Market Research ReportHonest Beauty

MKTG 601 : Marketing Strategy & PlanningProfessor Yanliu Huang, PhD

Prepared by: Sabnam Pandey

Research Question

The Honest Company is a consumer goods company co -founded by Hollywood celebrity Jessica Alba. It works towards the mission of providing non-toxic, eco friendly baby and household products. The Honest Beauty is a branch of Alba’s parent company. Honest beauty was started with the same mission as the parent company, to provide safe yet effective beauty products with less harsh chemicals.

The beauty industry is forever growing. There are a lot of big brands in the market that occupy large market share due to their long history and competitive brand loyalty. Honest beauty, launched in September 2015, has a long way to go to penetrate into such a competitive market. With the rise of people leaning towards healthier lifestyle, the beauty industry is seeing a rise in demand for natural cosmetic products. With Honest beauty positioning itself as a brand providing safer color cosmetic and skin care products, could have an advantage at differentiating themselves from its competitors. Honest beauty sells exclusively online at present and has only one pop up store.

Questions this survey aims to answer: 1. Is the demand for natural cosmetics large enough for Honest Beauty to capitalize on

the trend into positioning themselves as a safe cosmetic brand?2. How much are people willing to transition into the “natural” cosmetic trend? 3. Selling exclusively online, should Honest Beauty be looking to place themselves at

specialty stores and/or drugstore?

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Methodology- Quantitative

The honest company in a very short time has become a Unicorn (A company valued more than $1 Billion). The company gained good reception fast with Jessica Alba adding credibility as a mother and her creating the products out of necessity. The product and their marketing material stand out due to their narrative, rather than a more traditional marketing of celebrities endorsing random products that they don’t even use. The honest company products were created so Alba can use it for her kids.

Today the honest company is valued at $1.8 Billion with sales close to $250 million. With honest beauty products just rolling out, it was important to find out how the core target demographic perceives the product and what is the best way to reach them. I relied only on primary data collected through my survey questionnaire to answer the research question listed in the previous question. I used structured questionnaire to collect my responses which included close-end questions which includes multiple choice questions where respondents have the ability to choose from a number of different answer choices. I also included scales refer to questions that ask respondents to rank their answers at a particular point on a scale. The list of questions can be found in the appendix at the end of this report. The following are the different factors I considered for collecting my data.

Population For this report, I decided to invite women between ages 18 and 35. Wanted to start with the age when girls first start wearing make up which tends to fall between 14-16 but decided to go with the age starting at 18 which I thought is by when girls are more educated and sophisticated about their make up needs. Since the report concerns with make up for women, all my respondents were girls and women. Also, Honest Beauty’s target segment is 15-35 year old’s. So selecting the 18-32-age range I thought was a good starting point, which aligns with the Honest Beauty target segment. Since I live in the University City area, my respondents were all students (both undergraduates and graduates) with varying ethnicity.

Sample Size and Quantitative data collection MethodSince it’s a quantitative survey, the bigger the sample size, the more reliable are the findings. I surveyed a total of 42 people. The survey was delivered mostly online with the help of survey tool like SurveyMonkey, so that the respondents will have time to fill it up at their convenience. Also since I live in University City, which has a large student population, I have also handed out some surveys in person.33 out of 42 responders surveyed online while the rest 9 responders were handed out paper survey. All the respondents received the same survey.

Question TypesThe questionnaire was structured in way that gives them a brief description about The Honest Company and proceeds to understand a bit about the customer. By asking questions like “How often do you wear make up?” and “Where do you buy make up” I could gather information on their behavioral patterns. The questionnaire then proceeds to ask information that might be unique but will also reveal a pattern of targets buying behavior. The questionnaire concludes with their opinion and purchase intent on natural beauty products and their purchase intent of Honest Beauty products.

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Findings

The survey starts with a simple question of how often do you wear make up, with majority of our respondents which is 45.24% saying they wear make daily and 35.71% saying occasionally which is at least twice a week. The purpose of this question is to understand our target demographic a little better and know how often they put on make up. Going forward this will also be a good starting point in the future to determine which kind of consumer will be most willing to try our products.

