CONSUMER BEHAVIOUR

PROJECT REPORT & QUESTIONNAIRE

ANALYSIS ON

NYKAA

SUBMITTED TO: DR. MONIKA SURI

SUBMITTED BY: YASHVI BANSAL
BBA(B) 2018-21
 INDEX

1) Introduction……………………………….1-4
(A) The Nykaa Story...…………………..3
(B) Mission and Vision…………………..3
2) Product Line……………………………….5-6
3) Global Reach………………………………7-9
(A) Customer Reach……………………8
(B) Market Reach………………………..9
(C) Competitors’ Reach………………...9
4) Business Model of Nykaa…………………..10
5) SWOT Analysis…………………………11-12
6) Porter’s Five Forces……………...……..13-14
7) Value Chain……………………………..14-17
8) Consumer Analysis……………………..18-27
9) Conclusion……………………………….... 28
10) Recommendations…………………….……29
11) References…………………………….……30
 INTRODUCTION:
NYKAA

Nykaa is an Indian retail seller of beauty, wellness, and fashion

products. It was launched as an e-commerce portal curating a range of
beauty and wellness products. It started with beauty and grooming
prodcuts for women, but have now expanded to men also. It has also
entered the fashion industry with its website for clothes.
Founded by Falguni Nayar in 2012, a former managing director
at Kotak Mahindra Capital Company. The company has expanded
from online only to an omnichannel model and it began selling fashion
products in 2015.

Nykaa is a market leader and a preferred destination for online beauty

and wellness products in India. Nykaa has also opened many physical
stores in two formats called Nykaa Luxe and Nykaa On Trend. The
Luxe format features Indian and international luxury beauty brands
along with Nykaa Beauty, the in-house collection of beauty products.
The latter format has products curated by category basis their
popularity.

Nykaa is one of the few first companies which have brought

international brands earlier not there in our country, and given
customers a safe and trust-worthy space to the customers to access the

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international brands. Nykaa has built trust and loyalty among the
customers over-time.

With almost 400 curated, well priced and 100% genuine brands and
35,000 products, Nykaa offers a comprehensive selection of cosmetics,
skincare, haircare, fragrances, bath and body, luxury and wellness
products for women and men.

In 2015, Nykaa launched its collection of in-house beauty products. In

March 2016, it introduced private products in the bath and body care
category
Nykaa follows an inventory-based model with warehouses in Mumbai,
New Delhi and Bangalore. In addition to its primary ecommerce
business, it has an offline presence via 68 brick-and-mortar stores
across the country. It claims to have over 3 lakh products across 1,500
brands.
Nykaa is purely a private family business. 95% of its stakes are with
the Nayar family. The founder rose only domestic funding for Nykaa
and stayed away from the foreign money to legally do the inventory
business model. Nykaa has 10 investors apart from the Nayar family.
They are: Marico Ltd (Harsh Mariwala and family), TVS Capital Funds
Pvt Ltd, TPG Growth, Lighthouse Funds, Warburg Pincus, Max
Ventures and Industries, Michael Carlos, Dalip Pathak, Atul Nishar and
Sunil Kant Munjal. All of them hold just a minority. (Nykaa
Stakeholders,2019)
(Source of above mentioned data- Economic Times)

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The Nykaa Story
The Mumbai resident founder and the CEO of Nykaa, Falguni Nayar,
is a graduate from IIM Ahmedabad, India. Before launching Nykaa,
she served Kotak Mahindra Capital Co. for 18 years but she quit her
job as she always wanted to be an entrepreneur.
She noticed that there was a huge gap in the Indian beauty line market,
the demand was greater than the available options to buy beauty
essentials and personal care products in the country. This led her to
launch Nykaa with her husband Sanjay Nayar, a banker by profession
and daughter Adwaita Nayar.
Nykaa raised its business funding of about 40 Million USD in multiple
rounds of funding from various investors and generated a turnover of
about 39M USD in the very first 5 years.
In the last 2 years, its revenue has raised to nearly 400%. Nykaa
follows inventory-based business model and content-based marketing
strategy.
All its products are sourced directly from the original label/brand.
Recently with the launch of lingerie, Nykaa attempted to enter the
apparel segment in the market with its website nykaa fashion.

