Marketing Assignment: Product Launch By Sephora

Question

Task: You are a product manager for one of LVMH brands, you are required to develop a new product for launch into the Chinese market to address the issues outlined in the above case. You are required to provide report to the Board outlining the reasons for the choice of the new product.
You will produce a 1200 word (+/- 10%) report for the Executive Committee that describes the following key areas:
1. Describe the new product
2. Undertake a SWOT analysis to support your decision.
3. Undertake STP (segmentation, targeting and positioning) analysis to support your decision.
Papers must be submitted via the Turnitin link on Moodle by the due date. Late submissions will loss 5% per day up until day 5. After this a zero mark will be awarded. Papers must be submitted in Microsoft word using the Harvard referencing system

Answer

Introduction
LVMH Moet Hennessy Louis Vuitton explored in the marketing assignment is one of the largest conglomerate company in the world specialized in manufacturing ofhousehold and luxury products with $194.3 billion market capital.LVMH owns 75 brands which mainly includesluxury fashion product, jewelry, beauty products wines and spirits. It is founded in 1987 and is based in France.It ranked 75 in Forbes list of World’s most innovative companies in 2013.$60.1 billion revenue observed in the year ending 2020.With the economic downturn around the world, it has affected many industries and one of the most impacted industries is company manufacturing luxury products(LVMH,2020).

What is the background of the brand explored in the marketing assignment?
Sephora is one of the brands of LVMH that comprises of cosmetics, skincare, fragrance and other beauty products.In 2018, Fast Company honored Sephora by ranking at 36th position in the list of World’s most innovative companies.

Description of the product
As per the investigation on marketing assignment, it has been observed that there is a great increase in consumer consciousness regarding the use of organic products. Sephora is launching a new range of customized organic products.With the market analysis, the need and preferences of consumer has been identified. Considering consumer’s taste and preference, there is a requirement to bring organic toiletries and various beauty products which are sulfate free and are natural without using chemicals. The unique selling proposition of this whole new range of organic product is including customization of products. Customers can customize their shampoos, cosmetics and other beauty products as per their skin and hair nature. Everyone has their own skin type and hair texture. It is stated in the marketing assignment that Sephora is bringing a range of organic product where customers can customize as per their requirements. Sephora newly launched range of customized beauty product are a great initiative towards sustainable development. Since, there is no harsh chemical present in the products; there will be significant growth in the economies of scale.

Reason of choosing the product
After reviewing the product and its qualities, it has been determined to introduce product range in the best interest of the company and its investors/ shareholders.There are great benefits of using organic products as they don’t contain harmful ingredients, they are non- allergenic, work better than chemical products, various skin and health benefits and the most importantly it helps in preserving environment. With the increase in awareness towards environment and health/ wellness, there is a much scope of organic beauty products in the global market(Oancea, et. al., 2017).

Issues observed related to Chinese market
Chinese shoppers play a great role in LVMH’s market share, that is the reason industry would be hit hard if the shoppers in China market boycott or restrict themselves from buying LVMH’s product range. It has been observed that political issues or tensions around the world has impacted the market a lot. A trade dispute between America and China has turned into a trade war around the world because of which there is a pullback by China’s big spending shoppers. Further, it has been evaluated in this part of marketing assignment that there is no scope of negotiations in the countries; therefore ending of dispute has reach to an impasse. All these issues have affected the fall in share price which was considered as at all-time highest share value. China’s economic downfall is another reason which has affected fall in the revenue generated from the China division(Godement, 2016). Spending capacity of Chinese people because of economic issues in the country has greatly influenced the profitability of LVMH and other peers in the same industry.

