International Luxury Fragrance and Toiletry Brand Pink Company - Case Study Example

Table contents Executive Summary………………………………………………………………………2 of Product Market…………………………………………………………………2 Analysis of Aspects of External Market Environment……………………………………3-4 Customer Analysis…………………………………………………………………………4 Competitor Analysis………………………………………………………………………..5 Company Analysis………………………………………………………………………….6 SWOT Analysis…………………………………………………………………………….6-7 Marketing Information Requirements………………………………………………………8-9 4 P’s………………………………………………………………………………………...10-15 Control………………………………………………………………………………………15 Estimate/Forecast……………………………………………………………………………16 Timing………………………………………………………………………………………..17 References…………………………………………………………………………………….18 Executive Summary My company, Pink, is an international luxury fragrance and toiletry brand. Creativity and innovation are the driving force for Pink. Our goals and objectives are to achieve a strong position in international market with a turnover of US$ 0.5 billion per annum. Target market for Pink (The brand) ranges from older women to teenage girls. Affluent market in USA, Japan, China, Europe, Middle East and India is our target. An overwhelming boom in female employment market also boosted fragrance industry and it is more likely to be accessible by every age group. It is flourishing more than ever before. Consequently, fragrance has become a necessity rather than a luxury for women. The future of fragrance industry seems to be rosier than ever, but the possibility of downturn in luxury item market can not be ruled out due to widespread recession wave. Fragrance market is highly competitive with the presence of giant business corporations. Name of the product: Pink (A perfume brand) Pink is a small but international company with a range of 6 brands which is divided into two main lines; Pink Divine and Pink Dew. Market in USA and Europe is saturated for Pink with chances of growth by extensive competitive strategy; on the other hand, opportunities are diverse in Middle East, Japan and China. Pink can have an edge through partnerships and research ventures with the established corporations. Pink’s marketing strategy is to innovate and play with the strengths. We have to focus on competitors in order to achieve our target of US$0.5 billion. Analysis of Aspects of External Market Environment Economic Environment Economic environment is volatile, due to recession period there is a downturn in world economy. In this situation demand for luxury goods, especially fragrances decrease. Consequently, women are spending lesser on expensive products especially fragrances are used occasionally rather than regularly. There is very little room for growth in over saturated markets like USA and Europe. Technological environment In 21st century the marketing world has changed completely. With globalization markets are easier to approach as advanced communication means has shrunk the world to a village. To meet the needs of business in this fast-paced world there are much technological advancement. Internet has not only changed marketing techniques but also replaced inventory with information. To meet the requirements of modern customer we have to concentrate on technological advancements like nanotechnology in sunscreen products in future. Suppliers will be provided by the superior technical support. For Pink, to support customer needs and value creation through the products and innovative ways are the only way to beat competitor’s move. Political and legal environment In global market, Pink is facing highly competitive scenario. Highly influential and resourceful competitors and survival in saturated markets are huge challenges. “Price sensitivity is an increasing issue at the time of increasing production cost due to new European Community Regulation on chemical and their safe use(REACH:EC 1907/2006), which suppliers are expected to bear the costs of. REACH covers the registration, evaluation, authorization and restriction of chemical substances. The new law entered into force on 1st June 2007.” (Euromonitor, 2008, p.35). Cultural and social environment French are seen as lazy people in Europe. The reason is that French like free time to spend with their family. However, people from Paris are good athletes, and hard workers. After their job, they like spending 45 to 1 hour in the fitness center or dance club. The French have an effective work by superior week to that of the United States, Germany, Britain, Ireland, Belgium, Netherlands, the Scandinavian countries. The actual hours of weekly work is 38 hours in France, or an hour more than in the UK and 2: 30 hours more than in Germany, and a higher average of the 27 countries of the European Union level. In addition, 35 hours Act does not apply to executives, who work day package and are therefore not their hours. So that can be judicious for my product. However, it is important to mention that French consumers are scared of new products especially products coming from another country. Customer