Estee Lauder Essay Example for Free

Estee extoller EssayI. BACKGROUND OF THE COMPANYEste extoller Companies, Inc. founded by Estee laudator and her husband Joseph in 1946 started by merchandising four skin c atomic number 18 increases invented by her chemist uncle in saucer salons and hotels. The enterprise realized their first department store account with Saks Fifth Avenue in New York in 1947. By 1960, Estee extoller was an origination-wide manufacturer and marter, selling their crossings in the famous Harrods Department Store in London. In the subsequent years, they opened outlets in Central America, Denmark, Hong Kong, Italy, Spain, Sweden, Belgium, New Zealand and Switzerland. Today, Estee extoller foodstuffs its mathematical products through different brands in more than 140 countries and territories. It also holds the global license for redolences and cosmetics. The fellowship consists of a collecting of prestige brands targeted at a diverse selection of consumers.The groups portfolio of br ands includes the more or less recognized labels for mature customers (Estee lauder, Clinique, Prescriptives, Aramis, and La Mer), eco-correct labels (Aveda and Origins), as well as hip labels (M.A.C., Bobbi Brown, Tommy Hilfiger, Donna Karan, Stila, Jo Malone, Bumble and Bumble, Kate Spade, jane, Darphin and Smashbox). The Estee extoller Companies is an organization which engages in the manufacturing, marketing, and sale of several beauty products.The friendship is divided into four sectors, skin isthmus, makeup, fragrance, and hair c be. Estee Lauder is based in New York City and currently employs 32,300 people. The products argon by and large marketed through department stores, medium retailers, upscale perfumeries, pharmacies, salons, and spars. Additionally products argon sold at company owned free standing stores and through e-commerce in selected countries. The company is still controlled by the Lauder family, which controls about 70% of the voting shares. Estee Lauder s grandson is currently the chairman of the board of directors.II. STATEMENT OF THE PROBLEMThis case analysis attempts to determine the most hard-hitting strategies Estee Lauder must use in the Philippines. To determine the main objective of this case the researchers center ones on the major components of the case analysis which are as followsA. market Analysis1. To what extent allow foring the Filipino consumer ordain backing or use Estee Lauder products? 2. What are demographic profiles of the target users of Estee lauder in the Philippines? 3. What are the information needs of the Filipino consumer to divert their patronage to Estee Lauder products?B. Technical Analysis1. found on the needs of the Filipinos what would consist the basic collection of Estee Lauder products that should be put up into Philippine markets? 2. Where the contingent locations that ordain effectively inform and market to the Filipino consumer the Estee Lauder products?III. OBJECTIVES OF THE STUDY The primary objective of this demand is to determine the most effective strategies Estee Lauder must use in the Philippines using market analysis and technical analysis.A. Market Analysis1. To determine the apprehension of the Filipino consumer on Estee Lauder products versus different beauty product competitors. 2. To verify the demographic profiles of the target users of Estee lauder in the Philippines. 3. To determine the information needs of the Filipino consumer to divert their patronage to Estee Lauder products.A. Technical Analysis1. To enumerate the possible collection of Estee Lauder products that should be put up into Philippine markets? 2. To plot possible locations that will effectively inform and market to the Filipino consumer the Estee Lauder products.IV. INDUSTRY ANALYSISA. Analysis of the Macro environment1. Demographic EnvironmentIn the nigh 20 years, on that point would be an expected increase of sales of cosmetic products because roughly 70 million people a round the world will distribute an income that will allow them to purchase such kind of product. In the next 40 years, aging population in the world will multiply by 2.5 times. With an increase in the worlds aging population, life expectancy would improve too.2. Social and Technological EnvironmentSocial environment is a long concept which may be affected by all factors to be considered in making analysis in the Macro environment of the company. There is a significant factor that may affect sale of products easily. Majority of the Filipino consumers especially those who live in the National Capital Region may support products easily because of the practice called mental colonialism. What is imported is better. Of course it is Filipinos tend to patronize imported products most especially those that are know for years. In fact, products made by the Estee Lauder Company are sold in some known malls all over the Metro Manila region. May it be cosmetics or fragrances consumer will buy it as long as they have the money. Social media affects Filipinos perception about a certain thing. If there is one thing that Estee Lauder to focus on in onerous to caught more attention from Filipinos, it shall be in the social media.I have noticed that they cannot be seen in the TV commercials, receiving set stations or even print ads. They appear in print ads but rarely with the local magazines. Since Estee Lauder is based in London, cosmetics are mostly designed for the white people. This company should create cosmetics that are compatible with the Asian skin especially to the Filipinos. Filipinos are fond of social net operative sites which may be an value of Estee Lauder to advertise products internationally easily and can hear feedbacks with just a click.Since Estee Lauder legal injurys ranges from mid-high to high, not all Filipinos can afford to have a single product on their pouches. Mid-range to elite people may patronize the product continuously but not those who ar e tight with the budget. Filipinos should be awake that though it may be a little expensive, the bill spent is worth e rattling product. It has been a practice that those who cant have those products, eluding to an imitation of the original. I believe, these products should be innovated even more where in all Filipinos can afford to use Estee Lauder products in their daily routine. They should know the astronomic difference between the original and the imitation. What is it? We should see it ourselves. 