I. BACKGROUND OF THE COMPANY
Estee Lauder Companies. Inc. founded by Estee Lauder and her hubby Joseph in 1946 started by selling four tegument attention merchandises invented by her chemist uncle in beauty salons and hotels. The endeavor established their first section shop history with Saks Fifth Avenue in New York in 1947. By 1960. Estee Lauder was an international maker and seller. selling their merchandises in the celebrated Harrods Department Store in London. In the subsequent old ages. they opened mercantile establishments in Central America. Denmark. Hong Kong. Italy. Spain. Sweden. Belgium. New Zealand and Switzerland. Today. Estee Lauder markets its merchandises through different trade names in more than 140 states and districts. It besides holds the planetary licence for aromas and cosmetics. The company consists of a aggregation of prestigiousness trade names targeted at a diverse choice of consumers.
The group’s portfolio of trade names includes the most accepted labels for mature clients ( Estee Lauder. Clinique. Prescriptives. Aramis. and La Mer ) . eco-correct labels ( Aveda and Origins ) . every bit good 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 Lauder Companies is an organisation which engages in the fabrication. selling. and sale of several beauty merchandises.
The company is divided into four sectors. tegument attention. make-up. aroma. and hair attention. Estee Lauder is based in New York City and presently employs 32. 300 people. The merchandises are largely marketed through section shops. forte retail merchants. upscale perfumeries. pharmaceuticss. salons. and spars. Additionally merchandises are sold at company owned free standing shops and through e-commerce in selected states. The company is still controlled by the Lauder household. which controls about 70 % of the vote portions. Estee Lauder’s grandson is presently the president of the board of managers.
II. STATEMENT OF THE PROBLEM
This instance analysis efforts to find the most effectual schemes Estee Lauder must utilize in the Philippines. To find the chief aim of this instance the research workers focuses on the major constituents of the instance analysis which are as follows:
A. Market Analysis
1. To what extent will the Filipino consumer will back up or utilize Estee Lauder merchandises? 2. What are demographic profiles of the mark users of Estee Lauder in the Philippines? 3. What are the information demands of the Filipino consumer to deviate their backing to Estee Lauder merchandises?
B. Technical Analysis
1. Based on the demands of the Filipinos what would dwell the basic aggregation of Estee Lauder merchandises that should be put up into Philippine markets? 2. Where the possible locations that will efficaciously inform and market to the Filipino consumer the Estee Lauder merchandises?
III. OBJECTIVES OF THE STUDY
The primary aim of this survey is to find the most effectual schemes Estee Lauder must utilize in the Philippines utilizing market analysis and proficient analysis.
A. Market Analysis
1. To find the perceptual experience of the Filipino consumer on Estee Lauder merchandises versus other beauty merchandise rivals. 2. To verify the demographic profiles of the mark users of Estee Lauder in the Philippines. 3. To find the information demands of the Filipino consumer to deviate their backing to Estee Lauder merchandises.
A. Technical Analysis
1. To recite the possible aggregation of Estee Lauder merchandises that should be put up into Philippine markets? 2. To plot possible locations that will efficaciously inform and market to the Filipino consumer the Estee Lauder merchandises.
IV. INDUSTRY ANALYSIS
A. Analysis of the Macro environment
1. Demographic Environment
In the following 20 old ages. there would be an expected growing of gross revenues of decorative merchandises because approximately 70 million people around the universe will make an income that will let them to buy such sort of merchandise. In the following 40 old ages. aging population in the universe will multiply by 2. 5 times. With an addition in the world’s aging population. life anticipation would better excessively.
2. Social and Technological Environment
Social environment is a wide construct which may be affected by all factors to be considered in doing analysis in the Macro environment of the company. There is a important factor that may impact sale of merchandises easy. Majority of the Filipino consumers particularly those who live in the National Capital Region may back up merchandises easy because of the pattern called mental colonialism. What is imported is better. Of class it is! Filipinos tend to sponsor imported merchandises most particularly those that are known for old ages. In fact. merchandises made by the Estee Lauder Company are sold in some known promenades all over the Metro Manila part. May it be cosmetics or aromas ; consumer will purchase it every bit long as they have the money. Social media affects Filipinos perceptual experience about a certain thing. If there is one thing that Estee Lauder to concentrate on in seeking to caught more attending from Filipinos. it shall be in the societal media.