SWOT Analysis
It is a technique for assessing the strengths and weaknesses of the organic beauty products to be launched in the Chinese market.And further evaluating the available opportunities available in the Chinese market for the respective products(Gürel, & Tat, 2017). With the help of analysis done in the marketing assignment, it has been observed that- Strength-Government of China supports environment friendly products, because of increase in global warming prevailing in the world.And further people are becoming very conscious regarding the health and wellness. This is the reason; organic beauty products have wider scope in the China’s market(Thamaraiselvi, et. al., 2020). Luxury products may get affected with the economic downturn, but organic and natural products that too with available customization will have greater scope. Moreover, brand value ofLVMH is the biggest strength that can help in increase the potential customers in the China market.

Weakness- The key weakness identified in this report on marketing assignment isSephora launches its organic beauty products at a premium price which can only target higher income group. Moreover, it is required to create various platforms to sell the products. Currently there are a smaller number of showrooms and limited number of online portals on which products can be made available. Further customization need time to manufacture product as per the requirement of customers, with limited number of selling platforms, it may create dissatisfaction among customers. Opportunity-There is an increase in awareness of eco-friendly products. There is a range of wide variety of beauty products and products can be customized as per the customer’s requirement based on their skin and hair type. With the high brand value of LVMH, wide potential market can be targeted with little marketing techniques. China consists of the world’s biggest market therefore; it will be great opportunity for Sephora to create a market as per the taste and preference of the target market. Threat-Biggest threat to the wide variety of organic products is the competition in the prevailing market. LVMH has many competitors; biggest threat of cosmetic industry is increase in new brands and competition. Economic downturn of China market is the major concern.

STP Analysis
STP analysis helps in understanding customers and market that ensures in decision making in determining who the potential customers are and how to position them to achieve organizational goals(Hanlon, 2020). Three steps involved in the analysis are discussed below within the marketing assignment-

Segmentation
- The product is developed according to the taste and requirement of China market and the conditions prevailing in the China economy. Targeting the specific market as per the required need and taste will also help in developing branding and marketing techniques by LVMH. It has been identified that China market is shifting their taste in beauty products to more organic and natural products and customers are aware of their skin and hair qualities. Targeting- It has been identified in the marketing assignment that there is an increase of 14% in the revenue of the company’s organic products. Further China is the world’s biggest cosmetic market, with more than 400 million women in the country. It has further observed that there is a demand of customized organic products in the market and not many brand options are available for the customers.

Positioning- LVMH is facing competition with many available brands like Burberry, kering and others, but there is much scope for the company in customization of organic beauty products. Therefore, there is an opportunity for Sephora to launch organic product in the China market with comparatively low price to target mass potential customers. With the help of STP analysis, it has been identified that there is a vast scope of customized organic beauty products market inChina, but it has been observed that products are required to launch with comparatively less price to target huge market.

Conclusion
It can be concluded from the overall discussion on marketing assignmentthat China is a huge market, and to target the Chinese market at the time of economic downfall and various external environment issues like trade war between America and China has impacted the world’s trade market a lot.It is necessary to launch a product in the China market as per their taste and preference. With the help of SWOT and STP analysis it has been identified in the above context of marketing assignmentthat customized organic beauty products have a huge scope in the respective market.

References
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International Social Research, 10(51).

Hanlon.A. 2020.The segmentation, targeting and positioning model.[Online].Assessed from.https://www.smartinsights.com/digital-marketing-strategy/customer-segmentation-targeting/segmentation-targeting-and-positioning/

Godement, F., 2016. China's market economy status and the European interest. European Council on Foreign Relations..

LVMH.2020. Company Profile.[Online].Marketing assignment Assessed from. https://www.lvmh.com/investors/profile/financial-indicators/

Oancea, I.A., Stanciu, T., Barbu, A. and Vlad, A., 2017. DISCOVERING THE BENEFITS OF SOME BIO-ACTIVE COMPOUNDS FROM ORGANIC COSMETICS USING MARKETING & PR. Journal of Science and Arts, 17(1), p.113.

Thamaraiselvi, G., Rani, S., Ramkumar, M., Samundeeswari, S. and Pradeepa, D., 2020. Consumers’ Preference towards the Usage of Organic and Non Organic Food Products. International Journal of Psychosocial Rehabilitation, 24(05).