Marketing Strategy for Skin of Gold

28th March 2016

I would like to share an early-stage project with you, to give you a feel for the approach I’m designing to creating new marketing strategies.

So in this post I would like to share my thought process (so far) and to start to explore the reasons why a particular marketing strategy makes sense.

My ultimate goal is to break down the logic of “when this, do that” for all small-business marketing strategy decisions, so that the process of deciding what to do becomes simpler for all of us.

The product in question here is called “Skin of Gold” and it is a small-volume, artisan-made face cream produced in the United States. (See the current website: http://skinofgold.com)

skin-of-gold-skin-cream

The product itself is distinctive. Here are just a few key points…

  • The product contains pure 24ct gold (which has powerful antibacterial properties) as well as silver and a range of other organic natural ingredients.
  • It is made about once per month in small quantities (production literally happens in a dedicated room in the maker’s home).
  • The makers, Botanical Joy, claim it can positively help to reawaken the skin’s own natural healing abilities, and they have told me a number of stories of the cream’s effectiveness against blotches and other skin conditions.
  • The majority of sales are to repeat buyers.

Short Circuit

Let’s do a brief Circuit analysis, as a sanity-check…

  1. Brand: There is very little about the Botanical Joy brand, which is okay, as when you sell a single product, the product pretty much is the brand. The website does mention that they donate 15% of profits to environmental causes.
  2. Product: From what I can see, the product is excellent and unique, with a reasonable number of positive testimonials. The product is free from a range of ingredients found in even well-known brands (e.g. Lancôme) that the makers say are toxic.
  3. Proposition: The overall (global) proposition is that the cream can replace your moisturizer, toner, and serum. (Works with all skin types, including combination dry/oily skin.) That means you can simplify your skincare routine, saving time and possibly money.
  4. Problem: Can address a range of skin problems, possibly including aging. There is an issue that the sellers are prohibited by law to claim certain benefits (even if they’re true).
  5. Market: Primarily women over the age of 30, in the USA, Canada, the UK, and also Australia (where skin health is a much bigger issue and the benefits of gold are better known). Customers are likely to treat their skin with great care, and will be sensitive to issues around holistic health.

Initial Notes

It’s Far Too Cheap!

One of the first things that occurred to me is that the product is too cheap! A one-month supply (50ml bottle) currently sells for $47, however I believe many women will happily pay much more than that — particularly considering the exclusivity (low volume), cost of ingredients, and the fact that this one cream could negate the need for a range of other treatments.

Why?

I would advise putting the price up from $47 to $99 (if not more), which will have a dramatic effect on profits. (If the product costs say $15 to produce, $47 means a gross margin of $32, whereas a $99 price point would deliver $84 — 162% MORE profit for a price increase of 110%.)

Additionally, I would argue that an affordable price might set inappropriate expectations for the target customer. You expect a $47 product to be as good as other products in that general price range. But you expect an exclusive $99 product to be at least twice as good.

Play on Exclusivity

I love to flip potential perceived negatives into positives. In this case, the product is produced in very small batches, which might be viewed as “unsuccessful”, however it could be flipped into “artisan” and “exclusive.”

Why?

Exclusivity can create urgency, which would also lend itself to price elasticity (i.e. prospects and customers might tolerate a higher ticket price).

Add into the mix the fact that the majority of production goes to repeat customers and demand could be heightened further.

Packaging

I have also suggested to Botanical Joy that the bottles themselves could be reviewed, to suit a more up-market angle.

Why?

I think the product design itself should more closely match the specific features of the brand and the product.

Compare the current packaging to one alternative that I found in minutes on Alibaba.com.

skin-of-gold-bottlegold-bottles

So I would recommend making more extensive use of the colour gold, and I also like how the alternative bottles connote other high-end healthy products (specifically royal jelly), which can only be a positive association.

My Proposed Strategy

After consideration, and taking into account the fact that it would not be feasible to increase production too fast, the crux of the strategy I would propose is a challenge.

You know the kind of thing…

Try Skin of Gold for One Month, and IF You're Not Convinced It's THE BEST Skin Product You Have Ever Used, Return Your Empty Bottle to us for a 100% Refund!

Remember the Pepsi Challenge?

Remember the Pepsi Challenge?

The problem I now face is to decode WHY a challenge backed by a money-back guarantee could be the right approach!