I have noticed that they can non be seen in the Television commercials. wireless Stationss or even print ads. They appear in print ads but seldom with the local magazines. Since Estee Lauder is based in London. cosmetics are largely designed for the white people. This company should make cosmetics that are compatible with the Asiatic tegument particularly to the Filipinos. Filipinos are fond of societal networking sites which may be an advantage of Estee Lauder to publicize merchandises internationally easy and can hear feedbacks with merely a chink.
Since Estee Lauder monetary values ranges from mid-high to high. non all Filipinos can afford to hold a individual merchandise on their pouches. Mid-range to elite people may sponsor the merchandise continuously but non those who are tight with the budget. Filipinos should be cognizant that though it may be a small expensive. the measure spent is deserving every merchandise. It has been a pattern that those who can’t have those merchandises. displacement to an imitation of the original. I believe. these merchandises should be innovated even more where in all Filipinos can afford to utilize Estee Lauder merchandises in their day-to-day modus operandi. They should cognize the large difference between the original and the imitation. What is it? We should see it ourselves. 3. Economic Environment
All sectors of the cosmetics industry showed growing in the Philippines in 2008/2009. harmonizing to Euromonitor. Beauty and personal attention gross revenues were US $ 2. 26bn. a 2 % rise twelvemonth on twelvemonth. The highest growing was in coloring material cosmetics ( 7. 9 % ) . tegument attention ( 6. 3 % ) . deodourants ( 4. 3 % ) . hair attention ( 4 % ) and aroma ( 2. 9 % ) . The mass market is dominant in the Philippines. accounting for 96. 3 % of all bath and shower gross revenues. As elsewhere in the sou’-east Asiatic part. the major participants are foreign multinationals – Unilever. followed by Procter & A ; Gamble. L’Oreal. Estee Lauder and Shiseido. harmonizing to the trade association Chambers of Cosmetics Industry of the Philippines ( CCIP ) . In the beauty and personal attention sector. Colgate-Palmolive is the 3rd largest company. behind Unilever – who in 2009 adopted a scheme of offering smaller-sized packaging. targeted at center and lower income consumers – and Procter & A ; Gamble. harmonizing to Euromonitor.
The economic lag in the Philippines has prompted growing in direct merchandising. Companies such as US-owned Avon and Philippines-based Ever Bilena Cosmetics adopted committednesss to hiking grosss through price reductions and tapped into a female labor market lament to increase family incomes. The market appears to be staying vivacious. Between January 2009 and January. 2010. 511 new cosmetics merchandises were launched in the Philippines. harmonizing to market research group Mintel – the highest figure ( 176 ) was in skin attention. followed by soap and bath merchandises ( 131 ) and hair merchandises ( 108 ) .
B. Competitive Analysis
1. Intensity of the Rivalry Among Existing Rivals
Estee lauder’s brands face great competition in the cosmetics industry. Internationally it competes with Loreal. Avon. Revlon. Elizabeth Arden and Bare Escentuals. Though there are a batch of rivals in the industry. Estee Lauder consists of assorted merchandises that competes on each of them. Estee Lauder’s all-natural merchandises face competition from Bare Esentuals. Its mid-end merchandises vie against Revlon. Avon. and Elizabeth Arden. Additions to these rivals are the local companies in the Philippines like Ever Bilena and Careline. Rivalry intensifies because there are a batch of companies that are in to beauty merchandises. Competition is more intense because of the local trade names that use monetary value cuts or other selling tactics to hike unit volume.