Analysis Pink’s customers range is diverse from masses to premium users. With more employment generation for female, now they are more conscious about how and what to wear. Fragrance is one of the most used luxury item by every working women on daily basis and by other females occasionally. This sudden change has boosted fragrance industry in developing countries as well. For example, India is witnessing rapid growth and increase in GDP. With increasing awareness and consciousness about fashion and personality, customer is keen to buy the product of certain class. Media and satellite television has also changed the perception of traditionalist countries towards fashion and making a statement, for example, Japan. Pink believes in targeting the psychographics of customers. It is associated with luxury and class anywhere and everywhere in the world. Our clients are not only females ranging from teenager to women 14-65 but also male customers buying for their loved ones. Competitor Analysis Fragrance industry holds huge market share and strong presence in world economy. With raising competition and saturation in matured markets, ways of marketing products are crafted in very intelligent manner to drive more sales. For competitor’s analysis manager should keep an eye on what moves a competitor will or can take, and also what moves he can imagine in response to your own moves (Argenti, 2002). We constantly keep an eye on competitors’ moves and respond accordingly Though European markets are the largest but other markets such as Asia-pacific are and Middle East are growing immensely in terms of sales and turnover. “Competition is likely to grow over the next decade and growth will be fostered by both innovative product development and intelligent marketing” (Euromonitor, 2008).Let’s have a look on our assumed competitors and potential collaborators.Market share of the global fragrances for 2006 (Euromonitor, 2008) was; Estee Lauder 4.9%, Unilever 4.9%, Coty Inc. 4.8% and Others 85.3%.Market share for Asia-Pacific fragrance market in 2006; Shiseido Company 11.8%, Chanel 9.0%, LVMH 5.2% and other have 74.0 % (Euromonitor, 2008).One of the most threatening barrier is the presence of more powerful and resourceful competitors and we planned to stand by them through acquisitions and mergers in coming years. Company Analysis Pink holds the mission of excellence; be it creativity or customer satisfaction. We are a team, which innovate and experience only the best. We strongly believe in quality and uniqueness. The mission is to deliver exceptional quality fragrance worldwide. We value our stakeholders, and our relationship is based on honesty, integrity and empowerment. Our motto is, innovate and rule the world. Corporate Objectives/aim At Pink, our objectives are; To achieve sales target of US$1 billion by 2010 Establish a competitive edge, as a unique and fast product creator To accelerate business activities in Western Europe and North America To launch in Asia-Pacific market successfully To maintain and enhance our license with Unilever Expand product family, according to the targeted customer, to cater more markets like Japan and India Establish Pink in China by introducing products targeting young customers Strategic Objectives and Challenges For achieving corporate aims and objectives, Pink’s preferences on strategic front are; To identify priority brands and markets for development To concentrate on strategic development of brands, new launches and planned partnerships Maintaining growth and active development in fragrance market Targeting developing areas such as Eastern Europe, Africa and Middle East Enhancing Pink Dew range into emerging economies i.e., India Exploiting opportunities for mass fragrance market Targeting Asia-Pacific market, especially in Japan Establishing a strong position in premium markets SWOT Analysis Strengths Presence in global beauty market Six well known brands in the very beginning Licensing agreement with Unilever Effective target marketing Highly developed marketing strategy Comprehensive portfolio International operations Smaller size of portfolio is a strength as it helps to concentrate each and every brand precisely Responsive product innovation capturing market share driven by market trends Strategy for growth through acquisitions and organic growth, utilizing brand diversification and extension Weaknesses Private company status: it may seize the opportunities for fundraising as compared to multinational competitors such as L’Oreal Low funds for research and development No active participation in cosmetics and toiletries market, which can potentially offers high returns Expensive celebrity endorsement Possibility of short term gains from celebrity endorsement Short-lived nature of market may limit opportunity for significant growth of the brands Dependence on European and American market for sales Opportunities Organic growth in Eastern Europe Strong growth potential in Latin America, Asia Pacific, China, India, Argentina and Brazil