Student: Karolina Bielecka (W1665869)
Tutor: Kyung-Joon Kwon
Chosen company for CW1: Sainsbury’s
Chosen company for CW2: Nyx Cosmetics
Nyx Cosmetics was found by Toni Ko in 1999 in Los Angeles. She named the company after a Greek goddess of the night, who also symbolised beauty and power. The company started as the founder noticed a market gap between luxury and mass market makeup brands. Her first products that were developed and sold were lip pencils and jumbo eye pencils. They were sold for 1.99$ a piece which was a bargain compared to the prices of the top brands like
MAC Cosmetics. The brand made $2 million in sales by the first year.
Few years later, after the economic crash in 2008 many of shoppers who were previously buying a high-end product decided to go for more affordable solution and started to buy from Nyx. Moreover, the founder decided to boost the sales even more by sending packages of free cosmetics samples to YouTubers and vloggers all over the world, so they could test and promote her products worldwide. By reaching out to influencers the company has recorded sales of $120 million in 2014.
In the same year Toni Ko decided to sale her company and to do that she put it for an auction where the highest bidder at that time was L’Oréal which bought Nyx Cosmetics from her for $500 million. In 2015 Nyx was awarded as Brand of the year in Women’s Wear Daily Beauty Inc Awards. It recorded an annual of sales/revenue of $148 million in year 2016. Today the brand has more than 2700 items in its catalogue, around 12.2 million followers on Instagram and 1,915,493 likes on Facebook. It has also generated over 1.6 billion impressions on YouTube.
“NYX is a dynamic company that has done a tremendous job of harnessing the power of social media, digital marketing and multi-channel distribution. Both L’Oréal and NYX share a passion for innovation and a confidence in the strength and vitality of the colour cosmetics market.” said Frédéric Rozé, President and CEO of L’Oréal USA.
Thanks to historical analysis Nyx is one of the fastest growing companies in consumers and services industry. Company has also a wide market size in comparison to its challengers. It has 4000 stands spread across 35 countries. For those who prefer to shop online Nyx has well-constructed page on which you can for example select your perfect foundation. You are able to do so, as one of the search stages helps you find product that will match your skin tone as well as have the finish fitted to the preference. The packaging of products has a huge influence on the buyers as well. Nyx packaging is always well thought off, colourful and carefully created. As Cristina Bartolucci, the chief creative director said out of concern for the environment, they never use more packaging than they need to. Additionally, company offers decent quality and professional makeup services at low cost.
On the other hand, the quality of the products may be not good enough for the clients who visit regularly high street brands like Urban Decay or Benefit. This maybe a huge weakness of Nyx in the competition with the luxury brands. Also since the beauty industry started to grow really fast in the past few years the products can be duplicated at even cheaper price, which may reduce number of customers for them. (tu cos mozesz dodac)
One of the biggest opportunities for Nyx is to keep expanding the market through social media. Trying to reach the customers by television adverts or billboards may bring them new group of clienteles, including older women who are not familiar with social networking. It would hugely increase the number of customers likewise the number of sales.
Nyx Cosmetics also has it threats as the beauty industry is expanding widely, there are a lot of new companies coming to the market with even more wallet-friendly prices. This can be huge disadvantages for Nyx since loads of their clients purchase their product due to being one of the most price worthy brands. Further, since Nyx is not a type of drugstore neither high quality brand, it also has a lot of strong and older competitors which have a stable position at the market and have loyal customers who don’t mind overpaying for something that satisfies them through the years.
Nyx produce their products in China. Cosmetics imported into the UK currently receive a 6.2% duty tax. (DutyCalculator, 2014). Moreover, Foreign Cosmetics Companies are required by law of China to test their products on animals. Cruel as it sounds all the beauty brands selling or producing there must undergo animal testing.
Colour cosmetics, sometimes seen as a sign of consumer confidence was the best performing category delivering over £1.64 billion to the British economy, as only the lips sector saw decline whilst the nail products (generally a cheaper treat) saw the best growth. (CTPA Annual Report, 2016). Since Nyx Cosmetics position in the beauty industry is growing really fast, they’ll take part in delivering more and more income to the British Economy. The UK cosmetics industry is predicted to see rates of growth of around 0.06% per year, bringing its value of £2.25 billion in 2013-14, to reach a value of £2.32 billion in 2018-19. (Yahoo Finance UK, 2014).
Unlike many of their competitors, Nyx Cosmetics does not work towards manufacturing hypoallergenic products. They’re also unable to market themselves as “cruelty free” as they products are product on the lands of China. Due to that many of beauty influencers and consumers may refuse to purchase from them due to the image that this may leave, as it may be deemed as support for animal cruelty. In opposition to this ‘…a study found that women who wore makeup were perceived as more competent than those not wearing makeup.’ (Savvysyndicate.blogspot.co.uk, 2014) Thanks to those kind of reflections the sales of cosmetic products may be driven up.
