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In this comprehensive analysis, we delve into the factors, both internal and external, that will exert influence on Estee Lauder's Integrated Marketing Communications (IMC) program. Such a situational analysis is imperative to ascertain Estee Lauder's current standing in terms of financial stability, promotional strategies, product range, and brand image. A thorough examination will facilitate the identification of opportunities and potential threats that may emerge during the implementation of their new IMC program.
Moreover, we will delve into the identification of strengths and weaknesses to be taken into consideration during the development of the new IMC program.
As we embark on the internal analysis, it is crucial to evaluate Estee Lauder's historical promotional mix strategies. These strategies have played a pivotal role in shaping the company's brand image and market presence. Estee Lauder's past promotional efforts have primarily centered around two key elements: advertising and personal selling. Their presence in print media, especially in fashion magazines like Harper's Bazaar and In Style, has been a dominant aspect of their promotional strategy.
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Additionally, personal selling has been instrumental in establishing a personal connection with customers.
However, a notable shortcoming in Estee Lauder's past IMC approach has been the underutilization of digital channels and direct marketing. In the Australian market, their online presence has been minimal, with their website primarily catering to the U.S., European, and Asian markets. This represents a missed opportunity to engage with the Australian consumer base effectively.
The shift towards digital marketing and e-commerce is a trend that Estee Lauder should consider embracing in their future IMC program.
One of the glaring weaknesses identified in Estee Lauder's past strategies has been the challenge in reaching their intended 'youth' market, specifically consumers in their twenties. The brand image, pricing, packaging, and product design have been perceived as "too old" for this demographic. Addressing this issue is a primary focus of the new IMC program, as it represents a significant growth opportunity. Leveraging the strengths of Estee Lauder, such as high brand awareness and trust, will be crucial in attracting and retaining this younger audience.
In the realm of cosmetics and skincare, competition is fierce. Estee Lauder faces significant rivalry from industry giants like L'Oreal and Revlon. A comprehensive analysis of competitors' strengths and weaknesses is pivotal in shaping Estee Lauder's new positioning strategy. This analysis will enable Estee Lauder to identify areas where they can gain a competitive edge and capitalize on market opportunities.
Beyond internal factors, Estee Lauder must also consider external forces that can impact their IMC program. Socio-cultural trends, such as the growing concern over animal testing and other environmental and social issues, should not be ignored. Adherence to these values is crucial to avoid adverse effects on the IMC program. Furthermore, staying compliant with legal and political regulations is imperative to maintain the company's reputation and market presence.
Lastly, the external analysis highlights a significant opportunity for growth in the overall retail and cosmetic sectors in Australia. This trend presents an ideal scenario for Estee Lauder to expand its market share and strengthen its brand through an effective IMC program.
Estee Lauder stands as a leader in the cosmetics and skincare industry, a highly competitive and continually expanding market. Established in 1946, Estee Lauder has become a parent company for several renowned skincare and cosmetics brands, including MAC, Clinique, Stilla, Aveda, and Bobbi Brown. For the purpose of this analysis, we will primarily focus on Estee Lauder as a consumer brand and not delve into the broader EL Companies empire.
Estee Lauder boasts a solid customer base across various countries, including the USA, UK, Asia, and Europe. Notably, the combined sales of Estee Lauder and Clinique account for 40% of the total cosmetics market share. In recent years, Estee Lauder has experienced a slowing of sales, allowing Clinique, their sister brand, to gain market share and surpass them as the leading brand in department store sales. Estee Lauder's primary objective at present is to reposition themselves as the preferred choice for cosmetics consumers. Achieving this objective necessitates a thorough analysis of their current marketing strategies and an exploration of opportunities for expansion to enhance the reputation of the Estee Lauder brand.
Estee Lauder's pricing strategy positions their products at the higher end of the cosmetics market. This pricing is consistent with many direct competitors, including Lancome and Dior, as well as subsidiary brands like MAC and Stilla. Their prices typically exceed those of Clinique products by 20-35%.
Estee Lauder's primary advertising medium has been print media, with a strong presence in fashion and lifestyle magazines such as Harper's Bazaar, Vogue, In Style, Marie Claire, Cleo, and Cosmopolitan. These magazines cater to diverse female demographics but share a common trait of appealing to image-conscious consumers. Estee Lauder's use of celebrity endorsement, exemplified by Liz Hurley, has been instrumental in bolstering their prestigious brand image (Bittar, 2002). In recent years, EL Companies allocated a substantial budget of $US56 million for advertising to promote the core Estee Lauder brand, making it the highest advertising expenditure among EL Company brands.
Despite the digital age's prevalence, Estee Lauder has underutilized the internet within the Australian market. Their current website primarily serves the U.S., European, and Asian markets and does not provide customized information to Australian consumers regarding available products and company developments.
