Graduation Project

Strategic Analysis for Nykaa Fashion and Revised Consumer

Profiling

Submitted by

Jyoti Kaushik

IN PARTIAL FULFILLMENT OF THE POST GRADUATE DEGREE “MASTER

OF FASHION MANAGEMENT (MFM)”

Submitted to

Department of Fashion Management Studies (FMS)

National Institute of Fashion Technology (NIFT), Mumbai

 Graduation Project

Strategic Analysis for Nykaa Fashion and Revised Consumer

Profiling

Submitted by

Jyoti Kaushik

Under the Supervision of

Mr. Tanmay Kandekar

Assistant Professor

IN PARTIAL FULFILLMENT OF THE POST GRADUATE DEGREE “MASTER

OF FASHION MANAGEMENT (MFM)”

Submitted to

Department of Fashion Management Studies (FMS)

National Institute of Fashion Technology (NIFT), Mumbai

i
 DECLARATION

I Jyoti Kaushik, hereby declare that the Graduation Project (GP) entitled “Strategic Analysis
for Nykaa Fashion and Revised Consumer Profiling” is the result of my own research work
carried out by me during the period from 7th January 2019 to 30th April 2019 except as cited
in the references. This report has not been submitted to any other University or Institution for
award of any degree/diploma etc.

Jyoti Kaushik
MFM/17/23
Date :

ii
 CERTIFICATE

This is to certify that Ms. JYOTI KAUSHIK of National Institute of Fashion Technology
(NIFT), Mumbai has successfully completed his/her GP work titled “Strategic Analysis for
Nykaa Fashion and Revised Consumer Profiling” in partial fulfillment of requirement for the
completion of 2 Years Post Graduate Programme “Master of Fashion Management (MFM)”; as
prescribed by the Department of Fashion Management Studies (FMS), National Institute of
Fashion Technology.

This “Graduation Research Project” report is the record of authentic work carried out by him/her
during the period from 7th January 2019 to 30th April 2019 under my mentorship.

Tanmay Kandekar
Assistant Professor
NIFT Mumbai
Date :

iii
iv
 ACKNOWLEDGMENT

I am grateful to Nykaa Fashion and National Institute of Fashion and Technology, Mumbai for
providing me with an opportunity to conduct this graduation project as a part of our course. The
completion of this report wouldn’t have been possible without the help and guidance of faculty
members, family and friends. First and foremost, I’d like to extend my deepest gratitude to my
industry mentors Ms. Pooja Das and Mrs. Deepam Sequeira, secondly I would like to thank my
faculty mentor Mr. Tanmay Kandekar for constantly guiding me through this project,
contributing stimulating suggestions and supervising us in the completion of this report. Thank
you so much for always being so encouraging and having faith in me.

I also appreciate the kind cooperation of the respondents and thank them for helping me with the
survey. Finally, I’d like to thank my families and close friends for being so supportive of me
during this project.

Jyoti Kaushik

MFM/17/23

v
 RECOMMENDATION (INTERNAL JURY)

Proceedings of the Master of Fashion Management Graduation Project Internal Jury Examination
of Ms. JYOTI KAUSHIK held at _______________am/pm at NIFT, Mumbai. The GRP
Internal Jury Examination of Ms. JYOTI KAUSHIK on her MFM GRP report entitled
“Strategic Analysis for Nykaa Fashion and Revised Consumer Profiling” was conducted in
the _________________________am/pm.

The following members of the Internal Jury were present.

1. _____________________________________
2. _____________________________________
3. _____________________________________
4. _____________________________________

vi
 JURY RECOMMENDATION FOR AWARD OF MFM DEGREE,
NIFT MUMBAI

The Research scholar Ms. JYOTI KAUSHIK presented the salient features of her GP work.
This was followed by questions from the External Jury members. The questions raised by the
Jury Examiners were also put to the scholar. The scholar answered the questions to the full
satisfaction of the jury members. Based on the scholar’s research work, her presentation and also
the clarifications and answers by the scholar to the questions, the board recommends that Ms.
JYOTI KAUSHIK be awarded the Master Degree In “Masters in Fashion Management
(MFM)”.

The following members of the Internal Jury were present.

1. _____________________________________
2. _____________________________________
3. _____________________________________
4. _____________________________________

vii
 TABLE OF CONTENTS

EXECUTIVE SUMMARY xi
1. INTRODUCTION 1
1.1. About the Project 1
1.2. Problem Statement 2
1.3. Objectives 3
2. COMPANY PROFILE 4
2.1. Nykaa.com 4
2.2. Introduction to Nykaa Fashion 7
3. PART 1: STRATEGIC ANALYSIS 9
3.1. Segmentation, Targeting and Positioning 9
3.1.1. Segmentation 9
3.2. Competitive Analysis 11
3.3. Marketing Mix 12
3.4. SWOT Analysis and TOWS Matrix 18
3.5. IFE, EFE and CPM Analysis 21
3.6. Key Data Indicators for Nykaa Fashion 24
4. PART 2: CONSUMER PROFILE AND MARKETING MIX REVISION 26
4.1. Review of Literature 26
4.2. Research Methodology and Design 29
4.3. Sources of Data 29
4.4. Sampling and Sample Size 30
5. FINDINGS, ANALYSIS AND SUGGESTIONS 31
5.1. Findings 31
5.3. Revised Consumer Profile 37
6. CONCLUSIONS 38
REFERENCES 40

viii
 LIST OF IMAGES

Image 1.1 Retail Ecommerce Sales In India, 2015-2020 1

Image 2.1 Nykaa Beauty’s Overall Principles 4
Image 2.2 Nykaa’s Key Milestones 5
Image 2.3 Nykaa’s Key Numbers 6
Image 2.4 Nykaa Fashion’s Business Model 7
Image 3.1 Nykaa Fashion’s Customer Profiles 10
Image 3.2 Nykaa Fashion’s Product Mix 13
Image 3.3 Nykaa Fashion’s Promotional Principles 15
Image 3.4 Nykaa Fashion’s Perceptual Map 1 17
Image 3.5 Nykaa Fashion’s Perceptual Map 2 17
Image 3.6 Nykaa Fashion’s Perceptual Map 1 18
Image 5.1 Nykaa Fashion’s Awareness Creating Channels 31
Image 5.2 Price Points Customers Are Willing To Pay 33
Image 5.3 Most Important Factor For Nykaa Fashion’s Customers 33
Image 5.4 Most Liked Factors For Nykaa Fashion’s Customers 34
Image 5.5 Most Disliked Factors For Nykaa Fashion’s Customers 34
Image 5.6 Most Important Factors For Non Customers 35
Image 5.7 Most Disliked Factor In Nykaa Fashion Non Customer 35
Image 5.8 Preferred Websites For Non Users Of Nykaa Fashion 36