3. Economic EnvironmentAll sectors of the cosmetics industry showed growth in the Philippines in 2008/2009, according to Euromonitor. Beauty and personal give care sales were US$2.26bn, a 2% rise year on year. The highest growth was in colour cosmetics (7.9%), skin care (6.3%), deodorants (4.3%), hair care (4%) and fragrance (2.9%). The mass market is dominant in the Philippines, accounting for 96.3% of all john and shower sales. As elsewhere in the southeast Asian region, the ma jor players are foreign multinationals Unilever, followed by Procter Gamble, LOral, Este Lauder and Shiseido, according to the trade association Chambers of Cosmetics Industry of the Philippines (CCIP). In the beauty and personal care sector, Colgate-Palmolive is the third largest company, behind Unilever who in 2009 adopted a system of offering smaller-sized packaging, targeted at middle and lower income consumers and Procter Gamble, according to Euromonitor.The economic slowdown in the Philippines has prompted growth in direct selling. Companies such as US-owned Avon and Philippines-based Ever Bilena Cosmetics adopted commitments to boosting revenues through discounts and tapped into a female labour market keen to increase household incomes. The market appears to be remaining vibrant. Between January 2009 and January, 2010, 511 in the raw cosmetics products were launched in the Philippines, according to market research group Mintel the highest number (176) was in skin care , followed by soap and bath products (131) and hair products (108).B. Competitive Analysis1. Intensity of the Rivalry Among Existing CompetitorsEste lauders brands face coarse rival in the cosmetics industry. Internationally it competes with Loreal, Avon, Revlon, Elizabeth Arden and advertise Escentuals. Though there are a lot of competitors in the industry, Estee lauder consists of various products that competes on each of them. Este Lauders all- instinctive products face competition from Bare Esentuals. Its mid-end products compete against Revlon, Avon, and Elizabeth Arden. Additions to these competitors are the local companies in the Philippines like Ever Bilena and Careline. Rivalry intensifies because there are a lot of companies that are in to beauty products. Competition is more intense because of the local brands that use price cuts or other marketing tactics to boost unit volume.And because most Filipinos are thrifty, ambition is stronger when the cost incurred by custo mers to switch their purchases from one brand, like Estee Lauder to another, like Careline, are low. Competitors might get a close competition with some EL products. But because of its variations of beauty products Estee lauder possesses, it still rises above the others internationally. Its professional makeup brands, M.A.C. and Bobbi Brown face significantly less competition because of their target marked of specialise clientele. In more than 25 years, Ever Bilena has become the number one Filipino brand. It has penetrated an industry dominated by global giants, and have made products outstrip suited for our Filipina consumers with international fictional character at inexpensive price.Ever Bilena and Careline cater products that are way too cheap compare to EL and other international beauty companies. Ever Bilena and Careline target market are different from the target market of EL. They target teenagers who need beauty products for their bothday use. It outwits EL by selling their products in a very low price. Our country is considered as third world so along with that it gives EB and Careline the edge among competitors because of the market it targets, basically the Masa.Estee lauder is known for its record and expertise in beauty products. EL has been in the industry for years. They have gained loyal customers as time pass by, and as fiber of their products modify along with it. They got an edge among other competitors just by the name it carries. But in the Philippines, those who cannot afford high-end beauty products will definitely not patronize Estee lauder products. Its a really tough completion EL have in the Philippines, but it still stand a chance in competing with other local products because of the colonial mentality of the Filipino, love for foreign products. 