Yatsen Holding Limited (YSG): Marketing Mix Analysis [Dec-2025 Updated]

You're tracking Yatsen Holding Limited (YSG) and wondering if their aggressive pivot to premium skincare is actually working after all this time. Honestly, the late 2025 data suggests the transformation is gaining serious traction: Q3 saw skincare sales jump an impressive 83.2% year-over-year, which helped lift the overall gross margin to a very healthy 78.2% on total revenues of RMB998.4 million. That margin improvement is the real story here. So, how are they balancing this high-end product push with their digital-first distribution and promotion spend-which still clocked in at 68.3% of revenue in Q3? Keep reading to see the full 4P breakdown of this beauty group's strategy.

Yatsen Holding Limited (YSG) - Marketing Mix: Product

You're looking at a company in the middle of a significant product overhaul, moving from a trend-driven model to one centered on scientific efficacy. Yatsen Holding Limited's product strategy is built around a multi-brand architecture designed to capture value across different consumer segments in the beauty space.

Multi-brand strategy anchored by core color cosmetics (Perfect Diary).

The foundation remains the flagship color cosmetics brand, Perfect Diary, which is one of the leading color cosmetics brands in China by retail sales value. This segment is still substantial, representing approximately 50.8% of total net revenues in the third quarter of 2025. While the overall color cosmetics category faced headwinds, it showed a return to growth in Q2 2025, posting an increase of 8.8% year-over-year. A concrete example of successful product development in this area is the Biolip Essence Lipstick, which achieved leading positions in major sales rankings.

Significant expansion into the higher-margin skincare segment (e.g., Galénic, Eve Lom).

The strategic pivot is clearly visible in the rapid ascent of the skincare portfolio, which is now the primary driver of margin improvement. Skincare Brands accounted for 49.2% of total net revenues in Q3 2025, a significant jump from 39.6% in the prior year period. This segment grew by an impressive 83.2% year-over-year in Q3 2025. By Q2 2025, skincare brands already contributed 53.5% of total revenue. Acquired brands like Galénic and Eve Lom, alongside DR.WU, are key to this higher-margin push, with recent launches like DR.WU's PDRN Serum and Galénic's No.3 VB Serum showing management's focus on innovation-led products.

Here's the quick math on the revenue split as of Q3 2025:

The gross margin for the entire company reflects this shift, rising to 78.2% in Q3 2025, up from 75.9% a year prior, because skincare products carry a higher margin.

Focus on R&D investment to improve product efficacy and brand perception.

Yatsen Holding Limited is backing this product evolution with consistent investment in its scientific backbone. Research and development (R&D) expenses for the third quarter of 2025 were RMB 39.8 million, compared to RMB 25.3 million in the prior year period. As a percentage of total net revenues, R&D spending increased to 4% in Q3 2025, up from 3.7% year-over-year. The company has invested over RMB 600 million in R&D to date, keeping spending above 3% of annual revenue. This investment supports a global research network:

• Operates 3 proprietary R&D centers in Shanghai, Guangzhou, and Toulouse, France.
• Maintains 6 joint laboratories.
• Has filed 252 global patents since 2022.

Rapid, data-driven product development cycles based on consumer feedback.

The company emphasizes accelerating brand and product innovation to drive sustainable growth. The success of products like the Biolip Essence Lipstick was attributed to leveraging consumer insights and professional expertise gained during development. This agility allows Yatsen Holding Limited to respond to consumer trends favoring functional beauty and clinical efficacy, which are key drivers in the evolving personal care landscape.

Portfolio includes mass-market and premium-tier offerings.

The product portfolio is intentionally tiered to cover a broad spectrum of the market. Perfect Diary serves as the mainstream/mass-market anchor. Conversely, acquired brands like Galénic and Eve Lom are positioned to target the premium segment, allowing Yatsen Holding Limited to capture higher average selling prices (ASP) necessary for margin expansion. The overall lineup spans mass, masstige, and premium tiers.

Finance: draft 13-week cash view by Friday.

Yatsen Holding Limited (YSG) - Marketing Mix: Place

Yatsen Holding Limited (YSG) maintains a distribution strategy heavily weighted toward digital channels within China, reflecting the market's mobile-first and social commerce nature. The Company primarily reaches and engages with customers directly both online and offline, with expansive presence across all major e-commerce, social and content platforms in China.

The reliance on major Chinese e-commerce platforms is evident in the broader market context, where Alibaba's Tmall/Taobao commanded approximately 51% share of China's e-commerce sales, while JD.com held about 16% as of 2025. YSG's quarterly performance demonstrates the scale of its digital marketplace operations:

The Direct-to-Consumer (D2C) model remains central, supported by the performance across these digital storefronts. The strategic shift toward higher-margin skincare brands is also reflected in revenue composition, with skincare brands reaching RMB490.8 million (about US$68.9 million) in Q3 2025, representing 49.2% of total net revenues for that period.

The distribution footprint management includes specific actions regarding physical locations:

• Strategic reduction in the number of underperforming offline retail stores was cited as a factor influencing Q1 2025 results.
• The Company's primary reach is through expansive presence across all major e-commerce, social, and content platforms in China.
• The Q3 2025 outlook projects Q4 2025 total net revenues between RMB1.32 billion and RMB1.49 billion.