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 LIST OF TABLES

Table 3.1 Nykaa Fashion Competitive Analysis 11

Table 3.3 Nykaa Fashion’s Tows Strategy Analysis 20
Table 3.3 Nykaa Fashion’s Internal Factors Evaluation 21
Table 3.4 Nykaa Fashion’s External Factors Evaluation 22
Table 3.5 Nykaa Fashion’s Internal Factors Evaluation 23
Table 5.1 Average Scores Given By Respondents 37

x
 EXECUTIVE SUMMARY
This project aims to conduct a strategic analysis on Nykaa Fashion’s current business model and
find out the gaps in the existing brand positioning and marketing mix. As Nykaa Fashion is a
very young website, it is continuously undergoing several experiments in terms of their business
model and their marketing strategies. It faces the basic struggles that any start-up faces,
understanding the customer base and creating brand recognition & brand value are the biggest of
these challenges. As the website first started out as a premium to luxury fashion destination for
fashion conscious women, it has since discovered that they are not meeting the expectations of
their customers and have been largely unable to convert the visitors on their website into buyers,
while the lack of awareness about Nykaa Fashion contributes to these issues there are several
undiscovered factors contributing to these problems. This project aims to uncover these hidden
factors and closely analyze the existing practices to find areas of improvement regarding the
same. The project is divided into two parts, the first part focuses on analyzing Nykaa Fashion in
terms of internal and external factors affecting the business, a brief comparison with the other
competitors in the market and the kind of strategies that can be suitable for them through the use
of strategic matrices. The second part of the project focuses on brand repositioning and revised
consumer profiling, in light of the available data for the brand and a consumer survey. Through
the findings of the first and second part of the project, a new customer profile for Nykaa Fashion
is created.

xi
 1. INTRODUCTION
1.1. About the Project

The fashion and lifestyle industry in India is experiencing a boom, with strong factors of growth
and a plethora of other factors giving rise to its progress. Currently at $100 billion and growing
at a CAGR of 8-10% offline, the segment gradually seems to be embracing online as the channel
of the future, evident from a projected penetration of 15-20% over the next 5 years, from the
current 4%. India has 450 million internet ever accessed population which is expected to grow by
62% to 729 million by 2020. Of this, 310 million is the active internet accessing population,
accessing the internet at least once a month. This number is expected to increase by 35% to
419Mn by 2020. Total number of online transactors were 200 million in 2017 and they are
expected to increase by 65% by 2020. Of the online transactors, 60Mn is the base of online
fashion shoppers. 

This is estimated to double by 2020 to about 120Mn. Nykaa Fashion has entered this market
while it is experiencing good growth numbers and a lot of growing opportunities. The online
fashion scenario in India has many players already which are playing in many different price
ranges and catering to a wide variety of fashion needs. A growing number of businesses aim to
enter the premium to
luxury online selling as
India has an increasing
number of customers
who want to buy
premium and luxury
goods. The increasing
disposable income and a
very young market also

IMAGE 1.1 RETAIL ECOMMERCE SALES IN INDIA, 2015-2020

supports the growth of such a businesses. This project aims to conduct a strategic analysis on

1
Nykaa Fashion’s current business model and find out the gaps in the existing brand positioning
and marketing mix. As Nykaa Fashion is a very young website, it is continuously undergoing
several experiments in terms of their business model and their marketing strategies. It faces the
basic struggles that any start-up faces, understanding the customer base and creating brand
recognition & brand value are the biggest of these challenges. As the website first started out as a
premium to luxury fashion destination for fashion conscious women, it has since discovered that
they are not meeting the expectations of their customers and have been largely unable to convert
the visitors on their website into buyers, while the lack of awareness about Nykaa Fashion
contributes to these issues there are several undiscovered factors contributing to these problems.
This project aims to uncover these hidden factors and closely analyze the existing practices to
find areas of improvement regarding the same. The project is divided into two parts, the first part
focuses on analyzing Nykaa Fashion in terms of internal and external factors affecting the
business, a brief comparison with the other competitors in the market and the kind of strategies
that can be suitable for them through the use of strategic matrices. The second part of the project
focuses on brand repositioning and revised consumer profiling, in light of the available data for
the brand and a consumer survey.

1.2. Problem Statement

Nykaa Fashion first started out as a premium to luxury fashion destination for fashion conscious
women, it has since discovered that they are not meeting the expectations of their customers and
have been largely unable to convert the visitors on their website into buyers. The premium to
luxury buyers trust the well established websites more for their shopping and the mass to
premium buyers find very little options on Nykaa Fashion. The best selling brands are still the
ones with the cheapest price points and the inclusion of such brands has diluted the initial brand
positioning statement. Since it is a start up and continues to face competition from other fashion
websites with huge financial backing and brand value, it struggles to leave a mark on the market.
Hence, a need arises to analyze the current functioning of Nykaa Fashion to recognize its

2
standing in the market among its competitors, conduct a customer survey and come up with a
new positioning statement and widen the target audience by revising their customer profiles.

1.3. Objectives

To conduct a strategic analysis for Nykaa Fashion, and identify revised consumer profiles
to increase market coverage:

1. To conduct a basic strategic analysis to clearly understand Nykaa Fashion’s standing in

the market

a) To study the STP and marketing mix

b) To do a competitor analysis and SWOT analysis

c) To analyze Nykaa Fashion’s strategy through strategic matrices


2. 2. To assess the level of awareness about Nykaa Fashion among the target audience

a) Analyze awareness about Nykaa Fashion among customers

b) Suggest ways in which customer outreach can be increased


3. To understand customer behaviour for existing customers


b) Frequency of purchase

c) Preferred categories

d) Issues faced with Nykaa Fashion

3
 2. COMPANY PROFILE

2.1. Nykaa.com
Nykaa is a multi-brand beauty retailer based in Mumbai that is selling cosmetic and wellness
products. Nykaa was founded by Falguni Nayar, the former Managing Director of Kotak
Mahindra Capital Company. Nykaa started out as an online retailer in April 2012. Nykaa is an e-
commerce website that offers beauty and wellness products from all the leading brands all across
the world such as Lakmé, Kaya Skin Clinic, L'Oréal Paris and several others. The company
raised money through multiple rounds of funding. In July 2014, it raised INR 20 crore in funding
from private investors and raised around INR 60 crore in Series B funding in October 2015 led
by TVS Capital. Nykaa ended its last loop of funding by raising INR 104.3 crores led by Max I
India post which VC firm Max Ventures and Industries acquired a 2% stake in online cosmetic
and wellness brand. Nykaa uses an inventory model with warehouses in Mumbai, New Delhi,
and Bangalore.

