4.1.1 Political

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In the global market, the premium skincare industry is closely linked to the political environment. In Europe, AGEC laws and trends have shifted towards more reusable packaging, so in order to follow the government's initiative, eight companies in the industry, such as L'Oréal, Chanel, Sephora and others, have taken it upon themselves to form an alliance for sustainable development (Beauty Packaging, 2024). In Chile, the Senate voted for a bill to abolish animal testing in skincare products, becoming the third government to introduce such a policy (Humane Society International, 2023). In the State of Washington in the United States, the government has introduced legislation on cosmetic products and has begun a total ban on toxic cosmetics (Washington State Department of Ecology, 2023). In the United States, the government has established final rules for the labelling and effectiveness testing of over-the-counter sunscreen products sold by companies through the enactment of legislation (FDA, 2022). The U.S. government has facilitated the advancement of the industry by enacting legislation that clarifies the legal definition of the industry's natural standards. This has enabled companies to effectively mitigate the legal risks associated with costly litigation and/or enforcement actions by regulators (U.S. Congress, 2019).

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4.1.2 Economic

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Figure 4 from McKinsey & Company illustrates that the beauty industry has experienced sustained growth on a global scale since 2015. In 2022, the market generated revenues of $430 billion, and it is anticipated that this growth trend will continue in the coming years. Figure 5 illustrates that China and the United States will be the leading countries in the beauty market, reflecting a trend of geographic diversification. China's beauty market is projected to reach US$96 billion by 2027, while North America's is projected to reach US$114 billion.

Between 2022 and 2027, the general beauty market is expected to grow at an annual rate of 5 per cent, while the premium beauty market is expected to grow at a rate of 8 per cent. In summary, the potential of the luxury and super-luxury beauty market is projected to double over the period from 2022 to 2027, with an estimated growth from $20 billion to $40 billion (McKinsey, 2023).

Figure 4: The four main beauty categories are projected to grow in the next few years.   Source: McKinsey & Company (2023)

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Figure 5: Asia and North America are forecast to stay the two biggest beauty markets.

Source: McKinsey & Company (2023)

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4.1.3 Sociocultural

In recent years, there has been a growing emphasis on personal grooming and the importance of appearance (Global Market Insights Inc., 2023). This is particularly evident in the beauty consumer group, where younger consumers are particularly interested in the emergence of new brands and unique brands are increasingly accepted by the majority of this group (McKinsey & Company, 2023).

A study conducted by the Harvard Business School (2019) revealed that some well-known brands are facing a loss of credibility due to the direct social interference they receive from direct-to-consumer social influencers. Approximately two-thirds of consumers in the beauty industry indicate a willingness to purchase new products from social influencers. Social influencers in the beauty industry are making a notable impact, particularly on social platforms such as Instagram and YouTube. (Harvard Business School, 2019).

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In order to engage with their customers, 65% of beauty retailers offer interactive quizzes which assist in the recommendation of appropriate products (Cbinsights, 2021).

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4.1.4 Technological

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In recent years, the development of artificial intelligence and machine learning in the industry has led to the emergence of an increasing number of customised services. The advancement of technology, driven by technological advances, has enabled intelligent skincare devices to meet the needs of consumers more effectively. This has resulted in the emergence of advanced skincare equipment and other technology products (Global Market Insights Inc, 2023).

Furthermore, the advent of digital technology has facilitated the development of online marketing channels, with e-commerce accounting for a significant proportion of the industry's major sales channels, as evidenced by McKinsey & Company (2023)'s research. Additionally, live marketing channels, particularly in Asia, have emerged as a key driver of industry growth, driven by the advent of live-streaming technology.

Based on the environment of the premium skincare market in Chapter 4.1, this sub-section summarises the key factors influencing consumer buying behaviours in the advanced skincare market through the literature review in Chapter 2 and the information collected through secondary research, this is presented in Table 3.

The literature review in Chapter 2 and the analysis of consumer behaviours patterns in Chapter 4.2 provide the basis for some of the case studies in this chapter. This chapter employs Aesop as a case study to examine the impact of branding on consumer buying behaviours in the premium skincare industry. Following an evaluation of the Aesop brand and its consumer buying behaviours, recommendations are made to optimise the brand's impact on consumer buying behaviours in the premium skincare industry.

