International Marketing The Cosmetics Industry Estee Lauder vs. Shiseido Cosmetics. Wang July 8, 2005 BAD 491 Introduction The cosmetics business is a billion dollar industry. Every year, women are responsible for consuming millions of cosmetic products. The cosmetics industry is so large because of several factors. The media is a huge contributor to the intense pressure to look a certain way. The idea that "sex sells" is evident in gossip magazines, movies, advertisements, music, and more subtly- in the business world.
People first notice what race someone is, how beautiful or ugly they are and what clothes they are wearing. Beauty is skin deep; however, first impressions are usually what others use to base their personal judgments. In the business world, people are expected to dress appropriately and carry themselves appropriately. Studies reveal that better looking people on average earn more than their peers. Obese applicants are discriminated against because of their larger appearance. Sadly, how one dresses and appears is often the determinant of the amount of respect one receives.
Cosmetics can pessimistically be seen as a group of products which feeds on either people's insecurities or egos. Optimistically, cosmetics can be a product which helps us bring our best face forward. The desire to look beautiful, young, and sexy does not only apply to women, but men as well. Cosmetic companies are highly competitive with one another. To remain competitive, companies feel the pressure to come out with innovative products. In the past few years, cosmetic companies are expanding their product lines to include products for men.
In addition to music, beauty is also the universal language. The popularity of cosmetics in China is growing with the economy. The government's change towards a more market-based economy has opened flood gates of opportunities for its people and foreign companies. Cosmetic companies in the industry have seen an overall growth. Personal Experience My travels in China resulted in an increased awareness of the similarities and differences that I have from mainland Chinese women. In my observations, I can confidently say that most women in China do not wear makeup on a daily basis compared to women from America.
I believe this has to do with cultural differences and economic differences. In America, having sex appeal is emphasized more than having intellectual appeal. Whereas in China, there is more pressure for their young to study hard and work hard than to look pretty. I met students in China who had never gone to the bars before, especially with American students, and there were many students who still chose not to make an exception because they are responsible. Don't get me wrong, I believe that the Chinese do care about looking pretty, but they will not put precedence of looking attractive if it means it will prevent them from getting things done. I also visited a shopping mall in Shanghai.
A particular department store offered a variety of cosmetic brands, most of which I recognized and am familiar with. I was surprised to see that Maybe line, a cosmetic brand sold in discount stores such as Target, had a large kiosk complete with sales representatives. Although there were a variety of American and European cosmetic brands being offered at this department store, about half were advertised with European models. I expected to see predominantly Chinese or Asian models. In Nebraska, we seldom ever see any Asian models featured in cosmetic advertisements because there isn't a large demographic of Asians here, but the difference is that China does not have a highly contrasting, diverse, racial population. So, it would have seemed logical to expect Chinese faces in all cosmetic / retail advertisements, but it wasn't so.
The Products Cosmetics are almost a universal product for women around the world. According to market research, four out of five women wear makeup (market research. com 2005) and use skin treatment products. Many women enjoy buying and wearing makeup because of the makeup, in general, makes them feel good about themselves. The main purpose of cosmetics is unmistakable- to make you prettier.
Women wear varying amounts of makeup depending on the occasion, the time of day, or just personal preferences. Makeup can be broken down into categories. Skin makeup consists of foundation, concealer, powder, and blusher. Eye makeup includes: mascara, shadow, liner, and brow definer. Lip makeup is comprised of products such as lipstick, lip gloss, and lip liner. The generation of Baby-Boomers are growing older and living longer.
The struggle to stay young has created a demand for a cosmetic product that slows down the hands of time. Many cosmetic companies have developed products that promise to erase wrinkles, lift and firm skin on our faces, and smooth out blotchiness created by age spots. Estee Lauder's Idealists Skin Refinishing line promises to do all that. The products range from US$46 to US$85 (EsteeLauder. com 2005). These miracle serums and lotions have a price tag many consumers in China still may not be able to afford. Skin treatment products are often sold next to the cosmetics, but in reality are not cosmetics themselves.