Estee Lauder incentivizes its distributors, such as Myer and David Jones, with promotional gift packs to encourage customer spending. The company maintains its prestigious image by infrequently discounting their products. Sampling promotions have also been employed effectively to introduce new products to consumers. However, recent attempts to promote the "Pure Colour" range of eyeshadows and lip glosses to the younger market (17-25 years old) have not yielded the desired recognition (see appendix 4 & 5).
Estee Lauder places great emphasis on personal selling, with sales consultants receiving extensive training and possessing in-depth product knowledge. Given the high involvement nature of cosmetics purchases, well-informed consultants are vital for providing a personalized experience.
Estee Lauder's utilization of the internet for direct marketing within the Australian market has been limited. Department stores occasionally send promotional brochures to opt-in mailing list clients when new products are released or special offers are available.
Estee Lauder, as a brand, possesses a set of strengths and weaknesses that play a critical role in shaping its marketing communications strategy.
As Estee Lauder transitions its focus to a younger demographic, it encounters a new set of competitors within the mass market of cosmetics and skincare. These competitors operate in a highly competitive landscape, requiring effective integrated marketing strategies to maintain or increase market share.
Revlon and L'Oreal Paris emerge as the primary direct competitors that pose significant threats to Estee Lauder's foray into the younger market. These brands are known for their mid-range cosmetics products, which are more appealing to younger consumers in terms of quality, pricing, and packaging.
Estee Lauder's indirect competitors primarily consist of skincare brands targeting mature-age women. Notably, these competitors do not compete directly in the cosmetics sector targeted at younger women. However, Loreal Paris offers skincare products designed specifically for young women, serving as a substitute for Estee Lauder's offerings.
L'Oreal Paris, a key competitor, has adopted a successful marketing strategy by positioning itself in the mass market. The brand targets young females seeking high-quality, innovative, and affordable beauty products. Their iconic promotional campaign, 'Because I'm worth it,' has effectively communicated a message of modernity and self-confidence to their target audience. International spokespersons, including Andie McDowell, Laetitia Casta, Heather Locklear, Vanessa Williams, Virginie Ledoyen, and Milla Jovovich, have been used to endorse the quality of L'Oreal Paris products. This diverse selection of international faces allows L'Oreal Paris to reach a wide range of consumers, catering to various skin tones and image preferences.
Revlon shares a similar marketing approach with L'Oreal Paris, focusing on offering young women a sense of glamour, excitement, and innovation in their cosmetics products. They recently introduced Halle Berry as the face of the Revlon brand, a renowned U.S. actor known for her independent, confident, and youthful image. This strategic choice has allowed Revlon to establish a unique identity for the brand, encouraging younger consumers to use Revlon products to embody a similar image. The consistent association with Halle Berry in various forms of advertising has created strong brand recall.
L'Oreal Paris:
Revlon:
Estee Lauder:
The cosmetics industry is characterized by luxury products that demand a high level of consumer involvement (Schiffman et al., 2001). Consumers, especially in the cosmetics and skincare segment, seek safety assurance in their purchases, prioritizing products that won't harm their skin. Estee Lauder has recognized and addressed this consumer need by mitigating risks throughout the pre-purchase, purchase, and post-purchase stages.
Estee Lauder Australia has undergone a significant transformation in the appearance of their department store counters, enhancing the consumer experience (King, 2003). These newly designed counters feature vibrant colors and interactive displays, enabling passersby to explore products independently. Knowledgeable and friendly staff are also available to assist customers when needed. The professionalism of the consultants enhances consumers' experiences, providing information about specific products and helping customers understand their skin type. These revitalized counters have become prominent features in major department stores, surpassing competitors in terms of brightness and sophistication, creating a salon-like experience for consumers (Gold Coast Bulletin, 2003).
In the cosmetics industry, buyers are often the primary users of the products they purchase, unlike other product categories where the buyer and user may differ. However, during certain occasions like Christmas, Easter, Valentine's Day, and Mother's Day, individuals other than the end users, such as husbands and boyfriends, may make cosmetic purchases. Estee Lauder has recognized this distinction and tailors its promotional activities accordingly. Advertising predominantly features young, attractive women who serve as aspirational figures for consumers. The choice of a youthful model like Carolyn Murphy in current advertisements resonates with the brand's efforts to connect with the younger market segment, as opposed to previous models like Elizabeth Hurley, who were considered too old for this demographic.
Among younger consumers, there exists a perception that Estee Lauder is a brand primarily meant for "older people" (The Nation, 2003). Changing this perception will take time, but Estee Lauder is taking steps in the right direction. Pilot research has shown that Estee Lauder's products are often perceived as too expensive for the younger market to afford. To successfully conquer this demographic, Estee Lauder may need to consider pricing options for specific product ranges, making them more accessible to the target market. Despite the pricing issue, the brand is still perceived as fashionable among younger consumers, as indicated by the results of the pilot research study.
