skin products / shower gel share accounted for 12.4% / 10% respectively in 2004. With the development of the cosmetics industry online and high-end, Olay tends to age its brand, and in August 2014, the group launched a plan to cut long-tail brands with low revenue and weak profitability, focusing on promoting core brands. In 2016, Olay Olay clarified its positioning of anti-aging skin care products and streamlined products and channels in China and the United States:
1) In December 2015, it was the first to cut 1/6 of the long-tail SKUs in the United States that did not match the anti-aging positioning or had poor sales;
2) Since 2016, Olay has closed 30% of inefficient counters in the Chinese market and resolutely shifted to e-commerce channels. After streamlining and improving efficiency, the company will focus its resources on the "small white bottle" series of large items and reshape its brand image. In 2016, Olay upgraded to the third generation of small white bottles to emphasize its whitening function, relying on the strong group research and development strength of small white bottles into Olay's large single products, in 2021, the double eleven small white bottle facial essence (including sets) accounted for about 45% of Olay's total GMV.
Based on product strength + content marketing continues to exert efforts, Olay brand power is renewed. After the rise of the ingredient party after 2017, the Baidu search index of niacinamide has increased significantly, and Olay has continued to increase its popularity with strong product strength. Olay invested 40% of its annual budget in content marketing in 2017-2018. Relying on repeatedly placing Little Red Book notes to expose users, launching the "28-day Whitening Challenge", etc., Olay has attracted a relatively widespread spontaneous spread among KOLs and young consumers. The company's investment in content marketing is resolute and continuous, and at present, Olay small white bottles have occupied the minds of whitening essence consumers.
3. Growth mode of large single products: micro-innovation drives series upgrades, expands categories and expands product boundaries
3.1. Large items need to be upgraded through continuous micro-innovation and continue to attract customers
The continuous micro-innovation of ingredients + continuous marketing delivery are the core engines for maintaining the enduring of large items. Under the premise that the efficacy of the core ingredients can withstand the test of the market: 1) The ingredients continue to be micro-innovated to compound the ingredients and maintain the popularity of large items. For example, the fifth generation promotes the synchronous repair effect after adding raw material tripeptides, and the sixth generation uses yeast extract to replace tripeptide + echinacea extract to achieve "genetic clock synchronous repair technology + cell generation purification technology". 2) Continuous marketing investment, to a certain extent, to achieve resource tilt. For example, brand spokespersons focus on promoting large single product series, and even give large single product series the right to independently choose the promotion ambassador to cooperate.
3.2. Large items have strong ductility and the ability to expand categories
The renewal of large single products themselves is mainly to maintain the heat, and the expansion of categories is an important driving force for the continuous revenue generation of large single product series. After the small brown bottle series has stabilized the mind of the high-end anti-aging essence, it has the potential to expand the category: 1) In 2011, the first generation of small brown bottle eye essence was launched, and the first generation of small brown bottle eye cream was launched in 2013. In 2017, the small brown bottle eye cream series achieved rapid growth in the Asia-Pacific region, driving the growth rate of the global small palm bottle series to nearly 50% and setting a record in recent years. 2) In 2015, the launch of the small brown bottle double mask was also a great success, and won the title of "Iron Man" mask.
Large items can drive sales of other products in the form of sets of boxes and increase the overall revenue of the brand. For example, after 2018, the small brown bottle series used the form of sleeve or "CP", which led to the growth of other series such as Perfectionist/Micro Essence to a certain extent. According to magic mirror data, the 2019-2021 Singles Day contains a small brown bottle series/Perfectionist series/Micro Essence series of packages of GMV of 1.57/2.42/295 million yuan respectively, accounting for 14.8%/14.9%/15.9% of Each Estée Lauder's overall period. (Source: Future Think Tank)
4. Review the importance of product and marketing innovation to cosmetics
4.1. Mass positioning does not hinder the emergence of large items, but continuous innovation is the key to maintaining the vitality of large items
4.1.1 Product side: Positioning the public ≠ unchanged, and large items also need to continue to innovate to attract consumers
In the early days, Dabao successfully stood out through the strategy of differentiated positioning + large single products, but the product side failed to continue to innovate, resulting in a squeeze on market share. In 1986, the Dabao brand was formally established, and in 1990, two important events occurred in Dabao: 1) officially positioned as "cosmetics affordable to the people", the skin care market of the card position public and blue-collar workers, and competed misplaced with overseas big brands and well-known domestic brands represented by Shanghai Jahwa; 2) launched a large single product SOD honey. Dabao SOD honey formed a product force by virtue of the antioxidant effect of the core ingredient "superoxide dismutase", and gradually stood out in the moisturizer market at that time, and its sales once accounted for 80% of Dabao's overall sales. The success of the differentiation + large single product strategy has made Dabao stand out, and its share in China's cosmetics market in 2003 also reached 17.8%. However, with the continuous deepening of the sinking strategy of overseas big brands and the improvement of consumption power brought about by China's accession to the WTO in 2000, consumers have put forward higher requirements for skin care products. After the launch of Dabao SOD honey, there is no product upgrade and innovation, such as SOD honey has antioxidant effect, but its stability is weak and it is easy to lose activity, so the ingredients and formulas are unchanged, so the relative competitiveness of Dabao SOD honey gradually declines.
