Cosmetics and Lush Company free essay sample

In the following part, the background of LUSH Company and its products will be given. Company background History LUSH is an internationally recognized cosmetics retail corporation producing and selling handmade beauty products. With its roots in the 1970s, LUSH Company has grown to over 700 shops in 43 countries by 2011 (lush. co. uk). In the early 1970s, Mark Constantine, the original founder together with Elizabeth Weir established wholesale soaps and cosmetics company Constantine Weir which began to be The Body Shop’s main supplier of soaps and cosmetic products (Evans, 2009). In 1988, the company launched a new enterprise—Cosmetics To Go headquartered in Poole, Dorset, UK. They sold their natural products through The Body Shop and the mail order business. However, due to some unfortunate events and a major recession at the end of the 1980s, this company went bankrupt. But the bankruptcy didn’t let Mark give up his career. In 1994, Mark restarted his business in Poole and renamed his company ‘LUSH’ (Evans, 2009). From then on, this company began to be popular throughout the world. By 2012, there are 22 LUSH shops in France. Company value LUSH produces fresh-made soaps, shower gels, shampoos, lotions for the hair, face and body with 100% vegetarian recipes. The concepts of â€Å"ecological† and â€Å"green† are shared by LUSH Company, which include a major concern for the environment, a wish to reduce packaging and wastes, a desire to build an environmentally sustainable business. The company prefers solid rather than liquid products as they can be cut and wrapped in grease-proof paper without any plastic bottles (Evans, 2009). As the â€Å"we believe† statements illustrate on its websites, â€Å"We believe†¦in making effective products from fresh, organic fruit and vegetables, in buying ingredients only from companies that do not commission tests on animals and in testing our products on humans,† etc. The company values focus on freshness, safety, no animal testing and sustainability of resources in general. 2. Situation analysis Macro Environmental Analysis Political environment Lush Company launched in France can face great chances. Firstly, the future for natural cosmetics companies is bright. The European Union has published the Cosmetics Products Regulation (1223/2009) which will go into effect on July 11, 2013 (Steinberg, 2010). This regulation will focus more on product safety to protect human health which is in consistence with LUSH Company’s value. Besides, it will create a legal standard on natural cosmetics to protect its industry. Secondly, France and United Kingdom maintained a fairly close relationship during these years. Nicolas Sarkozy, the French President said Britain and France have never been so close and he wanted a new â€Å"brotherhood† between the two countries (Porter, 2008). This friendly relationship guarantees a stable political environment for the development of LUSH Company in France. However, despite the great opportunities for LUSH Company, some threats cannot be ignored such as the company tax in France. The rate of company tax depends on the turnover and capital structure of the business. At present, the individual income tax rate increased to 40% and the corporate tax rate are progressive up to 33. 33%. The sales tax/VAT rate reached 19. 60% (Tax rates, 2010). Economic environment France is a very attractive cosmetics market due to its strong economy. The following parts illustrate the economic opportunities for LUSH Company. First of all, France has a High-income economy and is the second-largest trading nation in Western Europe. The World Economic Forum ranked France 18th out of 139 countries in terms of competitiveness and 4th in terms of infrastructure. Besides, GDP is known as the best index for measuring country’s economy. A country with a better state of economy will be beneficial for launching business. According to CIA (2012), The GDP (purchasing power parity) increased from $2. 48 trillion in 2009 to $2. 214 trillion in 2011. The real growth rate of GDP is 1. 7% in 2011 compared with 1. 4% in 2010 and -2. 6% in 2009. Meanwhile, the imports rose from $588. 4 billion in 2010 to $684. 6 billion in 2011. In accordance with French branch of the market research firm NPD, the cosmetics market in France grew by 3% in 2011 to reach 2. 9 billion euros (Premium Beauty News, 2012). Furthermore, the French government has taken a number of measures to support French small and medium sized enterprises during the current financial crisis. For example, in 2008, the French government announced a EUR 22billion plan and signed an agreement with the Federation of French Banks to support these companies (Brown, 2009). Therefore, French economic environment is advantageous for LUSH Company to entry the French cosmetic market. Nevertheless, according to International Money Fund (IMF, 2011), the current account balance of France has gradually worsened from a surplus to a moderate deficit—largely because of rising labor costs. Wages have grown faster than other European Countries while total factor productivity growth has increased relatively slow. Besides, France has been struggling with high unemployment rates for decades. In 2011, the unemployment rate hits a 12-year high and stands at 9. 