Marketing Audit for Estee Lauder

Marketing Audit of Estee Lauder

Claire Liu

MK 320

4/19/17

Contents

Introduction        3

1. Macro Environment Assessment        3

1. Market Environment Assessment(Economic)        5

1. Strategic Assessment(Mission and Vision)        2

1. Organizational Assessment        7

1. Financial Assesment(Profitability)         8

1. Marketing Mix Assessment        10

1. Recommendation and Action Plan        11

1. Conclusion        14

1. Reference        15

Introduction

Estee Lauder is a US based cosmetic company. The major products they sell are skin care, makeup, fragrance, hair, and others. They have strong competence in cosmetic industry. They have been Fortune 500 company since 1996. The company’s heritage brands include Clinique, Origins, Aramis, DKNY Fragrance, etc.

1. Macro Environment Assessment

1. Demographic

Different products have different targeted demographic groups. Millennials make up the major age group. Skin Care and Makeup take approximately 80% of their annual sales every year. Therefore, the major demographic groups the company is targeting are women who are older than 15.

1. Current Trend

The current trend of today’s cosmetic buyer is testing. Being able to try the product on before they buy it is critical to cosmetic consumers. There is survey shows that fewer beauty products are brought online in recent years. Some new businesses take the advantage of this trend, such as Sephora and Ultra. They open specialty stores to let consumers to try on variety of products. There are also sample box services such as BrichBox and Scentbird. Another tendency is that consumers do not do one-size shopping anymore. They tend to buy products from different brands. Consumers have a high capacity to try and use multiple brands a time and this tendency is growing strong. The NPD Group reported that smaller cosmetic companies have significant sales growth nowadays. This implies a potential threat which is that big brands such as Estee Lauder will lose business to new brands. One trait of millennials is that they like individualism and they like having choices to express themselves. Similar to “eat healthy”, cosmetic consumers start caring about how “natural” a product is. In the past four years, organic channel has over 24 percent growth. On the contrary, this is also a growing distrust in the use of chemicals. This could become an opportunity to big companies like Estee Lauder, who have strong Research and Development Department to come up with organic products. [3, 2]

1. Action plans for trend management
   Estee Lauder’s brand portfolio is well diversified. Their strategy to manage current cosmetic shopping trend is innovation and distribution. In the last three years, 70% of its products being sold today are new or upgraded. They also closed a lot of department stores in the US while ensuring the ability to reach out to their customer effectively through other marking campaign strategies, such as social media. Estee Lauder focuses on making the brand more attractive to millennials. Their recent acquisition of Smashbox, is a successful niche brand targeting millennials. The firm’s acquisition strategy is searching for brand matches consumers’ taste. Estee Lauder also focuses on reinvesting and company growth to be able to keep up with everchanging consumer shopping habits. [4]

1. Economic

1. Personal income is a major effect on cosmetic spending. Even though cosmetic is not considered necessity, women especially, like to spend money to make them look more attractive. According to research, economy downturn has a positive effect of the beauty industry, which is known as “lipstick effect”. [6,5]
2. Estee Lauder’s competence is in cosmetic and beauty industry.
3. Short-term economic recession may have different degrees of threat to company’s sales.

1. Market environment assessment

1. Markets

Estee Lauder’s company marketing is constantly growing at a steady rate. Almost 50% of their products are sold through department stores [8], and other main distribution channels are travel retails, freestanding retail stores, and online shopping websites. Looking at EL stock price graph over the past ten years. It is fair to say that their stock price fluctuates a lot but overall trend has been going up. [7]

1. Skin care and Makeup is their main targeted market segment, and then fragrance, and hair care. Their major sales are made in the Americas, Europe, middle east and Africa. Online sales channel, digital initiatives and revival of its travel retail channel will be EL’s focus in the future. E-commerce and mobile internet penetration are especially prevailing in China, and Chinese market has a lot of potentials. EL will for sure keep up with this trend. [9]
2. Customer
   Current customer see Estee Lauder as a luxury beauty brand. People generally have positive experience with. They are especially a prestigious brand outside of the US. EL is ranked in the 9th for top 50 cosmetic brands in the US [10].
3. Need recognition: consumers feel the need of a particular type of product to solve a beauty problem. Need comes from internal and external aspects. Internal aspects include fashion consciousness and self-esteem. External factors could include others opinion, or advertisement.

Search for info: retrace the way they get information on beauty product last time. They usually gather information through asking friends or go to beauty advisor. Important searching key words include brand, function, price, and product suitability.

Evaluation of alternatives: consumers compare products that serve the same function according to its features, characteristics, benefits, quality, and price

Purchase decision: When selecting product, consumers considering various potential risks (financial, physical, functional risk) they would face when making the decision.

Post purchase evaluation: positive post purchase experience leads to positive impression of the brand and the product. Consumer will suggest the product to friends for future reference. They will more likely to buy a different product from the same brand. Negative post purchase experience leads to dissatisfaction and negative impression of the brand or the product. They will more likely to switch to another brand. [11]