Market Segmentation of the Skincare Market in United Kingdom - Essay Example

MARKET SEGMENTATION OF THE SKINCARE MARKET IN UNITED KINGDOM The skincare market has grown rapidly in The United Kingdom (UK). This has been accomplished by developing a balanced, well managed, portfolio of brands. Customers are becoming increasingly sophisticated and consumer demand has been met with growth in the number of new product launches. There were approximately 200 new launches in the past year. (Mintel, 2006) Nivea products are formulated to meet specific consumer skincare needs while keeping their skin looking and feeling healthy, soft and well cared for. By creating products that fit in with the latest cosmetic trends Nivea has responded to changing consumer needs. Nivea has the ability to appeal to a wide range of consumers. Nivea marketers use market 'Segmentation Strategy' to communicate with consumers. Advertising and promotional activities target consumers' perceived needs. Population According to Superbrand(2006): "In the UK, four million people use a Nivea Skincare product everyday". Nivea users comprise about 6.8% of UK population. Mintel (2006) argued that the "Potential Consumers" of Nivea products comprise approximately 8% of the population. Mintel (2006) indicated that Nivea is likely to concentrate its marketing on large cities. This target population has a high potential to be loyal buyers of Nivea Skincare products and would most probably buy Nivea products over other products. For example, the major city of London has a population of seven million people and is measured to have 12.2% penetration of the Nivea brand. Lifestyle Nivea marketers target marketing communication generally focuses on women who purchase skincare products for themselves and their families. This target market segment would most probably be readers of advertisements and internet users. In addition, women who are loyal Nivea users would be more willing to try new products under the Nivea brand. Since Nivea launched several innovative new products they have recategorized some of its products. The nourishing, tanning and firming products have been moved into the new and rapidly growing gradual tanning segment. This coincided with the launch of "Nivea Body Sunkissed Skin", a daily moisturizer that helps firms the skin. (Superbrand, 2006) According to IRI sources (2006) "the fastest-growing segment is body care with an annual increase of 29%, mainly attributable to the new gradual tanning segment. Their interest is in the target market that consists of consumers who sun-bathe and those who enjoy adventure sports. It is believed that this target market segment is interested in trying new products related to sunbathing and adventure sports. Age Group & Gender Beiersdorf annual review (2005) indicated that Nivea skincare product users ranged in age between 18-35 years of age. This is about 12 million people in the UK. In 2006 Nivea launched a new sunscreen in the UK. The product advertising states that it provides "immediate protection for children in spray and lotion formulations, forming part of the new Nivea sunscreen for children SPF 50+" (Superbrand, 2006). Nivea has expanded significantly and provides products for younger consumers. They believe that by the time the consumers are over 30 years of age they have become a part of their premium brand consumer market. This transition takes place because this market segment has grown up believing that the Nivea premium brands will help keep their skin young and healthy looking. This market segment looks for products that will help their skin look and feel younger for a longer period of time. This group never stops looking for the best quality products suitable for their age and skin types. (Mintel, 2006) Most male consumers become loyal customers because they are not likely to change their products as often as women do. Income Group Resources indicate that Nivea consumers earn an income from 10K to 35 per month which rates on 'Starting and Basic' of taxable brands. In comparison to other skincare products marketed on the same shelf, Nivea priced in the low level range of costs. Because it is marketed at the low end of the cost spectrum its affordability is a marketing success. Pricing for Nivea skin care products typically starts at about 3. Social Class & Occupation The C11 class in the UK has approximately 13 million people which is about 27.7 % of the population. This is the target group that Nivea markets its skincare products to.(Mintel) The AB segment of the population has become a part of the Nivea consumer group that is interested in anti-ageing products. This market segment consists of the upper-middles class with a large disposable income to spend. Nivea consumers in the UK typically hold positions in the low to middle management structure in organizational structure of their companies. These are considered the "Skilled Occupations" within the UK.(TBWA, 2006) This group consists of people who have a low to average disposable income and includes both part-time and full-time workers. Members of this segment of the market are ideally suited to the low cost of Nivea skincare products. Positioning of Nivea Market in Thailand The Beiersdorf Co, Ltd. (Thailand) is one of the leading international vendors of branded skincare products. Its primary success is derived from its leading international brand: Nivea. This brand has more than 120 years of experience in research and development as well as a strong international presence. Nivea's competitive advantage lies in consumers' perceptions of the products developed by continued use and positive results. Nivea considered setting up price, ingredients, and packaging using the same style as Pond's Vaseline, but did not. The key to winning and keeping Nivea customers is to understand their needs and buying process better than Nivea's competitors do. This includes delivering more value for the price paid. For example, packaging Nivea in its unique blue and white colours gives familiarity to the product and causes repeat purchases of the product. Most consumers that use Nivea products are between 18 and 35 years of age. Marketers assume that this age group is likely purchase products with colourful packaging that is unique and brand specific. Perceptual Map of the Lip Care Market in Thailand Figure 1 Figure 1 shows a hypothetical map of the Lip Care Market, using price and quality as two dimensions that may represent important attributes. It demonstrates that KA is serving the bottom end of the market Segment A, offering a cheap, specially formulated ingredients to provide daily care for the most delicate skin which costs only 48 Baht (1 pounds = 71 Baht), whereas Segment B targets consumers who prepare to pay a little more for all natural ingredients in their lip care products. Natural products used in lip care products are Macadamia Nut Oil and Natural wax of Candelilla Leaves as well as other ingredients that protect lips effectively. Vaseline seems to be closer to segment A than Segment B. It has similar qualities of Segment B which includes Ponds products (which are overpriced) but is high priced. Nivea and Smooth E are similar when it comes to quality and price. Segment B products aim for higher prices and higher qualities by adding SPF, vitamins, and good conditioning formulas that boost lip moisture for up to 24 hours. Research indicates Lip Care products are quite different from each other. Price differences are mostly a factor of packaging and 'perceived worth' of ingredients. However, lip care products are not in a fixed, price driven category. The highest category sales are found in stores with the highest pricing with proven potential to price up to increase profitability. For example, Nivea, Vaseline, and Ponds launched similar lip care products at the same time. Each are a combination of Anti-Ageing ingredients and Q10.(Appendix C) Each should have the same potential for profits. But brand loyalty and perceived worth guides purchases. Manufacturers attempted to satisfy their customers' needs in terms of consumer benefits such as attractiveness, consumer confidence in the product and perceived health benefits. Nivea is positioned as a high quality "active care, special care, beauty care and classic care2" product. Brand awareness and loyalty ensures Beiersdorf Company (Thailand) that consumers will continually select their products for purchase just as they selected the brand for their last purchase. People purchase products based upon brand awareness, brand loyalty and perceived health benefits. Read More