Responsive to social significant trends, for example, fashion, lifestyle and celebrity culture Increased incomes of women customers in mature markets A good amount of income is being spent on appearance Opportunity for mergers, acquisitions, celebrity endorsements, strategic alliances, and partnerships Threats Recession and downturn in world economy Saturation in global markets Powerful, Established, influential and resourceful competitors Short-lived celebrity-cult which can damage to brand image Price sensitivity Low growth potential in US market Volatile nature of business Pink is a luxury brand that creates fragrance and preparing to launch beauty products in order to cater world market needs. We believe in collaboration rather than rivalry in business. Our competitive edge is clearly defined target audience and our strategies unlike our competitors. Marketing Information Requirements Pink will be focused on mass markets mainly. But small and noticeable steps will be taken towards premium markets. We will be doing it by introducing and developing products innovatively which differentiate it from rest in fragrance industry. Euromonitor International explores the drivers and trends which are expected to buoy growth to 2011.The emerging regions are becoming increasingly important to the worldwide fragrance market. Latin America and Eastern Europe alone account for almost a third of global sales and almost doubled in value between 2000 and 2007 to an estimated US$ 9.3 billion... At US$ billion, a premium fragrance make up almost 60% of the market but it is mass brands that are contributing most to the growth, both in percentage and absolute terms…(Dodson, 2008). According to Euromonitor International, Asia-Pacific, such an important driving force behind the growth in other beauty markets, is less significant in fragrances. With predicted sales of around US$2 billion in 2007,the region accounts for less than 7% of the worldwide market and has historically achieved growth at below the global average. This is primarily due to the cultural norms, where consumers prefer to be odorless and associate heavy scents with the masking of body odor. Japan, for example… (Dodson, 2008). Pink market is clearly defined according to the demographics, psychographics and geographic demands and requirements of a specific region. Mass market is mainly based in developing countries with growing GDP and increasing per capita income. Our regional offices work in extensive research in collaboration with the local resources for primary and secondary data collection. Let’s have a look at the existing fragrance market segmentation by product type and by region. If we consider market segmentation by product type, according to Euromonitor research (2008), in 2006 world fragrance market is segmented as female fragrances 65% of total sales, Male fragrance 29 %, while Unisex products is 6% of market. Euromonitor research (2008) also shows market segmentation by region in 2006 as; Europe 47 %, America 37% and Asia-Pacific 16% of market. America and Europe are competitive and comparatively saturated markets with little room for growth, but, Asia pacific, Middle East, India, South Africa and Japan are emerging markets for Pink with higher growth rates. According to a research conducted by datamonitor, “The total value of sales amounted to $3.9 billion in 2006, a CAGR of 4.1% for 2002-2006” (qtd. in Euromonitor 2008) Females’ fragrance market holds a clearly strong position thus generating more revenues. With the development in fragrance market, it has become more and more sensitive for price. It is due to the fact that customers are more aware now and they understand marketing and its tactics. Price comparisons, discounted products and other incentives from different companies are also reasons of price sensitivity. The main markets for fragrance globally include; Europe, America and Asia-Pacific. For Pink there are great growth chances in China, Japan, Asia-Pacific, India and Latin America. Product Pink is basically a consumer product (brand) which is a range of six fragrances. Product class: Pink is an international fragrance brand with six fragrances divided in two main categories; Pink Divine and Pink Dew, for premium and mass markets respectively. We are focusing on mass market for revenue generation and stepping into premium luxury market through licensing and acquisitions. Current stage in the product life cycle: Pink is comparatively new brand in international market. It is in growth stage with an established six product range. Product lines Pink offers vary from new products, limited editions to growing ones. New product development requirement: At Pink, we believe in growing faster in mass market. To achieve this goal we have developed new products in no time. We have launched different fragrances for mass and premium markets. This practice will be continued in future with a more precise and effective research about customer needs and market requirements. Now we are interested in getting