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L'Oreal Brandstorm - Kiehl's


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Presentation on Kiehl's prepared for the L'Oreal Brandstorm 2014 competition.

Published in: Marketing

L'Oreal Brandstorm - Kiehl's

  1. 1. L’Oreal Brandstorm 2014 BrandStars Team Ada Kuzniar, Annelise Sealy, Daisy Plowright London College of Fashion (UAL)
  2. 2. Market Overview •  According  to  data  provided  by  L’Oreal,  the  global  beauty  market  is   worth  87.2  billion  Euros.     •  The  men’s  global  beauty  market  is  worth  7.58  billion  Euros,  with   men’s  fragrance  accounting  for  7%  of  the  market  share  and  only  1%   accounting  for  men’s  skincare.   •  From  2007-­‐2012,  the  global  men’s  grooming  market  grew  31.8%   (Euromonitor,  2014).  
  3. 3. Kiehl’s Top Markets & Products
  4. 4. The UK Market •  In  2012  the  men’s  grooming  market  grew  5%  to  reach  sales  of  £1.1  billion  (Euromonitor,  July  2013).     •  Men’s  hair  care  was  the  fastest  growing  category  in  2012,  posting  a  16%  value  gain,  followed  by  skin   care  with  8%.     •  Procter  &  Gamble  remain  the  leading  player  with  a  31%  share  of  sales  (Euromonitor,  July  2013).     •  According  to  a  survey  of  1,250  men  and  women  in  the  UK  aged  between  18  and  45  by,  men  are  now  spending  as  much  as  women  on  personal  care,  with  86%  of   them  regularly  using  moisturiser  (Euromonitor,  July  2013).    
  5. 5. Kiehl’s Brand Identity Prism
  6. 6. Kiehl’s 4Ps PromotionPlace PriceProduct Unisex  product  offer.   Men’s  speciZic  products  include   moisturisers,  cleansing  and   shaving  preparation,  eyes  and   lips,  shower  products,   antiperspirants  and  deodorant,   hair  products.       Unique  packaging,  made  from   recycled  materials.   Premium  prices  ranging  from   £16.50-­‐£38  in  their  moisturiser   category,  £8.50-­‐£25  in  hair  care,   and  peaking  at  £38.50  for  their   signature  scent.  (Prices  in  their   broader  ranges  exceed  this  e.g.   youth  regeneraCng  creams).         Generous  with  free  samples.     Presence  in  44  territories.   Selective  distribution.   Department  stores,   freestanding  stores  and  online.     Strong  in  travel  retail  presence,   having  stores  situated  in   airports  and  train  stations.   Online  use  of  promotional  codes,   e.g.  for  free  shipping.   Strong  associations  with   charities  and  community  groups   Use  of  social  media,  interacting   with  the  customer  and  creating  a   dialogue  on  Facebook.  
  7. 7. Kiehl’s Communication Mix Awareness  is  driven  primarily   through  “word  of  mouth”:   utilizing  sampling,  PR  and   digital  communication.   Traditional  advertising;   speciZically  television  or  print   advertising  is  not  a  part  of   Kiehl’s  business  model.  Kiehl’s   was  built  on  sampling   philosophy:   “Try  before  you  buy”.     Leadership  in  service:     For  over  160  years,  Kiehl’s   has  been  committed  to   providing  customers  with   exceptional  service,  personal   consultations,  and  generous   samples  of  their  efZicacious   formulas.   All  customers  receive   personalized  service  “We  are   here  to  serve  you”     Kiehl’s  is  targeting  ultimate   consumer;  Makes  use  of  a  variety   of  formats:  sampling,  promotional   codes,  online  contests  and  store   events.  Actions  attract  attention,   offer  strong  purchase  incentives,   and  are  supporting  building  long-­‐ term  brand-­‐customer  relationship.     Kiehl’s  PR  is  based  on  3   pillars:     Brand,  Heritage  Skincare   and  Philanthropy     Mainly  online  marketing.  Kiehl’s   actions  are  customized  and   interactive,  especially  when  it   comes  to  social  media,  yet   discreet,  as  they  want  to  over-­‐ expose  and  dilute  the  brands.     Advertising Personal Selling Sales Promotion Public Relations Direct Marketing
  8. 8. Kiehl’s UK Competitors Premium Mass Market Lower Price Higher Price
  9. 9. The Kiehl’s Customer The  Trendy  Trier      Age:  26      Resides:  Dalston.    Occupation:  Marketing              manager  at  a  fashion  brand.    Earns:  £30-­‐50k  per  annum     The  Trendy  Trier       Age:  31    Resides:  Pimlico/Marylebone.    Occupation:  Lawyer,  based  in  West      London.    Earns:  £50-­‐70k  annum     The  Proactive  Professional       Age:  45   Resides:  Surrey.   Occupation:  Works  in  Zinance.   Earns:  £70k+    
  10. 10. UK Consumer Trends •  Men  are  willing  to  take  more  care  of  their  appearance  and  are  increasingly   interested  in  having  the  tools  to  do  so  (Euromonitor,  June  2010).     •  The  recent  trend  towards  facial  hair  has  resulted  in  a  decrease  in  the   proportion  of  men  using  shaving  preparations  (Mintel,  2013).     •  Trends  for  the  older  demographic  include  anti-­‐ageing  and  Zirming  products   (Euromonitor,  June  2010).     •  Nutricosmetics  is  also  thought  to  become  a  trend  (Euromonitor,  June  2010).  