Founded in 1987 in Melbourne, Australia, the Aesop brand is dedicated to botanicals and sustainable design, and is now expanding globally, with over 200 directly managed shops in 25 countries, characterised by innovative retail spaces and sensory-pleasing products with a focus on natural ingredients, especially botanicals, and a commitment to sustainability and the environment. Committed to sustainability and environmental protection, the brand is growing at an annual rate of 30 to 40 per cent (Aesop, 2024).

It is pertinent to highlight that L'Oréal, a leading player in the premium skincare industry, announced on 30 August 2023 that it had formally completed the acquisition of Aesop, a premium skincare brand, from the Natura & Co Group. This acquisition has resulted in Aesop being incorporated into L'Oréal's premium division, thereby marking Aesop as a subsidiary of L'Oréal (Statista, 2024).

The transaction, valued at US$2.525 billion, not only marks the success of the Aesop brand, but also opens a new chapter in its history. L'Oréal continues to drive the growth of the Aesop brand, particularly in markets such as China and in the travel-retail sector and maintain the original independent operation mode of the Aesop brand (Natura & Co, 2023).

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4.3.2.2 Typical Analysis

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Davidson Branding (2020) posited that the distinctive design approach employed by the Aesop product brand has positioned it as a pivotal player in the premium skincare industry, as well as in premium skincare retail and experience design on a global scale. Aesop is now part of the L'Oréal Group, the world's largest cosmetics and beauty company. The L'Oréal Group is currently the world's leading manufacturer of beauty products, with revenues of approximately $40 billion in the global market (Statista, 2024). Moreover, the L'Oréal Group occupies the leading position among the major global players in the beauty market, with 38.2% of sales, has the largest share of the beauty market (L’Oréal, 2022) (see Appendix 3). Furthermore, the Aesop brand represents the largest acquisition in the history of the L'Oréal Group (CNN, 2023).

As a rapidly expanding premium skincare brand owned by the world's largest beauty company, L'Oréal, the study of the Aesop brand reflects the current preferences of global consumers and demonstrates the efficacy of premium skincare brands in influencing consumer buying decisions.

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4.3.2 The Aesop brand and its consumer buying behaviours

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4.3.2.1 Aesop Brand Characteristics

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Osum (2024) posited that the Aesop brand has chosen to collaborate with companies that share a similar appreciation for beauty and luxury, which has facilitated Aesop's ability to reach a discerning customer base and maintain its brand uniqueness. Aesop's shop design and overall experience are informed by the principles of beautiful, luxurious design, thereby enabling customers to experience the unifying values of the brand.

Creative Supply (2024) discovered that Aesop emphasised the uniqueness and selectivity of its brand strategy, focusing on brand storytelling through retail spaces rather than traditional advertising, as illustrated in  Appendix 4.

The literature review posits that consumers' buying decisions in the premium skincare industry are driven by their individual needs. By precisely controlling customer preferences, Aesop is able to foster a robust consumer awareness and connection, thereby reinforcing its brand image. The brand has developed a distinctive brand equity through its unique taste and positioning.

Now, what does the Aesop have to do with consumer buying behaviours?

4.3.2.2 Aesop's Product and Communication Strategy

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Providing quality products

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By creating a quality product and enhancing its reputation in the premium segment, Aesop has succeeded in making customers willing to pay for its products, which is the first step in attracting buying behaviour from consumers. Section 4.2 posited that product quality attributes are efficacious factors in influencing the buying decisions of premium skincare consumers. Aesop specialises in product development through natural botanicals, its products being enriched with vitamin C and antioxidants. Furthermore, it sources raw materials from renowned suppliers around the world and employs a team of qualified chemists to enhance the quality of its products (La Comercial, 2021). Aesop's product value has been acknowledged in the premium market, with Hilton announcing that its premium hotel brand, The Waldorf Astoria, will collaborate with Aesop to provide guests with Aesop's bath and shower products to enhance their stay (Hilton, 2022).

Bringing products to life

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By integrating its products into the lives of its consumers, Aesop is able to generate sustainable buying behaviours for its products over the long term. Aesop uses the user's mindset to proactively cater to the user's quest for healthy and sustainable lifestyles. Aesop's products are designed to integrate with the consumer's lifestyle, with the objective of promoting a healthy lifestyle (Jeong, Gyuyeon, 2016). Furthermore, Aesop advocates the integration of products with sustainability, with the brand philosophy being to prioritise the impact on consumers' lives (Vogue, 2023). A review of the literature indicated that consumer buying behaviours is influenced by sustainable and environmentally friendly products. In response, Aesop has implemented an ethical sourcing programme in its own supply chain management, with the objective of continually assessing and improving its suppliers. In order to meet consumer demand for sustainable lifestyles and environmentally friendly products, Aesop advocates the creation of a circular economy. This is achieved by proactively recycling and reusing products that consumers have finished using. The company's best-selling 'Resurrection Aroma' hand sanitiser is an example of this approach, with a recycling rate of up to 40% (Aesop, 2024b).