In the early days, the proportion of large items in Dabao was too high and the profit margin was low, and the brand failed to smoothly expand into other categories. An excellent large single product can usually grow into a "cash cow" product after the initial investment, that is, when the income maintains steady growth, it can continue to contribute profits to the brand as a whole, mainly through the scale effect of the marketing end (higher repurchase rate) and the research and development end (the core components are unchanged, grasp the rhythm of micro-innovation), and the Dabao brand faces two major problems: 1) The proportion of large single SOD honey is too high. Large items are the "dinghai god needle" of brand growth, but if the proportion of large items is too high, it means that the brand product innovation ability is insufficient, and the big single products once accounted for more than 80% of the brand; 2) the price of large single products SOD honey is low, and the profit margin is also low. In order to maintain brand positioning and seize market share, Dabao's large single product SOD honey has always maintained a low price, but this positioning makes its profit margin low. At the same time, the company's cleansers, moisturizers, etc. failed to attract consumers, resulting in the company facing pressure on revenue and profit growth.
4.1.2 Marketing: Relying on CCTV to quickly build awareness, but failing to continue to attract new consumers
Dabao relied on Yangguang to quickly gain popularity in the early days, but failed to continue to attract consumers in the follow-up. In 1993, Dabao placed advertisements on CCTV, relying on a series of high-frequency word brainwashing broadcasts + "Dabao tomorrow, Dabao every day to see" and other catchy advertising words quickly gained popularity, in the sinking market, blue-collar crowd quickly became famous, and even once became a "national- level" skin care brand. According to Nielsen data, Dabao has always maintained a high level of advertising spending, and in 2001, it maintained the first place in advertising spending. However, due to the fact that Dabao's positioning in terms of age and gender is too "large and complete", it is more inclined to do business that "grows up in a generation" in terms of strategy, rather than "continuing to do business of a certain age". Its reaction is reflected in the advertising strategy to cater to the sinking market of the year Blue-collar crowds overemphasize the cost performance, such as advertising slogans "If you want to have a good skin, use Dabao sooner or later", "Dabao Tomorrow see you!" See you every day! ”
Aggravation leads to the loss of existing customers, and the failure to innovate in marketing leads to the disadvantage of expanding new customers. In 2003, the pace of overseas big-name marketing and sinking began: 1) In terms of sinking, L'Oréal acquired Little Nurse in 2003 and obtained its 280,000+ sales outlets nationwide, helping the brand enter the 2-3 line market. For example, Procter & Gamble and Unilever have also proposed sinking strategies in this period of time; 2) In terms of marketing, overseas brands have increased their bidding efforts to seize core resources. In 2003, Procter & Gamble insisted on running 30 seconds of medium-length TV commercials, and in 2004/2005, it won the CCTV king with 176/385 million yuan, continuously improving brand awareness and seizing customer sources. Overseas big names and well-known domestic brands have intensified their competitiveness, and Dabao has not been able to successfully continue to develop new customers in terms of marketing strategy and innovation.
4.2, large items to shape the brand image, Dabao recovery obstacles and long
Large items have a decisive impact on brand image building, and Dabao's recovery is obstructed and long. Johnson & Johnson completed the acquisition of Dabao in 2008, and in recent years, it has broadened and innovated its product line with Dabao, such as the launch of the higher price of the hydrocoagulation moisturizing/collection whitening series in 2014/2016, and the launch of the brand's first "Little Red Riding Hood" serum priced at more than 100 yuan in 2018. However, large items have a decisive impact on the image of the brand, from the Tmall flagship store, the sales of SOD honey and vitamin e milk with lower unit prices are still much higher than those of its serums, softeners, etc. Dabao recovery is obstructed and long.
