From humble origins in 1946 the cosmetic company started by Joseph Lauder and his wife Estée Lauder has changed into a multibillion money empire stretching across various locations and items. Today Estee Lauder is one of the world's top aesthetic brands with estimated sales of $ 7. 8 billion this year 2010. (elcompanies. com, 2011)
The company manufacturers an amalgamation of skincare, makeup, fragrance and hair care products. It utilizes over 31, 200 people both domestically and in foreign countries and has operations in 150 countries and territories. The business has a profile of well established brands such as Aramis, Clinique, Bobbi Brown, Tommy Hilfiger, , Donna Karan and Smash container among others. Some products such as Clinique and Bobbi Dark brown specialize in processing beauty products while other such as Donna Karan and Tommy Hilfiger specialize in a whole selection of products including perfumes, accessories and garments. (elcompanies. com, 2011)
In conditions of market talk about Estee Lauder handles a sizeable 46% of the cosmetic market in america. In conditions of International market show 61 percent of the business's total sales arise in THE UNITED STATES, 27 percent originate in Europe and the center East and the rest of the 12 percent occur in the Asia Pacific. (elcompanies. com, 2011)
Most of the company's phenomenal success within the last 65 years success is attributable to the marketing skills of its founder Estee herself. Influenced by her uncle who was a chemist Estee implemented in his footsteps and brewed some products in her kitchens. Within the era preceding the next World Warfare she functioned hard to promote her own make of makeup. In 1946 she got her first respite when Saks Fifth Avenue agreed to buy her creams and sell them over the counter. In a few brief years Estee were able to changed her fledgling aesthetic company into a major market player. She applied a unique online marketing strategy which would come to explain Lauder's approach in the foreseeable future. This technique utilized the use of innovative packaging materials to make the product look distinguished and appealing. Within the post world warfare period when most cosmetic companies were advertising its lipsticks packed in vinyl Estee recognized her product by packing it in upscale and impressive metal circumstances.
Another technique pioneered by Lauder which includes now achieved standardization in the plastic industry is the " get a free of charge present with your purchase offer. Estee was the first aesthetic manufacturer to experiment with this system when she first started out offering free examples with acquisitions to encourage clients. These progressive marketing campaigns resulted in the brand obtaining huge acceptance and creating a niche for itself in the makeup products market. (elcompanies. com, 2011)
The primary and continued success of Estee Lauder can be related to the effectiveness of its internal features. These include strong management skills, satisfactory price product, campaign and placement blend, discovering the right target markets and using the right distribution and placement strategies to reach these marketplaces. However these factors by itself do not influence performance. There are several external environmental factors that have afflicted the performance of the business over the years. Included in these are factors such as competition, changes in laws and regulations and the introduction of new technology. When developing a marketing strategy it is essential to examine both the inherent capacities of the company as well as the exterior factors influencing the industry and the organization. Smooth execution of the company's strategic ideas requires that factors in both the internal and exterior environment factors be strongly examined and evaluated using specific analytical tools The internal power and weaknesses of the business as well as the opportunities and dangers that it encounters can be talked about using analytical tools known as the SWOT evaluation and the PEST analysis.
Using the SWOT analytical Approach
A power, weaknesses, opportunities and risks examination known as the (SWOT) is an important exercise when drafting the business's strategic plans because it can help determine where the company currently stands in terms of its strategic capabilities and what areas require improvement. It will also provide an knowledge of the exterior environmental factors that will have an effect on the company's businesses and what strategies should be adopted to either exploit these factors or reduce any negative effects they might cause. (David, 1995)
One of the key strengths of Estee Lauder is its brand name and the exclusivity and prestige it accords to its customers. This brand equity can be used to attain and maintain competitive advantages.
Another key strength is a high performing human learning resource and financing function. Superior personnel performance and the presence of experienced and trained employees indicate a strong Individual Source Function within the Organization. The capability to meet all debt obligations, a strong balance sheet and the fact that the company generates income above its breakeven point implies that the Company has a higher performing financial function.
Another key durability is accorded by the variety of products offered by the company. No other company offers such diversity both in conditions of the amount of brands and products that a customer can purchase.
One of the major weaknesses of the company is that clients often perceive Estee Lauder prices to be high in contrast to other vendors. Customers of a specific income group may therefore not be considering shopping at the company's stores.
One opportunity that Estee Lauder can exploit includes the increased use of mobile technology to access the internet. Since people use the internet more often to execute online deal Estee Lauder may use this opportunity to start mobile applications which allow users to access the online supplier and conduct trades through the mobile.
Another opportunity is the acquisition of a excellent competitor. This might accord the business both economies of trade and result in a more robust more varied entity. It could also add value to the company's shares and help improve the company's brand identity and good will
Opportunities can also be accorded by increasing into international markets. This can help identify and generate new consumer marketplaces in emerging economies which may have a demand for the business's products.
