Marketing Analysis of the Aesop Company - Case Study Example

Marketing Analysis - AESOP Name Class Unit Executive summary This market analysis report looks at Aesop market globally. The report critically analyses the company marketing background, its marketing mix, competitor analysis and lastly give recommendations. The report establishes that since the company was started in 1987, it has managed to penetrate international market. The company has both physical and online selling platforms. The report establishes the company marketing mix which comprises the four Ps (product, place, price and promotion). Aesop products are of high quality and packaged in a simple uniform way. The packaging according to the company ensures the consumer is not distracted from the product through physical appearance. The report looks at the place aspect of market mix and establishes Aesop products are sold in physical stores and online. Physical stores are in major cities in its countries of operations. The company also uses departmental stores to distribute their products. According to the report, it establishes that Aesop uses product line pricing. The products are priced either premium or medium priced depending on its line. Aesop mostly depends on personal selling through their well trained staff. The report establishes that Aesop does not use advertisements in their marketing mix. According to the report, the main competitors to Aesop are; proctor & Gamble co, L’Oreal group, Uniliver Group, Colgate Palmolive co, Avon products inc, Beiersdorf AG, Johnson & Johnson Inc, Shiseido Co Ltd and Kao Corp. The report recommends that Aesop have to invest more in research and development. There is also need for Aesop to follow current trends in developing their products. The report also recommends that Aesop should consider engaging in advertisement due to the competitive nature of the industry. There is also need to carry out search engine optimization to enhance company online presence. The report concludes that despite high competition in the sector, Aesop has been doing well. There is need to implement the recommendations in order to increase market share and gain a competitive edge. Table of Contents Executive summary 2 Table of Contents 3 Introduction 4 Company Background 4 Sustainable practices 5 Products, services and suppliers 5 Aesop customers 6 Marketing 6 Market mix 7 Marketing mix for Aesop 7 Product 7 Price 8 Place 8 Promotion 9 Competitor analysis 10 Competitors 4 P’s comparison 11 Recommendations 15 Conclusion 16 References 17 Appendix 19 Swot analysis 19 Position chart 20 Introduction Over the last 20 years, the beauty industry has grown with an average rate of 4.5% globally. This has led to expansion of the industries which deals with beauty products (Berghoff & Kühne, 2013). Aesop is a beauty products company based in Melbourne Australia. The company has gained reputation due to their high quality products made using plant based and laboratory made ingredients. The company has been committed to ensuring that they meet the needs of their customers. The company has their products at Signature spaces, major department stores in large cities such as Paris, Hong Kong among others (Aesop, 2015). The company also operates an online store which can be accessed internationally (Aesop, 2015). The company has been very successful in the sector and recording profit in their operations. This report will analyze Aesop market through looking at the background of the company, its marketing mix, competitors’ analysis and give recommendations. Company Background Aesop was founded in Melbourne Australia in 1987 by Dennis Paphitis with an aim of coming up with superlative skin products for skin, hair and body. The industry is in the global beauty market which has been expanding at a very fast rate. At the moment, the company has grown to be one of the Australia largest beauty products exporters. The company has made their products available online and also in major cities which include New York, Melbourne, and Paris among others. The company also places their products in department’s stores (Aesop. 2015). In 2012, the company entered into an agreement with Natura Cosmeticos S.A where Natura acquired 65% stake. The company is led by Paphitis who has a title as the creative director. The recent stores are located at Collins Street, a new store in Paris among other major cities where the company has expanded their presence (Aesop. 2015). The company has 79 formulas which use uniform packaging of brown bottles and squeezable beige tubes (Hattie, 2013). Sustainable practices Aesop has been very active in sustainability practices. The company environmental record especially through their packaging has been impressive. The company social and economic footprint is reduced by working through their sustainability strategy. The company has been working under the Australian packaging covenant. The current Aesop covenant on packaging is expected to last up to December 2016 (Aesop, 2014). The company utilizes their packaging to conserve the environment. They use recycled glass, plastic, aluminum and cardboard. The company has been committed in ensuring that they are engaging in sustainable packaging. Their cardboards and shipper cartons are manufactured from recycled materials. Ink used to print is environmental friendly. The suppliers of these products are all signatories of the Australian Packaging Covenant. Biodegradable bubble wrap is utilised to protect products when necessary. The company uses 100% recycled papers for their printing needs. The company always ensures that their products are sourced in ways which does not impact ecological footprint (Aesop, 2014). Products, services and suppliers Aesop product line includes; Parsley Facial cleansing, Parsley Seed Anti-Oxidant Serum, Sage & Zinc Facial Hydrating Cream, Geranium Leaf Body Scrub, Fabulous Face Oil among other products. Aesop sells a large range of modern products with an aim to satisfy the customer diverse needs (Aesop. 