Market Segmentation and Target Markets: Merle Norman Cosmetic Studios - Essay Example

Merle Norman Cosmetic Studios: Targeted Market Merle Norman Cosmetics is a high-end producer of various products for skin care and makeup. It competes with companies like Lancome and Clinique for upscale sales to individuals who can afford the best cosmetics available. Unlike its competition, however, Merle Norman does not engage in E-commerce at all (Merle Norman, 2005, p. 1), preferring to conduct business in franchised studios; in fact, it is a serious violation of company policy for a local studio owner to market product over the internet.

That does not mean that the company lacks a refined and effective marketing information system, for it surely does. Through a combination of consumer information and sales data, Merle Norman tracks its best-selling products and markets directly to consumers. The purpose of any customer or market information system is to enable “companies to develop programs that target specific customer needs and business opportunities within segments and fragments of its base” (Lowenstein, 1997, p. 88).

This is exactly what Merle Norman does. When a customer makes an on-site purchase, they are asked for their name, address, phone number, and birth month. The provided information is combined with a record of the products they are purchasing. Subsequent visits to the same studio record all additional purchases so that a customer profile can be built. This data is available to the studio owner or franchisee. The information obtained from the consumer assists Merle Norman in its marketing efforts in several ways.

First, the general popularity of any particular item is gauged so that promotional efforts can be focused on maximizing profits. Second, regional sales information assists the company in deciding whether to market certain products in various areas of the country. This marketing takes place in one of three ways. The studio owner can enter into a cooperative agreement with the corporation to share the expense of regional television advertising. This, most general, method usually promotes newer or seasonal products and is designed to bring more customers into the studio.

The collected consumer data is put to a more direct use as the company analyzes those products that are not selling as well as expected. Those specific items are then bundled into giveaway promotions that are tagged to more popular products. For example, if Product A is not selling well and Product B is, the company will use direct mail to advertise that with the purchase of two items of Product B, a full-sized sample of product A will be included at no charge. Finally, in the most direct use of consumer information, the studio owner may conduct their own direct mail campaign within their region.

By using product purchase data, the owner can mail individuals who have previously purchased a specific product to advise them of a sale or promotional event featuring that item. They can also promote other products that have lower sales success to customers who might be a good fit based on past purchases. While a traditional brick-and-mortar operation, Merle Norman Cosmetics has used the principles of consumer data collection to full advantage. ReferencesLowenstein, M.W. (1997). The Customer Loyalty Pyramid.

Westport, CT: Quorum BooksMerle Norman, (2005). About Us. Retrieved June 19, 2006 from the World Wide Web: http://www.merlenorman.com/aboutus/ aboutus.html