2. Threat of the New EntrantsLocally, the barrier is high but we can say that there is a great chance of any other aspiring businessman to enter into the industry. Economies of sca le act as a great barrier to entry, and with EL, its sales for the past hardly a(prenominal) years. The Estee Lauder Companies Inc. today reported a strong pecuniary performance for its fourth quarter and fiscal year ended June 30, 2012 based on the financial statement posted via internet. In line with these facts gathered, we can say that the stability of the company is very strong that becomes a barrier for new entrants. Its capital unavoidableness established in the industry by Estee Lauder is so large that it becomes a discouragement for the new companies planning to enter the industry. Another barrier is the Estee Lauder product specialism. It offers different products that create a barrier by forcing entrants to incur expenditure to overcome existing customer loyalties.New entrants must spend a great deal of money and time to overcome this barrier. Filipinos will always patronize products that are affordable and with good quality. They can enter the industry by taking the form of aggressive price-cutting and increased in advertising. Estee Lauder is considered as high-end beauty products for the Filipinos. Only hardly a(prenominal) can afford to buy fragrances, skin cares and play Estee Lauder offers. If the new entrant penetrates in the market by having the strategy of offering its products in a relatively low- price, it will definitely boom Filipino consumers. Watson beauty care, easily took Filipino patronage by selling different variety of products in a low prices. The barrier is really high when it comes to reputation and quality. But in the Philippines, the door in entering the industry is very much open to those who are willing to produce quality products in affordable prices.3. Bargaining origin of the BuyersThe consumers can bargain in this industry simply because they are the buyers purchases are a sizable percentage of the selling industrys total sales. The products are unimportant to the quality of the customers product or service. The item being purchased is sufficiently standardized among sellers that not only can buyers find alternative sellers.4. Bargaining Power of the SuppliersSuppliers do not play a big roll and have little bargaining power in this market. Big brands like Este Lauder develop essential ingredients in their own RD department, and only outsource basic and non-value-adding chemicals and packaging.5. Threats of Product SubstituteAs a rule, the lower the price of substitutes and the higher the quality and performance of substitutes, the more intense are the competitive pressures posed by substitute products. We Filipinos go for the ones that are almost free of charge that gives us the corresponding result that a costly product offers. We are the most resourceful race. Filipinos are naturally creative and imaginative people.Filipinos can invent a lot of things to substitute any products just so they can save money. We are also fan of herbal products which is the result of our being authentic Fil ipinos. Along with these ideas, the threats of product substitute are very high in the Philippines. Though Estee Lauder produce a brands, Aveda and Clinique, which focus on producing products made with natural ingredients and anti-allergens, many will still go for the naturals, literally, to make their skin or hair really good.V. ENVIRONMENTAL ANALYSISThreats* Intense competition in cosmetics has increased and market initiators with quality providers are a serious threat to the pissed. * New entrants, even though the market has considerably mature in the sense that it has captured customer loyalty, but there is always room for improvement in this field. * Counterfeit commodities affect the sales of the branded commodities. 9%, according to the Global Congress on Combating Counterfeiting, of all the world trade comprises counterfeit goods.Opportunities* New markets are emerging in various countries where the firm can inject its products, such as India, China (known to be the second largest cosmetics market in Asia) etc. * Markets where wealthy rule is also a good opportunity to tap in because of the tendency of the wealthy to own opulence commodities. * Many nations are growing to be beauty conscience every passing day the firm will do well in cabaret to tap-in without any delay and initiate in order to get customer loyalty attached to its products. * Diversification of the distribution channels.* Expansion to global markets, worldwide.Weaknesses* Lack of ducking regarding customer value (Client.) * Profit oriented (loses sight of the customer) * Weak Liquidity Position (decline in the firms liquidity in the past few years.) * Distribution Networks lack of reach to other viable markets. * Declining operating income in various market marks the weak penetration of the products in those specific markets. Strengths* Strong Brand Reputation (The brand is associated with luxury quality. Also has a strong brand portfolio). * Research Development (Role model and leader in identifying consumer needs, and preferences and developing products accordingly). * Strong Distribution Network (The products are sold to a limited stores that compliments the image of the brands such as department stores, upscale perfumeries, intensity level stores, professional hairdressers etc. specially in U.S.) * Vigorous Revenue Profitability (Net Earnings for fiscal year 2010 $478 million while Net sales were $7.8 billion.) * 31,000 employees working under its umbrella, full-time. (approximate value) * Products are sold in more than 150 countries.