IMAGE 2.1 NYKAA BEAUTY’S OVERALL PRINCIPLES

4
Nykaa has its offline presence in 35 stores and expanding. It has over 1300+ curated brands and
35,000 products. Nykaa’s main target customers is the 22-35 age group. Apart from the website
and applications, Nykaa has 2 offline store concepts– Nykaa Luxe and Nykaa On Trend. The
Luxe concept offers Indian and international luxury beauty brands along with Nykaa Beauty, the
in-house collection of Nykaa. The On Trend concept is one of its kind in the market with
products curated on the basis of their popularity in the market. In March 2016, Nykaa came up
with privately produced merchandise in the bath and body care category. Nykaa launched its own
collection of in-house beauty items in 2015 with nail paints. And since then, they have launched
their own line of beauty and skin care products such as lipsticks, foundations, oils, creams etc.

IMAGE 2.2 NYKAA’S KEY MILESTONES

Nykaa broke-even in 5 years of its operation. It does not offer heavy discounts and follows a
very premium kind of approach when it comes to business. The key factors working in Nykaa’s
favor are the increasing demand of makeup and wellness products in India, the authenticity it
provides to its customers and the kind of reviews, tips and beauty advice it gives in the form of
blog videos and articles. Nykaa, as an omni-channel retailer of beauty products, could well be
on its way to become the next billion-dollar Indian company. Nykaa has raised Rs 100 crore
from private equity firm TPG Growth at a valuation of $724 million, company filings sourced
from business intelligence platform Paper.vc, showed. This means, in just six months, the

5
 IMAGE 2.3 NYKAA’S KEY NUMBERS

company’s valuation has more than doubled. In September 2018, when Lighthouse Advisors
invested Rs 113 crore to buy out early investor TVS Capital, Nykaa was valued at $330 million.
Avendus Capital advised on this deal. Earlier, in 2018, the start-up had also raised Rs 160 crore
through primary and secondary share sale. TPG Growth’s Rs 100 crore investment gives Nykaa a
spectacular jump in post-money valuation. The private equity firm’s investment gives Nykaa a
Rs 5,027 crore ($724 million) valuation. The raise comes after a long hiatus in institutional
investment in the cosmetic platform. Nykaa.com has become the 4th largest beauty retailer,
globally in the year 2018.

The growth of Nykaa.com has been a success story which can be seen in the way customers trust
Nykaa.com as well as the numbers which are speaking for themselves. Nykaa.com has over 39
million monthly visits with over 14 million unique visitors. Nykaa has now become a household
name with over 3.4 million active users monthly.

6
2.2. Introduction to Nykaa Fashion

Nykaa Fashion is the fashion vertical of its parent company Nykaa.com. It was initially launched
in 2018 by the name Nykaa Design Studio. Adwaita Nair is the CEO of the company and her
vision was to create a one stop fashion destination for premium and luxury designer wear for a
well aware Indian woman. The website started with big designer names such as Anita Dongre,
Abu Jani Sandeep Khosla, Amit Agarwal etc. Since then the website has roped in over 150
brands, in only a span of 1 year. These brands include the fresh and independent designers from
all across India.

IMAGE 2.4 NYKAA FASHION’S BUSINESS MODEL

The company leadership decided to change the name from Nykaa Design Studio to Nykaa
Fashion in January 2019, as customers were getting confused as to what a design studio implies

7
in the case of Nykaa. Nykaa Fashion provides an indulgent online shopping experience through
carefully curated designer labels and collections both, contemporary and Indian styles for every
occasion at premium to luxury price points. There is a separate domain for the Nykaa Fashion
website but a link also appears on www.nykaa.com by the name Nykaa Fashion. Nykaa Fashion
operates on a Just-in-time marketplace model. Wherein as and when an order is placed by the
customer, a purchase order is raised for the vendor. Nykaa Fashion gets a commission on the
order. The cost of sending the product to the Nykaa Fashion QC center(one located in Delhi and
another in Mumbai) is to be borne by the brand, whereas the cost of shipping to the customer is
paid by Nykaa Fashion.

Nykaa Fashion continues to on-board new brands such as W, Aurelia, Forever 21, etc. There is a
dilution in the brand positioning because of this as Nykaa Fashion wants to present itself as
something far more premium than the likes of Myntra and Jabong.

8
 3. PART 1: STRATEGIC ANALYSIS

3.1. Segmentation, Targeting and Positioning

3.1.1. Segmentation

The following characteristics can be sought for in a customer for a business such as Nykaa
Fashion:

Demographics: Women and Men in the age group of 20-50, belonging to upper middle class to
upper class of the Indian society, single/ married/ nuclear families/ joint families, high disposable
incomes, easy access to information, educated and aware

Geographic : Tier 1 and Tier 2 cities of India

Psychographic : Innovators, Achievers, Strivers and Experiencers
Behavioral:
• Well versed with world cultures
• Fashion savvy
• High value for trends and fashionability
• Status seeking behavior
• Give importance to brands and designer wear
• Value Indian craftsmanship and design

Lifestyle of Indian Women :

• Shift towards more fashionable lifestyle and products.
• Consumerism on rise with increase in product offerings and ranges.
• Fast paced routines and work schedules.
• Appreciation of national trends and brands.

9
• Rise in disposable income.
• Socially influenced and media oriented interactions.
• Rise of digital awareness
• Convenience-over-money approach in youth.

3.1.2. Targeting

Nykaa Fashion currently has the following 3 customer profiles, all these profiles are based in tier
1 cities, with high disposable incomes belonging to affluent social classes from upper middle
class to upper class of the Indian society. The following image comprises of a detailed
description of these customer profiles, however as the website has been in action for almost a
year now the financial matrices point to the fact that these customer profiles need revision.

Nykaa
Fashion
Customer
Profiles

IMAGE 3.1 NYKAA FASHION’S CUSTOMER PROFILES

10
3.1.3. Positioning

The current positioning statement of Nykaa Fashion is, “Nykaa Fashion provides fashion
conscious Indian women with all their fashion needs, while inspiring them to make fashion
choices that best suit them.” The planned positioning statement talks about the fashion conscious
Indian women and a strong emphasis on curation from the brand’s side. However, the current key
performance indicators for the website have clearly shown that there is some gap in this
positioning as the customers have perceptual gaps.

3.2. Competitive Analysis

In an increasingly fashion friendly market of India, there are several players which have been
competing directly and indirectly in the online shopping arena. Nykaa Fashion has just recently
entered this space, as there are several experimentations going on in terms of their offerings and
operational model.

