1) The document provides market data on market share, sole loyalty, and customer duplication for 8 cosmetics brands, including 3 prestige brands (Christian Dior, Estee Lauder, Shiseido). 2) Analysis of the data shows that bigger brands have higher market share and loyalty, consistent with the "double jeopardy effect", while prestige brands have higher-than-expected loyalty given their smaller size. 3) Dior's main competitors are Estee Lauder and Clinique based on high levels of customer duplication; the best strategy for Dior growth is likely reducing duplication with these brands to take a share of their customers.

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“Understanding Dior Customers”
Developed by Cllr Dr Maxwell Winchester,
Senior Lecturer, Harper Adams University College, and
Research Associate, Ehrenberg-Bass Institute, University of South Australia
____________________________________________________
Abstract
"Understanding Dior Customers” is an exercise in using and interpreting brand performance
measures (penetration, cross purchasing, etc.). This case has been adapted from the
“Armed to the Teeth” exercise in understanding buyer behaviour, developed by Andrew
Ehrenberg, Mark Uncles, Doug Carrie and John Scriven (2000). This fictional case uses real
data and results presented at the Thought Leaders International Conference on Brand
Management in 2007 (Romaniuk & Winchester, 2007). While the sample size was small, it
is sufficient to allow students to get an understanding of some basic market patterns that
have been shown to hold across many industries and countries.
Introduction
Carrie Jones had been thrilled to be offered employment as a brand co-ordinator of a
leading cosmetics company following her graduation. She had always been passionate
about fashion and particularly luxury brands, so to be offered a position at Christian Dior in
the cosmetics area was a dream come true. In order to familiarise herself with the
cosmetics market, her direct line manager had asked her to propose how the Dior
cosmetics brand could grow their brand in the marketplace. She asked her market
research manager to supply some basic brand measures and has asked you to act as a
consultant to the project. Your task is to explore market patterns and propose growth
plans for the Dior brand. Carrie has asked your advice on how to grow share for the Dior
brand. Consider how would recommend they go about achieving such a goal. Possible
methods for growth could be:
1. Getting existing customers of Dior products to buy the brand more often.
2. Getting buyers of other brands to switch to the Dior brand.
3. Getting previous non-users of cosmetics to enter the market (for example, men have
been recently targeted in this manner to expand the market).
4. Introducing a line extension or product variant. For example, Dior with SPF factor sun
protection.
5. Launching a completely new brand as a method of gaining market share.
6. A mixture of the above options.

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To consider the feasibility of the above options, you have asked the market research
manager for information about the market in terms of who the customers are and how
often they buy. For example, in deciding who to target and how to position the brand, it is
important to know whether Dior’s current sales are due to either just a few highly loyal
customers, or to many customers who buy it occasionally as one of a wider ‘portfolio’ of
brands. It is important to know whether the Dior brand differs from its competitors in
these respects and if so, how and why? There are some long-standing patterns that will
need to be considered in your interpretation.
For example, it has been well established that bigger brands tend to get not only more
customers, but it gets them buying their brand more often. This bias in customer loyalty is
known as the Double Jeopardy Effect (McPhee 1963; Ehrenberg, Goodhardt et al. 1990;
Ehrenberg and Goodhardt 2002).
It is also established however that premium or prestige brands can get more loyalty than
non-premium/prestige brands (Phau 2000; Prendergast and Wong 2003). For example,
Colombo, Ehrenberg and Sabavala (2000) found that Mercedes Benz obtained more repeat
purchasers than expected for its brand size and also found that loyalty to a group of
prestige brands such as Mercedes-Benz, BMW, Porsche and Volvo was higher than for other
brands (Colombo, Ehrenberg et al. 2000).
Carrie has forwarded you a request to interpret market share figures, solely loyal figures
and a duplication of purchase table. In this market, three of the eight brands are
considered prestige brands, this categorisation being determined by previous literature and
a pilot study. The prestige brands are Christian Dior (Dubois and Paternault 1995; Nueno
and Quelch 1998; Phau 2000); Estée Lauder (Dubois and Paternault 1995); and Shiseido
(Dubois and Paternault 1995). While Revlon had been cited as prestige (Dubois and
Paternault 1995), a pilot study conducted with marketers was virtually unanimous that it
should not be considered a prestige brand (Romaniuk & Winchester, 2007).
A. Market Share:
The first set of figures you are given are for the market share of each brand. Market Share
is a brand size measure that shows the proportion of a market (in terms of sales or product
sold) allocated to each brand.
Market
Share %
Revlon 25
Oil of Olay 20
L’Oreal 14
Clinique 12
Estee Lauder (P) 11
Christian Dior (P) 7
Elizabeth Arden 6
Shishedo (P) 4
Total 100%
As can be seen in the above table, the prestige brands tend to be the smaller brands in this
market. Would you expect these figures to change considerably when looking at data for a
month or a year? Why or why not?

