CASE STUDY Marketing Audit Maybelline Cosmetics Natali Louise 2010 Natali L 1/1/2010 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY 2. IDENTIFY MAYBELLINES CORPORATE & MARKETING OBJECTIVES 3. DEFINE THE PROBLEM 4. EXTERNAL ENVIROMENTAL PROBLEM * MARKET DEFINITION * MARKET SIZE * MARKET GROWTH * MARKET STRUCTURE * MARKET TRENDS * COMPETITION * MARKET SEGMENTATION 5. INTERNAL ENVIROMENT (EXISTING MARKETING MIX) * PRICE, PRODUCT, POSITION, PROMOTION * DISTRIBUTION * RESOURCE ANALYISIS * FINANCIAL SITUATION * SWOT ANALYISIS 6 . SELECT SEGMENTS FOR ATTACK 7. IDENTIFY ALTERNATIVES 8. SELECTION OF BEST ALTERNATIVE . KEY SUCCESS FACTORS 1. EXECUTIVE SUMMARY In this case study we will be examining Maybelline Cosmetic Company and its current market position and distribution domestically and globally, we will be looking at the expansion of the company as well as the feasibility of successful expansion, options available and extension of the Maybelline line. 2. IDENTIFY MAYBELLINES CORPORATE & MARKETING OBJECTIVES Maybelline’s corporate objectives can be summarized in the three point strategy designed to- * Expand the company’s market presence through corporate acquisition, making its geographic presence wider. To develop or purchase a new personal line of care products that will compliment Maybelline’s existing business * To revitalize the company’s core colour cosmetics business The marketing objectives have been organized to- * Develop and advertise the newly launched “Shades of You” a cosmetic line targeted to meet the specific needs of woman of colour. * Develop and launch a shine free product line for teenagers and young woman. * Introduce a new product segment ‘Revitalize” developed specifically for older woman. * Appeal to an international market. 3.Order now
DEFINE THE PROBLEM Maybelline desires to expand on into the global cosmetics market, this may encounter difficulties as the barriers to entry into Asian and European markets are high, existing well entrenched cosmetic companies are already well established and hold a high market share, there may also be the difficulty of marketing cosmetics in an international market place where cultural obstacles may arise, perception of Maybelline as a brand may not be high, as well as international sales of Maybelline accounting for only 10% of the company’s net sales in 1991. . EXTERNAL ENVIROMENTAL PROBLEM * MARKET DEFINITION Maybelline’s presence in the domestic United States market should be considered strong, they have held second largest market share for the last five years, including second and third positions in the domestic market for their face and lip cosmetics, this has encouraged them to expand globally, however as stated net sales internationally have been poor compared to sales in their domestic market. MARKET SIZE Unit Sales and Profitability Sold currently in approximately 80 thousand retail outlets domestically, as well as various wholesalers such as Wal-Mart, Kmart and Target, Maybelline’s net sales through Wal-Mart alone constituted over 10% of the company annual sales with eye makeup constitute 39% of sales followed by face products at 24%, lip products at 14% and nail polish at 4%.
One can see through current sales figures that within the domestic market and distribution channels, globally positioning Maybelline would depend heavily on successful product distribution channels. YEAR ENDED YEAR ENDED DEC. 1, 1990 DEC, 31, 1991| POSITION SHARE POSITION SHARE| TOTAL COLOUR COSMETICS| 2| 18%| 2| 18%| EYE PRODUCTS| 1| 30%| 1| 30%| FACE PRODUCTS| 2| 14%| 2| 15%| LIP PRODUCTS| 3| 13%| 3| 12%| NAIL PRODUCTS| 5| 9%| 5| 9%|
PRODUCT GROUP PERCENT OF NET SALES%| EYE * MASCARA * EYE LINE/BROW * EYE SHADOW| 39%| 18% 14% 7%| FACE * FOUNDATION * BLUSH * CONCEALER * POWDER| 24% | 9% 6% 3% 6%| LIP| 14%| |
NAILOTHER COSMETICS| 5% 5%| | * MARKET GROWTH With strong profit potential in successfully selling cosmetics in a global market place, the plan to increase the company’s presence in their existing international markets has been currently to update product formulations, update packaging and advertise with current domestic advertising campaigns, also strengthening its current global distribution channels to ensure consistent availability of Maybelline’s products.