2015). Aesop distributors include Liberty London, Cult Beauty among other retailers. The supply for Aesop is global and complex. The suppliers are located in America, Asia, Europe, Africa and Australia. The company uses third party manufacturers for their products. The company transport is also provided through third party logistic companies. The company is thus placed as a brand owner in the complex supply chain. Aesop customers Aesop has different products to cover for diverse clientele. The market covers teenagers, young men and women and the elderly. The company thus uses consumer differentiation based on age and sex. Aesop also focuses on the client financial resources which determine their purchasing powers. Aesop addresses clients with medium to high incomes in the market as well as luxury customers (Aesop. 2015). Marketing The marketing concept is based on consumer orientation (Mitręga, 2006). It involves coordinated actions which lead to a specific goal which is satisfying human needs (Townley, 2011). Aesop is in the global beauty market which has five segments. The segments are skin care, hair care, fragrances and toiletries. Skin care is the most significant beauty segment and accounts to more than 23% of the market in 2013 (Berghoff & Kühne, 2013). To market their products, Aesop does not do advertising. The company relies on their store visual aspect and brand popularity (Hattie, 2013). Entering into an Aesop store creates a memorable experience due to the visual design and fragrance. The business has a well trained personal marketing team. The team is made of eloquent speakers and educates the consumers in a quick and respectful manner (Hattie, 2013). Market mix The art and science of selling is very vital in any organization (Kahn & Kahn, 2010). Marketing mix gives the right tools to enable marketing to take place in a successful manner. According to Kottler, there are four Ps which makes up marketing mix. The 4ps are; product, price, promotion and place (Grewal & Levy, 2010). For the organization to have a successful marketing program, they are supposed to combine the 4Ps. This ensures that the organization have a strong positioning in its market (Blythe, 2006). Marketing mix for Aesop Product The company has adopted product novelty, colors and modern manufacturing technology. Aesop is well known for their superior quality products. The company does not utilize quality differentiation strategy (Hattie, 2013). Aesop uses assortment renewal strategy in their products. This is one of the most complex strategies that are utilized by the company. This involves coming up with new products in the existing products range (Kuada, 2008). The main aim of the strategy is to ensure that the company is able to offer products that are in line with consumer needs. The products are also designed based on the global taste and preferences (Hattie, 2013). This has enabled the company to standardize their products in their different categories. Aesop products are designed with care to ensure that they meet their core function. His have led to consumers having high levels of trust and loyalty to the company (Aesop. 2015). Aesop packaging is a mean of differentiating itself from the competitors. In their case, packaging acts as part of brand identity. The company utilizes uniform. Use of simple and uniform packaging has acted as an identity for the company (Hattie, 2013). The packaging is also very distinctive as compared to competitors which make it easy to recognize their products. Packaging has been acting as a silent salesmanship for the company (Aesop, 2015). Price In pricing, Aesop uses three aspects which are; price level, degree of price diversification and price mobility (Hollebeek, 2011). The company uses product line pricing strategy. The price is set to reflect the benefits and quality of each range of products. This leads to different product lines with different prices. This implies that prices in some instances vary based on the criteria used for their establishment. Aesop prices are from medium to premium. The prices are all justifiable based on the quality of the products being sold. Aesop has been implementing their prices based on the fact that the perceived product value is equal to the price. The price of Aesop product is able to send a message to the customer on the quality. The price and products quality offered by Aesop matches very well (Aesop, 2015). Place This refers to the whole distribution process that is used by Aesop. Aesop has both online and physical stores in their distribution channel. From the customer enquiry to delivery and after sale service, Aesop has been committed to excellence service delivery. Aesop uses a short distribution channel which has made them closer to their customers. This has also enabled the company to know the customer needs and what they think about their products. The short distribution channel has also enabled