MKB2706 Brand & Product Management

MKB2706 Brand and Product Management
Assessment 2: New Product Development for AESOP
Student name: Hanbo Zheng
Student ID: 28207327
Tutorial day/time: Thursday 1:00pm - 2:30pm
Word count: 1515

Executive Summary
The new product I have developed for AESOP in the Australia market is the Herbal Extract
Foundation. It is a foundation that not only provides concealing and skin brightening
function, but also contains Herbal Extract to help improve the condition of the skin.
Customers would be willing to buy it because in the market, most cosmetics contain essence,
pigment, and preservatives, which could burden the skin or increase irritation of the skin
(WebMD). Therefore, a foundation that include both the skincare and makeup functions
could significantly fulfil customers’ needs. It is a potentially viable product for AESOP
because: firstly, the objective of AESOP has always been to provide hair, skin and body care
products with the best quality; and the sources AESOP used are all plant-based and
laboratory-made ingredients that can provide with a proven record of safety and efficacy
(AESOP). Consequently, a foundation with Herbal Extract meets the value of AESOP and
customers would also trust this product due to the brand image of AESOP. Furthermore, there
are many brands in the market, such as Chanel and Dior, develop both makeup lines and
skincare lines, to design more products and attract more customers (Richard). To follow this
trend and survive in the beauty industry, AESOP should also start to research and develop the
makeup line and the Herbal Extract Foundation could be the first product to launch.
Figure 1.1 mock-up image of Herbal Extract Foundation

Idea generation process
1. Ansoff’s growth matrix
Firms use the Ansoff growth matrix to analyze and develop their growth strategies. There are
four strategies that can be used to help a firm grow and also analyzes the potential risks
(Mindtools). For AESOP, since the beauty market is already existed and mature, to help the
growth of AESOP, I choose to use product development strategy in my idea generation
process. That is, developing a new product to enter into an existing market. This strategy can
be worked in the following aspects:
Methods Implementations
Investing in R&D to develop new products
to cater to the existing market.
Since the sources AESOP used are all plant-
based and laboratory-made ingredients,
R&D could follow this value to develop
new products within these ingredients.
Acquiring a competitor’s product and
merging resources to create a new product
that better meets the need of the existing
market.
All competitors’ products focus only one
function between makeup and skincare,
AESOP could create a new product that can
meet both these two functions to better meet
the need of the beauty market.
Forming strategic partnerships with other
firms to gain access to each partner’s
distribution channels or brand.
Although AESOP is successful in the
skincare industry, makeup product is a
brand-new challenge for the organization.
AESOP could find a makeup organization to
form a strategic partnership which leads to a
win-win situation.
Figure 1.2 Product development strategy for AESOP
2. Customer Analysis
According to Lavidge’s Hierarchy of Effects Model, it is a long process from customers have
awareness of a product to customers finally decide to buy a product (Lavidge). Therefore, an
analysis of customers could help organizations know more about what the next product
should be like, and a customer analysis is broken down according to the customer base into
groups and segments.
Segmenting
Age Most customers belong to Generation Y, which are well-educated
about the importance of skincare and are more used to shop
online.
Gender Most customers are women. But more and more male customers
identify the importance of skincare.
Social class Most customers belong to the social class which is well-educated
and high-income due to the positioning of luxury product of

Aesop.
Lifestyles Customers who purchase Aesop appreciate products from every
detail. From product trial, packaging, store image to every detail
in communication inside stores all need to be consistent to meet
their criteria. They care about their living quality
Personality Customers who purchase Aesop intelligent, independent,
educated, travelled and well-read.
Figure 1.3 Customer Analysis of AESOP
According to the customer analysis of AESOP, most customers of AESOP are young females
who are well-educated and care about their living quality. Therefore, the idea of developing a
product that contains both skincare and makeup functions is generated to fulfil these
customers.

