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How Nykaa acquired (majority stake) clean skincare brand Dot & Key found its own niche?

Despite growing competition from homegrown & global beauty brands, Dot & Key has been able to make its mark among customers, create brand identity and equity, and carve a niche for itself. 

The consumer perception of the brand is hashtag#aspirational . The longtail searches for the brand is a reflection of the same-  "Is dot & key Korean?"

The Scale: 

In 2021, Nykaa acquired 51% stake in Dot & Key. As per the red herring prospectus (RHP) of Nykaa, they bought 3,35,000 equity shares from the then existing shareholders of Dot & Key for about Rs 46.9 crore and further subscribed to 3,57,143 equity shares for a consideration of about Rs 50 crore.

Exploring how Dot & Key is continuing to solidify it’s identity among customers & generate brand equity 

#1 Very differentiated value propositions that aren’t offered by incumbents

Dot & Key started with the value proposition that their products address neglected body parts, skin & hair issues. E.g. Their products addresse issues like pigmentation in elbows, knees, underarms etc; frizzy hair post swimming etc. 

#2 Elevated influencer marketing using traditional beauty creators & dermatologists 

For one of their campaigns called hashtag#BreakUpWithAcne they partnered with influencers but also dermatologists. Such campaigns enable brands to support their claims with science and trust. They are consistent in their communication across their website & social media that they are dermatologist tested, such partnerships aren’t gimmicks or one time effort. 

#3 Aesthetic & utilitarian branding, which appeals the premium customers

Very aesthetically pleasing packaging & social media content with constant communication around the utilitarian aspects of products, the brand truly resonated with premium consumers who have disposable income. 

#4 Positive brand association

The brand partnered with Goonj, an NGO that works on community development & other humanitarian aids & pledged to provide sustainable & reusable sanitary napkins to women, who don’t have access to menstrual hygiene products. 

#5 Sustainability Initiative

Dot & Key gifts voucher worth of Rs 500 to customers who ship back four Dot & Key empties (packaging) of certain specifications, e.g. Serum bottles greater than 15ml, containers must be greater than or equal to 21ml. The brand further recycles the empties to new packaging. 

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