8% (Financial times, 2011). Thus, LUSH Company should pay attention to the economic threats mentioned above to ensure a healthy cosmetic industry. Social-Cultural environment The social-cultural environment exerts a big influence on French cosmetics market. In this part, 2 important social opportunities will be discussed, namely changes of values and population. In terms of changes of values, the cosmetics market is going green nowadays. Today’s customers are enthusiastic about products made by the companies which take responsibility for social ethical issues and the environment. The natural cosmetics in French market grew significantly due to rising consumer awareness of chemicals in cosmetics and toiletries (Organic Monitor, 2006). Many media reports published the health risks associated with chemicals in conventional products. For instance, a TV documentary in 2005 highlighted the possible danger of synthetic substances such as parabens in skin care products (Organic Monitor, 2006). As a result, customers focus more on health and turn to natural products with plant extracts and natural ingredients and a minimal level of synthetic compounds. In terms of changes of population, France has an aging population, thus, customers are eager to maintain a healthy skin by using natural cosmetics. Furthermore, based on Hofstede’s cultural typology, the French people dislike taking risks. Every decision has to be analysed carefully before being taken, which also result in a high power distance. French people are individualists; they may buy products only for their use. And they work rather alone, which make an intense competition among many companies. France is a feminine society which share female characteristics, thus, French people may pay more attention on what they eat and what they put on their skin. Technological environment Technology has become the driving force of business innovation. Today’s customers are increasingly using the Internet and social media as an information platform for exchanging views. With the growth of e-commerce, LUSH products are available online, which also makes contributions to its total sales. In addition, in order to remain competitiveness in the market, the cosmetics companies have to advance the technology continuously. For example, Estee Lauder Company has applied innovative cell vector technology to produce anti-aging skin care products (Bowler). Nowadays, there are 3 major technologies applied in cosmetics industry, namely Biology engineering technology, Nano technology and the natural plant extraction technology. These 3 technologies are well developed in France with lower costs. The cosmetics company aims to produce more natural products with those high techonologies. Market analysis Customer analysis—Targeting Firstly, LUSH’s target is women from 18 years of age and above market, belonging to a middle class or upper class so that they can have more disposable income to purchase specialty products. LUSH’s second target is men between 20 and 55 years old belong to both classes. Additionally, Customers should have knowledge about environment, sustainability and animal rights issues to have a more detailed understanding about LUSH brand. Competitor analysis The main competitors in natural cosmetics market are Yves Rocher, L’Occitane and The Body Shop. Yves Rocher is a French brand focus on botanical beauty. L’Occitane which comes from France is an international retailer of body and face. The company’s values are: â€Å"Authenticity and naturalness†, â€Å"Effectiveness and pleasure† and â€Å"Respect and responsibility† (l’occitane. com, 2012). The Body Shop, regarded as the biggest competitor will be analysed carefully in this part. The Body Shop, founded in 1976, it was the first main retailer in UK to focus on natural ingredients that were ethically sourced and not tested on animals. In 2006, it was sold to the cosmetics giant L’Oreal (Guardian, 2011). This company sells naturally-inspired products for the body, face and hair etc. It rewards the customers a Love Your Body card which offers a package of benefits including 10% off all purchases for a year and up to ? 20 of free products (Guardian, 2011). LUSH is similar to The Body Shop in many ways. For instance, both offer similar products such as soaps, creams etc. Both persist on the same value of ethical sourcing with no testing on animals and environmentally-friendly production techniques. But in terms of size and scale, the Body Shop occupies the first place, while in terms of social media engagement, LUSH Company trumps The Body Shop (Esposito, 2010). According to a in-depth analysis of the Facebook page of these two companies, the Body Shop Facebook page adopts a more official tone of engagement, announcing special offers to promote its products. The LUSH facebook adopts a more personal and conversational approach. The separate group called Lush Times enables the customers to post pictures of them using the products, drawings and reviews, therefore building a deeper and close relationship with the customers (Esposito, 2010). 3. Marketing objectives LUSH Company aims to gain a modest growth in total retail sales with an ncrease of 5% till December 2012. Refresh and review a series of products to ensure at least 30% of the target shows likelihood to buy. Enhance awareness of LUSH core brand and its unique values. Build loyalty to brand products to ensure at least 15% of the target becomes repeated buyers. Expand more LUSH shops in France with approximately 3 shops every year. 4. Recommendation of marketing strategy Differentiation and positioning Product innovation There are many innovative products such as bath ballistics, solid body tints, dusting powders, massage bars, shower jellies and solid perfumes. LUSH takes â€Å"food† as the theme of its handmade bath products, some products are shaped like cakes but you are not supposed to eat them. The products are made of raw