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Submitted By:

Vidhi Nagar

MFM - II

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Objective of the assignment:

To study the Consumer Behaviour of any National/International Brand.

Brand Chosen : Estee Lauder

Product area : Cosmetics

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Contents:

S.No Topic Page no. 1. Introduction 4

2. About the brand 6-9

3. Customers behavior towards beauty products 10-17

4. Estee Lauder‘s Strategy 18-19

5. Conclusion 20

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Acknowledgement:

This assignment on study of consumer behavior has been successfully completed with the able guidance of Ms. Ruchika.

The lessons taught to us in class helped me a lot in completing this document.

Last but not the least I would also like to thank my dear friends Kiran Khokar and Arushi Bhasin who helped me in this

project.

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Introduction:

Many companies at different levels strive to achieve a positive attitude towards their organizations, companies such as Coca

Cola, Estee Lauder Companies Incorporation (Estee Lauder) and many others. Estee Lauder is a globally recognized

manufacturer and marketer of prestige skin care, makeup, and fragrance and hair care products. Estee Lauder founded the

Estee Lauder Company in 1946 and it‘s headquarter is located in Midtown, New York. Estee Lauder comprises of popular

brands such as Estee Lauder, Clinique, MAC Cosmetics and many others.

According to Estee Lauder (2011), the purpose of Advance Night Repair (ANR), is it frees skin from the visible accumulation

of excessive damage and helps dramatically boost skin's natural ability to repair the visible effects of this accumulation and

restoring skin of past damage.

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Products:

Skin care: Moisturizers, creams, lotions, cleansers, sun screens and self-tanning product

Makeup: Lipsticks, lip glosses, mascaras, foundations, eye shadows, nail polishes and powders. Also compacts, brushes and

other makeup tools

Fragrance: Eau de perfume sprays, colognes, lotions, powders, creams and soaps based on particular fragrances. Also bath

and aromatherapy products

Hair care: Shampoos, conditioners, styling gels and crèmes, hair coloring products and hairsprays

Each of the company‘s brands has a single global image that is promoted with consistent logos, packaging, and advertising

designed to differentiate it from other brands.

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Marketing:

The products of Estee Lauder are marketed throughout the world via a large network that consists of quality products under its

portfolio of brands. When looking at the product aspect of marketing Estee Lauder was the first major prestige cosmetics firm

to offer shopping via the Internet. Department stores remain the best venue for high service generating 7.6 billion in beauty

sales with numbers growing rapidly in the areas of sales on TV, in doctor‘s offices, and distribution channels in North

America. While there is growth in perfumeries in Asia, the Asian department stores continues to dominate that channel.

Through promotion, Estee Lauder was the first cosmetic company to offer free samples and gift-with-purchase and continues

this strategy today. (p 8) Moreover, Estee Lauder uses celebrities as endorsers in commercials on TV and in magazines. As far

as pricing Estee Lauder tends to be on the mid-high to high range varying from product to product.

Manufacturing: The manufacturers are located in various countries including United States, Belgium, Switzerland, the United

Kingdom, Canada and France.

Research & Development: Research and investment has always been one of the key interest points for Estee Lauder as a

company. The various areas of research and development include activities for support of current product development, the

development of new products and also for the search for new product-oriented businesses. Many of the research locations are

located in the following: Melville, New York; Blaine, Minnesota; Oevel, Belgium; Tokyo, Japan; Ontario, Canada; Shanghai,

China; Colombes, France; Petersfield, U.K. (http://www.elcompanies.com/the_company/company_facts_at_a_glance.php

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Financial Position: For fiscal 2010, net sales were $7.8 billion and net earnings were $478 million.

Product Diversification: Even though Estee Lauder is very committed to its core businesses, it sternly believes that ―we except

to enhance our leadership in prestige beauty around the world‖ (p. 12) but also continuing to deliver innovative, cutting edge

products and build strong global brands

Commitment to Employees: Estee Lauder believes in treating its employees with as great a concern as their customers. Estee

Lauder greatly values its employees and provides them with very high quality employee benefits. Estee Lauder‘s workplace

culture fosters a unique spirit of teamwork, innovation, passion and a shared vision to ―bring the best to everyone we touch‖.

The below principles are clearly posted in their offices throughout the world for their employees to live and work by the

following:

• Strive for excellence – deliver your best.

• Put your customer first. Know your customers, understand their needs and surpass their expectations.

• Be passionate about what you do! Enthusiasm and energy are contagious.

• Never stop caring. Show concern and respect for every individual, regardless of position or title.

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• Understand your role in the big picture. We‘re all part of a larger whole.