The idea here is that, if I can figure out the factors that make this a good strategy, then next time I come across a business with a scenario that matches the same combination of relevant factors, we could assume that the same strategy should be considered.

That process is the crux of Open Source Marketing.

After deconstructing the relevant factors, the next step of the process is to revisit the Circuit to ensure that each factor is represented by questions. (In future, my ultimate goal will be to automate the strategy process into some kind of wizard!)

(That’s why I have added a few more questions to the Circuit today. It keeps getting better — and longer! But the good news is that, by constantly testing this process with new case studies, we’re building a comprehensive and truthful model that can in theory be applied to any marketing challenge!)

Break it Down

So now comes the hard part… Why is “challenge” a good strategy??

Here are my ideas so far.

  1. Great product, with tangible, demonstrable benefits (*). This may seem obvious, but we need to be confident that our product will actually deliver on its promises if we’re going to make a powerful claim for ditching your existing product/s. In this case, we can!
  2. Emotive topic (*). Women who care about their skin (and aging) can really care! Clearly, there is some inertia we have to overcome with our call to “take the challenge” so we’ll need to be confident that the benefits we’re promising are not just realistic but emotionally engaging too.
  3. “Switch” proposition (*). We’re taking the position of a challenger brand/product, and asking customers to ditch their existing (incumbent) products and to try our product instead for a fixed period of time.
  4. High margin (*). This is a requirement for a money-back guarantee. You have to be able to honour every request for a refund without hesitation. Of course, this is much easier for digital products (which have a near-100% profit margin) and trickier for services (which have a hard cost), so where there are real costs (i.e. services and physical products) there must be sufficient margin for a MBG to be viable.
  5. High customer loyalty (+). This may not be a critical factor, rather a positive factor. Basically, a regular repeat purchase pattern reinforces the high margin, effectively creating higher LCV (lifetime customer value), thereby further off-setting the risk.
  6. Minimal cost/risk of switching (+). We’re not asking someone to switch car brands or move house here. And we’re not asking them to commit to spending $100s per month. In fact, it may be that (even at a higher $99 price point) they could end up paying no more than they spend now on their beauty régime. Also, if they don’t prefer our product, there’s very little risk, as they can just go right back to what they were using before. I’m also listing this as a positive factor (+) rather than a key factor (*), because of course we are often persuaded to spend significant amounts when we are convinced of the benefits and value.

Test the Assumptions

Next, we can do an intellectual exercise where we ask the question…

Should we assume that the “Challenge” strategy could apply in every case where these same factors are evident?

I don’t think we can ever say that with 100% certainty, because we could find counter-indications in future case studies that override or negate these factors. However, I would say that, in principle at least, we can be confident that the answer to the question will be affirmative.

Later Phases

Note: My marketing strategy includes more steps and phases, including rolling out a continuity program (“get the product for a significant discount if you subscribe to receive one bottle every month”) plus expanding the market through carefully-selected affiliate partners. However, taking a lean approach, none of those will apply until we have first tested and proven the immediate assumptions.

Please Comment!

I’d love to get your perspective. Is there something I’ve missed? Or do you disagree with my conclusions?

Please share your thoughts. This is an open-source process, so everyone’s view counts. Thanks 🙂

Ben Hunt

About the Author

Ben Hunt

Ben Hunt has over 20 years' experience in web design and marketing, and has written numerous books, courses, and presented at seminars round the world. In 2010 Ben created the world's most complete web design course, and in 2015 founded Open Source Marketing.

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Nathaniel Grinnell

Yes, I think it is priced to low, and the higher price point is the correct one. You could stamp the higher price on the package and offer a limited time offer at the lower price point.

Brian Mcfarlane

Hi Ben,
Proactiv uses this same strategy so i do not really see anything new coming out of your process here. i would suggest looking at this report by marketplace in Canada. that basically states if you are paying more than $25 for face cream your being ripped off.
http://www.cbc.ca/news/health/remedy-or-ripoff-5-things-to-watch-out-for-1.2817483

Rather than using a guarantee that is already a marketing tactic that is currently used by many, i would focus more on the user stories.
I would focus on the premium creams that are $250 and up and show the value of this cream at a much lower price point and focus more on volume sales and upsells.
thats my 2 cents on it.
cheers
Brian Mcf

    Ben Hunt

    Thanks Brian. The point here is not to come up with a novel and unique strategy.. The whole point of open source marketing is to come up with a standardized system that we can use to help filter those approaches that are most likely to be effective. I agree that user stories could be very powerful.