* Powerful marketing techniques used by the firm Free Gift, Gift-With-Purchase, Makeup Artist Events (for trying out the new products) etc. * Operations and cost maintenance with the firm holds a strong positive attitude in the long run. * Regulations are increase delinquent to the voicing of different groups about harmful chemical ingredients in cosmetic products.VI. GENERIC STRATEGIESDifferentiationDifferentiation is a competitive business strategy whereby firms attempt to gain a competitive advantage by increasing the perceived value of their products and services relative to the perceived value of other firms products and services Charles W.L. Hill, Gareth R. JoneNo other companies has done better than Estee Lauder company. They are already on top but the concept of being alone(p) or different is far more important today that it was years ago. The company should consider strategies in differentiation. First, they can use quality/price differentiation for Estee Lauder. The company can improve more on the quality of their cosmetic products so that customers will build loyalty to the company. Next, said company could use product differentiation by adding more features, specifications, design or the image, packaging and benefits on their products.Also, they can use differentiation by re purviewing. To regain its position as a premium product, Este Lauder must reposition itself. A successful repos itioning would require the Este Lauder brand to develop a profit brand image and provide its customers with something that is unique. There are a few possibilities that Este Lauder could take Este Lauder could emphasize the natural ingredients in a product, the romance and sexiness, or the technology involved in a product. Another possibility for Este Lauder would be to create a new brand image through the release of a sub-brand. In considering each of these strategies, it is also important to take into account how Este Lauders competitors will react.Natural Ingredients. Currently, Este Lauders customers are not interested in the naturalness of the ingredients used in Este Lauder skincare products. This is manifest by the fact that Este Lauder does not promote the natural ingredients and yet they still have customers. To redefine the brand as one that emphasizes natural products might ostracize the current Este Lauder customers. In addition to this, the natural ingredient skincare market is not high-end. The main competitors in that market are Biotherm and Clarins. These brands are well recognized by those customers that place natural ingredients above technology however, they cannot demand as high a price as Este Lauder for their skincare products. This would not be a wise move for Este Lauder.Romance. Another option for Este Lauder would be to position the brand so that it is appealing for those women who desire the romance and sexiness that is associated with cosmetics. This positioning strategy would place Este Lauder in direct competition with Lancme. As Lancme is a French brand, it already has an advantage over Este Lauder as France is widely associated with romance.The Este Lauder brand would have to work very hard to overcome Lancmes natural advantage. A first glance comparison of an Este Lauder and a Lancme booth at Macys will show that Este Lauders image is lacking the luscious, red lips of Lancme. Instead, Este Lauders image is of the elegant Caro lyn Murphy and Liya Kebede. Their images are beauteous but distant and lacking passion. To rework this image would be extremely difficult. Direct competition with Lancme would also be unfavorable.By more heavily show its technology, Este Lauder also has the opportunity to occupy the trendy end of the technology market as opposed to being a complete dermatologist-brand. This is due to the elegance and fashion that is associated with Este Lauder. Presently, the bestsellers in the skincare market in general are anti-aging formulas. In the growing Asian skincare market, the bestsellers are anti-aging and color formulas. Both these formulas rely heavily on technology, so it is a good time for dermatologist-brands to enter the market. By occupying the trendy end of the technology market, Este Lauder will have a good position against these strong new entrants.VII. ALTERNATIVE COURSES OF ACTIONEstee Lauder can implement Horizontal Integration where the company will buy another company. I f they really want to increase the sales in the Philippines, they can buy local brands and kill the competition.VIII. RECOMMENDATION/ CONCLUSIONBased on the data gathered we can conclude the following1. Filipinos are aware of Estee Lauder and they consider this as a very high-end product. They patronize competing product that offers more reasonable price. Estee Lauder should formulate products that they can offer to Masa, a product for Filipinos. Same as to what LOreal did in the Philippines, when they introduced shampoo and conditioner that is close to the price of local brands. 2. Estee Lauders target market is middle-aged female whose buying power is relatively secure and thus are less price-sensitive. Filipinos are price sensitive, with that they should formulate strategy that is similar from the first conclusion. 3. Filipinos need lots of information about beauty care. We should be informed about the importance of Estee Lauders product, and what are the difference between their product to other companies and substitute product we are using.They should increase their advertisements in the Philippines. Technically, they are so known in the industry that they dont need any advertisement, but Filipinos are fan of idiot box that they rely mostly to what they see on TV. 4. The collection should consist of products that can be offered to middle market. It should be affordable and with good quality. The collection should be focusing on whitening skin and affordable cosmetics. 5. off from department stores and exclusive beauty shops, Estee Lauder should try putting up a place for their products in drugs store like Mercury and Watsons, which include every product they offer. They are already doing this but just to chosen products. They should start advertising their cosmetic products to these places where people have easy access and this will care people to get familiar to Estee Lauders product.