Two important business models I learnt recently from Nykaa :
- Creating demand through customer education where the intent to purchase a product in already visible:
Eg. Indian customers are increasingly focused on improving their lifestyles. For instance, when it comes to skincare routines, understanding which products to use based on skin type, how to use them, and when to use them is crucial. However, many people feel confused about product choices, leading to delays or neglect in using beauty products. Nykaa, a market leader in the organized beauty retail sector, has taken proactive steps to educate customers. They engage influencers, organize virtual and physical demo sessions, and implement other initiatives to guide customers effectively, eventually leading to higher sales.
- Should we educate the customer for free?
In Adam Grant’s book “Give and Take,” he highlights an intriguing concept: for eg. when a person or platform provides free education/goods/services, recipients often feel obligated. This psychological tendency increases the likelihood that they’ll return and make a purchase from the same platform/vendor/company which inturn results into higher revenue.
Notably, India remains an underpenetrated market for beauty product consumption. Currently, India’s per capita beauty product consumption stands at $15 annually, significantly lower than the $250 per person per annum in developed markets like UK and USA. However, with the increasing participation of women in the workforce, there is substantial potential for a significant surge in demand within this space.
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