5. Analysis of domestic cosmetics companies: the era of explosive products is coming, and the brand has increased the strategy of large single products
The rapid development of content social platforms such as Douyin and Xiaohongshu, as well as the rapid rise of the component party, have brought about major changes in the industry: on the one hand, under the content social trend, beauty KOLs have appeared in large numbers, driving the dispersion of traffic. Since consumers' attention is more easily dispersed, it is the best solution for brands to attract the attention of multi-platform consumers through explosive products, and the strategy of large single products is imperative; on the other hand, the rise of component parties has tested the brand's research and development strength and the ability of technology dissemination. Some domestic brands keep up with industry trends, and brand power has been continuously improved.
5.1, Bethany: large single product strategy + technology communication channels are perfect, to create a domestic dermatological grade skin care product leader
5.1.1 Construct a doctor→ KOL→ consumers to improve the channels of scientific and technological communication, and enhance brand influence
Winona started from medical research and co-creation, and established a strong brand power by building a "doctor→ KOL→ consumer" technology communication channel. In front of the products in 2008, the company has laid out the hospital channels and doctor resources in advance: 1) Before the market, Winona cooperated with well-known laboratories such as the Kunming Institute of Botany of the Chinese Academy of Sciences to develop and develop, and was clinically verified by 16 well-known domestic hospitals such as the Chinese Association of Skin Physicians and the First Hospital of Peking University; 3) there was a dedicated sales team to expand hospital channels; 4) continuous professional academic promotion and obtained a group of doctor fans. For example, in 2015, Winona became the first Chinese brand to appear at the World Dermatology Congress, and in 2019, it appeared again, showing the strength of domestic products. At present, the company has basically cooperated with dermatologists in top three hospitals nationwide to build a barrier to brand professionalism.
Doctor KOL appeared to enhance winona brand influence, and other professional KOL recommendations helped the brand to break the circle. Winona not only realizes "medical research co-creation" with doctors in research and development and product end, but also uses these professional KOL endorsements to establish brand power on the marketing side. As a professional KOL, doctors have a great influence on consumer decision-making, and because this professional population has rich clinical experience and communication experience with patients, it is easier for consumers to understand and impress consumers when disseminating brand technology. The continuous recommendation of the doctor's KOL is also expected to lead to the recommendation of some professional KOLs (such as departing technicians of international cosmetics groups, or with a strong scientific and engineering background, etc.).
5.1.2 Large single special cream occupies the user's mind, and "sensitive +" continues to expand the category and function
The company's large single special cream has occupied the "sensitive muscle first aid" mentality, category expansion + function upgrade continues to expand the circle. 2017-2020H1 Company's ace product Shu Min Moisturizing Special Cream accounted for 18.4%/17.8%/18.4%/13.6% of the revenue, and the proportion of the driving whole Comfort Series reached 39.2%/39.1%/38.1%/32.1%. In recent years, while continuously consolidating the status of the ace single product of special cream, the company has also continued to break the circle through category expansion + function upgrade: 1) in terms of category expansion, the company has expanded from special cream to essence, cream, sunscreen, mask, etc.; 2) in terms of functional upgrade, the company has gradually expanded from soothing repair to hydration and moisturizing, desalising acne marks, oil control and so on.
5.1.3 The sub-brand Winona Baby has a strong synergy with the main brand, and the potential development space in the future is large
The potential scale of China's baby and child care market is large, and in recent years, categories such as lotion creams have attracted much attention. According to Euromonitor data, in 2020, the scale of infant and child (0-6 years old) care in China will reach 28.4 billion yuan, and the CAGR will reach 13.6% in the past five years. In 2020, China's 0-14-year-old population accounted for 17.9% (an increase of 1.1pct year-on-year), the future baby and child care market growth space is vast, according to Euromonitor is expected to exceed 50 billion yuan by 2025. Subdivision categories look at skin care products and toiletries as the core category, of which moisturizer, sunscreen, bath gel and other growth rates are relatively stable, while children's lotions /creams ushered in rapid growth in 2020, becoming a segment track that has attracted much attention.
