Marshal Cohen sounded a wake-up call for the beauty industry, challenging attendees at the conference to “grab the bull by the horns.”

“The best way to predict the future is to go out and create it,” declared Cohen, chief industry analyst for the NPD Group Inc.

Speaking quickly and determinedly, Cohen rattled off several industries — including footwear, premium denim and electronics — that are competing with beauty for consumers’ dollars.

Distractions from outside the industry — such as MP3 players, which continue to double in sales — are prompting the consumer to spend money differently, noted Cohen, adding that beauty firms “compete for consumers’ spending and frame of mind.”

To win over both, Cohen explained the art of what he calls “power branding,” a dual-pronged approach to lifestyle and image marketing. “Number one, be relevant. You must explain to consumers what this product does and why it’s important in their lives. The second part of it is helping them understand how it fits into their lifestyle,” said Cohen. He continued, speaking from the viewpoint of a marketer: “I’m not interested in how old you are, I’m interested in how you feel. I want to know about your life. I want to know what you do. I don’t want to know about the demographic stuff. I want to know what’s inside your head and what you really want this product to do for you.”

Displaying an Olay print ad that reads, Wrinkles and pimples. What’s next? Bifocals and ripped jeans?, Cohen commented that message “cuts to the core” of what women are thinking.

Turning to the prestige market, he noted that the skin care business is up 2 percent, and the antiaging segment is up 10 percent. He cautioned that not only Baby Boomers are driving this growth, but also twentysomethings looking for prevention. Speaking to the two groups requires two very different messages, said Cohen.

Meanwhile, the mass and prestige worlds are colliding. Citing an NPD survey of 48,000 consumers, Cohen reported that when participants were asked whether skin care and beauty products sold in drugstores and grocery stores are of lesser quality, nearly 60 percent of men and 75 percent of women responded no.

This story first appeared in the May 26, 2006 issue of WWD. Subscribe Today.

“That’s what we’re up against,” he said, addressing the prestige manufacturers in the room. To illustrate the survey’s findings, Cohen said that in the prestige market, sales of self-tanners slid 25 percent last year. Why? Because consumers can go into a Target store and buy Jergens Natural Glow for $4.99. “So the consumer is jumping ship,” he said.

At the same time, in the prestige skin care business, the number of products with a price of $70 and up has doubled since 2002, said Cohen, adding that the business grew 26 percent last year.

To explain, in part, consumers’ cross-channel movement, Cohen said that the bottom third of the prestige market is reaching downmarket for brands with an emotional connection, and midlevel consumers are reaching up for items with a glossier brand image.

Turning to the power of celebrity, he declared, “A picture is worth a thousand words. A celebrity is worth a million.”

And while celebrities generate excitement, NPD found that consumers are not willing to pay more for products trumpeted by famous faces. “They’re willing to buy it and they’re willing to listen,” but not to assign a higher value to it, remarked Cohen.

Using Chanel No.5’s association with Nicole Kidman as an example, he said that when used correctly, star power can elevate sales. When Chanel No.5 introduced Kidman in its advertising in 2004, the fragrance had a 26 percent growth rate, after a decline of 6 percent in 2003, according to Cohen.

“What did they do? They didn’t change the bottle, they didn’t change the packaging, they didn’t change the fragrance, they probably didn’t even change the price. So nothing really happened other than Nicole Kidman,” he said, adding that Chanel was able to attract a new, younger consumer to the iconic fragrance.

As Chanel adapted the celebrity trend to find its brand, Cohen called on its peers to do the same. “It’s about going out and creating your own market. It’s about uniqueness.”