There’s no place like home – or is there? 

There’s no place like home – or is there? 

It’s the modern day story of David and Goliath. On one side of the ring we have the large multinationals taking up shelf space – a stash of cash and global dominance on their side – on the other side we have the homegrown talent, proving their worth through consumer loyalty and a strong ‘story’ behind their smaller brands.

Indeed, most countries have long been privy to a market-share battle between homegrown beauty brands and those in-your-face multinational stalwarts that often take up more shelf space than their local counterparts thanks to high production power and a hefty bank balance behind them to drive manufacturing capabilities. The recent launch of part-Lauder-owned Dr Jart+ in Sephora stores across the Middle East (the ‘next China’, apparently) springs to mind.

But the question is, where do consumer loyalties lie, and what drives this said loyalty – if in fact there is any?

Needless to say that, as with any industry, price is a factor. Isn’t it always? And with the multinational brands offering a lower price point due to the high volume of products produced and put on shelf, it’s often a deciding factor. As an example, according to a recent global survey conducted by Nielsen, homegrown brands hold less than a fifth of market share in Singapore, as consumers prefer well-known international labels.

In fact, such as is the hold of these cosmetic multinational superstars in Singapore, that 44 percent of consumers prefer the global brands over homegrown products, with as few as 10 percent choosing those created on their home soil.

That said, price is most certainly not the bee all and end all. In fact, it seems that building a strong relationship with the consumer is the ace up the homegrown brand’s sleeve. And it seems to be working. Well, in some areas at least.

Local brands in Indonesia account for more than half of the market, while penetration of homegrown marques in Thailand grew 34 percent between 2012 and 2014. Not too shabby.

But while these domestic brands are eating into the market share in some areas, it’s clear that many consumers are happy to forego patriotism in favor of saving a penny or two. And who can blame them? Times are hard. So just what can the local brands do to try to win the battle of David and Goliath?

According to Joan Koh, Managing Director of Nielsen Singapore and Malaysia, “Homegrown brands ought to accentuate their relevance to the local consumers and establish the right relationships early. With their understanding of local preferences, Singapore brands can innovate in areas of unmet and emerging needs, maximize efficiency and be agile about responding ahead of the competition.”

However, it seems that it’s not just the bigwig powerhouses that are looking to take a slice of international markets, and the homegrown talent is less eager to rest on its laurels – eyeing its own growth move into new soils. Let’s look to Russia; due to the country’s shrinking GDP, many local companies are currently expanding internationally to offset the ramifications of the devaluation of the Russian currency against the euro and the U.S. dollar.

And if Koh is right, it’s time to build the relationship with the consumer in order to stand out amongst the sea of lower-priced well-known brands. Let battle commence. 

 

 

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