The online concentration of infant and child care brands is low, and the tightening of supervision is expected to clear out non-compliant small brands. Maternal and infant e-commerce has achieved rapid development in 2013-2016, but the overall infant care line is still at a low level, with only 25%/36% of the online CR5/10 in 2020, of which the overall retail sales of the red baby elephant in 2019 reached 1 billion. From the regulatory point of view, in October 2021, the State Food and Drug Administration issued the "Provisions on the Supervision and Administration of Children's Cosmetics", which clarified the definition of children's cosmetics and made specific requirements for their claims, labels, formula designs, etc., and also designed an exclusive logo "Little Golden Shield" in early December of the same year, highlighting the importance the state attaches to children's cosmetics.
Safety is the most important factor for consumers, and Winona Baby is expected to form a strong synergy with the main brand. Maternal and infant care is a typical industry that is separated from the user and the purchaser, and the user can only passively accept and it is difficult to directly and clearly express the quality of the product, so the purchaser needs to establish a strong trust in the brand when making decisions. Since the users are infants and young children, the recommendation of experts (especially doctors KOLs) and the safety of the ingredient side are the most important points for buyers. According to Grapefruit data, 63.7%/56.5% of consumers are influenced by pediatricians/babycare specialists when making purchase decisions, while 93.4% of consumers pay more attention to product safety.
5.2, Polaria: the essence of recognition highlights the strength of research and development, and the strategy of large items is at the right time
5.2.1 Based on the organizational structure and the efficacy technology as the core, Polaria has accumulated a lot of money in the research and development end
The iterative upgrading of the organizational structure and product development process keeps pace with the times, which is the basis for the continuous improvement of the R&D level of enterprises. With the decentralization of traffic and marketing, all departments of cosmetics companies need to work together to understand consumer needs, develop explosive products and even large items. The company established a R&D innovation center in 2012, and under the leadership of a group of experts with international vision, its organizational structure and product development process are constantly advancing with the times:
1) Purposeful cooperation with overseas enterprises. In November 2019, the company partnered with LipoTrue, a laboratory owned by Spanish anti-aging skincare brand SingulaDerm Partners, to lay the groundwork for the subsequent addition of 20% hexapeptides to its products. In January 2021, the company cooperated with Asland to carry out in-depth cooperation in efficacy evaluation; 2) focus on the innovation of research and development. In addition to the development of fashion products, a considerable part of the assessment of the company's full-time R&D personnel is also to assess its pioneering products, including the contribution of the master and apprentice; 3) the organizational structure is constantly iterative, and the R&D personnel also have market insight and product planning capabilities. The company's innovation and research and development center has a special "forward-looking technology research department" and a "product concept research and development department", which appropriately breaks down the functional barriers between various departments to form a strong "co-creation mechanism" and cultivates talents with cross-border composite capabilities. (Source: Future Think Tank)
Good efficacy and technology are the basis of explosive products and even large items, and Polaria rubies and double antibody essences have strong product strength. In 2017-2018, the company began to promote the essence category, and after inspecting various anti-wrinkle raw materials, it chose A alcohol and hexapeptide. 1) Select the main line of A alcohol:
(1) The effectiveness of vitamin A alcohol has an official endorsement. Vitamin A alcohol is the only ingredient certified by the FDA to have anti-static lines, but due to the high difficulty of application, the big brand has not widely used the ingredient; (2) there are not many essence products with A alcohol as the core on the market, and the more famous one is the A alcohol late cream of Lu deqing, and the company has finally developed "supramolecular vitamin A alcohol" after more than a year of research and applied for domestic and foreign patents; 2) The main line of hexapeptides is selected: A alcohol has the ability to resist static lines, and the high concentration of hexapeptides has the ability to resist dynamic lines, and A Alcohols form good synergy. The company has developed a detection method for the content of hexapeptides for Ruby Essence to prove its content, highlighting the company's importance to product strength, and laying a solid foundation for the company's subsequent scientific and technological dissemination through content marketing. Driven by technology and market demand, Ruby Essence has shown its product strength that does not lose to overseas big brands, and currently ranks second in the list of Tmall anti-aging old essences, and its monthly sales are only lower than Estée Lauder's large single product "Small Brown Bottle".
