A leading Japanese skincare/cosmetics company known in Asia and Europe for its strong brand and high-quality products had long desired to enter the Latin American market. Despite past success on two continents the company knew relatively little about Latin America, and this gap in knowledge limited its ability to identify which of its many skincare brands to launch in the market, and what channel strategy to pursue. Channel options ranged from pharmacy and specialty beauty shops to hypermarkets and kiosks. As a result, the company was at risk of missing the window to enter and advantageously position itself in this fast-growing market.
The company asked McKinsey for help in understanding the drivers of consumer choice in a specific Latin American country and to develop a perspective on which of its many brands to launch, and at what price point, positioning, and channel.
McKinsey established a global team of consultants to help solve this problem, bringing together a highly experienced Latin American team as well as senior leadership in Tokyo. We began addressing the issues by structuring an appropriate—and cost-effective—approach to conducting or obtaining qualitative and quantitative consumer-market research, including assisting with selecting the right research partner in the country.
Analyzing the results of the research allowed the team to detail various consumer segments and, more important, identify two key segments that the data suggested would likely gravitate toward a new “masstige” (mass/prestige) offering. We next worked with the client to select three skincare/cosmetic brands from its broad brand portfolio that would most likely appeal to these customer segments.
In parallel, our team focused on building the go-to-market approach for these brands. This included identifying the number and type of possible channels and points of sale and their impact, including nontraditional channels such as dermatologists and the Internet. The team also embarked upon a pricing-and-cost analysis, evaluating price points and channel- and trade-spend requirements.
The result of the consumer, channel, and market research efforts allowed the team to provide the client with:
- Detailed financial forecasts (including capex, revenues, costs, and profit)
- A proposed organization structure and role descriptions for the region
- Support in assessing local candidates to lead the new organization
The company believes its work with the McKinsey team resulted in a winning channel strategy and the right products on offer, and slated product launch for the first half of 2012. The client expects sales in Latin America to help it grow revenue and anticipates that its launch will exceed the forecasts of the project team given strong consumer buying strength in the target market.