Section 1The second set of questions goes into specifics like where the respondent buys her make up and if they buy their make up online. This question also helps in understanding even if consumers use a certain brand’s product will they buy that product on the brand’s website. This question is also to understand how many people actually prefer buying make up online vs brick and mortar store. A overwhelming number of the respondents said that they shop at department stores like Macys and specialist stores like Sephora. This gives us some insight into where would be a good place to start positioning the Honest Beauty brand. Also these stores seem to have a strong loyalty and their customers keep coming back, specially specialist stores. 35.71% said they buy make at department stores and 30.95% said they buy at specialist stores. Drugstores seem to be gaining some traction since more and more brands have started making products that can be sold at drugstore price points.

Section 2Cosmetics maybe one of the most forward and high tech industry when it comes to creating products but majority of our respondents seem to still make bulk of their purchases at brick and mortar stores but again the loyalty of specialist stores like Sephora can be seen with 38.10% of all respondents said they shop at Sephora.com and 45.24% of the respondents said they never bought make up online. This is a very important observation which aims to answer one of our research question about whether Honest beauty which currently relies extensively on its online sales, should focus more on making their products available in a variety of brick and mortar stores.

Section 3After the first few behavioral questions the questionnaire gets into specific details in terms of what kind of brands the users are buying. MAC cosmetics seemed to have high favorability among the respondents at 42.86%. Revlon and L’oreal accounted for 7.32% each. With multiple respondents saying they use Clinique, Maybelline and Bobbi Brown. This is to identify the competitive space that Honest Beauty has to consider if they want to place themselves as a premium cosmetic brand.

Section 4After understanding the consumer’s preferences and buying behaviors, the survey tries to understand why the consumers are buying these brands and what influences their decision the most. Brand recognition and price have been rated as one of the highest influencing factors with mean of 5.05 and 5.03 respectively. Recommendation from friend was also one of the highest rated factors with a mean of 4.62. It is also important to note that equal number of people voted for price and recommendation from friend as their highest influencing factor for a purchase of a cosmetic product.

Section 5

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The next sets of question continue to question and understand if the respondents use any kind of natural beauty products. A majority at 78.57% of the survey takers said they currently do not use any natural beauty products and 21.42% said yes to using some kind of natural beauty product. When asked about what brand of natural products respondents used body shop and bare minerals were among the popular responses. This is to identify the brands in the natural beauty sector within this industry that have already established themselves and will help Honest Beauty identify ways that they could differentiate themselves from the major players.

Section 6One of the chief objectives of this survey is to understand what is the best way to reach the target demographic. In trying to understand this question I asked our respondents which avenues influences them towards trying new products. In store promotion and free samples were rated one of the highest factors with mean of 3.24 and 3.29 respectively. Facebook/YouTube Ads and Billboard Ads were rated as the lowest with a mean of 2.05.Celebrity brand ambassador was weighed at a mean of 2.31.

Section 7With such low popularity for natural products, Question 8 in the survey is trying to understand people’s perception of natural beauty products. A variety of responses out of which expensive was highest at 42.86% while “for people who don’t need much coverage” was at 40.48% and ineffective and not enough variety were also one of the reasons at 19.05% and 23.81% respectively. I think this helps us answer one of our research question on whether the natural beauty trend is as viral to position your product as a natural brand to gain customers.

Section 8Finally, the survey concludes with if respondents are willing to try natural beauty products and if they are willing to try Honest beauty products.19.05% responds said they are extremely unlikely to switch to a natural makeup brand. Another 19.05% respondents said they are somewhat unlikely to switch and 14.29% said they are neutral. Majority of the respondents reply laid below the median point (neutral). Only 9.52% responds said they are likely to switch. The mean is at 4.48. The last question was to check if people are willing to try Honey Beauty with all the information provided.19.05% respondents said they are neutral.16.67% said they are somewhat likely to try Honest Beauty. Only 2.32% said they are extremely likely to try Honest Beauty. The mean is at 4.48.