5.2.2 Closely follow the "morning C evening A" skin care concept, and enhance brand reputation through content marketing
The company has always attached importance to content marketing, closely following the "morning C evening A" skin care concept. With the rise of the ingredient party + medical beauty penetration rate continues to increase, some consumers began to pursue more intense and faster skin care products, and in 2019, the "morning C and late A" (that is, the use of VC in the morning / the use of vitamin A with skin care in the evening) skin care concept has risen. At the beginning of 2020, the company has successively launched three blockbuster new source power essence + ruby essence + double anti-refinement, corresponding to "skin repair" + "late A" + "early C", and the good product force has been widely spontaneously disseminated under the rising trend of the "early C and late A" skin care concept. At present, the number of notes of "morning C and late A" in The little red book exceeds 80,000, and the company also closely follows this trend and emphasizes the "morning C and late A" combination in early 2021, and the 2021 double eleven combination GMV exceeds 200 million / accounting for 24%.
The self-built team explores new channels + continuous content marketing to help polaria continue to improve its brand power. Polaris started from the CS channel, and since then has continued to expand channels such as Tao, Douyin, and Live broadcasting through self-built teams, reflecting the company's strong willingness to expand its customer base and seize the interests and needs of young consumers: 1) Companies usually build their own teams earlier to adapt to new channels. In 2012, the company established an e-commerce division to enter the Tao Department, and in 2018, it joined hands with the "Blood Street Dance Troupe" dancers to shoot the vibrato "shake bubble dance", laying a customer base for the 2019 bubble mask vibrato fire; 2) The company adheres to cultural construction, content marketing and other aspects, in order to accumulate thick and thin. For example, the company signed a cooperation with UN Women in 2013 and launched a women's umbrella program in 2015, so the 2021 3.8 "Gender Equality" short film has received a lot of exposure.
5.2.3 Continue to try to expand the category, and the large single product strategy is expected to drive the brand's future revenue growth
Under the strategy of large single products, the company has driven continuous revenue growth through product upgrades + category expansion. After ruby and double anti essence became explosive products in 2020, the company achieved product upgrades and category expansion in 2021: 1) In terms of product upgrades, it was upgraded to double antibody 2.0/ruby 2.0 in April/May 2021 to achieve further upgrading of technology. For example, Ruby Essence replaced Hexapeptide-8 with Hexapeptide-1, which has confirmed its more pathways and higher anti-wrinkle efficiency through international certification; 2) In terms of category expansion, in July/October 2020, the company launched a double anti-night light eye cream/ruby cream, and in June/August 2021, it launched a small gyroscope eye cream/double anti-mask. By 2021Q3, the company's large single product series accounted for 21% of the main brand revenue of Polaria, and the logic of product iteration upgrade + continuous expansion of categories under the large single product strategy is continuing to be fulfilled.
5.3. Bloomage Bio: The brand matrix is gradually maturing, and the four-wheel drive is just in time
5.3, Bloomage Biology: the brand matrix is gradually maturing, the four-wheel drive is at the right time, the brand positioning is gradually clear, the expense ratio is expected to decline marginally, and the brand matrix is becoming more and more mature. At present, the positioning of the company's four major cosmetics brands is gradually becoming clear:
1) Runbaiyan positioned as the first brand of hyaluronic acid, achieving revenue of 780 million yuan / +163% in 2021Q1-3. As the company's earliest brand to break the circle, Runbaiyan has a high degree of reputation and search rate in the public domain. Ingredients Duanrun Baiyan continues to emphasize the Group's core hyaluronic acid technology, such as the new products launched in October 2021 using INFIHA-HYDRA technology to achieve 800Da hyaluronic acid dermal hydration, and continuously strengthen the mind of the first brand of hyaluronic acid;
2) Quadi positioning anti-aging, 2021Q1-3 to achieve revenue of 480 million / +160%. The core ingredient of Kwadi is CT50, and the core ingredient compounding shows the advantages of the brand in the formula, and better supports the high-end positioning of domestic products. In 2021, the Quadi category will be expanded from the secondary throw to the cream, eye mask, etc., such as the magic mirror data shows that the GMV of the Quadi 5D light age cream during the 2021 Double Eleven period exceeds 100 million yuan, and the category and Runbaiyan are gradually differentiated;
3) Mibel is scheduled for sensitive skin and achieves revenue of 245 million / +119% in 2021Q1-3. The ingredient end added the company's patented ingredient "Xi Minxiu", the current blue bandage mask, essence water for The Mibel volume of explosive products;
4) BM Muscle Activity Positioning Activity Control Master, 2021Q1-3 achieved revenue of 191 million / +143%. BM draws on the breakthrough of Runbaiyan explosive products and the follow-up continuation of the same series of expanding categories, first creating explosive brown rice muscle bottom essence water and subsequently expanding to muscle bottom essence milk and other categories. The positioning of each brand is gradually clear, the explosive products are gradually reflected, and the expense rate is also better controlled: 2021Q3 The cost rate of Quadi has entered a downward channel, the cost rate of Mibel and BM muscle activity has dropped by about 10pct, the total expense rate of the four major brands is about 50%, and the brand matrix is becoming more and more mature.
