Sharon Kwek
Sharon is Senior Innovation and Insights Analyst, Beauty and Personal Care at Mintel. Based in Singapore, she provides insights on Asia’s beauty and personal care categories.

Within the beauty and personal care industry, Original Equipment Manufacturer (OEM) refers to private label brands. A manufacturer owns and creates the formulations and a brand puts its logo on the product.

The growth of private label has changed the beauty and personal care industry in recent years, and we are also seeing a shift in consumers focusing more on product quality than brand name. Consumers are showing greater acceptance towards OEM brands and products, especially as they assure great quality.

The influence of private label brands has created new hype in the beauty market today, and established brands are feeling the pressure. Faced with this situation, many big beauty brands have bought smaller indie brands to enhance their existing portfolio and to minimise competition.

So what are some of the ways established brands can safeguard their interest and stay competitive in the face of OEM?

Exploiting ingredients knowledge

Agile brands that can take on a start-up mentality, but with the know-how and resources of an established company, have the strongest competitive advantage within formulations.

It is time for already-established brands to not only share the back story about their founders, but to also flaunt their capabilities in having their own manufacturing plants and technological expertise. Ingredients know-how is one of the biggest advantages established brands have in the beauty market.

Anchor innovations to Asia’s humid climate

Climate has become a hot topic, with formulators looking to develop products that are climate smart and can combat changing seasons or weather. The beauty space has seen products that can combat harsh winters or dry summers, but the hot and humid tropical climate experienced in most of Southeast Asia still offers much room for development.

Established brands can create products that specifically cater to the climate within a region to stand out against private labels. A detailed, scientific understanding and explanation of how Asian skin changes and reacts to humidity and high temperature levels will appear more convincing when using this product strategy.

Diane Moist Extra Fresh & Hydrate Shampoo
This shampoo product contains feather keratin protein that hydrates and repairs dry, damaged ends, and is specially formulated and clinically tested on Asian hair with hot and humid climates in mind.

Listen to your consumers

Innovation is defined by trends, no matter how short-lived. It is increasingly important to be perceived as trendy and innovative to sustain interest in today’s consumer landscape. Data collection on consumers, both existing and potential, is pivotal when catering to growing consumer demands. It is also important when beauty companies decide to expand ranges beyond their own expertise.

Private label brands (formerly known as ‘house brands’) have started investing in data collection, and are creating unique and compelling products that grab consumers’ attention. They are also closely monitoring market trends to innovate and appeal to a wider consumer base.

Smartly by Target pinpoints exactly what consumers are looking for in essentials and personal care, namely – lower-priced options that do not compromise on quality and design. Most items are priced under $2. (Source: Target.com)