Section 9I tried to analyze the data to see how certain questions correlate with each other. I compared how likely are people who currently use natural beauty products to try honest beauty. Figure 1 in appendix shows the comparison. Q6 asked whether they currently use any natural beauty products. Q10 asked if they are willing to try Honest Beauty.5 out of 9 respondents who currently use a natural beauty product said they are likely to try Honest Beauty ( I assumed anything above 5 to be a positive response).Another comparison which I thought would be interesting to observe is to see how likely are respondents who are currently not using any kind of natural beauty products to try Honest Beauty (Q6 & Q10). Figure 2 shows the findings.14 out of 33 responds who currently don’t use any natural makeup products are likely to try Honest Beauty( I assumed anything above 5 to be a positive response).I also made a comparison between respondents who currently don’t use any natural makeup product but are willing to switch(Q6 & Q9). Figure 3 shows the findings.10 out of 33 (30%) respondents are willing to switch.

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Recommendations

1. Is the demand for natural cosmetics that huge for Honest Beauty to capitalize the trend into positioning themselves as a safe cosmetic brand?

2. How much are people willing to transition into the “natural” cosmetic trend?

In my survey, only 21.42% agree to be currently using a natural or make up products with less chemicals. The rest 78.57% of respondents do not use natural makeup and also do not plan on switching to a natural makeup product any time soon. Even though the natural cosmetic trend maybe is catching up, not many people are willing to switch as of now. As more brands incline towards the natural cosmetic trend and there is increased awareness, then would be the right time to position Honest beauty as a more safer. One of the reasons people are unwilling to adopt natural cosmetics is because of how its perceived. But on the flip side, there are people who have never used a natural product before but now are willing to try Honest Beauty after some awareness about the brand and its credibility, which can be proved from the findings section 9.Honest beauty should strong their marketing campaign to capture this willingness to translate into their sales.

3. Selling exclusively online, should Honest Beauty be looking to place themselves at specialty stores and/or drugstore?

From my findings, we see that almost half of our respondents do not shop for beauty products online. Findings section 2,4, & 6 shows where people like to shop for makeup, which is their preferred website IF they buy make up online and different factors that influence their purchase behavior. Honest Beauty’s bulk of sales happens through its website.45.24% respondents prefer not to shop online. Based on these findings, I recommend that Honest Beauty at least place its products starting out at some of the specialist stores like Sephora or department stores like Macy’s. According to my finding, almost 66.66% of responds shop for their makeup products at one of these 2 places. This change in business model is also recommended based on the findings that people are more prone to trying new products based on store promotions. An average of 3.24 of all respondents said in store promotions most influences their decision on trying new product (finding section 6).

Another finding that is of importance to this research question is finding section 4.It shows that an average of 4.62 respondents try brands recommended by their friends. I recommend that Honest Beauty leverage this finding to make their online presence more visible. One of the ways you could achieve this would be to place a banner, which displays 10% off your first order if you recommend Honest Beauty to your friend. This will in most case increase web traffic and increase brand awareness.

Finding Section 6 shows that Facebook/YouTube Ads and Billboard Ads were rated as the lowest with a mean of 2.05. Celebrity brand ambassador was weighed at a mean of 2.31.Honest Beauty has heavily focused on ad placements throughout social media websites. Based on the finding, I recommend that Honest Beauty should spend less on placing their ads all over social media channels and build a strategy to bring products to brick and mortar store.

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Appendix

In figure 1,2 &3 ,the highlighted section represents positive response (above the median of 5)

Figure 1

Figure 2

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Figure 3

Survey Questions and Results

Q1 : How often do you wear makeup?

Q2 : Where do you tend to buy your make up products?

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Q3 : If you have to buy your make up online, which is your go to website?

Q4 : What makeup brand do you use?

Q5 : On a scale from 1 (being the most important) to 7 (being the least important),Please indicate when choosing a make up product, which of the following factors are important to you? Rank in the order of importance.

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Q6 : Do currently use any natural beauty product?

Q7 : On a scale of 1 (being the least influential) to 5( being extremely influential), please indicate to what extent the following factors would influence your decision to try a new brand/product?

Q8 : When you think of a natural beauty product, what are the things that come to your mind?

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Q9 : On a scale from 1(being extremely unlikely) to 10 (being extremely likely),Please indicate How likely are you to switch from your current brand to a “natural” beauty brand?

Q10 : On a scale from 1(being extremely unlikely) to 10 (being extremely likely), Please indicate how likely are you to try Honest Beauty?

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