And because most Filipinos are thrifty. competition is stronger when the cost incurred by clients to exchange their purchases from one trade name. like Estee Lauder to another. like Careline. are low. Rivals might acquire a close competition with some EL merchandises. But because of its fluctuations of beauty merchandises Estee Lauder possesses. it still rises above the others internationally. Its professional make-up trade names. M. A. C. and Bobbi Brown face significantly less competition because of their mark marked of specialised patronage. In more than 25 old ages. Ever Bilena has become the figure one Filipino trade name. It has penetrated an industry dominated by planetary giants. and have made merchandises best suited for our Filipina consumers with international quality at low-cost monetary value.
Ever Bilena and Careline cater merchandises that are manner excessively inexpensive comparison to EL and other international beauty companies. Ever Bilena and Careline mark market are different from the mark market of EL. They target adolescents who need beauty merchandises for their mundane usage. It outwits EL by selling their merchandises in a really low monetary value. Our state is considered as 3rd universe so along with that it gives EB and Careline the border among rivals because of the market it targets. fundamentally the Masa.
Estee Lauder is known for its repute and expertness in beauty merchandises. EL has been in the industry for old ages. They have gained loyal clients as clip base on balls by. and as quality of their merchandises improved along with it. They got an border among other rivals merely by the name it carries. But in the Philippines. those who can non afford high-end beauty merchandises will decidedly non sponsor Estee Lauder merchandises. It’s a truly tough completion EL have in the Philippines. but it still stand a opportunity in viing with other local merchandises because of the colonial outlook of the Filipino. love for foreign merchandises. 2. Menace of the New Entrants
Locally. the barrier is high but we can state that there is a great opportunity of any other draw a bead oning man of affairs to come in into the industry. Economies of graduated table act as a great barrier to entry. and with EL. its gross revenues for the past few old ages. The Estee Lauder Companies Inc. today reported a strong fiscal public presentation for its 4th one-fourth and financial twelvemonth ended June 30. 2012 based on the fiscal statement posted via cyberspace. In line with these facts gathered. we can state that the stableness of the company is really strong that becomes a barrier for new entrants. Its capital demand established in the industry by Estee Lauder is so big that it becomes a disheartenment for the new companies be aftering to come in the industry. Another barrier is the Estee Lauder merchandise distinction. It offers different merchandises that create a barrier by coercing entrants to incur outgo to get the better of bing client truenesss.
New entrants must pass a great trade of money and clip to get the better of this barrier. Filipinos will ever sponsor merchandises that are low-cost and with good quality. They can come in the industry by taking the signifier of aggressive price-cutting and increased in advertisement. Estee Lauder is considered as high-end beauty merchandises for the Filipinos. Merely few can afford to purchase aromas. tegument attentions and make-up Estee Lauder offers. If the new entrant penetrates in the market by holding the scheme of offering its merchandises in a comparatively low- monetary value. it will decidedly din Filipino consumers. Watson beauty attention. easy took Filipino backing by selling different assortment of merchandises in a low monetary values. The barrier is truly high when it comes to repute and quality. But in the Philippines. the door in come ining the industry is really much unfastened to those who are willing to bring forth quality merchandises in low-cost monetary values.
3. Dickering Power of the Buyers
The consumers can dicker in this industry merely because they are the buyer’s purchases are a ample per centum of the merchandising industry’s entire gross revenues. The merchandises are unimportant to the quality of the customer’s merchandise or service. The point being purchased is sufficiently standardized among Sellerss that non merely can purchasers happen alternate Sellerss.
4. Dickering Power of the Suppliers
Suppliers do non play a large axial rotation and have small bargaining power in this market. Big trade names like Estee Lauder develop indispensable ingredients in their ain R & A ; D section. and merely outsource basic and non-value-adding chemicals and packaging.
5. Menaces of Product Substitute
As a regulation. the lower the monetary value of replacements and the higher the quality and public presentation of replacements. the more intense are the competitory force per unit areas posed by replacement merchandises. We Filipinos go for the 1s that are about free of charge that gives us the same consequence that a dearly-won merchandise offers. We are the most resourceful race. Filipinos are of course originative and inventive people.