Geoff

This is great, Ben. I’m really looking forward to seeing how this develops, and the idea of a wizard to effectively generate a marketing strategy matched to the specific business is AWESOME! I’d love to see that. I’d love to use it right now in fact.

What’s intriguing me about this whole idea is the fact that the process is already happening in our heads as marketers – in this article you say “After consideration” and boom, you’ve got your initial idea for a strategy. The inputs are there, and the output just happens, after a bit of thinking and brainstorming. It’s what’s going on in that “consideration” bit that would be so useful to have as a process that can be held externally and updated and improved.

It’s a noble cause, and reminds me of this quote about having a proven method for advertising campaigns. I think the same sentiment applies to this endeavour to produce a “scientific” method for creating marketing strategies rather than just doing everything or going with your first best guess:

“Such methods, still so prevalent, are not very far from their end.
The advertising men who practice them see the writing on the wall.
The time is fast coming when men who spend money are going to
know what they get. Good business and efficiency will be applied to
advertising. Men and methods will be measured by the known
returns, and only competent men can survive.
Only one hour ago an old advertising man said to the writer, “The
day for our type is done. Bunk has lost its power. Sophistry is being
displaced by actuality. And I tremble at the trend.”
So do hundreds tremble. Enormous advertising is being done
along scientific lines. Its success is common knowledge. Advertisers
along other lines will not much longer be content.
We who can meet the test welcome these changed conditions.
Advertisers will multiply when they see that advertising can be safe
and sure. Small expenditures made on a guess will grow to big ones
on a certainty. Our line of business will be finer, cleaner, when the
gamble is removed. And we shall be prouder of it when we are
judged on merit.”
(“Scientific Advertising” Claude C. Hopkins)

    Ben Hunt

    Thanks Geoff, love that book. (Anyone who hasn’t read “Scientific Advertising” read it now! I’m sure you can find the PDF online.)

    It also reminds me of this short video featuring David Ogilvy > https://www.youtube.com/watch?v=Br2KSsaTzUc

phil

Your product sounds great, but your strategy doesn’t seem to reflect its nature and makes your approach incongruent with your desired outcomes. You’ve listed multiple compelling points of difference between your product and the markets leading branded offerings and then seem to of dismissed these strengths in favour of a strategy that is down market, and geared towards mass market consumption to grow global volume (seriously, the pepsi challenge?!?!).

Your brands marketing key focus areas need to emphasise:

1. The innovative evolution your product represents.
2. The fact that is replaces a raft of other products on your dressing table (a bona fide combination product).
3. Its production methodology as an artisan and bohemian product.
4. Its provenance and that of its ingredients.
5. the fact that it will always have limited availability, ensuring exclusivity.

The wisdom of the masses states that if I’m looking for silk, I don’t buy cotton, and if I’m looking for the best silk, then I don’t start my search in places that sell cotton…

Your customers need to find this product in environments they would expect to find the best, the most innovative, the most exclusive and the most efficacious products in this category, because that’s where they’re going to be looking for them, and thats where they’re going to be willing to pay the right price for them.

Your product needs to be congruent with its surroundings, and your current strategy is like taking a Jimmy Choo sandal and selling it in a hobnail boot store.
And I know you already know this stuff, so I wonder why you’re asking (Too much)???

    Ben Hunt

    Great analysis, thanks Phil.

    You’re right that this “strategy” is incomplete. The truth is that, tactically, it’s a starting point very much aimed at getting a short-term increase in sales (which I failed to mention). Long-term, yes, perhaps we should be looking at carefully selecting outlets to sell through.

    Why am I asking? Because I don’t have enough bandwidth to process all these case studies on my own. The whole point of Open Source Marketing is to invite the rest of the world’s “hive mind” to help with the massive challenge of decoding how we sell.

Ausman Nkhata

I just wanted to say ur strategies are correct,for example on packaging of this bottle it must be on appealing way that its also lotion not like a chemical for insects,the labeling must also be in cute way that targeted customer must assure its exclusivity of product.

In terms of price if it is new the can use each kind of price strategy the want according to your suggestions, coz this will determined of their future and current finance targets and market trends,or production cost.

Thus all I just wanted to Share Ben,I am a student In Malawi studying Marketing Management.

    Ben Hunt

    Thanks for your feedback Ausman. I appreciate it.

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