In year 2000, after Kiehl’s was acquired by L’Oreal, Kiehl’s has swiftly expanded its brand presence into 37 countries across five continents. Its omnipresence proves that Kiehl’s is truly an international brand.
Although internationalization provides brand opportunities to cut marketing cost and capture more customers, some challenges are unavoidable when brands go global. Since the brand entered Asia market, Kiehl’s has been enjoying double digits growth. However, concerns about whether Asian consumers are able to appreciate its brand culture and to what extent that Kiehl’s should customize in order to better meet Asian customers’ needs, have existed all the time.
Overall, our group feels that Kiehl’s should maintain a high level of standardization when expanding into different countries. As Kiehl’s has been positioned as a luxury yet cult brand – which is highly accepted and valued by its customers – too much customization will eventually diminish its cultivated cult image. Kiehl’s iconic symbols, such as medicine bottles-looking packaging, Mr. Bones and “lab ambassadors” enable the brand to stand out from the clutter. While these symbols may appear irrelevant to the masses, they certainly CAN and WILL attract those who are drawn to quirkiness.
Why Brand Extension?
Strong brand names deliver high sales and profits. As an established cult brand, Kiehl’s can leverage on its brand strength to launch new products/services in a new category: there is lesser need to communicate awareness and imagery, since consumer knowledge is prevalent.
Kiehl’s can harness on its strong “anchor” core product – its expertise in pharmaceutical manufacturing and chemistry – to launch other brand extensions. There also needs to be a broader market definition – that Kiehl’s is not just a skincare brand, but a lifestyle and wellness brand which offers beauty and spa services.
However, we acknowledge that Kiehl’s might face the risk of brand dilution, especially since Kiehl’s portrays a cult brand image. Hence, the following recommendations for brand/line extension have to serve the primary purpose of adding customer value – both functional and emotional benefits (badge/status value).
Starting out as a pharmacy dishing out its very own formulated skincare, Kiehl’s has been dedicated to health and wellness of its customers’ skin for over 160 years. Not surprisingly, Kiehl’s decided to extend into the health & wellness category by opening a spa in New York which uses none other than their amazing range of apothecary-inspired products!
The spa, named Spa 1851, was opened in July this year and features three full treatment rooms, a separate men's grooming station and interiors that boast vintage reclaimed ceilings, antique and oak fixtures. Although Spa 1851 has yet to release official sales figures, our group feel that it is a promising initiative and Kiehl’s should introduce such an outlet to Singapore as well. Apart from facials, Kiehl’s could also offer body treatments and massages.
We propose targeting Kiehl’s existing customers as they tend to be loyal to the Kiehl’s brand and would be more willing to give the spa a shot. In addition, the spa may help the brand acquire new customers as it gives non-users a chance to try Kiehl's products by going for a one-time facial before deciding if they do want to purchase Kiehl’s products. In this way, non-users who have not tried Kiehl's products due to various reasons (e.g. they are too intimidated by the store's appearance or are too shy to ask for samples) will have the opportunity to try the brand's products without feeling any embarrassment or discomfort.
We propose that Kiehl’s continue to focus on skin customization for customers. As such, Kiehl’s Skin Treatment Spa will offer a complimentary skin consultation with a Kiehl’s staff assistant before choosing the most suitable treatment from a plethora of treatment types (e.g. moisturizing, skin repair, anti-ageing facial treatments etc.)
All Kiehl’s staff will also be decked in lab coats, and the storefront of the spa will look similar to Kiehl’s current stores to provide a consistent brand image.
Natural Wellness Café
Our group also recommends opening a natural wellness café in the same vicinity of our Kiehl’s Skin Treatment Spa. The café will not solely serve to fulfil the basic needs of our customers but as the name suggest, our wellness café also seeks to bring out the wellness in people through a careful selection of light and healthy food such as fruits and salads and beverages such as fruit juices and tea.
Kiehl’s natural wellness café will specialize in tea for its healthy benefits. Teas with its antioxidant properties have been known to lower cholesterol levels, stimulate the immune system, delay aging and fight high blood pressure, etc. There’s an old adage "An ounce of prevention is worth a pound of cure". In our café, we want to offer well-being tea that is light, medicinal and yet flavorful to promote the overall well-being and vitality of our customers, thereby completing their experience with us.
Kiehl’s first started out as a pharmacy producing skin care products using the most unique natural ingredients. As a new brand extension to Kiehl’s, Kiehl’s should take advantage of their pharmaceutical background and launch a new range of medical cosmetics!
We aim to target women with this new "medical cosmetics range" as studies have shown that women tend to be more self-conscious and are more proactive in seeking solutions to resolve their skin problems. However, we noted that most females ignore their skin problems and apply more make-up to hide their skin imperfections instead.
Therefore, Kiehl’s medical cosmetics provide the perfect solution – make-up which heals the user’s skin as well as covers up all imperfections, thus giving users all the confidence they need!
To promote the environmental friendliness of Kiehl’s products, we suggest installing a “refill station” at the proposed “Natural Wellness Cafe.” Currently, Kiehl’s has a few refillable products, although they are not promoted extensively. Since hygiene is a concern to many, we recommend accepting the empty bottles from the customers and retain them for cleaning at Kiehl’s refill stations. The customer who brought the empty bottle will then be given another recycled bottle (which has been cleaned) at discounted price. This exchange program encourages users to be more environmentally-friendly as well as enhances Kiehl’s mission to be an eco-friendly brand.
Currently Kiehl’s has products lines for skincare, body, men and hair. However, Kiehl’s has not (or rarely) introduced cosmetic-related accessories. Since Kiehl’s is a ‘cult’ brand, it could leverage on its strong customers’ loyalty and on L’Oreal’s expertise to introduce several skincare-related accessories such as hair brush, eye mask, bath gloves, skin sponge and moisturizing socks, etc.
While our group has come up with several product extension for Kiehl’s, we certainly do not recommend Kiehl’s to implement all of them at once. Instead, we propose that Kiehl's approach each product launch with care and in the following sequence:
Since the first (and only) Spa 1851 has just started operations in New York early this year, we reckon that it would take some time for the Kiehl's management to evaluate the spa's popularity and sales estimates before deciding whether or not to introduce it to consumers overseas as well. Thus, we propose that Spa 1851 to be launched at a later time.
Similarly, for Kiehl's Wellness Cafe, we suggest that Kiehl's launches it last as it will be an entirely new establishment and Kiehl's needs time to research on the various F&B items to feature in its cafe. Furthermore, Kiehl's has to factor in start-up costs and source for suitable vendors/partners before embracing this new business.
Overall, our group feels that as a cult brand, Kiehl's has come a long way and it definitely has the potential to grow further. Consumers are constantly inundated with various product advertising and may inevitably suffer "ad fatigue". However, with Kiehl's quirkiness and the brand's trusted reputation, we believe that Kiehl's will definitely stand out among its competitors! Moving forward, we hope to see Kiehl's adopt more exciting product extensions and we are definitely eager to see how our proposed brand strategies will impact the brand in future!