Creating space for localization

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Moreover, previous studies have indicated that social factors are also significant drivers of consumer buying behaviours. In the contemporary consumer landscape, there is a growing appreciation for the convergence of a brand's social image and product functionality. In their study of Aesop, Hayoung Yun and Seongmo Ahn (2019) found that the localised spatial design strategy implemented by Aesop integrates the product's materiality with the local socio-cultural context. This is achieved by combining the materiality of the product with the locality of the local society and culture, and integrating the natural attributes of the product into the community. Concurrently, local cultures can express product attributes in a more diverse manner within the brand space, thereby reducing the sense of distance between the brand and its customers. Aesop's product and communication strategy is anticipated to influence the development of material processing techniques and various material interpretations of future products on a global scale. Its shop décor is also tailored to the cultures of different regions, with each offline shop decorated in a distinctive style to proactively create a sense of difference (see Appendix 4). Aesop's product and communication strategy is anticipated to inform the evolution of material processing techniques and diverse material interpretations for future products globally. The expression of local culture is the embodiment of the brand to further enhance the connection between the brand and the customer, this kind of promotion through the local culture to disseminate, is conducive to help the brand to enter the local market, catering to the local consumers, consumers are not only for the product, but also for their own local culture and to pay.

Now, how does Aesop fulfil its customer experience?

4.3.2.3 Aesop's Customer Experience

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Experiential marketing.

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Dr. Warren Harmer (2018) claimed that customer experience will play an increasingly important role in business interactions. Aesop's retail experience focuses on the details of the customer experience, offering unique samples in a discreet and stylish way.

As previously stated in section 4.2, sensory factors such as pleasure and pain are among the variables that consumers utilize when making buying decisions. Aesop's customer experience is centered on the consumer's senses, with the company engaging with customers through its offline shops. Aesop, a pioneer in retail design, offers unique solutions for marketing sensory experiences in physical shops (Marcus Baumgart, 2016). This increased customer experience gives consumers a new reason to buy, and that is to pay for service.

Huppatz, D. J. (2023) conducted a study of the consumer experience and sensory design of Aesop's Melbourne shop. The study found that Aesop advocates the design of an immersive shopping experience space to satisfy consumers' sense of shopping experience by integrating consumers' senses and eliminating interruptions. This approach contradicts the claim that the "demise" of brick-and-mortar shops is inevitable under the current wave of digitalisation. Instead, it represents a new solution to the digital era. This is contrary to the "demise" of physical stores under the current wave of digitalisation and represents a new solution for sensory experience design in the digital age.

Focus on social media

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In section 4.2, it is noted that consumers' buying decisions are strongly influenced by social influences, which are amplified by the proliferation of social media. Consumers' favourable impression of the brand developed in offline shops as a result of Aesop's experiential marketing may be fissured again in social media, which will be communicated to a wider range of customers.

Furthermore, it is asserted that marketing on social media can also increase consumer loyalty to a brand. Work & Co (2024) claimed that the Aesop brand focuses on the customer experience, and that the brand has spent 20 years developing customer loyalty. On the LinkedIn platform, Aesop presents its brand from the perspective of its employees through interviews (see Appendix 5), which adds a personal element to the brand's social media promotion and brings consumers closer to the brand through direct dialogue between the employees and the consumers. In this way, it breaks down the barriers between social media and the consumer, thus hopefully rekindling the desire to buy again in the consumer's mind.

However, as section 4.1.3 points out, the negative effects of the social media environment include the loss of brand credibility that many brands face today due to the distractions of social media. In this environment, Aesop provides emotional added value to the consumer through the creation of playlists on the Instagram platform (see Appendix 6), which provides a sense of relaxation and pleasure to the consumer around the consistency of the brand's philosophy. This sensory experience of relaxation and pleasure may potentially enhance customer loyalty to the Aesop brand, and the consumer's desire to buy may have been awakened once again.