MISSION AND VISION

• Curation
• Information
• Personalisation
Nykaa…your beauty, our passion.
Nykaa believes in offering best choices so that the customers make
selection for their beauty needs. (Source: www.nykaa.com.2019)
The founder believes that Nykaa should stand for Women
Empowerment. Nykaa supports various CSR initiatives and try to be a
socially responsible brand. In a long run, just like fashion and styles,
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Nykaa aims to incorporate beauty into current latest trends. (Source:
Nykaa.com, Beauty at your fingertips,2017)

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 PRODUCT LINE

Nykaa has various product lines, ranging from skin-care, hair, beauty,
grooming for men and women, fashion. Nykaa has been trying to
become a one-stop place for all the needs of a human which involves
grooming, personal care and clothes.

SKIN-CARE

HAIR CARE

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COSMETICS

APPLIANCES/ PERSNONAL CARE/ NATURAL

FRAGRANCE/ MEN’S STORE

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Nykaa also has a wide range of Household Supplies, Lingerie, Bags
And Footwear, Kids Wear and clothes.
Along with the In-House products that Nykaa sells, it also gives the
customers the access to products of different brands, both domestic and
international.
Nykaa, along with these in-house brands also gives the consumers
access to a lot of international brands, it also brings in prodycts that
celebrities makes by having collaborations ike GiGi
HadidxMaybelline, then Kareena Kapoor Collection by Lake.
When you open the application or the website, you will find 600+
products, under the categories of skin care, hair care,

GLOBAL REACH
Global Reach refers to the initiative of the business to increase the
access between a company and their current and potential customers
through the use of the Internet.
Nykaa has launched international shipping to 13 countries as the brand
is working to build a distributive channel function internationally. The
retailer’s entire multi-brand selection of Indian fashion brands and its
own private labels are now available to international customers.
COUNTRY MARKET SHARE
(%)
India 88.87%
United States 4.02%
United Arab Emirates 0.97%
United Kingdom 0.56%
Australia 0.46%
(Source-
similarweb.com)

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CUSTOMER REACH
For a company like Nykaa, customer experience is a key component of
a customer retention strategy. Nykaa’s YouTube channel - Nykaa TV
has more than 5 lakh subscribers with 121 million video views.
More than 45 videos with 80 industry experts and influencers are
created every month, which are also streamed at all Nykaa offline
stores. Hindi tutorial videos targeting Tier 2 & Tier 3, average over
200,000 views per video. Differentiated content according to the niche
has found wide appeal .
Meanwhile, Nykaa’s Infomercials reach out to regional audiences from
Tier 2 and Tier 3 cities just starting out on their beauty journeys with
differentiated content offerings and step-by-step product
demonstrations. (Source- Economic Times)

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MARKET REACH
The cosmetic retail market in India is growing at about a 16% CAGR
and is expected to reach $20 billion by the year 2025. The majority of
growth is shown to take place in the online retail sector as it has been
found to be much more convenient than the other modes. Nykaa is the
leading brands for multi-brand products in the Indian Market.

COMPETITORS REACH
Competitive advantage is about high quality performance. Nykaa has a
distinct competitive edge when compared to its rivals. It operates at a
way too lower cost and commands a good premium price
Nykaa’s category rank under lifestyle, of Beauty and Cosmetic in the
country is 33.

Company Category Rank

Sephora 2
Myntra 13
Style Craze 64
Purplle 189
Beardo 515
Makeup and Beauty 563
The Body Shop 799
The Man Company 2255
Biotique 2379
Lotus Herbals 10134

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 BUSINESS MODEL OF NYKAA
(INVENTORY BASED)

VALUE PROPOSITION-
Nykaa ensures that the people make best choices when it comes
to choosing products according to their needs, and this is
enables by analysing the varied information available.

MARKET SEGMENT-
Target customers of Nykaa is usually women who look for
wider availability of products and information related to how to
use the product. But now, Nykaa is targeting even men as its
expanding its products.

