Consumer Behavior in the Beauty Market: A Behavioral Economic Perspective on Emotional Influences

Bencsik Laura Anna (2024) Consumer Behavior in the Beauty Market: A Behavioral Economic Perspective on Emotional Influences. Külkereskedelmi Kar.

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Absztrakt (kivonat)

Hungary has a long lasting tradition of wellness and relaxation as we can see from the many spas and thermal baths Hungary has. This tradition dates back centuries, people have always put a lot of emphasis on their well-being. Hungary has many thermal baths, which can indicate that the people of Hungary place importance on their appearance and selfcare, which indicates the importance of the beauty market. Hungary’s revenue from spa services has always been high, from 2012 to 2019 the revenue rose from 30,241 million Forints to 57,752 million. There was a decrease during covid, but by 2022 it has gone back up to 60,686 million Forints (Statista, 2022). Hungary's beauty sector has grown steadily in the last few years. The market for makeup, skincare, hair care, and beauty services is still growing because people value their looks and personal care. In Hungary, the revenue in the Beauty & Personal Care market is projected to reach US$1,009.00m in 2024. The largest segment in this market is the Personal Care segment, which is estimated to have a market volume of US$453.40m in 2024 (Statista, 2024). Hungary's beauty market is divided into a number of categories, such as personal grooming, skincare, makeup, fragrance, and hair care. Every segment meets the varying needs and interests of its customers. In this paper we will be focusing on skincare and makeup. In Hungary’s beauty market there are both international and domestic brands competing against eachother. Alongside regional products that address particular tastes (such as ​​ALMOST 1.618, BABA, Elyn's Lab, etc.), major international beauty corporations are present in Hungary (such as L'Oréal brands, Estée Lauder, MAC Cosmetics, Clinique, etc.). In Hungary, a range of channels are used to distribute beauty items, such as departmental stores, specialty beauty shops, internet merchants, retail stores, and direct sales channels. A vast array of products are available to consumers via offline and online channels. You can find the product of you choice both in a Tesco, a drugstore (such as DM or Rossmann) and both in their official stores (referring to international brands, such as MAC Cosmetics). More and more Hungarian customers are looking for premium beauty products with noticeable effects. Demand for natural and organic beauty products is rising, as is the demand for products that target particular skincare issues including sun protection, hydration, and anti-aging. The perfect examples that support this fact is the new and upcoming Hungarian skincare brands, which are focusing more and more on this issue. In the past few years many new brands entered the market focusing on these demands, such as Elyn's Lab and ALMOST 1.618. Just like in every other sector, in the beauty industry there are certain rules that need to be followed. These can be both national and European guidelines. For companies in the beauty industry, adherence to laws pertaining to product safety, labeling, and advertising is crucial (European Comission, 2022). Hungary's beauty sector is dynamic, with new developments and trends influencing customer tastes and market dynamics. Consumers in Hungary are becoming more interested in emerging trends including digital beauty experiences, tailored skincare, and clean beauty (Roman Ustymenko, 2023). Globally speaking, the beauty sector is a constantly evolving field, and Hungary’s market is no exception to that. There is a lot of already existing literature about consumer behaviour in various areas, but the beauty industry lacks studies. The knowledge of the complex interactions between customer emotions and purchase decisions in the Hungarian beauty sector is still noticeably absent. Already existing studies focus on rational parts on the consumer decision making process. These studies primarily focus on brand reputation, product attributes and how pricing affects consumption. Consumer behaviour is especially important in the beauty industry, since there are constant emotional driving factors behind purchasing these kinds of products. Products in the beauty industry can be associated with the self-expression of individuals, since people use make-up and other cosmetics to achieve the desired versions of themselves. The aim of this study is to fill in the remaining gaps left by already existing literature, while diving further into the role of behavioral economics and economic psychology in shaping consumer emotions, attitudes, and motivations within the Hungarian beauty industry. This study seeks to unravel hidden motivating factors behind purchasing. Just like in every other sector, businesses in the beauty industry should understand consumer behaviour and emotional factors in order to thrive in a highly competitive market. Although it is not a need, but by understanding the field of behavioral economics, businesses can