Brands Pernia’s Aza Nykaa Myntra Jabong Tata Cliq

Pop Up Fashion Fashion Luxury

Target Market 23-45 23-50 23-45 All age All age 20-40
Age years(Men years(Men, years(Only groups(Men, groups(Men, years(Men,
and Women and women) Women and Women and Women and
Women) Kids) Kids) Kids) Kids)

Target Social Upper Upper Upper Middle Class- Middle Upper Middle
Class Middle to Middle to Middle to Upper Middle Class-Upper to Upper
Upper Upper Upper Class Middle Class Class
Class Class Class

Brand USP High Customer Undefined Price Website Trust and

Curation Orientation as the competitive experience reliability
model +Fashionable
keeps
changing

Price Points 2500-8 2000-12 500-3 lakhs 200-40000 200-40000 2000-80000

lakhs lakhs

11
Brands Pernia’s Aza Nykaa Myntra Jabong Tata Cliq
Pop Up Fashion Fashion Luxury

Online/Offline Both Both Online Online Online Online

Return 48 hours, 10 days 48 hours, 30 days, 15 days Mostly non-

Policies credits return refund return & return & returnable
refund refund

Variety of High Very High Low Extremely Very High Medium

Brands High

Fashionabilit Very High Very High High Medium Medium High

y

Customer High High Low High Medium Medium

Loyalty

TABLE 3.1 NYKAA FASHION COMPETITIVE ANALYSIS

It faces competition from websites playing only in the premium to luxury segment such as
Pernia’s Pop Up Shop and Aza Fashion as well as websites which are targeting the mass to
premium segment such as Myntra, Jabong, Tata Cliq. The above table shows the major
competitors for Nykaa Fashion, the table analyses all the competitors on the basis of certain
parameters in comparison with Nykaa Fashion. As it is clear from the table that Nykaa Fashion
currently struggles to leave a mark in the online fashion business as neither has it developed
brand value nor has it recognized its USP. While it keeps shifting from luxury to premium to
mass brands, it has an unclear image not only in the mind of the consumer but also in the minds
of the brands as they do not understand whether or not it is in line with their brand image to be
present on the Nykaa Fashion website or not. Among the competitors of Nykaa both in the
segment of premium to luxury and mass to luxury all other players are in a better position than
Nykaa Fashion as all these brands have better recognition among customers, whereas Nykaa
Fashion is not well known among customers.

3.3. Marketing Mix

3.3.1. Product Mix

Nykaa Fashion has a product mix basically focussed on women consumers and does not offer
any products for men. It has a variety of assortment for women’s ethnic and western wear. They
have also recently included jewelry, footwear and bags.

12
IMAGE 3.2 NYKAA FASHION’S PRODUCT MIX

13
3.3.2. Price Mix:

Although Nykaa Fashion initially wanted to play in the premium market, they have since
included several mass brands such as Aurelia, Global Desi etc. The price mix for their products
category-wise are as follows:

1. Ethnic Casual Wear: 500- 70,000 INR

2. Ethnic Occasion Wear: 2000- 300,000 INR
3. Western Casual Wear: 500- 30,000 INR
4. Western Occasion Wear: 1500- 100,000 INR
5. Footwear: 1200- 12,000 INR
6. Jewellery: 500- 40,000 INR
7. Bags: 700- 30,000 INR

3.3.3. Place:

Nykaa Fashion currently is present in 4 forms:

1. WWW.NYKAAFASHION.COM : Nykaa Fashion as a standalone website

2. Nykaa Fashion Mobile Application : As a mobile application available on android and iOS
3. Nykaa Fashion Pop-ups : As a very frequent medium of presence in tier-1 cities, Nykaa
Fashion organizes pop-up shops
4. As a part of Nykaa.com : Nykaa Fashion appears as a link on the Nykaa beauty website
which gives it more visibility

3.3.4. Promotion:

1. Nykaa Fashion uses Instagram as its main promotional channel, it has recently started doing
editorial shoots and youtube ads.

14
2. It uses Pop-ups as a frequent promotional activity.
3. It gives new user discounts for 10%.
4. The sales offered on brands usually ranges from 10% to 30 %.
5. It organizes discounts during festivals and fashion seasons but does not want to come across
as a discount oriented brand.
6. A lot of cross promotional activities are done on the Nykaa Beauty website and social media.
7. It has a blog and all major social media handles.
8. Often uses bloggers and models to promote the products.
9. Email marketing is also a preferred promotional activity as it shares a customer database
with Nykaa.com.
10. Styling videos on Instagram are a very effective promotional activity for Nykaa Fashion.

IMAGE 3.3 NYKAA FASHION’S PROMOTIONAL PRINCIPLES

15
3.3.5. People

A very young workforce which includes the executive team, brand management team, cataloging
team, purchase order team, marketing and social media team, styling and graphic designing
team, customer service team, and logistics team.

3.3.6. Physical Evidence

The Nykaa Fashion website has a very premium appeal, however the user friendliness of the
website is questionable since the filters do not work properly. The mobile application is also a
very neat and premium app and works better than the website in terms of usability. The logo,
color scheme and imagery all give out a very premium and classy vibe. The packaging used is
high quality and reusable. The return policies of Nykaa Fashion can be very unviable for
consumers but from a vendor perspective they work very well.

3.3.7. Process

Nykaa Fashion works on a JIT marketplace based model which has been earlier mentioned in the
company profile. Usual markdown gross margins are from 35%-45%, where high profile brands
give lower commissions to Nykaa Fashion. The brands are first judged on the basis of suitability
with Nykaa Fashion, then margins are negotiated after which an agreement is signed by both
parties. After this the brand sends their catalog and images to Nykaa Fashion which are then
uploaded on the website.

Perceptual map: The map below shows that Nykaa has a gap that it can fill which is the
massage to affordable luxury part of the map. Currently, Nykaa Fashion has very comparable
price points as Pernia’s pop up shop/Aza/Tata Cliq Luxury but at the same time these brands
have a very clear image as premium to luxury designer wear platforms whereas Nykaa Fashion’s
inclusion of cheap brands such as Aurelia, W, Forever 21 dilutes their message of being premium
to luxury. Brands such as forever 21 and Anita Dongre being present on the same website cause

16
confusion in a customer’s mind. Nykaa Fashion will have to address this problem and play in a
very clear way such that their brand identity is very apparent to the target customers. Revenue
growth in this industry takes time but diluting the brand image may prove to be counter-intuitive
in the long run, unless the brand decides to reposition itself.