  11. 11. The Macro-Environment - PESTEL •  Political  unrest  in  the  lead  up  to  the  2015  general  election.   •  Scottish  independence  could  lead  to  the  demise  of  ‘the  economic  beneZits  of  being  a  bigger  country,   greater  international  clout,  connections  between  people  and  the  cultural  impact  of  the  UK’  (BBC,  2014).   •  Cap  on  pension  charges  to  be  introduced  in  2015  (BBC,  2014).   •  The  UK  economy  grew  by  1.9%  in  2013,  its  strongest  rate  since  2007  (Sellgren,  2014),  and  is  set  to   grow  by  2.%  in  2014  (BBC,  2014).   •  The  unemployment  rate  has  fallen  from  7.7%  in  August  2013  to  7.1%  in  November  2013  (O’Connor,   2014).  Employment  growth  is  expected  to  continue,  together  with  starting  salaries  increasing  across   the  UK  (Groom,  2014).   •  AGR  predicts  that  graduate  job  vacancies  will  rise  by  10.2%  in  2014  (Howse,  2014).   •  Interest  rates  not  to  be  raised  until  UK  unemployment  falls  to  7%  (Peston,  2014).   Political   Economical   Social   Technological   Environmental/ Ethical   Legal   •  Universities  face  a  funding  cut  of  £125m  next  year,  which  is  likely  to  affect  disadvantaged  students   the  most  (Warrell,  2014).   •  75%  of  people  use  their  phones  while  on  the  toilet  (Drewett,  2013).   •  Threat  of  cyber  criminals  hacking  bank  accounts  through  online  shopping  –  banks  are  increasingly   concerned  with  cyber  security  (Arnold,  2014).   •  1.5  billion  smartphones  and  tablets  will  be  installed  globally  by  mid  2013  –  overtaking  laptops  and   PCs  (Millward  Brown,  2012).   •  Consumers  are  becoming  more  ethically  and  environmentally  aware  (Euromonitor,  June  2010).   •  The  government  is  promoting  new,  more  ethical  scientiZic  research  techniques  in  order  to  replace,   reZine,  and  reduce  the  use  of  animals  in  research  (Morgan,  2014).   •  Several  UK  banks  have  been  subject  to  theft  of  conZidential  information  of  customers.  The  most  recent   is  Barclays  having  the  data  of  27,000  customers  stolen  (Arnold,  2014).  
