How can you use consumer trends to inform pricing strategies in the beauty industry?

1 Identify the key consumer trends in your market

Identifying key consumer trends relevant to your market and product category is the first step. To do this, you can use market research reports, social media analytics, online reviews, surveys, and interviews to gain insights into customer needs and values. In the beauty industry, some of the common consumer trends include a demand for natural, organic, and sustainable products; a preference for personalized and customized products; an interest in innovative and novel products; and a desire for value-for-money products that offer high quality, performance, and convenience at a reasonable price.

2 Segment your customers based on their trend affinity

The next step is to segment your customers based on their affinity to different consumer trends. This means grouping your customers according to how strongly they relate to each trend, how much they are willing to pay for it, and how loyal they are to it. You can use various criteria, such as demographics, psychographics, behavior, and loyalty, to segment your customers. For instance, eco-conscious customers may prioritize natural, organic, and sustainable products and be willing to pay a premium for them. Self-expressive customers may seek personalized and customized products that reflect their identity and style while adventurous customers may be attracted to innovative and novel products that offer new benefits, experiences, or formats. Lastly, value-seeking customers may look for value-for-money products that offer high quality, performance, and convenience at a reasonable price and be sensitive to price changes.

3 Set your pricing objectives and strategies for each segment

The final step is to set your pricing objectives and strategies for each customer segment. Your objectives are the goals you want to achieve with your pricing, such as increasing sales or profit, while your strategies are the methods you use to set your prices. For example, eco-conscious customers may require a premium price that reflects the quality and sustainability of your products, so your pricing objective could be to maximize profit and your strategy could be value-based pricing. Self-expressive customers may require a differentiated price that reflects the uniqueness of your products, so your objective could be to increase customer loyalty and your strategy could be value-based pricing. Additionally, adventurous customers may need a skimming price to capture high demand and willingness to pay for novel products, so your objective could be to increase market share and your strategy could be competition-based pricing. Finally, value-seeking customers may require a penetration price that attracts and retains customers with value-for-money products, so your objective could be to increase sales volume and your strategy could be cost-based pricing. By using consumer trends to inform your pricing strategies, you can create a competitive advantage in the beauty industry and deliver value to customers.

4 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?