the creation of brand loyalty in the industry (Hollebeek, 2011). In their physical locations, the customers are able to directly interact with the sales people employed by the company. Through online marketing, Aesop has made the product closer to their customers. The channel is low cost, fast and cost effective. Aesop internet sales have been growing at reasonable rates with customers placing orders and paying online. The products are delivered within 24 hours after placing the order. Aesop online market is only available in their areas of operation. The process has helped Aesop to cut off retailers and sell their products directly to the customers. Aesop has also been using major retailers as their distribution channels. This has helped in reaching the population in areas which they do not have a physical location. The company stores are designed with care to ensure that they give visual design which is lasting in consumer minds. This is one of the areas in which Aesop has excelled in (Aesop, 2015). Promotion Aesop has been very active in influencing the consumer choice. This is through the use of appropriate consumer promotion strategies. Aesop promotional mix comprises public relations, sales promotions and personal selling. Aesop does not utilize advertising. According to the management, the company utilizes mostly visual marketing. There is also an aromatic experience once one is in their stores. There stores are impeccably designed to give the customers a great visual design (Aesop, 2015). Aesop has earned media attention due to their quality products and high consumer loyalty. There have also been media interviews in which the founder has engaged in. The organization PR has been able to create a close relationship with the clients and have also enabled the company to be well understood in its activities (Hattie, 2013). Personal selling at Aesop is one of the most successful areas. The organization employees are carefully selected to ensure that they are able to engage customers in the best way possible. The company discourages making orders without first talking with their shop assistants. This shows how the company values personal selling in their operations. The sales people in the company always ensure that they talk with the customers on their beauty needs. Aesop sales people and shop assistants are good in communication which helps them to educate customers in a quick manner and offer them solutions (Matzler et al, 2011). The company marketing communication strategies works together in a complementing manner. Competitor analysis The beauty industry is highly competitive with major players controlling more than half of the cosmetics industry (Leonard, 2010). In 2013, the major competitors for Aesop were proctor & Gamble co, L’Oreal group, Uniliver Group, Colgate Palmolive co, Avon products inc, Beiersdorf AG, Johnson & Johnson Inc, Shiseido Co Ltd and Kao Corp (Berghoff & Kühne, 2013). The competitors have been showing a positive growth rate over the years. L’Oreal- the company has its headquarters in France and is the second largest cosmetic firm globally (Global Insight Inc, 2007). The company major market segment is sales of skin care products. The company has been able to top the market especially in Europe. The company fragrance section has also been gaining high popularity in North America. The company major segments are; skin care, hair care, make up, perfumes, hair colorants among others cosmetic sectors. Estee Lauder- the cosmetic firm has their headquarters in US (Global Insight Inc, 2007). The main area of growth for the company is hair care products. The company also provides technical assistants to salons which also helps them to come up with products aimed at meeting the consumer needs. The company hair products are designed to meet different ethnic tastes and specific hair care needs. The company is among the leaders in the prestige cosmetic market based on luxurious and innovative products (Berghoff & Kühne, 2013). The company main cosmetic segments are; skin care, hair care, fragrance and make up. Avon- Avon has their headquarters in US and is among the leading global cosmetic companies (Global Insight Inc, 2007). The company is highly dependent on personal selling. The company main areas of business are; cosmetics, skin care, fragrances and toiletries. The company main weakness lies on its color line. Beiersdorf AG-the company have their headquarters in Germany and have popular brands such as Nivea and Eucerin (Global Insight Inc, 2007). The company strongest sales regions are in Asia, Australia and Africa. The company has a strong position in the global market especially in the skin and beauty care. The company has a strong advertising campaign. Current innovations in the company are anti aging products and hair care lines which have been a major success (Leonard, 2010). Shiseido- the company is global cosmetic company located in Japan (Global Insight Inc, 2007). The company has been growing internationally and currently has managed to get a market share in the Europe cosmetic market. There has also been great growth in America and China though the largest market share is in Japan. As evidenced, the global cosmetic industry is very competitive (Berghoff & Kühne, 2013). Aesop has been unique as compared to other competitors. The company is also unique due to fact that they shun most of the marketing practices used by the competitors. They do not use advertisements as the