3 - Competitors, analysis, competitor maps

Strength of the forces of competition are mild in industries like cosmetics, where high returns are common. Cosmetic industry globally is worth $274 billion.

Facts about competition in cosmetic industry:

•          Cosmetic industry grows 20 % annually
•          Cosmetic industry's worth in India $1.5 billion
•          Expected to increase to $3 billion by 2014
•          19% CAGR (Compound Annual Growth Rate) expected by 2014
•          Our industry expected to grow twice as much as Europe

Top companies in India

•          Lakme - Unilever
•          Revlon – 1932 American company
•          Oriflame Cosmetics SA – 1967, Swedish origin
•          The Lo’real group – World’s largest cosmetic giant at Paris
•          Chambor – In India from 1994, Geneva company
•          Maybelline – Started in 1915, acquired by L’oreal in 1996
•          Avon products Inc – No 1 beauty direct seller in the world
•          MAC cosmetics
•          ColorBar cosmetics
•          Streer wear

Product differenciation in Lakme -

•          Skin - moisturising and sunscreen lotions and creams, facewash, foundation, compact, shimmers
•          eyes - kajal, eyeliner, eyeshadow, mascara
•          lips - gloss, lipstick
•          nails - nail polish
•          hair - shampoo, serum

Barriers to entry

The cosmetics industry exists in a market structure called monopolistic competition. The industry is characterized by a large number of firms that attempt to differentiate their products and maintain a certain degree of control over their pricing. In general monopolistic competition is characterized by relatively low barriers to entry and exit. Government regulation (mostly related to differences in the approach to safety issues) and distribution channels appear to be the most significant barriers to entry in the cosmetics industry.

Direct competitiors for Lakme (In terms of product category and not price) –  

•          Maybelline Clear Glow All in one Fairness compact Powder 9g – Rs 185 (Comes in 5 shades)
•          Loreal Paris True Match Powder Compact – Rs 850 (Comes in 4 shades)
•          Colorbar Time Plus Powder Compact - 9 g – Rs 200 (1 shade)
•          Coloressence Compact Powder Compact - 10 g – Rs 160 (Comes in 4 shades)
•        Revlon Ivory Matte Pressed Powder 8.4 g – Rs 415 (1 shade)
•          Lotus Herbals Natural Blend Botanical Compact SPF 15 – Rs 425 (1 shade)

Substitutes for compact powder

•          Loose powder
•          Cream based powder
•          Foundation which gives a matte finish
•          Creams which give matte finish

1 - Sources of Customer Value and application

LAKME
·         India's biggest and oldest beauty brand.
·         Presently owned by Unilever and run by CEO Anil Chopra.
·         Named after the French opera Lakmé, the goddess of wealth renowned for her beauty.
·         Lakme Salons and Lakme Studios across 130+ centers in about 25 major cities.
·         Lakmé also partners with the leading cosmetic house; Milan-based Intercos Italia, Schwann Stabilo Germany and Paris-based Fiabila

PRODUCT

Lakme - Flawless Matte Complexion Compact - 9g

Price : Rs 265/ 275

Shades

• Melon (for fair-complexioned people) - Price : Rs 265
• Apricot(for medium-complexioned people) - Price : Rs 265
• Almond(for dark-complexioned people) - Price : Rs 275

Benefits:
·         Matte finish
·         Compressed texture
·         Vitamin E
·         Oil absorbing formula
·         Attractive pack with an attached mirror
·         Non-irritating
·         Does not get cakey

Competitive products within Lakme:
·         Lakme Radiance Complexion Compact 9g (Price : Rs 104) - matte finish for 4 hrs
·         Lakme nine to five Flawless creme Compact 9g (Price : Rs 450) - concealer, foundation not required,           cream texture
·         Lakme Rose Powder Compact 40g (Price : Rs 100) - loose & more quantity
·         Lakme Absolute White Intense Wet & Dry Compact 9g (Price : Rs 590) - (cream base & does not             spread uniformly on skin; wet & dry part separate), has hyaluronic acid (hydrates)
·         Lakme Perfect Radiance Intense Whitening Compact 9g (Price : Rs 170)

Competitive products outside Lakme:
·         Maybelline Clear Glow All in one Fairness Compact powder Compact 9g (Price : Rs 175)
·         Colorbar UV Perfect Compact 9g (Price : Rs 250)
·         Colorbar Time Plus Powder Compact 9g (Price : Rs 200)
·         Lotus Herbals Naturalblend Botanical Compact (Price : Rs 314)
·         Coloressence Compact Powder Compact 10g (Price : Rs 160)

What do you think before going to the store?

Is the product worth the money, does it serve the purpose, does it suit me, does it last long.

What is the product category?

Cosmetics.

Who are you?

I am either a student from a upper-middle class family background or a working professional.

Consumers who have bought this product before?

They will continue to buy it if it suits their skin (no allergy), if it makes them look better for a longer period of time and serves purpose (like skin should not look oily).

Consumers who buy this product for the 1st time?

Those who want to see if this party wear compact powder gives them an even complexion and makes them look better.

How customers are influenced to purchase?

As lakme is a well known safe Indian cosmetic brand and suits our skin well. The number of cases of allergies/ rashes post using lakme products is very minimal. it is also a reasonably priced cosmetic brand.

How to pitch marketing given different experience?

Customers can go online to the Lakme official site and see the shades in which the compact are provided. If customers go to a store like "Health & Glow", employees there tell them which shade is closest to their complexion & will suit them best.

Where  is the product bought?

·         First time - health & glow or cosmetic store or fancy shop

·         Second time onwards - if the person is online shopping savvy, either from sites like flipkart or from a cosmetic store

Why this product?

They have a lower & higher price range cosmetic powder also. This is a long lasting cosmetic in the mid-level price range.

2 - Motives Behind Buying of Goods & Services

Consumer Psychology-

Motivation -

Freud's theory - Shape of the packaging box and case, size, weight, colour, texture and brand name matter.

Herzberg's theory - Satisfiers - long lasting effectiveness, texture, ease of transport, the compact does not crack or crumble to loose powder.

Perception-

Due to selective attention and retention capacity of the consumer, the marketer has to have innovative ad's with different models and frequently associate with a big bollywood actress like Kareena Kapoor from 'Heroine' movie for the Lakme Absolute range on cosmetics.

Learning-

If people are happy with the compact powder, the probability of getting another Lakme cosmetic is very high due to satisfaction levels.

Buying decision process

Who influences the decision to buy the product?

Friends, family, ad's, self-motivation to try a new cosmetic, mass media, using a product post experience.

What does the customer buy?

The customer buys the cosmetic hoping it will make a difference to the way they look and are hence perceived by society.

When do customers buy?

When after analyzing many competing cosmetic brands and evaluating alternatives, they feel a particular brand works best for them. They should feel the price they pay is justified for the product they purchase.

Where do they go to look for the product or service?

They can go to a fancy store or one like 'Health & Glow', where they can feel the texture of the product & see how it looks. If they have purchased this product before and are satisfied, they can make an online purchase through sites like flipkart, healthkart etc.

How is our product perceived by customers?

Customer perceived value is the difference between the benefits & costs incurred while selecting this cosmetic.

Benefits - To see the shades available in site, to see how they appear on models in the online studio, to feel its texture at a store like 'Health & Glow'

Costs - Time & Energy spent in choosing this product over other brand competitors, if the money spent on it is justified and if the person who uses product receives morale boost.

Why do customers buy a specific brand?

They buy a brand when it suits their skin type best, and the price is justified in their perception. Also the ease of use and time period for which the product lasts (eg: product is effective for 8 hours and 2nd application of cosmetic is not required).