Skin treatment products are created with the purpose to improve the natural condition of the skin rather than purely the aesthetic. Cleansers, astringents, toners, acne medications, sunscreen, and lotion all help the skin stay healthy and free from blemishes. In the past, it used to be that consumers with sensitive skin had a harder time finding cosmetics and skin products that don't irritate their skin. Now, with advanced technology, an awareness of the demand for research and development, companies have made products for consumers with sensitive skin. Shiseido is such a company with products that care of delicate skin...
Shiseido offers a wide selection of skin treatment products as described above. They produce many different skin care product lines which are targeted towards different age groups and specific beauty concerns. Shiseido's "Bene fiance" skin care line addresses the aging woman's struggle to stay looking young and free of wrinkles. The products in this line have prices ranging from US$35 to $75. The "Optimal Balance" skin care plan calls for a daytime / nighttime moisturizing protestant against the sun's harmful rays, which cause skin cancer and premature wrinkles. It can be used in conjunction with other Shiseido skin care products, and costs between US$28- $45.
A new skin care line appropriately called, "The Skin Care", attempts to draw people in with the slogan, "new strength from deep within" (Shiseido. com 2005). Estee Lauder also has a skin care line which was developed for the correction and reduction of fine lines and wrinkles. Their ground-breaking Anti-Wrinkle Retinol Treatment cream costs $80 for 1.7 ounces. Retinol is renowned for helping correct the look of deep lines and dark spots.
The product is aimed to reduce laugh lines, crow's feet and lines around the mouth. Shiseido has a product which is targeted directly towards its domestic consumers in Japan. The brand carries a skin-whitening cream, called "White Lucent", that acts as a gentle bleach for the skin. In Asian countries- specifically Taiwan, Japan, and China- it is not desirable to have dark skin or increase your chances of skin cancer. Just as there are tall and short people in every race, there are dark and light skinned Japanese, Chinese, and Taiwanese people. It is typical to see Chinese women wear long sleeves and pants in hot and humid weather.
People walking outside will wear over-sized visors and have an umbrella over their heads. The difference is like night and day when comparing these attitudes with the U.S. where people go out of their way to get scorched by the sun. Estee Lauder has a product which mimics Shiseido's White Lucent cream, called the "White Light EX Brightening System". Estee Lauder's version includes the Extra Brightening Cleansing Foam for $27, the Lotion Treatment for $32.50, and the Moisture Lotion for $40. Shiseido's products cost more: Whitening Softener costs US$43, Clarifying Cleansing Cream is $32, Whitening Compact goes for $35, Whitening Eye serum sells for $45, and Toner is $43. At this point, Estee Lauder has more products available for men.
However, Shiseido has a more diversified selection to choose from. Estee Lauder has many products to sell for men, including deodorant, hair and body wash, aftershave, and cologne. Shiseido takes men's products a step further and offers products like: Anti-Shine serum, Eye Soother, Total Revitalizer, Moisturizing Emulsion, Deep Cleansing Scrub, Cleansing Foam, and Hydrating Lotion. The price range of these products goes from $20 to $60. The "Total Revitalizer" is the most expensive, featuring "Damage Defense Complex", which fixes fine lines and protects against environmental stress and dryness. Shiseido is currently trying to draw strength from a diversified product line.
They are starting to see stagnation in the growth of their toiletries department and have decided to strategically change the direction of their company to focus more on the cosmetics side. They company has a new line a beauty products aimed towards men. There is now a push for men to be less homophobic and more "metro-sexual", which means that it is okay for men to care about their looks and health. The Service Both Estee Lauder and Shiseido have cosmetic representatives who are trained to be able to answer any questions about the products as well as demonstrate the products on themselves or on the potential client him / herself. The personal attention customers get is part of the product that both companies provide at the cosmetic counter.
