Submitted By: Vidhi Nagar

MFM - II

 Objective of the assignment:

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

Brand Chosen : Estee Lauder Product area : Cosmetics

Contents:

S.No Topic
1. 2. 3. 4. 5. Introduction About the brand Customers behavior towards beauty products Estee Lauders Strategy Conclusion

Page no.
4 6-9 10-17 18-19 20

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.

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 its 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.

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 crmes, hair coloring products and hairsprays Each of the companys brands has a single global image that is promoted with consistent logos, packaging, and advertising designed to differentiate it from other brands.

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 doctors 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

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 Lauders 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.

 Understand your role in the big picture. Were 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. Were 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, dont treat the symptom. Spread the good news. Let others know when theyve done a good job. Smile.... and have fun!

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 everythingmore 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. 2. 3. 4. 5. Understand all aspects of the point-of-sale experience and its impact on brand performance Know what matters most to your end customers and retailers Identify the specific touch-and-feel experiences across geographies Ensure a consistent experience in all distribution channels 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 negativeon 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 categorylinking 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 conceptcombining 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 selfselected 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 buywhether lipstick, perfume, lotion, or eye shadowis 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 brandsChanel, 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 Lauders 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 brands 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 skins 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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Estees 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 Lauders 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.

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