competitors in the sector do. The uniqueness of Aesop as compared to the competitors makes them stand out and gain consumer loyalty (Hussey & Jenster, 2000). Competitors 4 P’s comparison Product Price Place Promotion L’Oreal -High quality products. -Wide range of products. -Well known for their luxurious products. -Utilizes diverse packaging. -Most of the products are premium priced. -Most of company stores are in North America and France. -Well established distribution channels. -Uses advertising, personal selling in their stores, public relations and sales promotions. Estee Lauder -Luxurious and innovative products. -High quality. -Innovative packaging design. -Premium prices due to luxurious and high quality products. -Highly developed distribution channels especially in North America. -Have both online and physical stores. -Uses a lot of revenue on advertising. -Engages in sales promotions. -Personal selling in collaboration with salons. -Public relations and discounts are also used. Avon -High quality products. -Engages in diverse product lines. -High quality and differentiated packaging. -Poor packaging color. -Price ranges from medium to premium. -This is based on the product line. -Well established product line distribution. -The company offers its products both online and in stores. -Short distribution channel. -Engages highly in personal selling. -Uses advertisement, sales promotions and discounts. -There is also use of public relations. Beirsdorf AG -High quality products with well known brand names (Nivea and Eucerin). -Different packaging for different products. -Unique colors for each brand. -Medium to premium prices. -Premium prices for luxurious brands. -Most of the brands priced within the range of medium income earners. -Well established distribution channels. -Both online and physical stores. -Products available in many retail outlets and department stores. -Uses of advertisements. -The company spends a lot of revenue on advertisements. -Utilizes sale promotions, personal selling, discounts and public relations. Shiseido -High quality products. -Diverse packaging. Middle to premium pricing. Price based on product quality. -Both online and physical stores. -Long distribution channels in physical stores. -Most stores in Asia and Europe. -Spends high on advertising. -Other market mix used are; personal selling, public relations, sales promotions. Aesop -Different range of products. -High quality. -Strategic product renewal -Unique uniform packaging for the products. -Utilize price level, degree of price diversification and price mobility. -Medium to premium price range. -Both online and physical stores. -Short distribution channel making them close to the customers. -Right product within the right time. -Highly designed stores. -Aesop promotional mix comprises public relations, sales promotions and personal selling. -Does not advertise. -Have been very successful in personal selling. Recommendations Aesop has to engage in market mix that will enhance their sustainability in the market and become more competitive. The company should continue using their sustainable packaging for their products. This is due to fact that product packaging differentiates them from the competitors. The company should follow their 2014-2016 action plans that stipulate sustainable packaging guidelines. The company should also venture into more departmental stores and retail outlets to ensure that the place aspect of marketing mix is well satisfied. Most of Aesop products are premium priced. Aesop can work more in developing medium priced products. This is due to fact that medium priced products will expand their market share. Aesop should also start advertising their products. The company does not use advertisement and relies mostly on personal selling and customer loyalty. As the company penetrates more into the global market, advertisement will be required. Most of the competitors in the industry are using large budgets on advertisements (Berghoff & Kühne, 2013). Making these adjustments on their marketing mix will make them more competitive and sustainable in the market. The industry is highly competitive with some of the countries having low barriers to entry (Barbalova, 2011). Aesop has to invest more in research and development to ensure they remain competitive. At the moment, Aesop does not look at the trends or what other companies are doing. This implies that Aesop is being left behind in terms of trend (Bernstein Research, 2009). The cosmetic industry is highly dynamic and there is need for Aesop to base their products in recent trends. The company can also venture into the time saving products. These are beauty products which are designed to cater for the busy lifestyle of the modern consumers (Berghoff & Kühne, 2013). Aesop is required to continue differentiating their products with an aim of ensuring that they meet current consumer needs. There is also need for Aesop to invest more in the skin care products which have been experiencing the highest growth potential in the sector. The can utilize online advertisements which will also help them in becoming more visible. They should also ensure that they maintain their unique packaging and quality products which have helped in differentiation (Kuehlwein, 2012). Conclusion To sum up, Aesop is a beauty brand that has been able to succeed in the market due to their uniqueness. Since the brand was established in 1987 in Melbourne Australia, the company has been