Kiehl’s target market are females and males aged 21 years old and above. We segmented our target market according to their skincare needs as well as their spending power. (See figure 1)
The first segment is female and males aged 21 to 25 years old. These consumers are either still in school or just graduated with little spending power. The next segment are females and males aged 26 to 35 years old that have been working for a considerable amount of time and have more spending power than the previous segment. Our third segment of our target market are consumers aged 35 years and above. These consumers generally have more spending power and have different skincare needs than the other two segments. The last segment of consumers generally has more interest in Kiehl’s anti aging products than the rest. (See figure 1)
Annual Growth Rate of Kiehl’s:
Based on the Euromonitor’s forecast on skincare industry, we use 5.3% as annual growth rate to project Kiehl’s annual sales in 5 years.
Annual growth rate for different age group:
To further breakdown the annual growth rate for different segments, we estimate that the annual growth rate for consumers from 26 to 35 years old is 8% on average as they have more spending power and will be remain as our sales driver. Consumers from 21 to 25 years old will also contribute to the large amount of sales as more and more youngsters and young working adults care about their appearance nowadays more than the past. However, due to its relatively high price of Kiehl’s products, the annual growth of 6% for consumers from 21 to 25 years old will be slightly lower than the previous age group. The small fraction of annual sales will come from customers whose age is 35 years old and above. As the nature of Kiehl’s cult culture, the annual growth for consumers above 35 years old will be more stagnant. 2% of annual growth rate is estimated for this age group. (See figure 3)
In general, we forecast that there is more business from male customers in 5 years due to the trend that beauty now has become a matter for men and intensive marketing efforts have been doing for male customers. Therefore, the annual growth rate of male will be higher than female. However, for male above 35 years old, we estimate that there is only 1% annual growth as this group of customers is from Gen X who has relatively stubborn and resistant mindset toward male grooming products. (See figure 4)
Based on the estimated annual growth rate for different segment, we forecast the total sales of Kiehl’s in 2015 will be $1,379,915 which is 38% incremental sales from 2010. (See figure 5)
In terms of growth, the 21-25 years old female segment has the highest future brand earnings followed by 26-35 years old females segment. . (See figure 6)
1. 21 – 25 years old females
This segment consists mostly of tertiary students and young working adults. Since females have more variety of choices for cosmetic products, the influence of the brand is lower than that of males. However we assign this segment the third highest brand influence position since most of them start to enter into premium skin-care products and choose carefully among the existing renowned brands.
2. 21 – 25 years old males
This young male segment has been assigned the second highest brand influence among all since they do not have much choice when it comes to cosmetic products. Although many other premium skin-care products, they do not have much variety for men. Kiehl’s has various products tailored to men and many other unisex products as well, making it a target for many men who consider to buy premium products.
3. 26 – 35 years old females
This group has the highest disposable income since most of them are in their second to eight years of work. However, due to the highly saturated cosmetics market for female, the brand influence on them will not be as high as the above sectors.
4. 26 – 35 years old males
With a higher purchasing power, this segment contributes most to the increasing trend of males using skincare products. As this segment probably had little experience with luxury skincare brands and limited knowledge of skincare product, they are highly susceptible to the marketing efforts of brand.
5. 35 years old and above females
This segment, having more years of usage of skincare products is less influenced by the brand. Their decisions are made by having thorough product knowledge and effectiveness.
6. 35 years old and above males
Unlike their female counterparts, males in this segment are slightly more influenced by brands because their ability to access the effectiveness of brands they have tried before in the past is not as sharp.
Kiehl’s has a relatively small market share as compared to its competitors. Evident from our survey results, the brand is not salient in consumers’ minds. Our tactical gap analysis also reveals that the brand faces problems with customer acquisition as consumers perceive the brand to be between luxury and mass-market.
Customers have strong resonance to Kiehl’s positioning as a brand with long history and unique heritage – its apothecary roots and pharmaceutical background. There is strong brand preference towards Kiehl’s.
Kiehl’s possesses presence in all key regional markets. It has flagship stores in many international markets such as Canada, France, Spain, Taiwan, UK, Korea, Hong Kong, Singapore, etc. Also, its brand image is strong and consistent as all its stores have a distinct layout and design that is unmistakably Kiehl’s.
Consumers demand more customized/dermatological skin care, body care and hair care products. Consumers are also increasingly beauty-savvy – especially the male segment (Euromonitor International, 2010). Kiehl’s is already set for the next wave of consumer trend, being one of the few dermatological skin care brands in the market. It has also introduced dedicated products for men since 1961.
Kiehl’s marketing campaigns are consistent with its brand values: quirky and charity. It minimizes above-the-line advertising and relies on low-cost promotional activities to gain buzz in the market (e.g. Kiehl’s Boys ambassador programme in Singapore)
Kiehl’s logos and URLs are trademarked. Most of Kiehl’s URLs are consistent across international markets except for Singapore’s (www.kiehlstimes.com instead of www.kiehls.com.sg) Kiehl’s Singapore should register the latter URL as soon as possible so that it is legally protected.
In order to calculate the brand value for each customer segment, future brand earnings are discounted at present value. In Kiehl’s case, the net present values are calculated at a discount rate of 8.09%. (See figure 8)
In addition, we anticipate Kiehl’s brand value will take a big leap in the future as it is currently expanding into several key markets and sales revenues has been robust.