From the initial exploratory research, the participants echoed a similar comment; that is SK-II products are effective. As such, the team is interested to find out the credibility of this statement among consumers so as to cater suitable marketing program in the later parts of this project. The team first establish the importance consumers placed on various attributes of premium skincare products. SK-II’s performance along these attributes is evaluated to obtain a statistical assessment of its product performance.
BRAND PERFORMANCE
ANALYSIS
Hypothesis 3: People perceived SK-II products to be more effective compared to other brands.
Table 5: Importance ratings on attributes of premium skincare products measured based on a 7 point scale
SK-II'S PERFORMANCE
The results from Table 5 have demonstrated that effectiveness (6.81) and quality (6.69) play a significant role in consumers’ decision criteria when purchasing premium skincare products. Positive brand reputation was ranked the third most important while price, accessibility of the products and packaging are relatively less important in their decision process.
PERFORMANCE COMPARISON
RESONANCE
FEELINGS
IMAGERY
SALIENCE
PERFORMANCE
JUDGMENTS
Next, respondents were asked to rate their perceived performance of SK-II products along the same dimension.
ANALYSIS
IMPLICATIONS FOR SK-II:
All the performance ratings of SK-II such as brand reputation, quality, accessibility and packaging are relatively high as well except for price. SK-II is perceived to be too expensive for its perceived value. As with many other premium products, we believe a higher perceived price is not too much of an issue for SK-II as higher price often leads to a higher perceived quality as well. Hence, this can be why Madam and Gentlemen users are willing to pay for the products.
However, Missus users have low willingness to pay for the products. Given their usual brand switching and variety seeking habits as seen from our qualitative research, they can switch to cheaper products easily and may even chance upon cheaper products that are as effective as SK-II for their skin. This is a threat to SK-II especially if they are looking to do market penetration and increase purchase from the Missus segment.
Furthermore, non-users are quite reluctant to pay for their products. This will translate to higher inertia to try the products which is a major concern for SK-II because non-users will not discover the high performance of SK-II products.
Hence, more needs to be done in order to retain the current users and to appeal to the non-users to try SK-II product. This can be done through increasing the perceived value of SK-II for all segments and for both users and non- users.
After satisfying the functional aspects of quality and effectiveness for users, SK-II can work on the emotional aspects to increase perceived value for the current users and therefore willingness to pay.
There may be insufficient product information or marketing campaigns that addresses the concerns non-users and display how SK-II products add value for them. SK-II needs to increase the perceived value and benefits of their non-users to encourage them to be more willing to buy and try it out.
As shown in Table 6, the perceived brand reputation leads SK-II’s brand performance by a large margin while quality, accessibility and effectiveness came in as the runner ups.
Table 6: Performance of SK-II on the dimensions
Table 7: Performance of Lancome on the dimensions
Relative to SK-II, Lancome performed closer to consumers’ decision criteria for the dimensions of Brand Reputation and Quality. Nevertheless, the effectiveness of its products received mixed emotions and is ranked low on the scale. In addition, similar perception can also be found in its product price dimension.
Table 8: Performance of Estee Lauder on the dimensions
Estee Lauder achieved the closest to the preferred dimension rated by consumers in Table 5; brand reputation, effectiveness and quality all perceived as the top three factors of its brand performance. Nonetheless, consumers indicated similar uncertainty over the performance of quality and price, which is also a common issue with SK-II and Lancome.
Even though SK-II is seen to have strong perceived effectiveness, the perceived effectiveness of competing brands (Lancome and Estee Lauder) are rated close to that of SK-II.
Apart from the survey, the users from our 7-day user diary also stated that they continue to use SK-II products are mainly due to the effectiveness of the products.
This proves our hypothesis 3 that people perceived SK-II products to be more effective than other brands.
A point to note is that even though Estee Lauder achieved the closest performance along the consumer preferred dimensions, its market share in Singapore is much lower than SK-II (as shown in the business strategy section in Assignment 1). As such, consumers’ sentiments have to be taken with discretion.
Most of them cited effectiveness as the number one reason for their loyalty. Thus, there is a good indication of the effectiveness of SK-II products but as exhibited by the above findings, more communications are needed to convey the effectiveness to consumers.
ANALYSIS
CONTINUOUS USAGE OF SK-II
Next, respondents specifically the users were probe on the reasons for choosing to continue using SK-II products. The top reasons are shown in Table 9.
Table 9: Top reasons stated for the continuous usage of SK-II
Table 10: Reasons stated for the discontinued use of SK-II
Respondents specifically the users were probe on the reasons discontinuing SK-II products. Around 36% decided not to continue with their usage of SK-II products, citing reasons mostly related to SK-II not suitable for sensitive skins and too expensive for them as seen in Table 10.
AVOIDANCE OF CERTAIN TARGET MARKETS FOR SK-II
SK-II may not be suitable for users with sensitive skin since it is the top reason for people to stop using. Thus, knowing this, SK-II can avoid target this group of people or develop products that could cater to this group of people.
ANALYSIS
From our focus group, respondents mentioned that SK-II products are quite expensive. As such, the team is interested to find out whether the price of SK-II products is an important factor in affecting the purchase decisions of consumers.
HIGH PERCEIVED PRICE
According to Table 5, the mean importance rating of price is 5.06. This shows that many respondents indicate that price is only somewhat important in affecting their purchase decisions when it comes to premium skincare. As mentioned earlier, they rated effectiveness and quality as the two most important attributes. Hence, it can be inferred that if the products are effective and of excellent quality, the price may not be that important to consumers after all.
Consumers perceived that SK-II is more expensive compared to its competitors. From Table 6, it can be seen that price for SK-II has the lowest average of 5.98 out of 7 as compared to the rest of the attributes. Using Table 7 and 8 to compare perceived prices of Lancome and Estee Lauder, perceived price of SK-II still has the lowest of 5.98 compared to 6.24 and 6.4 respectively. This means that SK-II has a higher perceived price than the other two competitors.
This proves our hypothesis 4 that people do perceive SK-II products are more expensive compared to other brands.
Further analysis on the prices of SK-II products can be seen from the willingness to pay for the three segments.
ANALYSIS
Table 11: Willingness to pay for Madam, Missus and Gentlemen segments
WILLINGNESS TO PAY
Madam
For the current SK-II users of Madam, their willingness to pay for products at current prices is fairly neutral. Out of the maximum value of 10, their average willingness to pay is at 7.47 (Table 11). As seen from Table 10, some users gave the reason for SK-II being too expensive hence they discontinued its use.
As for non-users, we tested their willingness to pay for a standard 75ml SK-II Facial Treatment Essence at $99. Compared to non-users, the users are more willing to pay. For the non-users, they are less willing to pay for the SK-II products even if it is the best seller and the highly raved SK-II product.
Missus
As for the current users of Missus, their willingness to pay is fairly low at 5.2 compared to users of the other two segments. This is surprising because given that users have tried and know the effectiveness and quality of SK-II products, they are still less willing to pay.
Even for the non-users, they are also less willing to pay for the SK-II product.
Gentlemen
The current users of Gentlemen have the highest willingness to pay out of the three segments with an average of 8. This shows that the Gentlemen are more willingness to pay after they tried and tested the products and found it to be effective for them.
For the non-users, their willingness to pay is the lowest out of the three segments (3.22). This is predictable as a trend for the non-users to be less willing to pay for the premium priced products that they have never tried before.
ANALYSIS
Hypothesis 4: People perceived SK-II products to be more expensive compared to other brands.