• Look for new and better ways to do things to continually raise our standards.

• Communicate! Voice your ideas, share your concerns, pass on what you know and be honest.

• Be a team player. We‘re stronger when we work together.

• Listen when others speak. Good ideas can come from anywhere.

• Be flexible. Success depends upon willingness to adapt when situations change.

• Pay attention to details – little things do make a difference.

• Solve the real problem, don‘t treat the symptom.

• Spread the good news. Let others know when they‘ve done a good job.

• Smile.... and have fun!

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Beauty: Only as Deep as the Customer Experience

In beauty care and cosmetics, the customer experience is where the sale is won or lost, where the brand comes to life, and

where the seeds of loyalty are planted.

As the beauty and cosmetics industry continues its global growth spurt, there is more of everything—more competition from

new entrants in luxury and mass prestige, more distribution channels, and more customer touch points. While similar issues are

plaguing most other industries, beauty is different. As a U.S. marketing executive in the beauty care industry so aptly puts it,

"the time has passed when consumers were intrigued by brand alone."

In today's beauty environment, consumers are demanding a higher level of in-store services and retailers are delivering it.

In beauty, the experience at the point-of-sale (POS) remains the most important. It is where the sale is won or lost, where

interaction with the brand comes to life, and where the seeds of loyalty are planted. To differentiate beauty products in a

crowded and competitive environment, best practice companies have several things in common. There are five beauty secrets1:

1. Understand all aspects of the point-of-sale experience and its impact on brand performance

2. Know what matters most to your end customers and retailers

3. Identify the specific touch-and-feel experiences across geographies

4. Ensure a consistent experience in all distribution channels

5. Use the right organizational model and competencies to maximize the point-of-sale experience

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This article discusses all five in more detail.

1. Understand the POS experience and its impact on your brand

The point-of-sale experience can affect brand performance in three ways:

Improve brand image and consumer satisfaction. The general POS atmosphere and design can have a direct impact—positive

or negative—on a brand's overall perception among customers and their loyalty to it. This is particularly true for premium and

luxury goods where well-heeled shoppers expect more. Chanel revamped its POS presence at Bloomingdale's flagship store in

New York City to create the impression of a high-end make-up studio complete with mirrors that can adjust to show how make

up will look in different lights, including daylight, candlelight, and fluorescent light. These nice touches deliver a unique

shopping experience and further enhance the beauty brand and customer loyalty.

Guide traffic generated through media. Not surprisingly, beauty companies invest in media to further a particular brand or

category—linking brands with holidays and special occasions already connected to these purchases. Fragrances, for example,

are always associated with Valentine's Day, Christmas, and New Year. Yet, there is no real guarantee that media-driven traffic

to one brand or category actually benefits that brand or category. As a marketing director in the United Kingdom fragrance

market warns, "The POS experience can either multiply or divide your media efforts: the goal is to find synergy." We believe

that the real change agent is the point-of-sale experience; so improving return on media investments can be as simple as

providing appropriate POS support.

Generate incremental sales. The point-of-sale experience also affects incremental sales. Although the actual impact remains

difficult to isolate, the two are undeniably connected. In Japan, for example, which is arguably among the most demanding

beauty care markets in terms of service, studies show that spending more time in one-on-one customer consultations increases

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sales and productivity. A regional manager in Japan said it best: "We know that the best counter managers are losing fewer

clients: On their corners, we have 40 percent more basket spending versus the average." With this in mind, U.S.-based Macy's

launched a sales strategy across beauty brands called "Magic Selling" (an acronym that stands for: Meet and make a

connection; Ask questions and listen; Give options, give advice; Inspire to buy and sell more; and Celebrate the purchase).

2. Know what matters most to customers and retailers

In selling premium goods, we can separate the beauty shopper's point-of-sale journey into five steps: welcome, atmosphere,

touch and feel, advice, and checkout (see figure 1). Each step is essential to maximizing the shopper's experience. If you meet

four out of the five, you are not really delivering a point of sale experience that will generate returns. It has to be five out of

five. What are some of the best point-of-sale experiences? Beyond beauty care and cosmetics, Nespresso really stands out

when it comes to offering a POS experience: Shoppers who visit Nespresso boutiques are treated like VIPs from the moment

they enter the store to the moment they exit. For example, once they've completed their purchases, customers are invited to join

the coffee bar where a Nespresso advisor asks them what they look for in coffee before offering them a free sample of coffee

and chocolate.

3. Identify how the POS experience varies across geographies

We conducted consumer and retailer research across the globe to identify the critical aspects of the point-of-sale experience in

beauty care and cosmetics.