Through the underlying technology + strong industrial transformation ability, the company is expected to enter the positive cycle of "innovation → application→ profitability → innovation", and four-wheel drive is timely. At present, the company's four major sectors: 1) the raw materials sector shows the company's technical depth, Q3 cosmetic raw materials growth rate of more than 60%, mainly due to the continuous expansion of the scope of application. Based on the company's hyaluronic acid raw materials, the company has expanded to other active substances, such as Gaba in 2021Q1-3 has also achieved rapid growth; 2) medical terminals show the company's technological height. In terms of medical aesthetic business, the total signed amount of gemini needles after listing reached 90 million, and the radiation terminal institutions reached 1,000; 3) The cosmetics and functional food business showed the breadth of the company's technical applicability. The cosmetics business is growing rapidly, and the functional food business is also steadily advancing.
5.4, Lushang development: backed by the technology of large factories, cosmetics business prospects can be expected
Backed by the strength of Freda technology, Yilian selects categories and relies on big explosive products to break through. Yilian was founded in 2003 by Ling Peixue, the "father of Hyaluronic Acid in China", and realized the patent "Silanized Hyaluronic Acid" in 2015, forming the core component of the underlying layer of the group. In 2016, Yilian entered the online and achieved rapid development after 2019, mainly due to: 1) Relying on the core technical advantages of the group, yilian quickly seized the market and occupied the minds of consumers through subdivision categories. Yilian launched hyaluronic acid spray in 2017, the spray is mainly hydrating and moisturizing effect, and Freda Group hyaluronic acid has a certain degree of popularity, and the core technology and category fit high. In 2018, Yilian Spray achieved 18 million sales, ranking first in the spray category in 2020, and currently spray accounts for about 40% of the brand's overall revenue; 2) Marketing methods keep pace with the times and continue to attract young consumers. Yilian continues to deliver and convert on platforms such as Douyin and Station B, and continues to attract young consumers, and the current main customer base is young people aged 23-27. 2021Q1-3 Yilian achieved revenue of 427 million yuan.
Dr. Yao'er card slot skin micro-ecological track, harvest the industry development dividend. Founded in 2018, Dr. Yauer was an early entrapment of the Skin Microecological Track. In July 2019, Lancôme upgraded its star item small black bottle, which led to an increase in the popularity of the concept of skin microecology, and Dr. Yaoer, as the brand that laid out the track earlier, won a certain first-mover advantage. 2021Q1-3 Dr. Yaoer's cumulative revenue reached 488 million yuan, and it is expected that Dr. Yaoer will continue to focus on the layout of high-end series products in the future.
The multi-brand matrix is steadily advancing, and it is expected to be empowered after the introduction of war investment. In addition to Yilian and Dr. Yier, the company also has the following brands: 1) Shanyan was founded in 2003, focusing on "skin customization" life beauty, and has opened more than 100 stores nationwide; 2) Iparhan is a spice enterprise, and from January to June 2021, Iparhan Company completed sales revenue of nearly 20 million yuan / an increase of 37% year-on-year; 3) Yirun brand focuses on the repair of weak and sensitive skin. In 2021, we will continue to strengthen cooperation with dealers and use dealer capabilities to expand sales scale; 4) UMT brand was launched in early 2020, and the product is positioned as "exquisite base makeup" and takes the road of niche high quality. In November 2021, the company announced the introduction of strategic investors such as Tencent and OneNet, which is expected to enhance its online marketing and operational strength.
(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）
Featured report source: [Future Think Tank]. Future Think Tank - Official website