International Business Marketing: Estee Lauder - Assignment Example

International Business Marketing Estee Lauder is a US-based company and the forth world leader in cosmetics industry. It operates on the global market competing with such firms as L'Oreal, Lancme and Shiseido. Its products include: cosmetics, toiletries, and skincare products for men and women. Economic growth is a driving force in the expansion of the international economy and the growth of global marketing for Estee Lauder. First, economic growth has created market opportunities for Estee Lauder that provides a major incentive for the company to expand globally. (Tai, et al 2005). Population growth rate and FDI are considered the main factors for country selection. Examining the statistical results, it is evident that China is on the top of the list having the highest population in the world (Table 1). The average rate of population growth is a lower than in India and Indonesia, nevertheless, it is expected that in 2025 the population in China will be about 1,476.0 ml, in contrast to India which will has only 1,363.0 ml (2004 World Population Data Sheet, 2005). According to the survey, "China was the largest FDI destination in the world in 2003, overtaking the US" (FDI Confidence Index, 2004). It has stable political situation, and high rates of economic growth. In case of China, FDI is a very important feature of the economies of the developing countries. For many big Western companies, expansion of their sphere of operations through the establishment of branches in other countries is regarded as a key aspect of strategy, often more important than immediate returns on capital. Many firms are seeing their investments as lower than they would have to be in the future and as providing them with a first-mover advantage as those economies begin to grow significantly. In 2003, FDI inflows were $53.5 billion. The economic health of countries is also assessed to determine whether the macroeconomic conditions are conducive to stable economic conditions. The economic prognosis says that 40% of world's investors "expected a more positive outlook on China's economy" (FDI Confidences Index, 2004). China expects liberalization of market, and that is why all those risks will be minimized. Demographic factors, taken into account together with measures such as disposable income per head, shows that China and India are two potential markets for this product. For instance, GDP per capita growth rate is the highest in China (8.8%) in contrast to other countries included in the list (GDP per capita, 2001). The penetration strategy will be based on specific product line which has not been developed yet. The strategy will be aimed to promote luxury skin care line for pregnancy and early motherhood. Estee Lauder has not promoted this product line, but its skincare product meet high quality standards making them safe for pregnant women. Cosmetics for pregnancy is based on all natural cosmetic line (Begoun, 2006) as those proposed by Estee Lauder. This strategy is important because there are limited number of companies promote this line in China (Dowling, 2006). International expansion strategy will consist of several steps. 1.The first step (during the first year) - co-operation strategy and selection of sales agents in big cities. (This step is aimed to evaluate market potential and growth rate, as well as competition tension. Estee Lauder will sale its products through drug stores and specialized stores for pregnant women in big cities around the country). 6 month - identification of potential agencies and sellers; contracting and licensing 6 month - advertising and promotion campaign, opening a Web page After the first year of performance - evaluation and analysis of the market potential 2.The second step (during the second year) - employing sales representatives and agents in order to promote products around the country (the aim is to sell products in middle-size cities through agents, drug stores and specialized stores for women; competitive rivalry on both a price and a non-price basis. 3.The third year - to expand regionally with both media and sales personnel, to constantly achieve cost benefit through an expanding provider network. During this year Estee Lauder will penetrate into small towns and rural areas in order to reach diverse target audience. 4 The third step is the open specialized stores (four stores) under Estee Lauder brand in three big cities around the country. The next steps will be followed: Finding appropriate location and opening a shop; Staff selection (3 sales persons for each store); 5. The fifth year - increasing number of specialized store under Estee Lauder brand up to 10 around the country. Marketing Mix: Communication and Promotion (McDonald, Christopher, 2003). Creating advertising program two approaches will be used: documentation strategy (the use of facts or figures to explain the value or quality of the service) and representation strategy (print advertising). Local and national press (create an impact and persuasive; allows more scope for testing than TV). Billboard advertisements will be aimed to attract customers advertising new products and promoting brand image of Estee Lauder. Internet promotion will support individual marketing or one-on-one marketing to provide superior value with quality to its customers. PR campaign (see Table 3) Press conferences should be the core of PR campaign. Two press conferences will help to inform potential consumers about recent developments and innovations, and inform public about future directions and strategy of the company on the Chinese market. TV programs (or press clubs) will be used to inform general public about Estee Lauder. Taking into account the data mentioned above it is evident that China proposes great opportunities for Estee Lauder international expansion. Strategies should integrate technology refresh provisions early in the design process of major systems and components to allow upgrades during development, production and system operation. As competition in the cosmetics market intensifies, Estee Lauder is designed to assist this market by providing timely and critical market intelligence necessary to aid in strategic and tactical planning for the fast growing market in the world. References 1. Begoun, P. Skin-Care Products and Pregnancy. Available at: http://www.cosmeticscop.com/learn/article.aspPAGETYPE=ART&REFER=SKIN&ID=106 2. Dowling, E. Saving Face in China 2006. Available at: http://www.fool.com/news/commentary/2006/commentary06010408.htm 3. Estee Lauder Available at: http://www.elcompanies.com/ 4. "FDI Confidences Index" The Global Business Policy Council, October 2004, Vol.7. Available at: http://www.atkearney.com/shared_res/pdf/FDICIOct_2004_S.pdf2004 5. GDP per capita annual Growth rate. 2001 Available at: http://globalis.gvu.unu.edu/indicator.cfmCountry=ER&IndicatorID=45#rowER 6. McDonald M., Christopher M. Marketing: A complete Guide. Palgrave Macmillan, 2003. 7. Tai, H., Su, P., Xu, Ya, Li, Y. Reviving Este Lauder, the Beauty Queen. 2005 Available at: www.hss.caltech.edu/mcafee/ /Classes/BEM106/Papers/2005/EsteeLauder.pdf 8. World Population Data Sheet. 2004, Available at: http://www.prb.org/pdf04/04WorldDataSheet_Eng.pdf Appendix Table 1 Countries Profile # Country Population rate (2000-2005) (ml) Average Population Growth Rate (%), 2000-2005 1 China 1315.84 0,7 2 India 1103.37 1,5 3 Indonesia 222.78 1,3 4 Vietnam 84.24 1,3 Table 2 Implementation of advertising campaign - Send Direct mail twice on April and one on May - Cinema ad 7 times a day starting from 1th of April to the end of May. - Radio ad 10 times a day from 1th of April to the end of May. - Advertising in local Press once a week from 1th of April to the end of May. - Control and feedback Table 3 PR Plan 1. 1-5/ IV Send direct mail to potential agents (mails and e-mails informing about the conference) 2. 5-5/ IV Press Conference "Cosmetics and Women" 3. 25 / IV TV program (press club) discussing recent developments of skincare products for pregnancy and its future trends 4. Press releases in magazines and newspapers informing about TV program and questions under discussion Read More