Hua Xizi said ＂not expensive＂ and consumers said ＂not worth it＂! Awkward high-end beauty cosmetics made in China

Due to the "What’s Expensive" incident in Li Jiaqi, Huaxizi, a domestic beauty brand, has been repeatedly pushed to hot search in recent days due to pricing problems, and even some netizens have calculated that its price per gram is more expensive than gold. For a long time, domestic beauty cosmetics have always been the representative of "flat replacement" in the hearts of consumers because of their low price or even low price. In recent years, a number of domestic beauty brands have been transformed and upgraded to the middle and high end, but the controversy about their pricing and marketing promotion has also expanded, and the "replacement" in consumer cognition has deviated from the middle and high end image established by the brand. In this context, how to boost consumers’ confidence in domestic beauty brands? How can domestic beauty brands achieve high-quality development more steadily?

Concern 1:

Can the model of "light research and development and heavy marketing" be changed?

The fuse of this "Hua Xizi" crisis is that consumers think that the eyebrow pencil of 79 yuan sold in the live broadcast room is too expensive, but it is "choked" by Li Jiaqi. It seems that consumers are dissatisfied with the words of the head anchor, which is essentially caused by consumers’ cognition that Hua Xizi is not worth the price as a domestic beauty brand. A few days after the incident fermented, Hua Xizi bluntly wanted to be a "high-end brand going global" in his official Weibo, but a large number of netizens left messages saying that "it is not necessary to sell high prices to become a high-end brand".

In recent years, the domestic beauty products represented by Hua Xizi have been transforming and upgrading to the high-end brand image, and their prices have long been out of the level of "parity", and even the prices of some single products are almost the same as those of international beauty brands. Take Hua Xizi as an example, the earliest concentric lock lipstick is priced at 219 yuan; The air honey powder that was ignited by Li Jiaqi has risen from the initial 149 yuan to 169 yuan; The price of this eye shadow tray, which is famous for its exquisite packaging, reached 259 yuan. While the price is rising, domestic beauty brands have been criticized by the outside world for "emphasizing marketing and neglecting research and development", and consumers question that they are paying for the high marketing cost.

Southern Reporter previously compared the annual performance of Betani, Polaiya and Huaxi Bio, the three head companies of domestic beauty and skin care, and found that the sales expenses including marketing and promotion were basically maintained at the level of 2 billion to 3 billion yuan, while the total revenue of these three companies was around 5 billion to 6 billion yuan. It can be seen that the sales expenses accounted for 40% and above, and the proportion was not low. At the same time, the proportion of R&D expenses still stays in single digits, with Betani and Huaxi Bio accounting for 5% and 6% respectively, and Polaiya’s R&D expenses accounting for only 2%. In the perfect diary that quickly occupied the market with various marketing methods, the research and development expenses of its parent company Yixian E-commerce were still hovering between 2% and 3%.

Then, why do domestic beauty brands especially rely on marketing promotion to build brand voice? Yu Hua, dean of the Amphibian Brand Research Institute, told Southern Reporter that the entry threshold for the domestic beauty industry is not high, so there are many competitors in the industry. It is the quickest way to stand out from the crowd by marketing. "This batch of special new domestic beauty products basically started around 2016-2017. Until now, they are still in the stage of shaping the brand and competing with competitors. How can you stop when competing products are doing marketing?" In addition, the rise of these new domestic beauty brands is mostly supported by capital, and the ultimate goal of capital is to promote the listing of enterprises and achieve financial exit. Yu Hua believes: "If you want to promote listing, capital will require brands to maintain digital growth and maintain the growth of performance scale, then marketing is inevitable, because capital will not stop you."

Concern 2:

Can the channel model that relies too much on the head anchor be changed?

In the industry debate, the deeper reason of Hua Xizi’s crisis is attributed to the channel layout of "excessive dependence on Li Jiaqi". When Hua Xizi was the most popular in 2019, Tmall’s data showed that the live broadcast rooms in Li Jiaqi contributed 80% of the total traffic obtained by Hua Xizi, and 60% of the transaction amount came from the live broadcast rooms in Li Jiaqi. While the public opinion of this eyebrow pencil incident was fermenting, many media reported that Hua Xizi’s rebate to Li Jiaqi could be as high as 60%-80%. Although Hua Xizi later denied the proportion of rumors to Southern Reporter, and emphasized that the cooperation rebate ratio between Hua Xizi and Li Jiaqi was the industry average, some practitioners in the beauty live e-commerce industry told Southern Reporter that Hua Xizi’s commission to the head anchor in Taobao was about 75%.