REVENUE MODEL-
Even though middlemen are being eliminated in online business,
Nykaa is still able to make it a sizable profit because of the
discounts and offers they have for the customers. This motives
and entices to the customers.

GROWTH MODEL-
Nykaa has been broadening its product portfolio by focusing on
women, and bring brands like Kay by Katrina Kaif and Kareena
Kapoor Collection on Lakme. They have been opening stores in
many tier 2 and tier 3 cities as the economies of scale in
logistics are higher, and then they aim to bring down the
shipping cost for the customers in these cities directly from the
stores.

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 SWOT ANALYSIS
Strengths

• Nykaa keeps on innovating, as can be seen by the variety in its

product range as it aims at building the customer’s attention and
adapt in the dynamic business environment, and get the first
movers’ advantage.
• Having a wide product range on both its online and offline
stores to avoid the customers shift from Nykaa due to lack of
availability.

• Buying and maintaining an adequate stock to avoid shortage and

underutilisation of resources.
• Nykaa has been successful in being able to shift many social
media users as their potential customers with regular online
campaigns.
• Nykaa is constantly increasing its offering from beauty items to
clothing, health & safety, baby care, and accessories.

Weakness

• It offers free delivery for the order above Rs. 700 which
eliminates some of the aspiring buyers.

• They are still not serving well at handling customer

complaints that can affect the growth of their business.

• Nykaa is charging a flat rate of Rs. 100 for all its orders
also shipping, below Rs. 700 which is quite high and
prevents online buyers to buy a low-cost product.

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 • They are spending low on their research and development
that is weakening their ability to perform well.

Opportunities

• With the rise in e-commerce opportunities, people are attracted to

buy the best in quality beauty products from online store and even
become customers to their offline stores.

• Nykaa is expanding to international borders.

• the company is continuously innovating, with advancement in new

technology, using it to analyse information and enhance customer
experience.

• With the upgraded and modern and fast moving lifestyles, people
are moving more towards e-commerce services for fulfilling their
needs fast as per their convenience that brings in an opportunity for
Nykaa, as it gives them more market to tap into.

Threats

• the rise in a large number of competitors both online and offline

poses a threat to loyal customer relationships.

• The government imposes various restrictions for promoting a

greener environment that leads to heavy logistics costs, paying
environment taxes, and usage of eco-friendly packaging
material.
• As customers reduce their disposable income, Nykaa is affected
by it.

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 PORTER’S FIVE FORCES

BARGAINING POWER OF SUPPLIERS-

Due to the huge number of suppliers in the cosmetic market,
many platforms have their own inhouse brand suppliers. The
share of the internet retailing is 2.9%. HUL has the major share
in personal care and beauty market. There are many brands in
the beauty and personal care market are currently trying to
increase their market share, just like Nykaa. This ultimately
decreases the bargaining power of suppliers due to the
abundance.

BARGAINING POWER OF CUSTOMER-

The existing and potential customer in this industry is huge, and
because of the substitute of these online stores, the customers

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have a high bargaining power. The customers switch easily
because the products are undifferentiated. Indians looks for
price and variety, along with convenience, which is why it is
very important to have a strong loyalty hold from them.

THREATS OF SUBSTITUTES-
Online stores have the brick and mortar stores as their
substitutes. The cosmetic industry requires the physical touch
and connection to ensure customer loyalty. Which is why Nykaa
has adopted the omni-channel strategy.

THREATS OF NEW ENTRANTS-

There are many new entrants in the market, especially as many
celebritiy and influencers are also entering with their own
brands, and with recognition already, get a good hold in the
market. As there are many suppliers, internet is an easily
accessible place and decresing the operational and marketing
cost. Hence a good access to the distribution channel and
transportation cost is required.

RIVALRY AMONG EXISTING CUSTOMERS-

The rivals are fighting based on large variety of brands as they
have to showcase their price, as well as offers and discounts.
They are trying to have a maximum customers so that they can
increase profit. Participants with best services retain the
majority of customers.

