Yue Sai Brand Repositioning: L'Oréal China Marketing Strategy

Introduction: Yue Sai's Marketing Challenges

Yue Sai, owned by L'Oréal, has not been performing as well as expected. Part of the issue may be related to the way the brand has been managed and its current positioning, which may be argued as ambiguous. There have been different approaches to marketing, and while L'Oréal has made investments in supporting the brand, the company appears to have been unable to differentiate it sufficiently to increase sales. While it may be tempting to argue that the brand should be repositioned again, given the history and the changes that have already occurred, it is possible this would create consumer confusion — with existing brand memories conflicting with new messages and detracting from the brand overall. Branding can also take time to establish, especially when the message seeks to change or alter previous values (Kotler and Keller, 2011). Taking this into consideration, it may be suggested that the current branding is supported and built upon using similar messages with aligned values, but with a higher level of targeting and improved differentiation.

To appreciate how a shift in brand strategy might be implemented, one must first appreciate the current problems. When the brand was founded in 1992 by Madam Yue-Sai Kan, it was clearly positioned and benefited from a first-mover advantage — being the first Chinese premium makeup brand designed specifically for Asian skin (Yang, 2013). Supported by a bestselling book by its founder, the brand became successful (Yang, 2013). However, when it was sold to Coty, that firm focused on distribution rather than marketing, and the differentiation was lost. By the time L'Oréal purchased the brand, the environment had changed significantly: many more well-differentiated brands were competing in the market, and Yue Sai had become an older brand associated with an older generation, making it difficult to gain market share (Yang, 2013).

Repositioning Options and Brand Architecture

The environment in China is also one in which there is recognition and affection for history and tradition. Yue Sai was the first Chinese makeup brand, and consumers who were using it in the 1990s may still be aware of this heritage. The current message — positioning Yue Sai as a brand for confident, modern Chinese women — may be built upon while simultaneously incorporating both the newer image and the brand's traditional roots.

The brand may be adapted so that it has two variants. In line with the French-sounding name, it is suggested that the brand introduce Madame Yue Sai and Mademoiselle Yue Sai — one targeting older women and one targeting the younger generation. This may help to build on the tradition established by Yue Sai. There is no reason why many older women would not be attracted to a brand for confident women; as the women who began wearing makeup in the 1990s age, they will need a brand they trust. The Madame variant can serve this purpose, and the current brand message of confidence is likely to resonate with this target market. Products targeting the younger generation may be differentiated through the Mademoiselle variant in the brand name, which implies a younger audience. The core brand message remains the same, but the increased level of differentiation builds on the brand's original foundations while bringing them up to date — combining nostalgia and modernity. This approach could also facilitate a further brand extension targeting men, under the variation Monsieur Yue Sai, or shortened to YS.

If this approach is not preferred and an alternative positioning is required, targeting the brand toward an older market may be viable. While the average age of the cosmetics consumer in China is much younger than the average European consumer, this may be changing as those who first purchased the brand in the 1990s mature. An alternative strategy would be to shift away from the current differentiation and embrace more fully the concept of natural ingredients and Chinese remedies. The brand already has a number of lines that incorporate this approach, and extending further in this direction would allow for a positioning more aligned with traditional Chinese medicine. Adopting this type of strategy could also facilitate distribution through traditional Chinese medicine shops and expand the distribution channels available.

A final potential strategy is a brand extension targeting men rather than women, with skincare products and enhancements, which may also support a premium positioning for the brand.

Cultural Differences Shaping the Chinese Cosmetics Market

With Chinese consumers viewing cosmetics differently from Western consumers, it may be argued that L'Oréal faces a number of barriers as a result of the cultural differences between the Chinese and Western markets. These need to be considered in the way Yue Sai's positioning is supported.

The first consideration is the view taken regarding makeup use. Many Chinese women see makeup as unnecessary, superficial, and potentially harmful to the skin. This means that Chinese consumers do not face the same level of social pressure to use makeup to change or improve their appearance as Western consumers do. This increases the degree of discretion that potential consumers may exercise, and may also act as a constraint on the market. Therefore, marketing messages need to be adapted in order to increase appeal and enhance the benefits associated with makeup use in terms of psychographic and internal feelings, rather than associations with external perceptions.

The second main cultural difference can be seen in distribution. Makeup in China is often sold through a tiered department store system. Tier 1 department stores are found only in the largest metropolitan cities, such as Beijing, with premium brands utilizing tier 1 and tier 2 stores only. This distribution channel can be constraining, as it limits the size of the target market to those who visit those department stores. This is particularly significant when a brand is not gaining market share, as limited floor space is allocated to underperforming brands, and stores will position the brands they believe will generate the greatest sales in the most prominent locations. While this dynamic is not entirely different in Western markets, the access to alternative distribution channels is more limited in China.

The relative lack of a long makeup tradition in China has also increased the openness that Chinese consumers have toward cosmetics, with fewer preconceptions and stereotypes influencing purchase decisions. This open-mindedness means that older brands and traditions are not necessarily viewed negatively, unlike in many Western markets. A trend that illustrates this is the revival of and increased interest in traditional Chinese medicine. This open-mindedness may be seen as offering opportunities for companies to break away from old stereotypes, develop new messages, and attract new customers more easily. It is also a factor that has contributed to the much higher level of sales in the male skincare market in China.

The suggestions made above build on these differences. The current marketing, based on the concept of confidence, already appeals to the internal emotions of the individual. By utilizing the current messages and dividing the brand into two variants — one for the older market and one for the younger market — there is an increased level of targeting that is likely to be well received in a marketplace where consumers have an open-minded approach. Confidence, beauty, and modernity can then be combined with a degree of nostalgia for the traditions of the past, particularly for the variant targeting the older market, whereas the younger market may appreciate the brand's heritage while identifying with contemporary messaging directed at their generation.

A problem that remains is the limited distribution and access to distribution channels, especially given the brand's decline. The reinvigoration of the brand with its existing messages may help to generate a more positive view of the brand among retailers. However, the provision of further branding support — such as point-of-sale material — may also be beneficial in overcoming preconceptions and gaining greater in-store prominence.