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Cosmetic Giants Segment the Global Cosmetics Market

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Tarin Davis

on 22 March 2016

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Transcript of Cosmetic Giants Segment the Global Cosmetics Market

Cosmetic Giants Segment the Global Cosmetics Market
Case Presentation
By Isabell and Tarin
Case Overview
Highlights how cosmetic giants are targeting a new market segment being the emerging middle class
Companies include L'Oréal, Estée Lauder, Procter & Gamble and Shiseido
Countries of focus include Japan, China, India and Russia
There is no 'one-size-fits-all' ideal of beauty!
L'Oréal
Estée
Lauder
&
Case Questions
1. How do women's preferences for cosmetics and beauty care vary from country to country?
Japan
Prefer compact foundation rather than liquid make-up due to higher humidity levels
Faces are cleaned twice a day
A lot of care is therefore placed in daily cleansing
Emphasis on long-lasting coverage
China
White skin is associated with wealth
Women use 2.2 products in morning and evening
Chinese market for men's skincare is growing faster than the women's as men view appearance as key to success
Price sensitive but willing to pay top dollar for products
India
Consumer attitudes shifting
Premium product is $9
Competitors target those that live on $2 a day
Strong focus on haircare products
Brazil
Compare
&
Contrast
From our own perspective we consider L'Oréal's brand to be stronger in respects to both depth and breadth

When individuals are asked to list cosmetic brands, L'Oréal was mentioned almost everytime but Estée Lauder was looked over

Estée Lauder is however recognised on cues such as advertisements or logos

L'Oréal has a deeper level of brand awareness and resonates more in the minds of consumers
2. Assess Estée Lauder's strategy for China. Does it make sense to focus on premium brands, or should the company launch a mass-market brand?
3. What is the best positioning strategy for Shiseido as the company expands in Asia? High touch? High tech? Both?
"Shiseido offers the highest quality products in brightening and anti-aging skincare, makeup and fragrance with 140 years of technology."
(Shiseido, 2016)
4. Do you think L'Oréal will succeed in changing the buying habits of Brazilian women?
Thankyou
References
L'Oréal
L'Oréal
1st Cosmetic Group Worldwide
"The group's mission is to provide the best in cosmetics innovation to women and men around the world with respect for their diversity.”

78,600 employees
22.53 billion euros in sales in 2014

501 patents registered in 2014

32 international brands
Branch of cosmetics: hair care, coloring, skin care, make-up, perfume.

Brands
JUDGEMENTS
Well established
Reliable brand
SALIENCE
Deep and broad brand awareness
Recognition of beauty icons, logo and slogan ("Because you‘re worth it")

PERFORMANCE
Professional
Innovative
Affordable products
Great variety of products
Elegant packaging

IMAGERY
Offers a range of solutions for different needs

FEELINGS
Design
Variety
Fragrance
Helps self-confidence

RESONANCE
A brand with a positive experience - makes you feel better!

L'Oréal
Customer-Based Brand Equity Pyramid
Products range from entry-level prestige to ultra-premium luxury
"The Estée Lauder Companies has the values of a private company and the financial sophistication of a public company. We care about our people; we take a long-term view of the future. We are driven by passion and ideas."
(Estée Lauder,2016)
40K+
Global Employees
Global Leader in Prestige Beauty
$10.78
billion
Net Sales
25+
Prestige Brands
Brands
3rd largest global cosmetics market
Door to door selling
Market share leaders are Natura Cosmeticos and Avon
Willing to spend more on beauty products
SALIENCE
Depth and breadth not overly strong
Brand doesn't come to mind easily in regards to simple recall and purchase usage situations
PERFORMANCE
Combines creativity & science with quality ingredients to create exceptional products
High performing products
Priced high to cater for the premium market

IMAGERY
Targets 30+ females but now targeting younger market
Products principally sold through limited distribution channels
Highly sophisticated products
JUDGEMENTS
Brand loyalty and word of mouth play a huge role
FEELINGS
Builds self-confidence
Sophistication & security
Happiness
Feel beautiful
RESONANCE
Loyal & attached consumers
Promotes respect and strives to be a positive influence
Estée Lauder
Customer-Based Brand Equity Pyramid
Both!
Shiseido has a significant competitive advantage because they understand the needs and requirements regarding Asian markets
Shiseido can be positioned globally as both high-tech and high-touch as it satisfies rational criteria and evokes an emotional response

Getting Brazilians to alter their buying habits won't be easy!
Distributes products through Dep't stores and pharmacies
Presence: 50% Worldwide vs 15% Brazil
L'Oréal
Brazil
Largest spending nation on beauty
Door-to-door sales
"The more the market develops, the less relevant direct sales will be."
Jean-Paul Agon, CEO
Will not succeed in the short term but long term there is potential!
Chinese consumers are willing to invest in products that are expensive relative to their income because they are confident about the future

Estee Lauder’s products are aspirational and sophisticated; therefore a mass market strategy may create a negative mindset regarding consumers
Estée Lauder should just focus on premium brands
Estée Lauder Companies. (2016). Our Company. Retrieved March 18, 2016, from Estée Lauder Companies: http://www.elcompanies.com/Pages/Our-Company.aspx
Estée Lauder Companies. (2016). The Beauty of Responsibility. Retrieved March 20, 2016, from Estée Lauder Companies: http://www.elcompanies.com/pages/corporate-responsibility.aspx
L'Oréal. (2016). L'Oréal. Retrieved March 18, 2016, from L'Oréal: http://www.loreal.com/
L'Oréal. (2016). Our Activities. Retrieved March 18, 2016, from L'Oréal: http://www.loreal.com/group/our-activities/key-figures
Passariello, C. (2011). To L'Oréal, Brazil's Women Need New Style of Shopping. Retrieved March 20, 2016, from Wall Street Journal: http://www.wsj.com/articles/SB10001424052748703951704576091920875276938

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