Creating Brand Aesthetics

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The brand's unique aesthetic has a long-term positive impact on customer relationships, increases customer loyalty, and contributes to the brand's competitiveness in the marketplace. This, in turn, influences the continued consumption of customers. Ji Eun Kim and Eun Soo Park (2023) demonstrated that Aesop's unique poetic space, characterised by shared aesthetic and emotional communication, serves to attract consumers and help them retain a positive association with the brand in their memory.

In the case study of Aesop (Arhanchiague, 2021), it was argued that the three themes of branding, social networking and the rise of aesthetics are one of the characteristics of contemporary marketing. Furthermore, it was suggested that the Aesop brand has created a differentiated brand image on social media through its unique aesthetic culture. This distinctive brand image has enabled Aesop to become an aesthetically driven brand.

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4.4 Weaknesses and Proposing Solutions

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Although both the Aesop brand strategy and consumer experience have had a positive effect on the brand, any brand faces challenges at all times.

A few areas that need to be improved are that the premium positioning may make some consumers feel inaccessible, creating a potentially negative effect for the brand (Randhawa, P. et al., 2015). It is noteworthy that the skincare section of Amazon (2024) indicates that Aesop products are generally priced higher than other generic products. Additionally, Tangen's (2020) study revealed that there are quality and cheaper alternatives available at drugstores for customers seeking alternatives to premium skincare products.

The question is, why should customers have a reason to keep paying for expensive Aesop products?

Furthermore, price is a significant factor in the buying behaviours of premium skincare consumers, as previously discussed in the literature review. Furthermore, consumers have become more selective in the economic downturn, with some individuals choosing not to purchase Aesop products due to the price factor.

In his 2015 work, Landesmann, M.A. (2015) drew upon the concept of "innovation rents" as described by the renowned economist Schumpeter. He posited that firms engaged in innovative activities, such as introducing superior products or production technologies, would enjoy higher profits over time. However, he cautioned that these rents are transient, as rivals may imitate the results of the innovation. The buying behaviours of consumers in the premium skincare market is diverse. Even if a company performs well, it is estimated that no brand can always cater perfectly to the buying behaviours of future consumers. Accordingly, the author believe that it is doubtful whether Aesop can rely on its existing product and service innovations to gain long-term consumer acceptance in the market.

To illustrate this point, Aesop's competitor in the premium skincare market, The Body Shop, which also specialises in natural skincare and focuses on sustainability, has closed a significant number of shops due to financial losses and other reasons, the company was once a big hit, but has since had to face a downturn in its performance (BBC, 2022). Aesop has benefited from the premium skincare industry's reliance on dividends due to its distinctive proposition and has achieved considerable business results, winning over consumers and the industry.

However, the question remains whether Aesop will be able to achieve long-term competitiveness based on naturalness and sustainability alone. The answer may not be certain, it is possible that some customers who are price-sensitive may not be willing to make a long-term buying behaviour to Aesop. As a result, the author posit that the company may suffer a similar fate to The Body Shop if it fails to consistently offer incentives to consumers to purchase Aesop products.

The question thus arises as to how Aesop can be improved.

Leverage Plan for Aesop:

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Optimizing communication channels with consumers.

As previously discussed in the literature review, consumers are becoming increasingly aware of sustainability and green products. Aesop can continue to strengthen its sustainability measures and communicate its green concepts to consumers in a more effective manner in order to attract them and communicate the concept of environmental protection to consumers through a greater number of channels.

Maintain product innovation and develop new products.

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It is also important to consider the potential for Aesop to develop a wider range of products at varying price points to meet the diverse needs of consumers from different economic backgrounds. This could help the company to expand its market reach.

Maintaining uniqueness.

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Another aspect that needs to be emphasised is that Aesop could consider developing more non-homogenised product lines at different price pointeds to meet the needs of consumers with different economic statuses without affecting the sales of existing products, which would help the company to open up a larger market.

Marketing by word of mouth

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In addition to maintaining uniqueness, Wang (2023) asserts that consumers care about product involvement, perceived quality and word-of-mouth. Consequently, Aesop may wish to incorporate these factors influencing consumer buying behaviours in its brand marketing. This can be achieved by encouraging users to promote the brand on their own and utilising consumers to disseminate branded content and incorporating social media to diffuse the positive outcomes from word-of-mouth marketing. This would enhance brand connotation and promote consumer trust and engagement.

In conclusion, Aesop must expand its distribution channels and remain innovative in order to achieve its desired outcomes. The author believes that these strategies will prove effective.