Filipinos can contrive a batch of things to replace any merchandises merely so they can salvage money. We are besides fan of herb tea merchandises which is the consequence of our being reliable Filipinos. Along with these thoughts. the menaces of merchandise replacement are really high in the Philippines. Though Estee Lauder produce a trade names. Aveda and Clinique. which focus on bring forthing merchandises made with natural ingredients and anti-allergens. many will still travel for the naturals. literally. to do their tegument or hair truly good.
V. ENVIRONMENTAL ANALYSIS
* Intense competition in cosmetics has increased and market instigators with quality suppliers are a serious menace to the house. * New entrants. even though the market has well mature in the sense that it has captured client trueness. but there is ever room for betterment in this field. * Counterfeit trade goods affect the gross revenues of the branded trade goods. 9 % . harmonizing to the Global Congress on Battling Counterfeiting. of all the universe trade comprises counterfeit goods.
* New markets are emerging in assorted states where the house can shoot its merchandises. such as India. China ( known to be the 2nd largest cosmetics market in Asia ) etc. * Markets where affluent regulation is besides a good chance to tap in because of the inclination of the wealthy to ain luxury trade goods. * Many states are turning to be beauty scruples every passing twenty-four hours ; the house will make good in order to tap-in without any hold and novice in order to acquire client trueness attached to its merchandises. * Diversification of the distribution channels.
* Expansion to planetary markets. worldwide.
* Lack of concentration sing client value ( Client. ) * Net income oriented ( loses sight of the client ) * Weak Liquidity Position ( diminution in the firm’s liquidness in the past few years. ) * Distribution Network’s deficiency of range to other feasible markets. * Worsening runing income in assorted market marks the weak incursion of the merchandises in those specific markets. Strengths:
* Strong Brand Reputation ( The trade name is associated with luxury & A ; quality. Besides has a strong trade name portfolio ) . * Research & A ; Development ( Role theoretical account and leader in placing consumer demands. and penchants and developing merchandises consequently ) . * Strong Distribution Network ( The merchandises are sold to a limited shops that compliments the image of the trade names such as section shops. upscale perfumeries. forte shops. professional hairstylists etc. specially in U. S. ) * Vigorous Revenue & A ; Profitability ( Net Net incomes for financial twelvemonth 2010 $ 478 million while Net gross revenues were $ 7. 8 billion. ) * 31. 000 employees working under its umbrella. full-time. ( approximative value ) * Merchandises are sold in more than 150 states.
* Powerful selling techniques used by the house: Free Gift. Gift-With-Purchase. Makeup Artist Events ( for seeking out the new merchandises ) etc. * Operations and cost care with the house holds a strong positive attitude in the long tally. * Regulations are increasing due to the voicing of different groups about harmful chemical ingredients in decorative merchandises.
VI. GENERIC STRATEGIES
“Differentiation is a competitory concern scheme whereby houses attempt to derive a competitory advantage by increasing the sensed value of their merchandises and services relative to the perceived value of other firm’s merchandises and services” – Charles W. L. Hill. Gareth R. Jone
No other companies has done better than Estee Lauder company. They are already on top but the construct of being alone or different is far more of import today that it was old ages ago. The company should see schemes in distinction. First. they can utilize quality/price distinction for Estee Lauder. The company can better more on the quality of their decorative merchandises so that clients will construct trueness to the company. Next. said company could utilize merchandise distinction by adding more characteristics. specifications. design or the image. packaging and benefits on their merchandises.
Besides. they can utilize distinction by shifting. To recover its place as a premium merchandise. Estee Lauder must shift itself. A successful repositioning would necessitate the Estee Lauder trade name to develop a clear trade name image and supply its clients with something that is alone. There are a few possibilities that Estee Lauder could take ; Estee Lauder could stress the natural ingredients in a merchandise. the love affair and amorousness. or the engineering involved in a merchandise. Another possibility for Estee Lauder would be to make a new trade name image through the release of a sub-brand. In sing each of these schemes. it is besides of import to take into history how Estee Lauder’s rivals will respond.