What shoppers think. Beauty shoppers in China and the United Kingdom want pretty much the same things—one-on-one

conversations with knowledgeable advisors and easy to use products (see figure 2). We know, for example, that cookie-cutter

beauty solutions do not work. Products and the experience have to be personalized. In Shanghai, a woman shopper describes

her frustration with the luxury market, saying that anyone selling luxury brands in China should be able to provide beauty tips

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for how "I, as an Asian, can be more beautiful." Clear product offers and displays are important to shoppers in both countries,

with a Londoner saying: "When I come to the counter, I like it when it's neat and clear. I want to see what I can buy at a

glance.

What retailers think. In interviews with executives at some of the top department stores in China and the United Kingdom, we

found similarities and differences. When asked what makes for a positive POS experience, Chinese retailers say it is a

combination of a high-end brand (the best, in their opinion, being Chanel and La Mer) and the attitudes of sales staff: "The

service should be tailor-made and really solve customers' skin problems," explains a Setan executive. "Customers need

comfortable sitting areas for discussions and trials," adds a Sogo representative. British retailers do not value the brand image

at the same level, placing more emphasis on the image of the retailer. However, attitudes toward service are similar. According

to Debenhams, "[the beauty advisor] should be knowledgeable, and provide expertise, and a good diagnosis." On the other

hand, British retailers also believe clarity is key as, explains a John Lewis executive, "the customer should find what she is

looking for quickly."

Cookie-cutter beauty solutions do not work. Products and the experience have to be personal.

Retailers not only expect beauty brands to improve the customer buying experience, they also invest in beauty brands to grow

sales in bricks-and-mortar stores. In the United States, major retailers such as Macy's, Sephora, and Ulta first create brand-rich

in-store environments. Macy's, for example, launched its Impulse Beauty concept—combining its established beauty counter

brands with gondola-like kiosks for niche brands. The overall use of space is more innovative and it is designed to attract new,

younger consumers who do not frequent the European or American brand counters.

These stores are interactive environments in which shoppers are greeted by salespeople trained across all or several brands.

This not only increases the value of each salesperson but also provides a consistent in-store experience for shoppers.

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Salespeople are trained aestheticians and make-up artists who can do in-store beauty makeovers. Ulta operates full-service hair

salons that also offer a variety of beauty services; Macy's and Sephora, for example, shape eyebrows in certain stores.

These trends in beauty merchandising are not only in high-end department and specialty stores, but also in drugstores. CVS

Pharmacy's Beauty 360 and Duane Reade's Look Boutique adopted similar strategies and are challenging the traditional POS.

In today's beauty environment, consumers are demanding a higher level of in-store services and retailers are delivering it.

4. Replicate the POS experience across distribution channels

If the touch and feel and personal interaction matters most in beauty sales, how can it be replicated in other channels—for

example, online? A few brands are recreating the one-on-one sales experience using mobile applications that offer real-time

instruction and information. For example, Estee Lauder's Clinique brand has two educational mobile apps: "The Next Best

Thing" suggests substitutes to customers whose favorite shade of make-up has been discontinued, and "Clinique Forecast"

advises customers on what skin care items to pack when travelling to cities with different climates. Also, beauty industry

leaders are seeking to replicate in-store sampling online to capture incremental sales. When online Sephora shoppers reach the

check-out they can choose from a collection of free samples. Our consumer interviews highlight the importance of self-

selected samples in driving trial and future purchases of the item.

5. Define the right organizational model and competencies to maximize the POS experience

Before developing a dedicated point-of-sale strategy, it is wise to perform a competitive analysis to highlight industry best

practices. From our work in the beauty and cosmetics industry we have identified five best practices common to all leading

players in this industry

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Point of sale best practices:

Build recognizable brand missions and values.

When the time comes to pay for a purchase, the customer must know that the product she is about to buy—whether lipstick,

perfume, lotion, or eye shadow—is top of the line. All signals, both subtle and blatant, throughout the purchasing process have

reinforced this belief. The brand is distinct from any other in the market, because it has been established through detailed

central guidelines to be executed in the field.

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Know your shoppers.

For years, indirect rather than direct contact with end consumers has hindered beauty brands from fully understanding the

needs and behaviors of their customers, unless of course their retail customers provided them with such insights. Today,

however, with the advance of POS analytics and the growth in online activity, beauty brands have access to a wealth of new

information. By better understanding customers as individuals, brands can target them more accurately, develop better

products, and increase their product hit rate. Sephora is a good example of best practices in the online world.