organic ingredients that have little or no preservatives. â€Å"Freshness† is a distinguished feature of LUSH. LUSH products are handmade in factories throughout the world, they are made in small batches according to the orders from each store to guarantee the freshness of the product. Thus, the products will not be older than four months and have a shelf life of only 14 months (Lush. co. uk, 2012). Lush company sticks to solid principle to develop solid products which don’t need preservatives or much packaging such as solid shampoos, solid conditioners, soaps, solid massage bars and solid bath oils, etc. It is better for the environment (Lush. co. uk, 2012). One of the characteristic that differentiate Lush from its competitors such as The Body Shop is handmade. Lush prefer people in big kitchens to make the products rather than by industrial machines. There is transparency in detailed labels to tell you when the products were made and who made it. As you walk along the street where there is a lush shop, you can smell the fragrances from far. When you pass by the window, you realize that this is the place diffusing the pleasant fragrance onto the street, and then you enter the shop naturally. This is the charm of Lush shop. Besides, Lush can cut the soaps to size depending on how much the customer wants. So the soaps are sold by weight. Based on the differentiation of Lush Company, the positioning of Lush will be the fresh handmade cosmetics focusing on natural characteristics of beauty with high ethical values and high customer relationship quality. 4Ps Strategies Pricing strategy Pricing is a significant strategic tool as it can position the products. Lush offers customers with good value. Approximately 65% of the products are selling under $10. The most popular soaps should sell between $4 to $6. In general, LUSH products usually priced less compare with other cosmetics companies like the Body Shop but more than the price of local supermarkets. Besides, Lush Company can offer good discount for people by giving a loyalty card with a 10% off. Place stategy Since Lush is doing business in 43 countries, they can adopt a multi-channel strategy with different outlets distributing which can lead to less delivery charges. They can run a mail order operation and sell its products online. With a wide range of products, they can use a mail order catalogue for cross-selling products for the existing customers. In addition, the Lush stores should locate in primes areas such as high end business and shopping area. Promotion strategy There are many promotion means for Lush. Firstly, Lush can use in-store advertising to advertise their products as well as celebrity endorsement. The influence of celebrities cannot be ignored. If the idols show interest in one particular product, their funs would follow the taste. Also lush can print advertisement on fashion magazines, doing advertisement on popular TV shows, talk show and online advertising with online media such as Facebook and Twitter etc. Secondly, word-of-mouth will be one way of seeping into the market. In this case, customers love our brand and they share the Lush experience with their friends or families. A good reputation is important for personal recommendations. Thirdly, lush can rely on public relations to build a good reputation for its brand by doing charity. For instance, Lush as created the Charity Pot body lotion aims to raise money and awareness about charities (Lush. com, 2012). Furthermore, with the development of e-commerce, it is effective for Lush to start their online sales through its official website. Product strategy In terms of environmentally friendly packaging, the transparency of detailed labels is needed. The products are â€Å"naked† or only use recycled plastic and paper bags. Besides, Lush can offer free gift for potential customers or offer loyalty cards to build close relationships with customers. Additionally, good customer service is important. The staffs in Lush should be patient enough to educate the customers about their products and the value of their company. For example, what is the expiry date of one product? Does the product involve natural and organic ingredient? Does the product include preservatives? Etc. 5. Conclusion In conclusion, there is no denying that there are some threats exist in the market, however, France has a strong economy and stable political environment to ensure a sustainable development of cosmetics market. Besides, the changing of values of public and the need for natural and organic cosmetics can stimulate the sales of natural products. Therefore, French market is really attractive for LUSH Company. Although the competitor the Body Shop occupy the first place in terms of scale and size, LUSH can differentiate itself by introducing innovative products and become quite popular as the fresh handmade cosmetics. Furthermore, in order to expand Lush’s market share, Lush continues to offer customers good values, advertising the products by celebrity endorsement, word-of-mouth advocacy, sticking to the environmentally friendly packaging, establishing close relationships with customers by offering loyalty cards and free gifts. Green and natural products are the mainstay of the LUSH Company as this brand focusing on using fresh organic fruits and vegetables, natural essential oils and safe synthetics to produce their products. Also, the policy of no animal testing for any of the product ingredients is highlighted by LUSH Company. Based on these long-standing commitments to the environment, LUSH embrace their cores values and gain the trust from their customers.