  12. 12. Five Forces
  13. 13. The Micro-Environment – Strengths & Weaknesses Strengths 1. Unique)and)authentic)brand)history.) 2. Credible)and)approachable)brand)DNA)with)quirky) personality.) 3. Brand)signature)carried)throughout)all)brand) communications,)including)inBstore)and)packaging) design.) 4. Extensive)background)of)using)herbal)and) medicinal)knowledge)combined)with)natural) ingredients)and)advanced)science.) 5. Reputation)for)innovation)–)in)the)1960s,)Kiehl’s) was)a)top)producer)and)distributor)of) pharmaceuticals)and)medicinal)salves.) 6. Quality)of)the)formula)vs.)expensive)packaging)or) advertising.) 7. Global)retailer)with)distribution)in)44)different) countries.) 8. Leadership)in)service,)including)the)Kiehl’s)“Circle) of)Service”,)personalised)customisation)and) generous)sampling.) 9. Philanthropic)commitments)to)communities)and) charities.)) Weaknesses 1. Low)brand)awareness)due)to)lack)of) advertising.) 2. Men)typically)shop)for)convenience,)and)may) tend)to)stick)to)mass)products)sold)in) supermarkets/convenience)stores.) 3. Hygiene)staples,)deodorants)and)shampoos) appeal)to)the)highest)proportion)of)men,)with) over)nine)in)ten)using)these)products)(Mintel,) 2013).)Kiehl’s)does)not)have)a)range)of) “staples”,)or)deodorants.) )
  14. 14. The Micro-Environment – Opportunities & Threats Opportunities 1. Men’s(grooming(is(one(of(the(most(dynamic( categories(within(cosmetics(and(toiletries.(The( major(markets(are(in(Western(regions( (Euromonitor,(November(2009).( 2. All(zones(for(Kiehl’s(are(in(doubleIdigit(growth(–( MEA(+52%,(Latin(America(+(42%,(Europe(+41%,( Travel(Retail(+34%,(and(Asia(+18%.(It(is(key(to( retain(growth(and(increase(growth(in(the(lower( performing(sectors.( 3. The(UK(men’s(grooming(market(is(forecast(to(see( constant(value(CAGR(of(3%((Euromonitor,(June( 2010).( 4. Modern(marketing(and(PR(capabilities(will(enable( product(and(brand(promotion(and(awareness.( 5. With(the(number(of(employed(men(set(to(increase,( products(with(fastIacting(and(convenient(USPs(can( appeal(to(men(on(the(go.(Men’s(toiletries(will(be( buoyed(by(men(looking(to(maintain(a(professional( image((Mintel,(2013).( 6. Hair(concerns(are(the(most(common(complaints( among(men,(including(hair(loss,(greying(hair,( dandruff,(and(dry/itchy(scalps((Mintel,(2013).( 7. Partnering(with(fashion(retailers(to(show(men( which(grooming(products(complement(which( clothing(styles(can(appeal(to(male(shoppers( (Mintel,(2013).( 8. Multifunctional(products(most(appeal(to(16I24( year(old(men(looking(to(save(money(and/or(time( (Mintel,(2013).( Threats 1. Following(a(strong(year(in(2012,(2013(has(seen( a(slowdown(in(sales(growth(for(the(men’s( toiletries(market,(with(estimated(annual( growth(of(just(0.2%(resulting(in(a(market(value( of(£590(million((Mintel,(2013).( 2. The(Western(European(region(shows(signs(of( stagnating(and(maturing(in(regards(to(the( men’s(grooming(market((Euromonitor,( November(2009).(This(is(also(reflected(in(UK( data(with(minimal(growth(in(the(men’s( toiletries(market(in(2013((Mintel,(2013).( 3. The(Western(European(men’s(hair(care(and( skin(care(markets(experienced(sales(dips(in( 2009,(2010,(and(2012((Euromonitor,(2013).( 4. Shaving(sales(in(Western(Europe(started(to( decrease(in(2009(and(have(not(recovered(to( the(same(level(as(in(2008((Euromonitor,(2013).( 5. Companies(such(as(Lynx,(Gillette,(Unilever,(and( Beiersdorf((Nivea)(dominate(the(UK(market( (Euromonitor,(June(2010).( 6. The(UK(grooming(market(is(predicted(to( decrease(in(2013.( 7. The(big(challenge(for(brands(is(encouraging( men(over(the(age(of(40,(who(show(a(level(of( disengagement(in(the(category,(to(experiment( and(try(new(products((Mintel,(2013).(Brands( need(to(capture(younger(males.( (
  15. 15. Summary As  a  result  of  a  thorough  macro-­‐  and  micro-­‐environmental  analysis,  a  clear  opportunity  is   presented  for  the  25-­‐35  male  AB1  consumer  group.  Once  Kiehl’s  is  introduced  to  them  at  an   earlier  stage  in  life,  they  will  be  able  to  grow  with,  and  remain  loyal  to,  the  brand.  Due  to   Kiehls’   prominent   use   of   digital   marketing,   and   no   advertising,   the   current   promotional   strategy  sits  well  with  targeting  a  younger  consumer.     Within   the   UK,   Kiehl’s   could   take   inspiration   from   a   sense   of   Britishness,   producing   a   product  range  suited  to  young  urban  professional  in  combination  with  the  variable  climate.   This  strategy  would  also  be  successful  in  countries  with  a  close  cultural  and/or  geographical   distance,  as  well  as  cultures  that  admire  the  British  aesthetic  such  as  Japan  (one  of  the  top   Asian  markets  in  men’s  grooming).