Analysis of the idea generation process
1. Idea screening
Criteria
Market Size Australian consumers are willing to spend more and more
on beauty and personal care (color cosmetics and skincare
in particular) due to high disposable income.
Organizations are mainly focusing on theses consumers
especially millennials since they tend to follow recent
trends and make purchases frequently based on new
product claims and application methods (Mordor
Intelligence). In conclusion, the beauty market of Australia
is large, and more and more customers would be willing to
care about their skins.
Product Price The prices of AESOP’s skincare products range from $30 -
$55. The prices of other luxury brands’ foundations such
as Channel range from $40 – $75. Therefore, it is
suggested that the Herbal Extract foundations should be
priced from $55 - $85.
Development Time & Costs Although AESOP is good at producing with plant-based
and laboratory-made ingredients, foundation is a segment
of product it never researched before. The development
Time & Costs could be high.
Manufacturing Costs There is a minimum production requirement within most
makeup manufacturers, which means they should be
prepared in case of a large order. In other words, investors
should prepare a considerable cost to produce a makeup
product at the beginning, but in the long run, it translates
to a lower cost per unit finally. (Anthem)
Rate of Return The return rates of beauty and skincare products are at 1%-
2% on average (Digital Commerce).
Figure 1.4 Idea screening
2. SWOT analysis
Strengths
1. Brand focus: The objective of AESOP has
always been to provide hair, skin and body
care products with the best quality.
2. Customer experience: Skilled employees
in the stores provide suggestions and
solutions to customers quickly and
respectfully.
Weaknesses
1. Did not focus on creating brand
awareness.
2. High price due to the position of luxury
skincare products.
Opportunities Threats

1. Digital marketing: The technology of
online-shopping revolutionize skincare
industry.
2. More educated customers who care about
the importance of skincare.
1. Skincare industry is a highly competitive
industry.
2. Cultural shift in brand positioning
Figure 1.5 SWOT analysis
SWOT analysis is used to summarize situation analysis findings. In the Aesop’s case, we can
conclude the situation and decide what are the important things to think about for future
revenue growth.
For example:
O2W1: Grab the opportunity that more and more customers start to realize the importance of
skincare, to create brand awareness.
S1T1: Take advantages of the high-quality products as a competitive advantage to against
competitors.
O1T2: With the trend of digital marketing, there are less issues with facing cultural
differences.

Viability of this product
1. Value analysis
Criteria
Functional Value The product provides both skincare and
makeup functions.
Convenience Value It is easy to use as a formal foundation.
Self-Esteem Value Makeup products are designed to facilitate
customers’ identity building and self-
expression.
Price Value It combines two functions in one product
with only a little higher price. In general, it
still provides customers a low-cost
experience.
Status Value Since AESOP is a luxury brand, customers
who purchase the product would meet their
status value.
Confidence Value As an organization who is famous for plant-
based and laboratory-made ingredients, the
fair and safety desire could be fulfilled.
Figure 1.6 Value analysis of AESOP
In conclusion, the new product of AESOP could deliver several specific values to customers,
which assess appropriateness of this Herbal Extract foundation.
2. Needs theory
Maslow's hierarchy of needs theory is a theory of motivation which declares that five stages
of human needs influent an individual’s behavior. Those needs include physiological needs,
safety needs, social needs, esteem needs, and self-actualization needs (Pichère).
The esteem needs consist of self-respect, that is the belief that you are meritorious and
deserving of respect, and self-esteem, which means the confidence in your potential for
personal growth and accomplishments. As makeup products are designed to make customers
look more attractive and are confidence about their appearance, we can say that this product
meets the esteem needs of customers.

Reference list
1. WebMD. (2020). Habits That Wreck Your Skin.
https://www.webmd.com/beauty/features/bad-skin-habits#1
2. Aesop. Our Story.
https://www.aesop.com/us/r/about/
3. Richard Kestenbaum. (2019). The Biggest Trends In The Beauty Industry.
https://www.forbes.com/sites/richardkestenbaum/2018/09/09/beauty-industry-biggest-trends-
skin-care-loreal-shiseido-lauder/?sh=72f348b56982
4. MindTools. (2017). The Ansoff Matrix: Understanding the Risks of Different Options.
https://www.mindtools.com/pages/article/newTMC_90.htm
5. Lavidge, R. J., & Steiner, G. A. (1961). A model for predictive measurements of
advertising effectiveness. The Journal of Marketing, 59-62.
6. Mordor Intelligence. (2021). AUSTRALIA BEAUTY AND PERSONAL CARE
PRODUCTS MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS
(2021 - 2026).
https://www.mordorintelligence.com/industry-reports/australia-beauty-and-personal-care-
products-market-industry
7. Anthem. (2019). HOW MUCH DOES IT COST TO MANUFACTURE SKIN CARE
PRODUCTS?
https://www.anthemusb.com/cost-manufacture-skin-care-products/
8. Digital Commerce. (2017). The big opportunity in online health and beauty.
https://www.digitalcommerce360.com/2017/09/27/the-big-opportunity-in-online-health-and-
beauty/
9. Pichère, P., & Cadiat, A.-C. (2015). Maslow’s hierarchy of needs. Lemaitre.