VALUE CHAIN ACTIVITIES

The value system of Nykaa is a big part of the market that

includes both distributors and the suppliers. Hence, managing it
properly is very important, as they need to make the right

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 decisions. This makes the manager‘s role very important as he is
solely responsible to observe the company‘s value system.
Manager here is the one entitled to make the decision about where
to have a hold in the value system.

The value chain activities are basically of 2 types:

• Primary
• Supporting

Nykaa has 5 categories of primary value chain activities:

INBOUND LOGISTICS:
These logistics include storing and receiving the inputs for products.
This includes warehousing, handling materials and infrastructure to

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maintain consumer database for the company. It has many warehouses
in Maharashtra and Delhi. Nykaa has currently outsourced most of
these activities.
OPERATIONS:
Operations is the process of transforming raw materials into the
finished products. Nykaa has broad range of operational activities and
it involves collecting information and use them to know the customer
better.
OUTBOUND LOGISTICS:
These are about the distribution of final products to the buyers. They
include wholesalers, distribution channels, retailers etc.
MARKETING AND SALES:
This activity focuses on creating a sales medium or channel where
Nykaa‘s potential customers can buy its products or check them out.
Selecting channels, pricing strategies, ad campaigns, promotional
activities etc, are few of the activities that come under this category.
SERVICES:
Like every other company, Nykaa needs an activity that can keep track
of post-sale data information and maintain it for further successful
usage in terms of the progress of its products. They analyse the
information, save it and use it to better their services.

Nykaa‘s support value chain activities are those that supports its
primary activities. There are 4 such activities.
FIRM INFRASTRUCTURE:
This includes general management, quality management, finance &
accounting, planning and legal services. These activities support
Nykaa‘s value chain completely. The scope of all these activities differ
as Nykaa is a diversified organisation within the industry. Nykaa‘s

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planning and financing strategies are made at the corporate level where
as legal services, accounting and quality management are dealt with at
the business unit level.
HUMAN RESOURCE MANAGEMENT:
In Nykaa, this includes recruitment, selecting & hiring employees,
training, people planning, skill assessment, development, at various
business levels like unit level and corporate level. In a firm, this
particular support activity either affects the competitive advantage or
defines it for the company.
TECHNOLOGY DEVELOPMENT:
Today technology is considered to be the most important factor as it
supports almost everything in an organisation. Tech-development at
Nykaa consists of activities like field-testing, component & feature
design, and process engineering.
PROCUREMENT:
Nykaa uses its procurement activities to make input purchases like raw
materials, machinery needs, lab equipment, supplies & office
essentials, buildings etc. Procurement support activities also use
technology to evaluate a company‘s on-going performance
(Source- ResearchGate)

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 CONSUMER ANALYSIS (SURVEY)

The purpose of this questionnaire survey is to see using thr VAK model
that which type of buyers does Nykaa has the most, and what is their
behaviour when and why they decide to buy the product and also what
Nykaa can do to further better its operations, what more it can add to
its product lines and how the overall customer experience can be
enhanced.
The survey done through the VAK Model.
Visual: People who learn by observing things, and they work best with
lists, written directions and instructions. This includes watching
advertisements, seeing the product, its price and then deciding.

Auditory: People who prefer transfer of information through sounds

and noises. These people go by reviews, word of mouth and get
influenced by it.

Kinaesthetic: People who prefer physical experience and often like to

experiment first, rather than read the instructions. These people try
products because they want to, explore by themselves on the internet,
and like to do things themselves.

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Of the 100 people I surveyed, 61% of them were in the age group of
19-25, which goes pretty well with the stereotype that young girls are
more aware and passionate about make-up and decking up.
This is actually not a surprise because this is trend we have observed,
but now Nykaa has come up with products, especially skin-care
suitable for people who belong to the age groups as you go up.
Nykaa has been marketing its products which target who are in their
late 30s and 40s.
The gender ration of male to female was less(among the 100 people I
surveyed), as I got more response from females, but that will hopefully
change as Nykaa is running many marketing campaigns, hiring male
influencers to promote their umbrella brand ‘Nykaa Man’, where they
make people aware of importance of grooming for brand.
So this is how Nykaa has now planning to expand the target market by
bringing new products all together.