Balance product knowledge with service and sales techniques. Point-of-sale advisors are in direct contact with shoppers, so

they more than anyone in the organization must fully embody the brand image. For example, MAC hires make-up artists who

reflect its brand values and image. In training beauty advisors, MAC finds the balance between product knowledge and service

skills. Sephora uses its formal training academy to make sure its advisors know the product and how to treat the customer.

Attract customers with appealing store merchandising. Products in attractive, eye-catching displays sell better than products

not in such displays. At Kiehl's, displays include merchandise briefs that tell the brand's story and guide the customer's

purchasing decisions. Other best-in-class brands work closely with their retail partners to plan and execute the brand promise

and, in the process, gain a better understanding of each retailer's requirements and ensure that the merchandising appeals to

their target audience.

Foster a retail culture and skills. Retail issues gain their "fair share" of attention across the organization, all the way up to top

management. In fact, attention to product and retail components are part of a fully integrated brand marketing mix. Top

executives at luxury players, such as Louis Vuitton, are very aware of key retail and commercial issues and local marketing

teams are structured to include team members with retail skills and experience in order to reflect retailers' needs.

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Finally, after benchmarking beauty care, cosmetics, and luxury players, the vertical "Maison model" (a brand-dedicated

structure with central P&L accountability) caught our attention. Many of the most prestigious luxury brands—Chanel, Dior,

Hermes, Louis Vuitton, and Cartier— use this business model to bring customer service to its highest possible levels. What's

more, we found that point-of-sale is easier for the customer because retail performance monitoring occurs across the board.

However, it is not a guarantee for excellence: Brand culture and DNA also play a role!

Estee Lauder‘s Website needed a makeover. Their online presence was not leveraging the luxury and the style of the offline

brand. Their ecommerce site showcased their products in catalog-style instead of romancing their presentation and creating

more cross-sell/up-sell opportunities. And the strong, striking editorial voice of the brand was not apparent on their site.

Stunning New Insights

One of the brand‘s hallmarks is its in-store Beauty Advisor. Beauty product catalogs are daunting in their offerings, their range

of colors and formulations; many women purchase department store brands because of the level of personal service, and the

knowledge that the products they walk away with will match their skin‘s needs.

We visited in-store Advisors ourselves, tried on makeup and moisturizers, called the 1-800 number, and followed the purchase

path online. We learned first-hand how direct contact with an advisor gave women more confidence in their purchases, and

added a demonstrative and educational element that was missing from the site.

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Estee’s Strategy:

Based on these insights as well as brand and consumer behavior research, we set out to design a beautiful, elegant and

satisfying experience that elevated the Estee Lauder brand online, engaged with the consumers on an emotional level, and

incorporated educational elements and digital tools to promote brand education and purchase consideration.

Looking Good

A beauty site must not only answer consumer needs, it must reflect the style and luxury of the brand. Translating Estee online

meant creating a showcase of modern sophistication and heightened elegance. Our starting point: the brand mark. We looked

to contemporize it, ensure that it stood out online and best represented the standards of Estee Lauder. The reflective gold

treatment we developed was enthusiastically received and greatly informed the whole of the site redesign.

Enhancing Tools

We went about extending the signature Estee touch online by enhancing existing interactive tools and recommending new

ones. Inspired by our own interactions with real life Beauty Advisors, we proposed the creation of instructional videos for

seasonal makeup application and tips, to give women the kind of education they could only have found in store. We enriched

the tools that allowed customers to find their perfect makeup (Foundation Finder) and created a cross-selling skin care program

configurator (Skin Care Finder). We also designed a Behind the Scenes look at the famous faces that have become

synonymous with Estee Lauder‘s standard of beauty and style.

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An Exceptional User Experience

We took into consideration how a woman shops for cosmetics and created two user paths. First, an experiential path that

provided a curated journey through the site with an emphasis on the emotional connection with the consumer. Secondly, a

direct to product path for those women who were looking for a specific formula and were ready to purchase, providing an

efficient engagement with emphasis on cross-sell and up-sell.

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Conclusion:

Estee Lauder will continue to deliver innovative, cutting edge products and build strong global brands. In addition, Estee

Lauder is committed to accomplishing the goal to optimize, diversity, and grow the business over the long term. (p. 12) Estee

Lauder has strived to keep up with the changing times and has successfully grown itself in the various markets all over the

world. It took many companies a long time to realize that the global market was the market of the future but Estee Lauder had

envisioned this growth a long time ago. And the best thing is that they were successfully able to ‗strike while the iron was hot‘

and take home the winning prize of global growth and customer care.