Regarding private domain traffic, Yatsen Holding Limited has increased investment in channels like WeChat mini-programs to nurture customer relationships, though specific revenue contribution percentages for these private channels as of late 2025 are not detailed in the latest public reports. Similarly, international expansion efforts are described as limited and highly selective, with the majority of reported financial performance tied to the mainland China market.

Yatsen Holding Limited (YSG) - Marketing Mix: Promotion

Promotion for Yatsen Holding Limited remains heavily weighted toward digital channels, reflecting the core of its business model, though there is a clear strategic pivot underway toward brand equity building.

High Digital Marketing Spend and Efficiency Focus

The commitment to high digital spend is evident in the reported figures, though efficiency is improving as the revenue mix shifts. Selling and marketing expenses for the third quarter of 2025 were RMB 682.3 million (US$95.8 million). As a percentage of total net revenues for Q3 2025, this spend was 68.3%, a decrease from 73.0% in the prior year period. This reduction in ratio, despite an absolute increase in spend compared to Q3 2024, is primarily driven by the leveraging effect of higher total net revenues, which grew 47.5% year-over-year to RMB 998.4 million (US$140.2 million) in Q3 2025.

The company explicitly noted that this efficiency improvement is driven by a higher skincare mix and more disciplined spending across channels, excluding seasonal investments for events like the Double 11 shopping season.

The key financial metrics related to promotional intensity are:

Reliance on Digital Traffic Drivers (KOLs/KOCs and Live-Streaming)

The heavy reliance on digital traffic drivers, which includes KOLs and KOCs, is intrinsically linked to their digital channel dominance. While specific KOL/KOC spend is not itemized, the success of platforms like Douyin (TikTok) serves as a proxy for this strategy. Douyin generated nearly RMB 20 billion (US$2.80 billion) in beauty Gross Merchandise Volume (GMV) in July 2025. This indicates that short-form video and live-streaming commerce remain central to driving consumer traffic and sales volume for the broader beauty sector in which Yatsen Holding Limited operates.

Strategic Shift to Brand Building

The narrative from management points to a deliberate shift away from purely performance-based marketing toward brand equity. This is supported by an increased focus on Research and Development (R&D), which rose to 4.0% of total net revenues in Q3 2025 from 3.7% in Q3 2024. The CEO specifically emphasized commitment to innovation and successful new product launches, such as the PDRN Serum from DR.WU and the No.3 VB Serum from Galénic, as key drivers of growth. The company views upfront investments for major shopping seasons as supporting 'stronger brand equity in the fourth quarter and beyond'.

The promotional activities are being channeled to support the premiumization strategy, as evidenced by the skincare portfolio's performance:

• Skincare Brands revenue grew 83.2% year-over-year in Q3 2025.
• Skincare Brands contributed 49.2% of total net revenues in Q3 2025, up from 39.6% in Q3 2024.
• Color Cosmetics Brands still saw growth of 25.2% year-over-year in Q3 2025.

Data Analytics for Personalization

The use of consumer data analytics to personalize marketing messages is implied by the stated focus on 'improving marketing efficiency' and the overall digital-first approach. While a specific financial figure for data analytics investment or personalization ROI is not provided, the company's ability to narrow its net loss margin to 7.0% in Q3 2025 (from 17.9% in Q3 2024) suggests better targeting and reduced waste in its substantial marketing outlay.

The company's cash position as of September 30, 2025, stood at RMB 1.16 billion (US$162.6 million), providing the financial base to sustain these targeted, data-informed promotional efforts.

Yatsen Holding Limited (YSG) - Marketing Mix: Price

You're looking at how Yatsen Holding Limited structures the money customers pay for its beauty products, which is a story of clear segmentation and margin focus right now.

Core color cosmetics brands, like the flagship Perfect Diary, are positioned to maintain an accessible, mass-market price point, though this segment saw a revenue increase of 25.2% year-over-year in Q3 2025, it is the skincare pivot that is reshaping the pricing power.

The company's strategy relies on acquired premium skincare brands, such as Eve Lom, Galénic, and DR. WU (for mainland China business), to command a significantly higher price. This is directly reflected in the financial performance, where the Skincare Brands segment generated net revenues of RMB490.8 million (approximately US$68.9 million) in Q3 2025, representing 49.2% of total net revenues, up from 39.6% in the prior year period.

Gross margin improvement is clearly a key strategic goal, and the results show success well beyond the targeted range above 65%. The gross margin for Q3 2025 increased to 78.2%, up from 75.9% in the prior year period, driven by the increase in sales of these higher-gross-margin products.

To drive volume, Yatsen Holding Limited employs frequent promotional activities and discounts, especially on e-commerce platforms, as evidenced by the significant Selling and Marketing Expenses, which were RMB682.3 million (as a percentage of total net revenues, this was 68.3% in Q3 2025). Management specifically noted that their robust product pipelines positioned them well for the upcoming Double 11 shopping festival, which is a major promotional period.

For the higher-end skincare lines, the pricing approach leans toward value-based pricing to compete with established international brands. This is supported by the successful introduction of innovative, higher-priced items.

• DR.WU's PDRN Serum launch.
• Galénic's No.3 VB Serum launch.
• Perfect Diary introduced the Biolip Essence Lipstick.
• Perfect Diary launched the Biophased Essence Foundation.

The overall financial health related to pricing power is summarized by the gross profit figures for Q3 2025, which reached RMB780.5 million (approximately US$109.6 million), a 51.9% increase year-over-year.