Nyx has beautiful and fully functional website (www.nyxcosmetics.co.uk) where they feature all new trends and special offers. Along with this they updated social media pages systematically. On Instagram, for instance, the brand accounts for 7% of interactions with Beauty brands in L2’s Digital IQ Index: Beauty, despite accounting for a far smaller percentage of posts.(Rosen, 2017) Moreover, social content comes into play elsewhere in the store on a broader scale in the form of a digital content wall. Makeup trends, top-selling items and most-liked products appear on the wall and, with a tap, users can learn more about the featured products and find them in store. Nyx is also incorporating video tutorials into the stores in the form of a “Beauty Bar,” a hub for digital screens that display video blogger content.(Digiday, 2017)
Nyx Cosmetics comply to all legal requirements that must be followed in order to handle production of cosmetics. Their website states that they ‘comply with the strictest worldwide regulations’ Along with this, they abide ‘Personal Data’ guidelines regarding information held about their customers.
Chief creative director said in one of the in one of the interviews that out of concern for the environment, they never use more packaging than they need to. They also won Self Healthy Beauty Award. However, since most of Nyx products are produced in Asia, the firm cannot deny using animals to test their products.
Porter’s Five Forces
Competitive Rivalry – High
The degree of rivalry in the market is high. As a lot of people may not be aware, it turns out that 182 beauty companies belong to one of seven huge manufacturers. These seven mega-companies — Estée Lauder Companies, L’Oréal, Unilever, Procter and Gamble, Shiseido, Johnson and Johnson, and Coty — employ thousands of people around the world and make billions of dollars in revenue every year.(cytacja bi) Moreover, there are numerous companies that work on the same customer segment. To distinguish themselves, brands use high-impact marketing campaigns and prices cuts.
Supplier Power – Low
Key suppliers in the beauty industry are chemical companies and mineral producers. The materials used in the production of beauty products, such as essential oils and mineral products, are easy to find and commonly available. Thanks to that fact, the switching costs are low, so they do not strengthen the suppliers’ power. The suppliers’ power is also minimized by the fact that they are small-scale companies compared to large cosmetics manufacturer.
Buyer Power – High
Buyers of beauty products have a huge opportunity to choose in which store they would like to buy and their choice is endless. Competition that reign right now is massive and because of that fact customers have more options to choose from. In beauty industry, brands are the ones who needs to attract and encourage the client to go buy in their store. They use promotions, discounts, loyalty cards to keep the buyer with them. Nowadays, value of specific brand or product matters as if all the vloggers or influencers decide to say that one particular item from one particular brand is outstanding from all the others, that is where demand going to grow.
Threat of New Entry- Low
These days to enter and compete with already established companies is close to impossible. The cost of entering the market is very high and it takes long period of time to have a firm position in the industry, if at all. Buyers usually search for items from the brands they have already tried or those recommended to them. They are unwilling to spend money on beauty treats from an unknown source.
Threat of Substitution – High
There are multiple beauty brands that sell similar products and can be easily substitute one with another. The companies are usually easy accessible and available in various locations. Often we can find different beauty stores next each other, which fight for customers daily. Due to that fact every company tries to be up to date with what’s competition is planning as otherwise, they would be replaced with other brand that’s trying to grow.
Nyx Cosmetics is sold in 70 countries and has around 4000 stands all over the world. It is also available online. The brand expands every year to attract different markets. In 2015 it gained +78.0% like-for-like sales growth. In 2016 they have opened a french e-commerce site. NYX was also named number 19 in the L2 Digital IQ Index of 106 beauty brands.
Nyx Cosmetics updates their products range every year, even recently it has launched their holiday collection including advent calendars with lipsticks, cosmetics sets and many more. Through the years Nyx has also developed into producing makeup brushes, removers, nail products and accessories.
Through strong advertisement, especially social media, Nyx Cosmetics increased their brand visibility and value. Since their online relevance was quite high, Nyx decided to begin with every year contest, NYX Face Awards, a competition between make-up artists.As indicated by 2017 statistics, the brand is likewise at the fourth place in ranking of most popular beauty brands on Instagram. It is through solid promoting that the brand’s picture and message achieves the wanted statistic effectively.
Nyx Cosmetics doesn’t make any moves to diverge from its roots. It have expanded its lines and created new products but every one of them has always been beauty related. Nyx is trying to focus on what it doing best to grow and beat higher set firms.