Shiseido is a company concerned with the environment. To reduce waste, makeup containers such as compact cases and foundations bottles, can be refilled at any Shiseido location. Customers enjoy getting the same amount of makeup that they had bought originally for a lower price. Promotion Cosmetics can be both sold at retail stores or directly through door-to-door beauty consultants. Shiseido's products are sold internationally at fine retail department stores and also convenience stores in Japan. The plan to sell their products in convenience stores seems strange at first, but this promotion strategy works because there is a demand that is being met in doing so.
By selling some products at convenience stores, Shiseido is making their product available to the consumer anytime, anywhere. Estee Lauder is the first to come up with the concept of "gift with purchase" (EsteeLauder. com 2005). The concept has been very successful with Clinique, one of Estee Lauder's companies. The "gift with purchase" makes customers feel like they are appreciated, and the samples in the gift help promote the brand's other cosmetics and skin care products. The Shiseido cosmetic line is promoted mostly visually. Both Asian and European models are used in their high-impact, colorful ad-campaigns.
The makeup company wants to make the statement that with their makeup, you too can be a work of art. In China, the European look is still a look that many young Chinese women strive to imitate. In addition to their visual advertisements, Shiseido's reputation, strength in innovation, and research and development helped promote their product in the European markets -where 41.9% of their revenue comes from (Shiseido. com 2005). The skin care line is the most famous. Shiseido has received awards for their research and development accomplishments as well as recognition from French makeup artists, like Tom Peche ux, who praises the Shiseido makeup because he believes "the products operate on several levels, to create a more matte, reflective or iridescent complexion" (Shiseido. com 2005).
Place / Distribution Estee Lauder is an example of an American cosmetic company which has been enjoying its international reputation as one of the world's leading cosmetic lines in over 100 countries. The company was founded in 1946 by Estee Lauder in New York City, where the company is also headquartered. The brand can be found in upscale department stores around the world. Their cosmetics products blend high fashion and beauty into a simple product. Big competitors include L'Oreal, Avon, and Proctor & Gamble. Shiseido is ranked fourth globally.
Founded in Ginza, Japan in 1872, the cosmetic giant began producing makeup for the Japanese / Asian woman. Shiseido captured the Japanese market and secured other Asian sectors early when they celebrated the Asian look rather than trying to totally westernize it. Examples of big competitors include: L'Oreal, Revlon and Procter & Gamble. The current world headquarters are in Tokyo, Japan.
Distribution centers are located in Japan, China, the United States, and Europe. Some of the cosmetics are shipped by ferry, which is more environmentally friendly. Globalization is on the minds of many large companies who are not already in China. Capturing part of the Chinese market early could help businesses gain a competitive edge by getting a jump start on understanding the tastes of the people. If cosmetic companies choose to expand their business operations in China, it would be advisable to do more market research into the demographics and current cultural trends.
If Shiseido or Estee Lauder wishes to expand their men's product line in China, they should set up a few kiosks in the larger cities. Price Estee Lauder and Shiseido's pricing are about the same as one another. Shiseido creates value by understanding their customers and offering a high quality product at a deserving price. Shiseido keeps their customers in mind and aims to create products that fit their needs.
The factors which affect the final prices of the product are the raw material costs, research and development expenses, distribution fees, and any tariffs charged during international trade. At the current prices, it is not yet affordable for the most Chinese women or men to buy cosmetics from Shiseido or Estee Lauder. Americans on average are in more of a position to afford these cosmetics. However, there is much anticipation and expectation for businesses to grow with China's expanding economy.
Estee Lauder Corporation. Esteelauder. com. 29 Jun. 2005.
Market Research. Com. 1 Jul. 2005.
Cosmetics & Toiletries in China: A Market Analysis". . Shiseido Corporation. Shiseido USA. 29 Jun. 2005.