As we all know, since the rise of live broadcast with goods, the live broadcast room of the head anchor has become the channel that can best achieve the integration of quality and efficiency, and domestic beauty brands are particularly dependent on new e-commerce channels such as live broadcast. "Most brands that cooperate with Li Jiaqi’s head anchor don’t make money. At this time, Li Jiaqi is not a single channel, but also can play a promotional role, thus driving the brand to sell in other channels. This is the strategy of most domestic beauty brands. After all, the celebrity spokespersons who used to spend a lot of money only had propaganda effect but could not move sales. But a big anchor like Li Jiaqi can not only achieve product promotion, but also bring sales and realize the integration of product and effect, "Yu Hua told Southern Reporter.

Indeed, in recent years, new e-commerce channels represented by live broadcasts and short videos have won the favor of domestic beauty brands, and the extra investment in new channels has also made their marketing "gameplay" show a new trend. Zhang Yi, chief analyst of Ai Media Consulting, said that the rise of the live broadcast platform is a huge opportunity for the beauty industry, because the beauty products themselves are very suitable to show their efficacy in the live broadcast room, and the cooperation between the brand and the head anchor makes this scene that can interact with the audience instantly more flexible and more direct to the promotion of brand awareness.

In addition, domestic beauty cosmetics are increasingly relying on social media platforms such as Little Red Book, Weibo, Tik Tok and Aauto Quicker, and they have even become the mainstream channels to get direct feedback from consumers and interact with consumers on new products. Therefore, in the process of moving towards high-end, domestic beauty brands began to use new channels to provide consumers with personalized customized services, and design products according to consumers’ needs and preferences to solve the vertical needs of different consumer groups. Even some insiders believe that domestic beauty brands often need more than the performance brought by new channels, but the digital assets of users behind them, so as to better guide brand planning and marketing promotion. This also explains from another angle why many domestic brands are increasingly relying on new e-commerce channels represented by live broadcast.

Concern 3:

Will the Huaxizi incident affect the high-end beauty of domestic products?

In Yuhua’s view, a number of domestic beauty brands will not give up their cooperation with the head anchor because of Li Jiaqi’s remarks that hurt Hua Xizi. After all, the benefits of such cooperation are too attractive to brands, but at the same time, brands may also be soberly aware that when their "flat replacement" label has not been removed, excessive reliance on live broadcast will also bring some resistance to the brand’s transformation to the middle and high end.

Yu Hua told Southern Reporter: "Brand equity contains brand association, which means that you are what you are when you are with a brand, just like you will never see Evian mineral water in a cheap supermarket. In the past, brand packaging and pricing directly affected brand association, but now the choice of channels has become an invisible brand association factor. Li Jiaqi, as the head anchor, will sell many other low-priced goods in his live broadcast room, and consumers also hope to buy relatively low-priced and cost-effective goods when they enter his live broadcast room. Sales volume is the most important thing for the anchor. He doesn’t need to be responsible for the brand image of the brand in his live broadcast room. Therefore, when choosing this channel, it actually means that he can’t contribute to the high-end brand image, which is the inherent defect of the channel. " In his view, domestic beauty brands need to be clear that they have to abandon some of the original consumer groups and even sales channels to survive the "pain" period when they are undergoing mid-to-high-end transformation and upgrading. "Now the price of domestic beauty products is controversial because it is in a relatively embarrassing positioning stage. Ordinary consumers in the live broadcast room feel more and more expensive, and consumers who really consume high-end beauty products feel that they are not good enough."

Since we can’t get rid of the dependence on the head anchor and KOL in marketing promotion for the time being, how to do a good job in brand reputation management and reduce the brand image risks that the head anchor and KOL may bring has become the key issue for domestic beauty brands to revive consumer confidence and rebuild their brand image.

Zhang Yi believes that domestic beauty brands should attach importance to building a complete brand reputation management mechanism, especially when social media is highly developed. While monitoring the comments and feedback from these platforms, there should also be mechanisms for responding and solving problems, so that they can respond in time when problems arise, and even have corresponding crisis management teams to form emergency plans and aftercare management when crisis public relations occurs, so as to avoid damage to the brand image to the greatest extent. But in the final analysis, we should pay attention to product quality and service, so as to improve consumers’ loyalty to the brand and establish a certain moat of brand image. Yu Hua also believes that it is impossible for brands to "stop eating because of choking" and never cooperate with third-party anchors or KOL again, so they should make a risk pre-plan for the risks that may be brought by them. At the same time, we should pay attention to the construction of brand association in peacetime, "point-to-point control of all nodes that consumers may reach, such as packaging, pricing, product quality, sales channels, publicity and promotion, including possible anchors and spokespersons. This is actually a good management of the brand image, and it is also conducive to the transformation of domestic beauty to the middle and high end."

Southern Metropolis Daily (nddaily), N video reports

Produced by Nandu Political and Business News and Data Department and Shanghai News Department.

Written by Southern Reporter Xu Bingqian