Strategic Marketing Analysis Of Lush Cosmetics: Environmental Analysis And Marketing Strategies Essay.

Upon successful completion of this assessment, students will be able to have demonstrated:

Knowledge and Understanding

• Explain the nature of marketing strategy and its significance for the organisation.
• Assess the drivers and factors affecting the choice of marketing strategies.
• Evaluate appropriate models and techniques that aid the strategic marketing process.
• Analyse contemporary marketing issues and problems in a strategic context.
• Research skills.
• Interpretation of advanced information and marketing data handling skills.
• Assessing communications skills to develop effective relationship marketing.

The task is divided into two parts (Part 1 & Part 2) and candidates are expected to address both.

Your task is to identify a brand of facial cosmetics and then analyse, evaluate and prepare an individual report of 3,500 words (+/- 10%) addressing the following issues.

• Using appropriate sources undertake a full marketing audit of your chosen category and brand. Include an evaluation of the current marketing strategy and position in the market.
• Provide a critical evaluation of the brand’s competitive edge (USP) with comparison to the main competitor brands in the marketplace. Demonstrate the brands effectiveness by providing an evaluation of their current market performance in relation to their competitor’s. This should include relevant market performance data to underpin your evaluation, for example market growth, sales trends, profitability etc.
• [Weighting - 50%]
• Based on your Part 1 analysis provide the rationale for the introduction a new product to the range.
• Outline the features / benefits of the new product.
• Identify target segment/s.
• Set clear marketing objectives(SMART) to launch a new product with the aim of increasing brand awareness, market share, sales and/or profitability.
• Recommendations - with application to the marketing mix, recommend a relevant marketing strategy to addressing the marketing objectives.

These suggestions should be your own ideas but may include marketing tactics and strategies used by other successful organisations or companies.

Your arguments, findings and recommendations should be supported by theories, facts and figures published within academic books, journal articles, recognised business magazines and market intelligence reports.

N.B.Please note the maximum word count excludes Appendix and References. Assignment Structure:

This is an individual assignment as a single report in two parts. Candidates are encouraged to be creative with their analysis and recommendations by using theories covered in the lectures and workshops.

The below is the structure that candidates must follow for this report: Part 1.

• Environment analysis
• Evaluation of current marketing strategy
• Analysis of the organisations competitive advantage
• Product rationale and specification (Anatomy of a product, BCG Product Portfolio Matrix)
• Segmentation Targeting & Positioning (STP)
• Recommend marketing objectives and goals
• Identify appropriate marketing strategies, based on the application of the marketing mix to your chosen product / brand.

Strategic marketing refers to a tool that is used by companies to differentiate their business functions from other competitors present in the international target market. The process of strategic marketing helps the business in increasing its effectiveness by depleting the level of competition from the market and developing potential strengths as well. Under this process, the company aims to initiate competitive advantage in the target market by gaining sustainable competitive advantage in the target market (Ottman 2017).

Lush is a UK based organization that deal in beauty products. The company is a cosmetic retailer that was founded by Mark Constantine and Liz Weir. The two people met at a beauty salon and few years later, they decided to open their new brand for selling natural hair and beauty product. The company is a private limited company that was founded in the year 1995. Products served by Lush are creams, shower gel, soaps, scrubs, shampoo, lotions etc. All the Lush products are made using vegetarian recipes. Further, the part 1 of the task evaluates the environmental analysis of the company Lush using SWOT framework. It also includes the current marketing strategy of the company Lush that helped them to attain competitive advantage in the target market. Further, part 2 of the report evaluates introduces a new product in the company that will help them to attract a new customer range in the market. The second part also discusses about targeting the new customers and marketing mix strategies of the company. More details about the report are discussed below:

Mark Constantine, a herbal trichologist and Elizabeth Weir, a beauty therapist met at a beauty salon who further decided to start a company that offer original and natural beauty and hair products to the customers in the target market. Lush is a privately owned company with a small number of shares presented on the basis of invitation only. The company works with a no advertisement policy under which they do not invest in TV campaigns or brand endorsement activities. Products of the company are endorsed using random act of kindness. The usual target market for the company is women between the age group of 18-45. All the products of the company are handmade and natural that provides a pleasant experience to the customers. The management of the company is efficient enough that it makes the stakeholders happy that are inside as well as outside the company (Lush 2018).