learn more about the motivational factors behind their customers’ purchasing decisions thus keeping customer loyalty and providing a positive experience for their consumers. It is also important when creating marketing strategies for already existing and new products, because by understanding the driving factors behind each purpose, firms can target their audience better. Like many other regions, the Hungarian beauty market is characterised by strong brand competition, changing trends and dynamic consumer tastes. Therefore, to create marketing tactics that work, improve customer engagement and ultimately increase sales, companies need to gain insight into the elements that influence consumer behaviour and emotional responses. In the beauty industry it is crucial to understand what could be some of the motivating factors behind purchasing decisions. It can be stated that within the beauty sector, purchases are mostly driven by the desire to express one’s self and identity, enhance the physical appearance of the individual, self care and wellness. In recent years make-up became a primary form of self expression, or the means to creativity. Recent trends included graphic eyeliners, bright colors, and complicated patterns. This is all to show that people use cosmetics as a form of self expression. Besides these creative trends, the latest focus was on glass like skin, which is aimed to achieve by either using light make-up or the use of carefully chosen skincare products (RealSimple, 2023). Enhancing physical appearance can be talked about within skincare, make-up and haircare as well. People aspire to be their most aesthetic selves, whether it is regarding perfect skin, luscious hair or beautiful make-up. According to the Nation Insitute of Mental Health (U.S.A.), self-care is an essential tool for bettering an individual’s mental health. Forms of self-care can be different for everyone. Some might consider exercise as variation of self-care, while others might look at sleep and beauty items as forms of self-care. Eventually, the term self-care is used to describe actions (in this study purchases) that improve one’s health. Inititally the efficiency and performance of certain products is crucial when researching consumer behaviour in the beauty industry. Within this sector, people seek specific results in products, once again, from clear skin to luscious hair, etc. Prior to purchasing, consumers seek evidence of the effectiveness of the product. Value perception is also relevant when talking about consumer behaviour in the beauty industry. Based on the previously mentioned needs of consumers, they do their research and during this phase value perception is significant. Moreover, brand reputation is incredibly fundamental within the beauty sector. Brand reputation is the key to building trust with customers, thus creating customer loyalty. In order to achieve brand loyalty, companies need to be transparent with their customers about the quality of their products as well as their policies (Investopedia, 2023). In recent years environmental factors also became important within shopping habits, these can also influence brand loyalty (Bateh et al., 2014). The younger generations are more environmentally conscious, thus prefer options that also support these standpoints (Tyson, Kennedy and Funk, 2021). This could include looking at a brands bigger picture, such as supplier chains. Gen Z is focused on these pressing issues, thus trying to find alternatives that reduce their environmental footprint, such as buying second hand clothes or supporting local businesses (Forbes, 2022). Since it is unsanitary to buy used beauty items, people try to select items that do the least harm on the environment. Packaging waste can be considered a pressing issue as well, since in the beauty industry most packaging can not be reused. There were some attempts to reduce packaging waste, for example companies creating refillable options. These are some great initiatives, but unfortunately are not greatly executed so far. In the hair care industry it is easily adaptable to purchase refills and not rebuy the whole packaging, but unfortunately this can not be done for all areas of the beauty industry. Every cosmetic has a best before date, and most the packaging does not make it possible to clean the container, thus eliminating the possibility of refills. Some high-end make-up brands are in the process of implementing refillable options, such as REN Clean Skincare and La Mer, but sadly these brands are not available in Hungary (Harper Bazaar, 2023).

Intézmény

Budapesti Gazdasági Egyetem

Kar

Külkereskedelmi Kar

Tanszék

Nemzetközi Gazdaságtan Tanszék

Tudományterület/tudományág

NEM RÉSZLETEZETT

Szak

Nemzetközi gazdálkodás

Mű típusa:	diplomadolgozat (NEM RÉSZLETEZETT)
Kulcsszavak:	beauty industry, behavioural economics, consumer attitudes, consumers' preferences, economic psychology, emotional influences
SWORD Depositor:	Archive User
Felhasználói azonosító szám (ID):	Archive User
Rekord készítés dátuma:	2024. Szep. 26. 08:02
Utolsó módosítás:	2024. Szep. 26. 08:02

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