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B. Sole Loyalty:
The next set of figures provided gives an insight into the proportion of solely loyal users (as
in, a customer who exclusively used that brand within the interview period).
Sole
Loyalty
%
Revlon 45
Oil of Olay 21
L’Oreal 20
Clinique 16
Estee Lauder (P) 28
Christian Dior (P) 21
Elizabeth Arden 5
Shishedo (P) 29
Average 23
What are your observations about how sole loyalty differs between big and small brands
and prestige and non-prestige brands? Why might this the case?
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4. An Open Educational Resource Provided by Victoria University
This work is licensed under a Creative
Commons Attribution-Non-Commercial-No
Derivative Works 3.0 License.
© 2011 Victoria University
Attribution: Dr Maxwell Winchester
To view a copy of this licence, visit:
http://creativecommons.org/licenses/by-nc-nd/3.0/
C. Duplication of Purchase:
One of the common forms of analysis of purchase data is ‘duplication tables’ (Dawes,
2007). Such tables compare the proportion of a brand’s customers who purchased other
competing brands within the time period of interest. Such a duplication table that relates
to the cosmetics market is presented below.
% who also bought…
% used Revlon L’Oreal Oil of Olay Estée Lauder Clinique Eliz. Arden Dior Shis’do
Revlon 61 57* 68 53 53 44 35 24
L’Oreal 59 59 52 43 45 38 31 23
Oil of Olay 59 70 52 47 47 40 30 24
Estée Lauder (P) 43 75 59 64 56 52 43 35
Clinique 39 83 69 71 63 53 49 35
Elizabeth Arden 32 84 71 74 71 65 56 34
Dior (P) 26 84 71 69 72 73 69 44
Shiseido (P) 19 78 71 75 80 73 58 60
Average 42 76 64 68 61 59 51 43 31
Estimated sharing 82 79 79 58 52 43 35 25
Deviation -6 -15 -12 +3 +7 +8 +9 +6
*interpreted as 57% of people who bought Revlon also bought L’Oreal
(Source: Romaniuk & Winchester, 2007)
What main pattern is evident in the table above? How does customer sharing differ
between large and small brands?
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What exceptions are there to any main patterns you have described?
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5. An Open Educational Resource Provided by Victoria University
This work is licensed under a Creative
Commons Attribution-Non-Commercial-No
Derivative Works 3.0 License.
© 2011 Victoria University
Attribution: Dr Maxwell Winchester
To view a copy of this licence, visit:
http://creativecommons.org/licenses/by-nc-nd/3.0/
What does this tell you about Dior’s main competition in the market?
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If Dior was to lose sales to other brands, which brand(s) is it most likely to lose share to?
Do you have any observations about positioning of brands or the segmentation of the
market?
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If Dior was to increase sales by taking share from other brands, which brands is it most
likely to take share from?
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Can a target of growing Dior’s sales be reached by making existing buyers of the brand buy
it twice as often? Can it be done by reducing the duplication of purchasing other brands?
What do you think is the most appropriate strategy for brand growth?
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6. An Open Educational Resource Provided by Victoria University
This work is licensed under a Creative
Commons Attribution-Non-Commercial-No
Derivative Works 3.0 License.
© 2011 Victoria University
Attribution: Dr Maxwell Winchester
To view a copy of this licence, visit:
http://creativecommons.org/licenses/by-nc-nd/3.0/
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Insights, Marketing Research Spring 2002: 40-42.
Ehrenberg, A. S. C., G. Goodhardt, et al. (1990). "Double Jeopardy Revisited." Journal of
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Nueno, J. L. and J. A. Quelch (1998). "The mass marketing of luxury." Business Horizons
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infant apparel: an exploratory study in Hong Kong." Journal of Consumer Marketing
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Romaniuk, J. & Winchester, M.K. (2007). The Perceptions and Loyalty of Prestige Brands.
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