IMAGE 3.4 NYKAA FASHION’S PERCEPTUAL MAP 1

IMAGE 3.5 NYKAA FASHION’S PERCEPTUAL MAP 2

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 IMAGE 3.6 NYKAA FASHION’S PERCEPTUAL MAP 3

3.4. SWOT Analysis and TOWS Matrix

The following is the SWOT analysis for Nykaa Fashion dot com across the areas of operations,
marketing, finance etc.:

Strengths:
1. Strong brand value of its parent brand Nykaa.com
2. Huge customer database from Nykaa.com
3. Low customer acquisition costs
4. Flexible operational model- JIT and Marketplace
5. Young workforce, well aware of the target customer
6. Focus on homegrown brands with high fashion quotient
7. Data based cost effective digital marketing

18
Weaknesses:
1. Catering to a very small customer segment due to very high price points
2. Customer perception as a portal for ethnic wear
3. Inability to provide high discounts in a price sensitive market
4. Curations are not detail oriented
5. Repetitive tasks in the cataloging process
6. Data collection not streamlined
7. Low conversion rate

Opportunities:
1. Demographic dividend of India a consuming age group
2. Positive investment sentiment in the market
3. Increasing disposable income
4. Aspiration based purchasing an increasing consumer trend
5. Increasing acceptance of digital shopping
6. Increased fashion consciousness among Indian women
7. Increasing demand for Indian designer brands

Threats:
1. Environmental concern regarding fashion waste may lead to strict government regulations
2. Complex tax system with GST
3. Increasing regulations for online businesses
4. Increased fear of data theft among consumers
5. Extremely cheap fashion products on Asian websites

19
TOWS matrix is given below for Nykaa Fashion which combines Internal and external factors to
come up with some strategies to help their business:

Strengths Weaknesses
TOWS MATRIX
Internal factors / external factors 1. Strong brand value of its parent 1. Catering to a very small
brand nykaa.com customer segment due to very
2. Huge customer database from high price points
nykaa.com 2. Customer perception as a portal
3. Low customer acquisition costs for ethnic wear
4. Flexible operational model- JIT 3. Inability to provide high
and Marketplace discounts in a price sensitive
5. Young workforce, well aware of market
the target customer 4. Curations are not detail oriented
6. Focus on homegrown brands 5. Repetitive tasks in the
with high fashion quotient cataloging process
7. Data based cost effective digital 6. Data collection not streamlined
marketing 7. Low conversion rate
Opportunities S/O strategies W/O strategies

1. Demographic dividend of India 1. Leverage loyal following of 1. Positive investment sentiment

a consuming age group
2. Positive investment sentiment
in the market
3. Increasing disposable income
4. Aspiration based purchasing an
increasing consumer trend
5. Increasing acceptance of
digital shopping
6. Increased fashion
consciousness among Indian
women
7. Increasing demand for Indian
designer brands
Threats
Parent company to better target
their marketing towards women
who are fashion conscious and
already comfortable with e-
shopping
2. Focus on homegrown brands
fills a gap in the market and
allows for easy differentiation
S/T strategies
coupled with brand value of
parent allows them to raise war
chests in a price competitive
market
2. High price points create a
perception of value in a
customer base with ever
growing disposable incomes
W/T Strategies

1. Environmental concern
regarding fashion waste may
lead to strict government
regulations
2. Complex tax system with GST
3. Increasing regulations for
online businesses
4. Increased fear of data theft
among consumers
5. Extremely cheap fashion
products on Asian websites
1. Close relationship with parent
allows them to leverage best-in-
class heuristics on how to run a
successful e-commerce business
as well as access to a strong
backbone of tax compliance and
IT security personnel
1. Threat from Asian websites and
price competition is more
imminent on western wear and
accessories which can be
sidestepped by focussing on
ethnic wear

TABLE 3.2 NYKAA FASHION’S TOWS STRATEGY ANALYSIS

20
3.5. IFE, EFE and CPM Analysis

3.5.1. Internal Factor Evaluation Matrix

The following is the internal factor evaluation matrix for Nykaa Fashion, it evaluates its
strengths and weaknesses. The ratings are given on the basis of how effectively Nykaa Fashion
uses its strengths and how ready it is to cope with the weaknesses it has.

Key Internal Factors Weight Rating Weighted Score

Strengths

Strong brand value of its parent brand nykaa.com 0.1 3.5 0.35
Huge customer database from nykaa.com 0.08 2 0.16
Low customer acquisition costs 0.06 1 0.06
Flexible operational model- Marketplace(JIT) and 0.07 2.5 0.175
Marketplace(inventory)
Young workforce, well aware of the target customer 0.05 1.5 0.075
Focus on homegrown brands with high fashion quotient 0.1 3 0.3
Data based cost effective digital marketing 0.04 1 0.04
Weaknesses
Small customer segment due to very high price pts. 0.1 2.5 0.25
Customer perception as a portal for ethnic wear 0.08 1 0.08
Lack of high discounts in a price sensitive market 0.06 2 0.12
Curations are not detail oriented 0.03 1 0.03
Repetitive tasks in the cataloging process 0.1 1 0.1
Data collection not streamlined 0.07 1 0.07
Low conversion rate 0.06 2.5 0.15
Total 1 1.96

TABLE 3.3 NYKAA FASHION’S INTERNAL FACTORS EVALUATION

In the IFE matrix, Nykaa Fashion gets a total score of 1.96 which is a very low score and points
to the fact that Nykaa Fashion is not completely being able to reap the benefits of its strengths

21
nor is it well equipped to make up for the weaknesses it has. Being an online business it has to
very aggressively build a brand image so that it does not get lost in the multitudes of other online
fashion websites.

3.5.2. External Factor Evaluation Matrix

The following is the external factor evaluation matrix for Nykaa Fashion, it evaluates its
opportunities and threats in the industry. The ratings are given on the basis of how effectively
Nykaa Fashion uses its opportunities and how ready it is to cope with the threats it has.

Key External Factors Weight Rating Weighted

Score
Opportunities
Demographic dividend of India a consuming age group 0.05 3 0.15
Positive investment sentiment in the market 0.08 1.2 0.096
Increasing disposable income 0.1 2.5 0.25
Aspiration based purchasing an increasing consumer trend 0.02 2.5 0.05
Increasing acceptance of digital shopping 0.06 1 0.06
Increased fashion consciousness among Indian women 0.09 2.5 0.225
Increasing demand for Indian designer brands 0.1 4 0.4

Threats
Environmental concern regarding fashion waste may lead to 0.03 3 0.09
strict government regulations
Complex tax system with GST 0.07 3 0.21
Increasing regulations for online businesses 0.1 2 0.2
Increased fear of data theft among consumers 0.2 1 0.2
Extremely cheap fashion products on Asian websites 0.1 2 0.2
Total 1 2.131

TABLE 3.4 NYKAA FASHION’S EXTERNAL FACTORS EVALUATION

22
Nykaa Fashion gets a total score of 2.13 on the EFE. Although it is not a very high score it shows
that Nykaa Fashion is better equipped to make use of its external environment than its internal
factors. With increasing advancements in technology and data science Nykaa Fashion has a great
opportunity to establish itself in the market and effectively target the new Indian customer with
high disposable incomes and aspirational fashion demands. Nykaa Fashion can also take
advantage of the opportunity that is presented by the increasing acceptance and demand for
Indian homegrown designer brands.

3.5.3. Competitive Profile Matrix (CPM)

The following is the competitive profile matrix for Nykaa Fashion and its main competitors, it
compares the firm and its rivals and reveals their relative strengths and weaknesses. The matrix
recognizes the Nykaa Fashion’s key competitors and analyses them using industry’s critical
success factors.

