Into the Era of Hero Product
- Chaileedo Press
- Dec 19, 2022
- 5 min read
Currently, Chinese beauty brands achieve double growth in performance and word of mouth by virtue of a hero product.
The rise of a brand is often predicated on the rise of a hero product which also can break through the market.
In cosmetics, international giants have always been considered the head players of the "a hero product" strategy. But in recent years, many Chinese domestic brands also adopted the same strategy. Some of their hero product achieved sales of over 100 million yuan, supporting the strong growth of the brand. This signifies that Chinese domestic beauty products may have entered the era of hero products. So, what is the effect of this strategy?
Hero-product strategy is popular
The creation of a hero product that can cross the time cycle is the key to the longevity of a cosmetic brand. Speaking of hero products from beauty brands, Estee Lauder Advanced Night Repair, Lancôme Advanced Genifique, SK-II Facial Treatment Essence and other classic products from international brands, all of them have experienced generation after generation of product innovation and upgrade. It also came across a long period of market competition and become the product of word of mouth. With the deepening of the Chinese and international beauty market, Chinese beauty brands have also begun to create their own hero product, which helps brand innovation breakthrough.
According to incomplete statistics, since 2020, the head of Chinese beauty companies has repeatedly mentioned "hero product" and "hero-product strategy" in the company's annual report and public response. Since 2020, when PROYA began its transformation proposing to upgrade from a channel-driven strategy to a product-driven brand. It also implemented a hero-product strategy. Since then, the term "hero-product strategy" has been appearing in PROYA's financial reports and announcements.
Since this year, BTN also proposed to "continue to consolidate the market position of hero product and in the sector of sensitive skincare brand". Bloomage Biotech also said, "adhere to the hero-product strategy. The hero-product strategy in Biohyalux, QuaDHA, Bio-Meso is beginning to bear fruit". S’Young also clearly "focuses on the creation of hero product". Marubi proposed to "vigorously develop hero products with core technology". It can be said that the hero-product strategy has become a common method (strategy) of Chinese local beauty products.
In fact, a mature beauty brand also needs a hero product as strategic support. BTN Group co-founder Dong Junzhi has publicly said that the brand must have a hero product in the early days. For example, Winona only stressed its Anti-sensitive Moisturizing Tolerance-Extreme Cream in the past ten years. A strong impression of "Winona = Anti-sensitive Moisturizing Tolerance-Extreme Cream = focus on sensitive skin" has been created in the minds of consumers. Now we also recognize that Winona is an effective skincare brand. It is easy to see that the hero product has a self-evident role in the brand to hit the market and stabilize its position.
Achieving double growth in performance and word-of-mouth
According to PROYA's public data, PROYA’s hero product on Tmall channel accounted for about 60% of the total for the whole year of 2021, including about 70% of the hero product for the Chinese Double 11 Shopping in 2021 on Tmall channel. In the first half of this year, the combined hero product accounted for 35%+ of the PROYA, 65%+ of the Tmall platform, and about 50% of the TikTok platform. "The proportion of hero products in this year's Chinese 618 Shopping Festival has further increased and exceeded that of last year's Chinese Double 11 Shopping Festival," said PROYA at an investment exchange in July this year.
As pushing the sales performance, the hero product also contributed to improving the gross margin and the unit price. In the analysis of the reasons for the increase in sales gross margin in the first half of 2022, PROYA said that the hero-product strategy has brought about an increase in gross margin, and the proportion of high-margin categories such as essence has further increased (gross margin of essence is 78%). The first three-quarters of PROYA's 2022 financial report also mentioned that the price of skincare category in the third quarter increased by 27.72% year-on-year and the price increase was mainly due to the increase in sales of its hero products with higher unit price (essence and cream category) year-on-year and the increase in revenue share.
It is easy to see that while hero products are increasing sales, the brand is also building a product matrix around its hero products in order to form a scale effect and lay the foundation for long-term brand development and image building. Huang Xiaodong, chairman of Mask Family, also said that compared to the previously popular pop-ups, hero products can continue to bring incremental growth to the brand. "Hero products must be explosive, while these products can extend the category to drive the sales of the whole brand."
From making explosive products to making brands
PROYA, as a traditional Chinese cosmetic brand, quickly caught the fast train of e-commerce and social media to become one of the few successful traditional beauty companies. Its hero-product strategy is also often considered by outsiders as the key to PROYA's comeback. Guotai Junan Securities analysis, the successful implementation of the hero-product strategy marked PROYA into a new growth phase of brand development.
The transformation of PROYA is also the epitome of Chinese national beauty from making explosive products to creating large single products and further solidifying the brand image. Previously, Korean cosmetics brands and innovative Chinese cosmetic products launched new and explosive products at a quick pace with the help of marketing, which strategy was chased after by many other brands. But it is difficult to last only relying on a marketing-driven explosive model.
Jiang Ligang, general manager of Hangzhou Ruiyan Qianzhan Biotechnology Co., Ltd. said, "The hero product is a must-have that will be upgraded year after year and can be sold continuously. The head of the Chinese national cosmetic brands shifted their strategy from the explosive products to hero product because the hero product can be sustainable." In the 2022 third-quarter earnings presentation, PROYA said that the hero product should have the characteristics of just-needed, long-term, high gross profit and high repurchase. Essence, cream and other categories, anti-aging, repair and other efficacy of the product has the potential to become hero products.
It is true that explosive products are the key to winning Internet marketing. But with the changing market environment and increased competition, It never goes out of fashion to create sales by product strength. The hero products that enjoy their own strength are likely to really drive performance growth and breakthrough. The brand identity eventually feeds back the product, forming a positive cycle. As Jiang Ligang said, "the arrival of the era of hero product means that the Chinese national product is building a brand. After the fall of the capital-generated newcomers, the left is returning to the road of brand building."
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