into make up and color cosmetic markets. Product liability, safety and social responsibility Pink give great importance to ethical values and corporate social responsibility as an international company. Fragrances are created from organic materials, thus, free from skin issues like burning, sensitivity and allergies. Every product is laboratory tested and approved as safe for external use. In order to meet exact needs, we also modify our mass market products for use in different regions by specific customers. Being an environment friendly company our waste are properly disposed off. Before to put our product on the, we will tested by the specialist of health food security in order to protect our customers. Specification of core physical good and service, features, quality: Pink perfumes are made by natural and organic base which is free from any skin issue. Packaging of perfume bottles is beautiful which attract young lot to get it for themselves or their loved ones. One of the main quality of Pink perfumes fragrance itself; it is wonderful to wear anytime and long lasting nature which can beat heat in any condition. Warranty: Pink is an established brand itself and now Unilever has confirmed the product authenticity by giving its license to Pink. Branding: Fragrance brand with six perfumes for mass and premium markets Packaging, Promotion and labeling need, Protection needs: Beautiful packaging is Pink’s USP. A beautiful fuchsia colored bottle in round shape with a flower shaped cap is designed for Pink Dew. For premium markets, a scarlet colored lady imaged bottle for Pink Divine is designed in order to please our customers. There are three different perfumes in each category which represents different aspects of womanhood through different colors. Labeling “Feel Beautiful” enhances the message. Cultural sensitivity of product: For mass market, product is carefully crafted for different regions and special care is taken in using oils and other materials in harmony with the cultural requirements. The perfume instantly makes a statement about the person wearing it as we have associated with status and life style through our promotion. Place Objectives: Our objective is to make it available to mass market through retail stores, super stores, marts, pharmacies and e-tailers. While premium market will be catered through duty free shops, super stores and specific brand outlets in order to maintain the exclusive factor. Degree of market exposure required: Worldwide exposure (in 18 countries) Distribution service level required: Due to diverse nature of market, distribution decisions are made by head of supply chain on basis of regional demand and other requirements. However, selective coverage level is acquired for mass market and for premium market we go for exclusive coverage level of distribution. Type of channel: A mix of both channels; Indirect channel: We follow single selling party system, i.e., Producer -Retailer- Customer Direct channels: Direct marketing system: direct retail systems and assisted marketing systems, for example, eBay. Channel distribution: We use a hybrid system for distribution as we sell from company-owned retail and e-retail stores, resellers, through other retail stores, duty free shops, pharmacies and super markets. Other channel members or facilitators required: None Type/number of wholesalers: Warehouses and distribution centers arranged by regional coordinators. Type/number of retailers: Superstores, retail stores, marts, duty free shops and pharmacies/Five. How marketing functions are shared: All regional marketing departments work in collaboration and assistance with the headquarters in USA. Coordination needed in company, channel, and supply chain: Supply chain head in headquarter will be dealing and coordinating with it. Inventory product handling requirements: It will be decided on the total level of inventory in every country depending on increase in shipment or decrease in sales. It is a highly coordinated effort, from order placement with strong processing systems through effective channels of communication to physical handling of product and delivery. Facilities required: Warehouse, Logistics-outsource materials, shipment facilities. Reverse channels: Customer service phone number, e-mail address, and address for letters pertaining to questions, comments, and concerns. Promotion Paper Objectives: The objective of the promotion is to create a buzz about new launch and to ensure and reinforce the idea in order to maintain customer loyalty. Major message themes for integrated marketing communications: All perfumes represent the celebration of womanhood as a beautiful thing to cherish. “Feel Beautiful” at any age is the main theme throughout promotion. Promotion blend, advertising: ATL advertising will be mainly used for promotion in addition with the brand endorsements by celebrities. Incentive based campaigns will be launched for mass markets especially in India and Japan. High profile shows and events will be organized in