Natural Ingredients. Presently. Estee Lauder’s clients are non interested in the naturalness of the ingredients used in Estee Lauder skin care merchandises. This is evidenced by the fact that Estee Lauder does non advance the natural ingredients and yet they still have clients. To redefine the trade name as one that emphasizes natural merchandises might banish the current Estee Lauder clients. In add-on to this. the natural ingredient skin care market is non high-end. The chief rivals in that market are Biotherm and Clarins. These trade names are good recognized by those clients that place natural ingredients above engineering ; nevertheless. they can non demand every bit high a monetary value as Estee Lauder for their skin care merchandises. This would non be a wise move for Estee Lauder.
Romance. Another option for Estee Lauder would be to place the trade name so that it is appealing for those adult females who desire the love affair and amorousness that is associated with cosmetics. This placement scheme would put Estee Lauder in direct competition with Lancome. As Lancome is a Gallic trade name. it already has an advantage over Estee Lauder as France is widely associated with love affair.
The Estee Lauder trade name would hold to work really difficult to get the better of Lancome’s natural advantage. A first glimpse comparing of an Estee Lauder and a Lancome booth at Macy’s will demo that Estee Lauder’s image is missing the juicy. ruddy lips of Lancome. Alternatively. Estee Lauder’s image is of the elegant Carolyn Murphy and Liya Kebede. Their images are beautiful but distant and deficient passion. To make over this image would be highly hard. Direct competition with Lancome would besides be unfavourable.
By more to a great extent stressing its engineering. Estee Lauder besides has the chance to busy the voguish terminal of the engineering market as opposed to being a complete dermatologist-brand. This is due to the elegance and manner that is associated with Estee Lauder. Soon. the best sellers in the skin care market in general are anti-aging expressions. In the turning Asiatic skin care market. the best sellers are anti-aging and whitening expressions. Both these expressions rely to a great extent on engineering. so it is a good clip for dermatologist-brands to come in the market. By busying the voguish terminal of the engineering market. Estee Lauder will hold a good place against these strong new entrants.
VII. ALTERNATIVE COURSES OF ACTION
Estee Lauder can implement Horizontal Integration where the company will purchase another company. If they truly want to increase the gross revenues in the Philippines. they can purchase local trade names and kill the competition.
VIII. RECOMMENDATION/ CONCLUSION
Based on the informations gathered we can reason the followers:
1. Filipinos are cognizant of Estee Lauder and they consider this as a really high-end merchandise. They patronize viing merchandise that offers more sensible monetary value. Estee Lauder should explicate merchandises that they can offer to Masa. a merchandise for Filipinos. Same as to what L’Oreal did in the Philippines. when they introduced shampoo and conditioner that is near to the monetary value of local trade names. 2. Estee Lauder’s mark market is middle-aged female whose purchasing power is comparatively unafraid and therefore are less price-sensitive. Filipinos are monetary value sensitive. with that they should explicate scheme that is similar from the first decision. 3. Filipinos need tonss of information about beauty attention. We should be informed about the importance of Estee Lauder’s merchandise. and what are the difference between their merchandise to other companies and utility merchandise we are utilizing.
They should increase their advertizements in the Philippines. Technically. they are so known in the industry that they don’t need any advertizement. but Filipinos are fan of imbecile box that they rely largely to what they see on Television. 4. The aggregation should dwell of merchandises that can be offered to middle market. It should be low-cost and with good quality. The aggregation should be concentrating on whitening tegument and low-cost cosmetics. 5. Aside from section shops and sole beauty stores. Estee Lauder should seek seting up a topographic point for their merchandises in drugs store like Mercury and Watsons. which include every merchandise they offer. They are already making this but merely to take merchandises. They should get down publicizing their decorative merchandises to these topographic points where people have easy entree and this will assist people to acquire familiar to Estee Lauder’s merchandise.