New manufacturing rights in Japan hope to expand the brand to a lucrative sales market currently profiting other cosmetic companies. At present product growth is expanding while developing new cosmetic lines for target demographics, such as develop and advertise the newly launched “Shades of You” a cosmetic line targeted to meet the specific needs of woman of colour. Developing and launching a shine free product line for teenagers and young woman and introducing a new product segment ‘Revitalize” developed specifically for older woman. MARKET STRUCTURE Competition against Maybelline in the global market appears to be strong, an example of this is Revlon’ s Max Factor and Beatrix cosmetic brands in Europe and Japan already using a well established network for product distribution and marketing. This would indicate that as profitable as entering the global market appears based on the existing market structure Maybelline’s strategic distribution channels and network will either create or inhibit their ability to compete internationally. Porters Five Force Model- * MARKET TRENDS
With sales for affordable cosmetic products on the rise it would appear that Maybelline’s position in its current domestic market very well attuned to its customers needs, providing a comprehensive range of diverse cosmetic products, Maybelline has structured itself to appeal to all age, and race demographics, the use of Multicultural models, an integral stepping stone to international market appeal. Technologically their use of EDI (electronic data interchange), allows for comprehensive market research to discover key customer buying trends by geographic purchases. COMPETITION Internationally Direct competition are companies such as Procter & Gamble owning Revlon, Japan’s Kao Corporation and the Anglo Dutch Unilever Group, already with wide distribution in their respective companies in the global cosmetics market. All of the above companies sell in within the same segments as Maybelline cosmetics, not very different in appearance or price they are however widely available in Asia and Europe. * MARKET SEGMENTATION
Within the market segments Maybelline sell to, the their least successful are the European and Asian markets, further market research to this specific market segment may help discover the specific consumer needs, which may not be addressed at present, such as a segmentation study to reveal overseas consumer characteristics, lifestyle, demographic, geographic and current trends. 5. INTERNAL ENVIROMENT (EXISTING MARKETING MIX) * Positioning,Product,Price,Promotion- Maybelline’s position in the affordably priced cosmetics industry is high; it has maintained a 30% domestic market share for the last five years. * Maybelline has developed a variety of products, updating its product formulations, its most popular being eye make-up, including mascara, eye liner and eye shadow, they also sell lip products and skin care and nail care products, they have developed lines to include all ages, and skin colours, they have redesigned their packaging. Affordable and widely distributed Maybelline is available in a wide range of shops from Cosmetic counters in department stores to supermarkets, both domestically and internationally. * Promotion for Maybelline has been extensive; they have launched a multimedia advertising campaign with a focus on the new product packaging of Maybelline, print ads in a variety of popular fashion magazines and television campaigns using celebrities.
Maybelline’s strong advertising campaigns would indicate their use of a pull strategy, with more focus on people buying their products on demand, rather than personal selling. * DISTRIBUTION Distribution domestically is predominantly generated by their own sales force, approximately 300 people in North America, to a lesser extent by a small network of food brokers, International sales are achieved through a combination of exclusive distributers and Maybelline’s own sales force. * RESOURCE ANALYISIS
Production capacity for Maybelline is high, Management appears to have clearly defined and well researched marketing goals and sales objectives, technically their use of EDI allows them to conduct thorough market research of their customer’s preferences and spending habits. * FINANCIAL SITUATION Profitability in terms of their existing net sales within the global market is not high when looking at comparative sales domestically; internationally Maybelline appears to be perceived by customers as a low end product, which may answer why only 10% of annual sales were generated by global sales. SWOT ANALYISIS STRENGHS| WEAKNESSES| * STRONG DOMESTIC SALES * HIGH DOMESTIC MARKET SHARE * WIDELY PURCHASED BY ALL AGE DEMOGRAPHICS * AFFORDABLE * WIDELY DISTRIBUTED * WELL ADVERTISED| * LIMITED OVERSEAS DISTRIBUTION * LIMITED ADVERTISING VISABILITY OVERSEAS| OPPOTUNITYS| THREATS| * OPPOTUNITYS TO DEVELOP SOAP CARE UNDER THE NEWLY AQUIRED ‘YARDLY’ BRAND * EXPAND IN THEIR OVERSEAS MARKETS| * EXISTING STRONG OVERSEAS COMPETITION * SIMILAR COSMETIC COMPANIES * DISTRIBUTION RELATIONSHIPS| 6 . SELECT SEGMENTS FOR ATTACK
It would appear that even with the barriers of entry to the overseas market if Maybelline strengthen their current distribution globally, as well as obtain new distribution channels, their existing company visibility and brand strength should create an overseas acceptance of them in the market place. 7. IDENTIFY ALTERNATIVES * A line extension specifically designed for Asian Woman * Trial increase/ online media giveaways * Promoting at public events * Expand to a male demographic (e. g. ; skincare) in similar style to L’Oreal Men’s Expert Line. 8. SELECTION OF BEST ALTERNATIVE
In light of the company’s objectives to expand overseas, a product specifically designed for Asian woman would fit Maybelline’s current marketing objectives, * The type of products designed for that market could include eye cosmetics with tips on application for more almond shaped eyes. * Keeping price competitive but using new packaging to appeal to this new market * Having an interactive marketing campaign including online giveaways, an advertising campaign to find “The New face of Maybelline” in Asia to expand awareness and excitement to the product launch, and a media campaign aimed at advertising in Asian fashion magazines. . KEY SUCCESS FACTORS The key success factors to for Maybelline to stay a domestic market leader as well as expand successfully into the international market consists of keeping their line of products affordable and attractively packaged at an intermediate level, along with economies of scale, keeping large production affordable hand in hand with intensive distribution, expanding to new distribution channels and keeping consumers happy with the quality of Maybelline Cosmetics.