Factors Weig Pernia’s Aza Myntra Jabong Tata Cliq Nykaa

ht Pop Up Fashions Luxury Fashion
Shop

Variety of 0.15 3 0.45 3 0.45 5 0.75 4 0.6 3 0.45 2 0.3

Brands

Product 0.1 2 0.2 2.2 0.22 4 0.4 3 0.3 2 0.2 2 0.2

Assortment

Customer 0.1 3 0.3 3 0.3 2 0.2 2 0.2 2 0.2 1 0.1

Loyalty

Financial 0.25 2 0.5 2 0.5 4 1 4 1 3 0.75 1.5 0.375

Strength

Customer 0.2 2.75 0.55 2.5 0.5 3 0.6 3 0.6 2 0.4 2.5 0.5
Service

Price 0.15 2 0.3 2 0.3 5 0.75 4 0.6 2 0.3 2 0.3

Competitiven
ess

Promotions 0.05 3 0.15 3 0.15 4 0.2 4 0.2 3 0.15 2 0.1

Total 1 2.45 2.42 3.9 3.5 2.45 1.875

TABLE 3.5 NYKAA FASHION’S INTERNAL FACTORS EVALUATION

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The above matrix shows that Nykaa Fashion fares the worst among its competitors in all the
major competitive factors. Its competitors in the premium to luxury segment, that is, Pernia’s
Pop Up Shop, Tata Cliq Luxury and Aza Fashions both have a score close to 2.4, both these
brands have high customer loyalty and variety of designer brands. In the mass to premium
segment Myntra, Jabong due to their high number of brands, discounts and financial backing
give a very tough time to Nykaa Fashion as it struggles to leave a mark. Nykaa Fashion is stuck
between 2 price segments and customers keep going to other websites instead of Nykaa because
they need high trust and brand value to buy luxury online which Nykaa is yet to build unlike
Pernia, Aza and Tata, and customers want a multitude of options while buying mass to premium
where Myntra and Jabong give them far more options than Nykaa Fashion.

3.6. Key Data Indicators for Nykaa Fashion

The following are some of the key numbers for Nykaa Fashion currently, the sales data in details
is confidential and cannot be disclosed to outside parties, however the numbers below give a
basic idea as to where the brand stands currently:

1. Number of orders a day- 40 orders a day(average)

2. 1 lakh per day in sales
3. Average cart size- 1.2-1.5
4. Average bill size- 2500 INR
5. Average discounting -20-30%
6. Best selling brands- AND, Global Desi, Ritu Kumar, W, Aurelia and Ambraee
7. Best selling categories- Clothing>Jewellery>Footwear>Bags

The number of orders in a day are currently very low, however since Nykaa Fashion is in its
initial stage the number is likely to grow with rising awareness about Nykaa Fashion among
customers. The average cart size is also not high and is likely to grow. The most discouraging

24
number for Nykaa Fashion is the average bill size which is just 2500 INR, being a website which
tries to project itself as premium to luxury, it mostly attracts mass to premium customers. So it
would be advisable to shift its brand positioning towards a more masstige to premium segment.

25
 4. PART 2: CONSUMER PROFILE AND MARKETING MIX
REVISION

4.1. Review of Literature

In March 2017, The Boston Consulting Group published a research report on the evolving
Indian fashion landscape, titled “Fashion forward 2020”. They found that more than half the
purchases made by women are driven by trends and variety, as compared to men who often cited
discounts as the primary driver for online shopping. Further, fit was found to be a bigger barrier
for women than men which often led to online purchases as retail stores went out-of-stock. Also
they found a high regularity of online trend discovery in women’s wear category. In conclusion,
they estimate that digital will influence $30bn of fashion spending by 2020. Out of this, e-
commerce will grow 4x its 2016 market size to reach $12-$14bn and women will account for
more than 50% of the base.

Stephanie O. Crofton and Luis G Dopico (2012) in their paper titled “Zara-Inditex and the
growth of Fast Fashion” make the point that most leading fashion firms combine design and
sales but outsource manufacturing, often to subcontractors even for in-house brands. Searching
for reduction in costs, companies use networks of subcontractors that may buy, dye, embroider,
and sew fabric each in a different country. Adversely, this process can stretch the design-to-retail
cycle to as long as eight months and hamper quality control. Examples for this technique include
brands like Anne Taylor, Abercrombie & Fitch, GAP, and The Limited. John Thorbeck from
supply chain 42 consulting firm SupplyChainge sums up the industry as follows: “everybody’s
gotten out of manufacturing’.

Jennifer Schmidt, Karel Dörner, Achim Berg, Thomas Schumacher, and Katrin Bockhold
(2012) in their McKinsey research report “The opportunity in online luxury fashion”
mention that most luxury and premium brands now interact with consumers both through their
own branded online store and on multi-brand e-tailers as nearly half of luxury goods buying

26
decisions are already influenced by what consumers hear or see online. They also mention that
multi-brand sites are expected to capture a greater portion of the growth in online fashion, as
single-brand sites have limited growth potential. According to the report, multi-brand e-tailers
allow large luxury brands the opportunity to reach both time-pressed consumers who don’t have
time to shop around on multiple mono-brand sites and the rural customers who do not have easy
access to urban boutiques. On the flip side, multi-brand retail also carries the risk of over-
exposure and dilution for luxury brands.

In McKinsey & Company’s annual publication, “The State of Fashion: 2019”, they cite
‘The Ascent of India’ amongst their top 10 trends for the year. Their FashionScope survey
estimates that India’s apparel market will be worth $59.3 billion in 2022, making it the sixth-
largest in the world, and comparable to the UK ($65 billion) and Germany ($63.1 billion);
whereas the aggregate income of the addressable population (individuals with over $9,500 in
annual income) is expected to triple between now and 2025. Interestingly, they also estimate that
traditional clothing is still very much the default choice for women, making up an estimated 70
percent of women’s apparel sales in 2017. Even as they expect the appetite for Western styles to
increase, traditional wear will continue to account for a 65 percent market share by 2023.

In Feb 2019, Deloitte published a research report on the behaviour of the Indian consumer
“Unravelling the Indian consumer”. They mention that India’s youth (the fastest growing
youth population in the world) is highly brand and fashion-conscious. They cite rising incomes,
advent of globalization, and improved employment and living standards in the country as vital
factors that are leading to the expansion in the market size of apparel, footwear and accessories.
They also mention that e-commerce marketplace model has seen growth in triple digits over the
past few years through innovation, modern retail concepts and use of technology in all parts of
the retail sale process.