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43% of the people buy the products sometimes, while 15% rarely do,
now this may be a potential target market to tap into, as it has to make
the people aware that they want the product, for a need that they
themselves don’t know yet.
The initial questions set the pace of the survey, and help us know the
dynamics we are working with. It helps us segregate people and analyse
how people who order frequently and those who don’t behave.

64% people together spend ₹0-2500 each month, which isn’t

surprising, while 12% spend more than ₹5000 every month.

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50% of the people buy products from online stores, which tells us that
50% people were they are more auditory in this sense, as they trust
the reviews people write online and go by it.

Also, the 10% who buy directly from manufacturers are also
kinesthetic as they try the products themselves. (Directly from
Manufacturers includes products which are custom-made for the
customers).The 23% account for being visual buyers, as they purchase
after seeing and touching the product and then buy it.

The 15% who buy from sales rep fall under the common area of
auditory and visual, as usually initially to get to use the product, they
use visual method as companies like Amay & Oriflame conduct
demonstrations, and then when they are familiar about the company,
people use auditory method as after trust they even try new products
purely based on recommendations.

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83% people use auditory method as they are ready to buy products
based on listening reviews about them from family, friends and even
celebrities. These people base their decisions on hearing the
information, analyse it and make a decision.
35% rely on visual senses as they decide to buy the product based on
how appealing the advertisement is to them. hence, they enjoy the
visual appeal of the product. The 29% who get influenced by price are
also under the visual category as they see and then decide.
13% are kinesthetic as they are influenced by their willingness to try it.
These people rely on their own experiences and then decide based on
their own experiences, they are more spontaneous believe in just doing
things.

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35% people show auditory behaviour as they got to know about the
word of mouth. 28% people who listen to celebrity endorsement also
fall under the same category. Celebrities have a huge influence on peple
as its been observed that fans often try to imitate the celeb they like and
this creates a very strong influencer culture.

The 46% people are kinesthetic as they explored the brand themselves
on the internet. This is the majority of the people from the surveyed
people.

29% people show visual tendencies as they get enticed by the

advertisements and hence decide to explore the brand. Now this shows
importance of clever ads as sometimes just the visual appeal is enough
for the people to explore the brand more.

23
19% people use auditory senses as reviews are the most important for
them, which means what people say about the product is an important
factor for them while taking the decision. The 20% people who chose
Brand Image also show auditory tendency, as how the brand sounds is
important to them, and how people perceive it matters.

Around 40-50% of the people have given importance to price and

quality which implies they have given importance to visual senses, as
they see and then buy.

The 3% people showed kinesthetic tendency as they mentioned their

willingness and need for products made them shop from Nykaa.

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47% people like Nykaa because the wide range of products it provides.
This isnt a surprising number as we have seen in the earlier part of the
report that how Nykaa has been trying to improve and retain and even
expand its customer base.

42% liked the fact that they can trust the brand and 38% were attracted
by its discounts. This is how Nykaa has even survived the trend of
eliminating middlemen, by giving offers and discounts even better than
the competitors.

Giving discounts along with wide range is what was the USP of the
company, and after they gained the trust, they started pushing more of
their products in front of the customers.

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21% people said their usage was affected and this can be credited to
auditory as they must have been listening to the news etc and 60%
said that their usage weren’t affected as such, these are kinesthetic
people as they do what they want based on their will and experience.
21% of people still said they were ordering general necessity products
as the pandemic had just begin. This shows their trust in the brand and
the brand’s efficiency to adapt to changes.

26
54% said their usage was affected in the pandemic and 33% didn’t
order anything, this must be because of the things that were doing
rounds at the time regarding the containment of the virus with
packages, if this is the case, then these customers used auditory sense.

The 49% of the people who prefer that the brand include more high-
end products are kinesthetic, as they want to try on new products
explore new things.
The 31% are visual as they want more sizes products, and want try them
to see which one is most convenient to them and best suited for them.
33% roughly fall under the auditory category as they are attracted to
the deals and trust the product based on what is being said about them
in respect to the discounts and deals and hence the increased word of
mouth.