In recent years, consumers have become increasingly aware of social and environmental issues, such as animal testing. Many consumers actively avoid purchasing products associated with animal suffering. Companies, including Estee Lauder, often provide vague or ambiguous statements on animal testing to avoid public opposition. Consumers also expect brands to be socially responsible and contribute to the community. This social awareness provides Estee Lauder with the opportunity to sponsor charities aligned with their target market. Such sponsorships should be an integral part of Estee Lauder's IMC strategy to promote the brand as socially aware and responsible. Failure to meet these expectations could lead consumers to remove the brand from their consideration set for future purchases.
Australian cosmetic companies must adhere to various political and legal obligations to protect consumers. There is a reasonable expectation that cosmetics should be safe for use as directed on the label. Compliance with Australian safety regulations, the Trades Practices Act, and other relevant regulations is mandatory for cosmetic companies operating in Australia. Non-compliance can result in financial losses due to court actions and irreversible damage to the brand's reputation due to bad publicity.
Technological advancements have made extensive information available to consumers about the safety and effectiveness of cosmetic products and their ingredients. Consumers have become increasingly skeptical, relying on scientific information and studies to inform their purchasing decisions. Estee Lauder must provide consumers with comprehensive information and evidence regarding product effectiveness to facilitate their buying decisions. Technology has also enabled Estee Lauder to develop innovative products, striving to gain a competitive edge.
Economic changes can significantly impact cosmetic sales, as cosmetics are considered luxury items. During economic downturns, when consumers have reduced purchasing power, cosmetics are among the first product categories to be affected negatively. For example, after the events of September 11, sales came to a virtual standstill, resulting in one of the worst holiday seasons for American retailers (Bittar, 2002). However, the Australian retail industry has experienced strong growth since May 2003. In 1998-99, $4.1 billion was spent on cosmetics, perfumes, and toiletries. These statistics suggest a healthy and growing industry, offering companies like Estee Lauder opportunities to increase sales and expand product lines.
In conclusion, a comprehensive situation analysis has revealed crucial insights into Estee Lauder's current standing in the cosmetics and skincare market, its strengths, weaknesses, opportunities, and threats, as well as the competitive landscape and consumer dynamics. These findings will guide the development of an effective Integrated Marketing Communications (IMC) program that aligns with Estee Lauder's objectives and helps the brand successfully penetrate the younger market segment while addressing environmental, social, and economic factors in the industry.
In conclusion, this comprehensive analysis has provided valuable insights into Estee Lauder's current position in the cosmetics and skincare industry, laying the foundation for the development of a robust Integrated Marketing Communications (IMC) program. Estee Lauder, a longstanding brand with a rich history, is facing the challenge of expanding its reach to a younger demographic while navigating the complexities of a highly competitive market.
The internal analysis highlighted Estee Lauder's strengths, including its high brand awareness, trusted reputation, and strong customer service. However, weaknesses such as a misaligned communication strategy with the target market and product pricing that may hinder entry into the youth market were identified. Nonetheless, Estee Lauder has several opportunities at its disposal, including expanding into younger mass markets, embracing online strategies, and co-branding initiatives. Simultaneously, the brand must be vigilant in addressing potential threats, such as alienating its existing customer base and the risk of diluting its brand prestige.
Competitive analysis underscored the formidable presence of direct competitors like Revlon and L'Oreal Paris, who cater to the younger demographic with attractive pricing and innovative products. Estee Lauder's indirect competitors, particularly in skincare, highlight areas where product offerings could be adapted to appeal to younger consumers.
Consumer analysis revealed that Estee Lauder's perception among younger individuals was that it catered primarily to an older audience. To bridge this perception gap, Estee Lauder must carefully consider pricing strategies and continue efforts to position itself as a fashionable brand.
Furthermore, the environmental analysis underscored the significance of being socially and environmentally responsible, aligning with changing consumer expectations in these areas. Legal and political considerations demand strict compliance with regulations to protect consumers and the brand's reputation.
Lastly, economic factors, while subject to fluctuations, offer opportunities for growth in the cosmetics industry, and Estee Lauder should remain agile in adapting to market conditions.
In light of these findings, the development of an effective IMC program for Estee Lauder becomes a strategic imperative. This program must encompass a holistic approach that leverages the brand's strengths, addresses weaknesses, capitalizes on opportunities, and mitigates threats. It should also resonate with the younger market, harmonize with the brand's heritage, and align with changing social and environmental values.
Strategic Analysis and Integrated Marketing Communications for Estee Lauder. (2016, Jul 08). Retrieved from https://studymoose.com/estee-lauder-integrated-marketing-communications-plan-essay
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