order to establish and reinforce Pink as an international brand. According to Nielsen Monitor-Plus personal care products and other health and beauty products contributed $1.63 billion to advertising on prime time television in 2006 which is higher than the rate in previous years’ of $1.53 billion (qtd. in Euromonitor 2008 p.43).So Pink will be considering prime time as a priority .Advertising and Public relation activities like event management, trade shows and celebrity events will be organized. Personal selling: Through regional retail or super store by sales presentations and trade shows. Sales promotion: Pink will be actively participating and encouraging fashion and lifestyle shows and events to promote the brand. Publicity: Pink is known and established brand in international market as a potential threat to competitors. The brand is known due to fast product development and as potential brand for acquisition and licensing. Main market for Pink is masses but we are very passionate about getting into the fine market through acquisition and licensing. Publicity is the main focus of Pink. One step towards this goal is license from Unilever International. We are focused to maintain the existing brands and to launch new ones. We strongly believe in brand endorsements and collaborations. Pink’s license agreement with Unilever and planning for future acquisition with Unilever cosmetics and celebrity endorsement contracts with Ann Hathaway for European market and with Neha Dhopia for Asian market are some of the initiatives by Pink. Interactive media: Regional retail stores and online stores will be serving as interactive media by communicating with customer 24/7 through emails, live chat. They will be promoting products through convincing, giving incentives and organizing events for customers in addition to get comments and feedbacks about product, events and other issues. Mix of push and pull required: our company will choose a pull and push strategy, because the most important for us is that the final consumers buy our product. Producer--Consumers Who will do the work? For implementing push strategy we will be coordinating with retailers in order to persuade them to convince customer. For push strategy we will outsource the services of a good advertising agency in order to get advertisements on television, radio, newspaper, magazines and websites. Pricing Pricing strategy will be considered according to the geographical standards and expected volume in addition to considering the given variables including; discounts, price list, financing and leasing options. Females’ fragrance market holds a clearly strong position thus generating more revenues. With the development in fragrance market, it has become more and more sensitive for price. Price comparisons, discounted products and other incentives from different companies are also reasons of price sensitivity. It is due to the fact that customers are more aware now and they understand marketing and its tactics. Price levels are kept under control and adjusted in accordance with the competitors and region. Control Every move at Pink is carefully crafted and implemented precisely. Every country has its own management who takes care of everything in the region and reports to the head office situated in USA.Highly researched and well segmented target audience is determined in coordination with the regional offices. From idea conception to perfume creation, distribution and organization, every thing is controlled by management there who are highly trained to handle any kind of situation/crisis. Forecasts and Estimates Our estimate for the year 2010-12 is achieving the target of US$0.5 billion turnover, with a leading position in premium fragrance market. The fragrance market is among the largest within cosmetics and toiletries globally; with sales totaling US$ 30.5 billion in 2006 it is exceeded only by skin care, hair care and color cosmetics. Historically, it has been one of the least dynamic markets, dragged down by declining prices, over saturation of new products and low brand loyalty in key value countries including the US. However, fragrances put in a strong performance in 2006(almost 6% growth in US$ fixed exchange rate terms) capping off a 3-year trend of growth acceleration. Feeding this is economic prosperity in the emerging markets, but also increased demand in the maturing, developed countries of which celebrity scents and youth-oriented fragrances are largely credited. Forecasts suggest these improved fortunes will continue in the mid to longer term (Dodson, 2008). Timing Reference: Argenti, A. P. (2002), The Fast Forward MBA Pocket Reference (2nd ed.), N.Y: John Wiley and Sons. Dodson,D. (2009). Growth upturn in the global fragrance market. Euromonitor International. Retrieved June 20, 2009, from http://www.euromonitor.com/Growth_upturn_in_the_global_fragrances_market. Euromonitor International. (2008) Coty Inc.Euromonitor International, Retrieved Jan 12, 2008 from http://www.euromonitor.com Read More