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 CONCLUSION
Hence, concluding this, as can be seen, majority of the cases, show an
auditory behaviour, followed by kinesthetic and then visual tendencies.
This means that most people from the ones surveyed, behave and get
influenced in terms of their buying behaviour, based on what they hear,
the transmission of information through noise and sound.
And then a slightly less number of people showed the kinesthetic
tendencies, where they don’t believe in written instructions and do what
they want. They take decisions based on their own experiences.
The visual tendency is when a customer takes decision based on what
they see, how it appeals to their eyes.
This tells us, Nykaa as a brand, should know how important word of
mouth is for the company, that most people have tried the brand just be
hearing, which is why it is important for it to keep the customers happy
and satisfied as they cannot control what people say about their
company but they can influence it greatly. And especially in a business
which is traditionally dominated by physical stores, requiring a sense
of touch and feel, its really important they maintain they image and
keep on strengthening the customer’s trust in them, as customer loyalty
is significantly one of the primary goals of a business like this because
of how easy it is to shift to different brands in this industry.
The kinesthetic buyers want new things to experience, which is why
innovation comes in, as Nykaa as a company has to cater to all the needs
of the people. They have to give the customers something new to try
von, new things and products to experience.
For the visual buyers, Nykaa has to focus on physical stores even more,
and provide them with the best cost.

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RECOMMENDATIONS:
From the above analysis, it can be said that Nykaa should focus on
utilising its strengths to make the most out of the available
opportunities.
It should enhance both its primary and support activities within its
value chain and Managers should be giver proper training so that they
make the best decisions possible.
Nykaa has proven to have filled the gap between supply and demand
of cosmetics in India by maintaining adequate inventory level. Nykaa
has 35% market share and is leading the market in the country. After
building the reputation of being genuine and selling 100% real products
of various brands (both local & global) including its own label of
production, it is time Nykaa brings in further big international brands
under its umbrella.
This expansion will boost its business thereby helping it retain the
position of the market leader in the future also.
After having the digital success, Nykaa is now trying to expand its
offline presence, by bringing up more brick and mortar shops. Nykaa
has eventually been an e-retailer that started with 100+ brands and
moved into being one-stop shop for all our premium needs by offering
600+ brands and more than 20 luxury brands on its business platform.
Nykaa has been extremely successful with its business model and its
on-going strategies, especially with the omni-channel strategy. It is
already doing great in India, both digitally and physically. The Nykaa
Luxe range has helped it enter into the luxury segment and further
enhance its image. It already has 80 shops set-upped across the nations
and is planning to open more.
Nykaa has already collaborated with a lot of international brands, now
it sould look towards expanding its territory in the internation
boundaries, and look for a bigger market to tap.

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Currently, not many companies provide multi-brand luxury products
on their websites or in stores, which can be completely trusted. Hence,
this creates a room for Nykaa to become dominant in its market but it
has to tap into that fast as we know business operates in such a dynamic
environment.
Nykaa would do well even internationally, if it carefully design it’s
strategies as it did for the Indian Market.

REFERENCES:

1. Research Net (diagram of value chain)

2. https://www.google.com/search?q=nykaa&rlz=1C1RLNS_enIN81
2IN813&sxsrf=ALeKk00uxcarVldV8yv-
NUJNKrBS81G3hw:1606943654168&source=lnms&tbm=isch&sa
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ECBQQBQ&biw=1366&bih=625#imgrc=dB9hSLZBMCeSMM
3. https://www.google.com/search?q=porters+force+of+nykaa&rlz=1
C1RLNS_enIN812IN813&oq=porters+force+of+nykaa&aqs=chro
me..69i57.5455j0j7&sourceid=chrome&ie=UTF-8
4. https://www.skyramtechnologies.com/blog/nykaa-24x7-beauty-
store-a-case-study/
5. https://lapaas.com/nykaa-business-model-detailed-case-study/
6. https://vue.ai/blog/trends-and-analysis/nykaa-a-beauty-industry-
disruptor/
7. https://www.businessballs.com/self-awareness/vak-learning-styles/

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