able to penetrate into different market regions globally. The company is also vveryy active in environmental sustainability. The market mix has looked at Aesop products, place, price and promotions. Aesop sells high quality product with unique features. The company products are packaged uniformly in bottles and squeeze tubes. This ensures that the consumer is not distracted from the quality product inside. The distribution channels are both physical stores and online sales. Physical stores are in major cities in Europe, USA, and Australia among other countries. The company also uses major retailers to sell their products. Aesop uses product line pricing. The price targets both middle income earners and premium prices for high income earners. The company does not advertise but relies heavily on personal selling and consumers’ loyalty. The major competitors are; proctor & Gamble co, L’Oreal group, Uniliver Group, Colgate Palmolive co, Avon products inc, Beiersdorf AG, Johnson & Johnson Inc, Shiseido Co Ltd and Kao Corp. Aesop should focus more on recommended market mix. There is also need for the company to observe the current trend and base their product development on them. Though the company does not rely on advertising, they should consider using it due to the competitive nature of the market. Lastly, following the recommendations given will enable Aesop to have a competitive edge in the market. References Aesop, 2015, About us, Retrieved 27th January 2015 from, http://www.aesop.com/au/about_aesop/ Aesop, 2014, Australian Packaging Covenant: Aesop Action Plan, 2014-2016, Retrieved 31st January 2015 from, http://www.packagingcovenant.org.au/data/ActionPlans/Aesop_AP.pdf Barbalova, I. 2011, Global beauty and personal care: the year in review and winning strategies for the future. Cosmetics Milan. Retrieved 27th January 2015 from: http://www.in-cosmetics.com/ RXUK/RXUK Berghoff, H., & Kühne, T. 2013, Globalizing beauty: Consumerism and body aesthetics in the twentieth century. New York: Palgrave Macmillan. Bernstein Research, 2009, “Cosmetics & fragrances: Analyzing sales growth prospects within the global beauty industry”, LVMH: King of the Luxury Jungle, pp. 139-153. Blythe, J. 2006, Marketing. London: SAGE Publications. Global Insight, Inc. 2007, A Study of the European Cosmetics Industry, Final report, Retrieved 28th January 2015 from, http://edz.bib.uni-mannheim.de/daten/edz- h/gdb/07/study_eu_cosmetics_industry.pdf Grewal, D., & Levy, M. 2010, Marketing. Boston: McGraw-Hill Irwin. Hattie, C. 2013, Aesop: The Cult Beauty Brand That Tries Not to Be, NYMAG, Retrieved 28th January 2015 from, http://nymag.com/thecut/2013/03/cult-beauty-brand-that- tries-not-to-be.html Hollebeek, L.D. 2011, “Demystifying customer brand engagement: exploring the loyalty nexus”, Journal of Marketing Management, Vol.27, n o.7–8, pp.785-807. Hussey, D. E., & Jenster, P. V. 2000, Competitor analysis: Turning intelligence into success. Chichester, West Sussex, England: Wiley. Kahn, M. N., & Kahn, M. N. 2010, Sentiment market analysis. Upper Saddle River, N.J: FTPress Delivers. Kuada, J. 2008, International market analysis: Theories and methods. Adonis and Abbey. Kuehlwein, J.P.2012, Aesop – Fabled Brand, Fabulous Marketing, Mass to Class, Retrieved 27th January 2015 from, https://masstoclass.wordpress.com/2012/12/03/aesop-fabled- brand-fabulous-marketing/ Leonard, C. 2010, State of industry. Global Cosmetics Industry. Matzler, K., Pichler, E., Füller, J. & Mooradian, T.A. 2011, “Personality, person–brand fit, and brand community: an investigation of individuals, brands, and brand communities”, Journal of Marketing Management, Vol.27, no.9–10, pp. 874-90. Mitręga, M. 2006, Market analysis. Katowice: Publisher of the Karol Adamiecki University of Economics. Townley, C. 2011, “The relevant market: An acceptable limit to competition analysis?” European Competition Law Review, Vol. 32, no. 10, pp.490-499. Appendix Swot analysis Strengths Aesop have been able to differentiate themselves with competitors due to their unique packaging The company have a strong brand image especially in Australia. The company unique design of stores has been able to make them unique and gain a competitive edge. Weakness The company market share is relatively small and stands at 2.7% in Australia. The company growth has been hampered by poor economic conditions, reduced consumer spending, high competition and reduction in retail pricing. The global beauty market has been very competitive with major competitors taking more than half of the market share. The company does not use advertisements. Opportunities The emergence of developing countries such as China present the company with an opportunity for increasing market share. There has been an increase in online purchases as consumers become more confidence. The use of innovative technology has made production easier hence reducing the cost. Threats There are low barriers of entry into the global beauty market. This may lead to high competition. The increasing range of new products in the beauty market. Rising costs for the raw materials. Fig. 1, SWOT analysis Position chart Company Market sales (2014) L’Oreal Group $31.6 billion Estee Lauder $10.9billion Avon $10billion Beirsdorf AG $8.5billion Shiseido $7.4billion Aesop $960 million Fig.2, Position chart Fig. 3, Aesop products display, (Aesop, 2015). Fig.4, Aesop squeeze tube packaging, (Hattie, 2013). Fig.5, Aesop interior design, (Hattie, 2013). Read More