One of the dangers that Estee Lauder encounters is the opportunity of hostile takeover and merger bids by other competitors on the market, changing legislations which have an impact on the company's local and global businesses as well as the starting point of the global recession. The global tough economy which were only available in 2008 has resulted in a reduction in the global disposable income and therefore the inclination of individuals to spend.
POLITICAL -The integration of more countries in the European union and the negotiation of more Free Trade contracts with past countries of Eastern Europe has opened up more chance of cosmetic companies such as Estee Lauder to set up operations in these countries.
ECONOMIC - The aesthetic sector is specially prone to the consequences of the global tough economy. The global downturn has led to massive job losses in US as well as Europe which has significantly reduced the disposable income of people and families. Sellers advertising luxurious items are specifically afflicted by the downturn.
SOCIAL - Changes in sociable styles may impact the merchandise and operations of the business. The new development to use anti-aging treatments even when one is still relatively young has increased the level of popularity of anti-aging creams and formulas. Skincare is one of the company's forte and this new trend has boosted the sales of one of the company's core product line.
TECHNICAL - The introduction of the internet has facilitated the retail process and managed to get easier for customers to buy cosmetic products online. . It has helped to raise the plastic business and also made it more global. Buying online is also more convenient and can be carried out in the relative comfort of one house without facing classic shopping dangers such as parking difficulties.
Assessing the logistics and offer chain processes of the company utilizing a Value Chain Analysis
All business procedures in the business are structured as a Value string. A Value Chain Analysis is an instrument which is employed to assess the company's logistic and offer chain process. The value chain analysis breaks down the logistics and supply function of the business as follows. (David 1995)
Inbound Logistic: This involves procuring the right components and raw material to make the product like the elements for the ointments, beauty products and perfume. Many of these substances are synthetic
Operation: This technique includes selecting employees, conducting research activities, determining potential local and international market segments etc charges.
Outbound Logistic: This involves the various ways that the merchandise can reach customers including syndication to conventional dealer stores and also other new innovative programs such as trusted online retailers like Amazon and eBay
Marketing and Sales: This process includes all the many promotional and marketing activities involved to increase sales and create a greater awareness of the business's various brands. This consists of advertisements on the net social and transmit advertising as well as celebrity endorsements
Services: This calls for activities which improve the value of the product. It may include the presence of the makeup artist to show how the customer can perform a makeover on a daily basis by using MAC products. By using a trained makeup designer to educate the client in how to use the product in a professional manner the business can perform great results for the company.
The value string research examines all the logistic and supply chain elements in detail and assess if they are being effectively employed in conjunction with the overall strategic goal of the business. (David 1995) In addition, it examines whether each function is being conducted effectively and exactly how it could be altered to achieve further productivity profitability and competitive benefits.
Evaluating aftereffect of Globalization on Estee Lauder
Defined as the integration of politics economic and communal culture the concept of globalization removes restrictions and brings countries together to talk about resources for further economical progress and development. (Hirst, and Grahame, 1996). For Estee Lauder globalization has accorded the following opportunities
1) The chance of taking new and larger markets on foreign ground. The marketplaces in the US are over saturated at this time with lots of competitors vying for a chunk of the marketplace. However foreign markets on the other hand still exhibit an enormous volume of demand and Estee seeks to earn a lot of gain catering to this demand.
2). Access into a specific markets also gives the company a vantage indicate enter other local marketplaces where demand for cosmetic makeup products, perfume and wild hair care are equally high.
1. Distinctions in Language and culture. To give its product wider acceptability and understanding Estee Lauder will also have to promote its product in both English and the local language of this country All sorts of promotional promotions which appear in print, tv set, and outdoor media will have to be bilingual. The company should primarily use reward based campaigns to appeal to new users. Also to help simple business practice it is recommended to convert all formal written business documents in to the local language To make sure that business partners and clients do not misunderstand the goals of the company it is also wise to hire a translator. This is particularly essential to aid communication in the local market (Griffin, and Pustay, 2006).
Hiring personal with experience in the neighborhood market that is familiar with local movements and market conditions. This will enable the business to gain know-how about the local conditions which it can use to make a deal in a new and foreign industry. (Below, Morrissey & Acomb, 1990)
3. Training the sales and tech support team teams: The Company would need to teach new recruits on the complex aspects of reselling products in a fresh market. They might require people who probably have previous experience in retailing products to the neighborhood market and also have a prior bottom part of clients that they can start by reselling to. Similarly the business would have to teach a bilingual support team to address customer's queries
4. Repatriation of Funds: Estee Lauder would need to consider local regulations before repatriating money home. If there are specific restriction enforced by the overseas country's law companies cannot repatriate all the income it generate. This places a limitation on the money that the business can repatriate home.
5. Understanding the buyer Segment
Estee Lauder must make an effort to understand its marketplace. The company should take on market research to assess how customers feel about their products. Consumer's choices and needs must be studied into account to alter the product or strategy used to promote the company's products
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