27
Wazir Advisors Pvt. Ltd. In their report “Apparel Consumption Trends In India”(2018),
say that middle class consumers in India tend to spend comparatively large sums of money as
compared to aspirers on apparel purchases. Although, there are very scarce clothing brands and
retailers in India that have correctly grasped the sentiments of the middle class consumers.
Middle class consumers in India are traditionally value sensitive but simultaneously want to
consume fashionable clothes as well. They look for design and quality at the least price. And
hence, India’s middle class customers are making an opening for this market which can be
captured with “economically feasible fashion”. The digital shopping experience these days gives
a fuller, captivating and personal shopping touch to a customer and this is a significant reason
which is directing growth. While the online digital transactions are growing, the opportunity to
create online led fashion brands is also rising. The growth of digitally led fashion brands will be
directed by the youth which is the major part of the population with access to gadgets for online
purchase and the aspiration to be fashionable.

Avendus Capital Private Limited in their report “Women’s Apparel Landscape in

India”(2018), say that consumers place the most emphasis on parameters such as design, quality
and fit. The expenditure is skewed towards apparel(up to 70%). The average size of a woman’s
wardrobe has grown by two times in volume since the past 5 years as there has been an increase
in the number of social occasions that the modern Indian woman has to attend. Impulsive buying
has increased as shopping for something is just a click away these days and gives instant
gratification to the buyer. Social media plays a huge role in influencing a purchase decision for
the fashion consumers. Artificial obsolescence has also led to an increase in the number of
purchases of clothing and other fashion products. Women these days have greater discretionary
purchase spending power and are becoming more aspirational in terms of their fashion
consumption.

Samit Chakraborty in his research paper “An Explanatory study on Indian Young
Consumers’ Luxury Consumption: The Underlying Relationship of Interpersonal

28
Influence, Brand Image, Brand Consciousness and Demographic Components with Luxury
Brand Purchase Decision”(2016), states that according to the current market trends modern
consumers like to pick from an assorted collection in reaching their purchase decisions, hence
the higher the variety of the merchandise available with a website the sales will be proportional
to the variety. Younger consumers displayed a stronger tendency to be affected by society,
interpersonal dynamics and self-image as compared to the older people in India.

4.2. Research Methodology and Design

This will be an exploratory study that will make use of mixed methods of data collection and
analysis – which is mainly qualitative. As premium fashion continues to penetrate into the Indian
mainstream the target market is generally affluent Indian women. Therefore, the population for
this study for Nykaa Fashion focuses on the audience defined by the senior members of Nykaa
Fashion, which is 23-45 years old women living in tier-1 cities of India, namely New Delhi,
Mumbai, Bangalore and Kolkata.

4.3. Sources of Data

For collection of data the following instruments will be used-

Primary Data Sources:

1) Questionnaire (Google forms), these online questionnaires will be sent to 100 female
respondents in the age group of 23-45.
2) Open-ended interviews can be taken to understand the buying behaviour.(Qualitative data
will be collected through these)

Secondary Data Sources:

1) Research articles

29
2) Nykaa Fashion data(out of this only key indicators are revealed in this report)

4.4. Sampling and Sample Size

Sampling Technique: Judgement sampling will be used to conduct this research, as the
respondents will be women who are likely to consume fashion. The sample size is 100 women in
the age group of 23-45 years.

30
 5. FINDINGS, ANALYSIS AND SUGGESTIONS
5.1. Findings

A sample of 100 women in the age group of 23-45 years, living in Mumbai, Delhi and Bangalore
were surveyed for this study. The sample comprised of customers who are existing customers for
Nykaa Fashion, customers who are not buying from Nykaa Fashion and customers who are
unaware of Nykaa Fashion before filling the survey. The primary findings of the survey are as
follows:

1. 60 out of 100 women were aware of Nykaa Fashion.com, 40 of the 100 did not know about
Nykaa Fashion.

2. 24(40%) of the women who were aware of Nykaa Fashion came to know about it through
Instagram, therefore Instagram is the most effective tool of marketing for Nykaa Fashion.
After that Email marketing comes with 16(26.7%) effectiveness, which indicates that
Nykaa.com’s customer base has been a ready target for Nykaa Fashion due to availability of
data. Interestingly, Nykaa Fashion pop ups with 11(18.3%) come before Facebook(11.7%) in
terms of awareness creating promotional channel among the sample for this survey.









IMAGE 5.1 NYKAA FASHION’S AWARENESS CREATING CHANNELS

31
3. 37(61.7%) of the women who knew of Nykaa Fashion came to know about it only 3-6
months back, whereas only 12(20%) have known about it from the time it was launched.
9(15%) came to know about it only 2-3 months ago and 2 of the women came to know less
than a month ago. This shows that the marketing efforts for Nykaa Fashion have to be
increased in a more aggressive way so that more people become aware about it.


4. Out of the women who are aware of Nykaa Fashion only 26(43.3%) are existing customers
for Nykaa Fashion. Whereas, 34(56.7%) are non-buyers even after knowing about the
website.


5. 22(84.6%) out of the 26 existing customers make a purchase once in 6 months on Nykaa
Fashion, 4(15.4%) make a purchase once every 3 months. Both these numbers indicate that
the frequency of purchase is low.


6. In terms of category purchase, the existing customers buy in the following manner:



- 24(92.3%) would consider Nykaa Fashion for ethnic casual wear

- 18(69.2%) would consider Nykaa Fashion for western casual wear

- 14(53.8%) would consider Nykaa Fashion for ethnic occasion wear

- 1(3.8%) would consider Nykaa Fashion for western occasion wear

- 3(11.5%) would consider Nykaa Fashion for footwear

- 19(73.1%) would consider Nykaa Fashion for jewelry

- 1(3.8%) would consider Nykaa Fashion for bags



Hence, the survey shows that Nykaa Fashion is perceived to be more suitable for buying
ethnic garments.


32
7. 10(38.5%) of the women who buy from Nykaa Fashion are willing to pay 3000-6000 INR
for premium designer wear, 8(30.8%) are willing to spend 6000-9000 INR, 6(23.1%) are
willing to spend 9000-12000 INR, 1 each are willing to spend less than 3000 INR and more
than 15000 INR. Zero of these women would be willing to pay more than 15000 INR.














IMAGE 5.2 PRICE POINTS CUSTOMERS ARE WILLING TO PAY

8. Quality of product, brand and fashionability emerged as the most important factors for the
existing customers while making a purchase online. Return options was another popular
factor among these women. Price and discounts were cited as important by very few of these
women.

IMAGE 5.3 MOST IMPORTANT FACTORS FOR NYKAA FASHION’S CUSTOMERS

33
9. The most preferred features about Nykaa Fashion among these existing customers are trendy
new designers, high quality products, high fashion quotient and informative Instagram posts
and marketing.


10. The most disliked features about Nykaa Fashion are a return window of only 48 hours and

IMAGE 5.4 MOST LIKED FACTORS FOR NYKAA FASHION’S CUSTOMERS

very limited return options, lack of filters in the website. Only 6(23.1%) women cited high
prices as a reason.

IMAGE 5.5 MOST DISLIKED FACTORS FOR NYKAA FASHION’S CUSTOMERS

11. 23(88.5%) would recommend Nykaa to their friends and family. 3(11.5%) would not
recommend it.


34
12. Among the 34 non users of Nykaa Fashion who are aware of it, 17(50%) cited price as an
important factor while making a purchase decision. However, quality of product and
fashionability along with brand and return options are also cited by most as important
factors.


IMAGE 5.6 MOST IMPORTANT FACTORS FOR NON CUSTOMERS

13. Return window of only 48 hours, lack of options in brands and lack of return options are
cited as the top most reason by these non-users for their not purchasing from Nykaa Fashion.
17(50%) cite high prices as the reason.

IMAGE 5.7 MOST DISLIKED FACTORS IN NYKAA FASHION BY NON CUSTOMERS

35
14. Among the non users who know about Nykaa Fashion, 15(44.1%) prefer Myntra for online
fashion shopping, followed by Jabong(7) , Pernia’s Pop up Shop(6), Tata Cliq Luxury(3) and
Aza Fashions(3). This shows the clear lead of the Flipkart owned Myntra and Jabong, which
occupy most of the online fashion retail market.


















IMAGE 5.8 PREFERRED WEBSITES FOR NON USERS OF NYKAA FASHION

15. Among the women who are not aware of Nykaa Fashion, 18(45%) get information from
print media, 38 out of these 40 women get their information from social media(Instagram,
Facebook and others combined). 16(40%) also get their information from television. So
Nykaa Fashion can concentrate of TV advertisements to capture more attention from the
customers however in spite of the survey results, print media is very costly to operate with
therefore should be avoided in initial stages of business.


16. As per the ratings given to the firms in competition with Nykaa Fashion by the
customers, the average score for each of them is given in the table below: According to
this table the most preferred websites among the 26 users of Nykaa Fashion are in the
following order of preference: Pernia’s Pop Up = Aza Fashions > Tata Cliq Luxury > Myntra
> Jabong = Nykaa Fashion.

36
 Frequencies

Score Pernia’s Pop Aza Myntra Jabong Tata Cliq Nykaa Fashion
Up Shop Fashions Luxury

1 0 0 0 0 0 1

2 1 1 1 4 1 2

3 13 13 20 17 16 18

4 12 12 5 5 9 5

5 0 0 0 0 0 0

Total average score= 3.42 3.42 3.15 3.03 3.30 3.03

(Sum
of(scores*frequencies)
)/26

TABLE 5.1 AVERAGE SCORES GIVEN BY RESPONDENTS

5.3. Revised Consumer Profile

According to the study conducted in this report, Nykaa Fashion needs to reposition itself as a
masstige to premium fashion brand website, the following should be the new customer profile
Nykaa Fashion should follow:

1. Age Group: 23-37 years women

2. Geography: Tier 1 and Tier 2 cities
3. Psychographics: Achiever, Striver, Innovator, Aspirational, Go-getter, Modern
4. Behavioural: Fashion and tech savvy, trend-oriented (ethnic and western), frequent traveller,
follows celebrity culture and social media avidly
5. Willing to pay a reasonable price for quality products, is not extremely price sensitive and
seeks masstige to affordable luxury brands


37
 6. CONCLUSIONS

1. If the motive is breaking even and not on brand building, it can be a good idea to focus on
cheaper products, but even then an online business might take a long time to break even.
Nykaa Fashion’s parent company took 5 years to break even and from the very beginning of
its inception stuck to a very premium segment while focusing on creating a brand USP and
brand identity. Nykaa Fashion is not being able to stick to one market segment and keeps
diluting the brand identity.

2. Nykaa Fashion has not been able to find its core area of competency and therefore faces
immense competition which it cannot fight through a distinguishable characteristic. All its
competitors have a higher recognition among the customers.


3. The hypothesis that Indian women still put price considerations as a top most priority has not
been proven to be true, quality of the product and fashionability are some of their top most
priorities while purchasing a premium/designer product.


4. Strict return options while purchasing premium products online remains as one of the biggest
problem areas for Indian customers. Nykaa Fashion’s policy of 48 hours return is something
that does not go down well with the Indian woman because to buy a premium product online
is already not a very easy thing to do as the transaction values are higher.


5. Nykaa Fashion should create an easy to follow catalog format as many of the brands
complain about the cataloging process as it is tedious and repetitive.


6. Nykaa Fashion must create a very strong and fixed brand proposition in front of its customers
so that there is no cognitive dissonance among the customers and the company can grow
through a core competency instead of just offering cheaper brands.


38
7. Premium brands and luxury designer brands do not want to present on websites where mass
brands are present as that hampers their brand image.


8. Nykaa Fashion’s positioning should be changed from premium-luxury to masstige-affordable

luxury as the price gap in these two ranges remains comparable, and suits the kind of brand
portfolio that Nykaa Fashion currently has.


9. Nykaa Fashion must create a very strong and fixed brand proposition in front of its customers
so that there is no cognitive dissonance among the customers, consistent imagery, color
schemes etc can help


10. Use more experiential marketing techniques such as pop-ups but carefully select the city and
location


11. Focus more on creating its own brand by having a highly curated list of brands


12. Even if there are cheaper products available on the website, subtle marketing for those is
ideal, while the face of the brand should remain premium


13. Give more visibility to the designer brands which have moderate price points


14. Effectively collaborate with partner brands, like asking them to do shout-outs saying they are
available on Nykaa Fashion


15. Collaborated capsule collections with designers available on the website


39
 REFERENCES
1. The state of fashion 2019- BOF; https://www.mckinsey.com/~/media/McKinsey/Industries/
Retail/Our%20Insights/The%20State%20of%20Fashion%202019%20A%20year%20of
%20awakening/The-State-of-Fashion-2019-final.ashx


2. https://www.indiaretailing.com/2018/07/09/fashion/the-evolving-indian-luxury-market/


3. https://www.indiaretailing.com/2017/10/15/fashion/indian-fashion-apparel-market-2016-
beyond/


4. https://economictimes.indiatimes.com/markets/expert-view/in-fy19-we-are-likely-to-close-
with-rs-1200-cr-revenue-falguni-nayar-nykaa/articleshow/68796364.cms?from=mdr


5. https://www.business-standard.com/article/companies/flipkart-has-biggest-piece-of-indian-e-
tail-pie-115032100041_1.html


6. https://brandequity.economictimes.indiatimes.com/news/business-of-brands/indias-online-
fashion-market-to-grow-3-5x-from-4-billion-to-14-billion-by-2020/63313245


7. “Fashion forward 2020”, Boston Consulting Group


8. “The opportunity in online luxury fashion” by Jennifer Schmidt, Karel Dörner, Achim Berg,
Thomas Schumacher, and Katrin Bockhold (2012)

40
APPENDIX