Environmental Analysis

Environmental analysis of an organization helps the company in analysing different factors present in the internal as well as external business environment of the company that can helps them to grow. Environmental analysis of Lush is discussed below:

Internal Analysis

Differential Positioning

The products and services offered by the company Lush are formed is using vegan and natural products that are healthy for skin types. The bright coloured products are packed using natural and biodegradable products only. The colour and shape of the products attracts the attention of customers (Ismail 2018).

Sustainability

The company is a highly sustainable brand that work with an aim to sell completely organic products in the market. The company works in a responsible manner along with minimal waste policy and no testing of animals as well.

Real handmade

The products served by the company are made by human beings and not machines. The strict diversity policy of the company enables them to hire people from different parts of the world having diverse culture, religion, gender etc.

Ingredients

The fact is discussed above that the company makes cosmetics using natural ingredients that are suitable for all skin types. The company does not uses any chemicals or preservatives in the product. The product of lush are very different like solid toothpaste, bath bombs etc. (Moraes 2018).

The expense of retailing is increasing day by day as the brand has started focusing on improving their in store experience. Various overhead expense like lighting expense, product display racks, employee charges etc. are affecting the profit margin of the company. These expenses have started to increase which is ultimately resulting in the high cost of production for the company.

The products offered by Lush are present in malls and different regions. The traffic present in the malls has started to reduce and the prices of the company serves only to the premium customers present the market. The margins present in products are very low along with the low volume of sales as well. This has acted as a huge loss of company in the market (Ramli 2017).

Lush Cosmetics serve products to the customers that are differential in the market due to which there is less competition for Lush in the market. Further, it should also be noted that the makeup product needs have started to increase due to which, the customers have also started demanding different products from the company. However, the company is facing problem in matching the demand of the customers in the market (Lundberg, Geel, and Hornebrant 2018).

Internal Analysis

Increasing Fear of Chemicals

The involvement of chemical substances in the makeup is increasing the concern for the customers in the market. Also, the companies have started practicing dangerous testing in animals like pigs, rats etc. However, Lush is an eco-friendly organization that do not performs such activities. This aspect increases the attention of the customers (Feng 2016).

International Expansion

International expansion acts as one of the best opportunity for the company to grow in the international market. The products offered by Lush are demanded in the international market but the company is not having its outlet in different parts of the world.

Competition

There are many competitors of Lush present in the market like, Estee Lauder, The Body Shop, Revlon, Sephora and Shisheido.

Difficulty to attract customers

Makeup and cosmetics belong to such a category that highly demands the loyalty of the customers in the market. Resulting to which, once the customers is attracted towards the products of other brands, then they start to use such product only irrespective of other circumstances (Nagasawa, and Kizu 2012).

With an aim to promote the products of the company, Lush has initiated effective marketing strategy. Such strategies organized by the company helps them to attract customers towards the products. The main objective of the company is to identify the requirements of customers and attract them towards their products as well.  At Lush, the needs of products can be seen through the marketing mix strategic analysis of the company. The main aim of the organization is to formulate the promotional and marketing strategies for the company so as to strategize the need of competition and customer’s needs as well. The marketing strategies of Lush depends on below mention six aspects (Wiedmann, and Hennigs 2013).

• Providing different types of cosmetics products to the target people
• Making use of consumer friendly edge
• Growing adequately from small to large aspects
• Targeting customers on the basis of their expectations from the products.
• Adopting the price range to increase profits and returns.
• Executing and making use of effective marketing and communication strategies.

Apart from this, the company Lush is aiming to start investing more in the field of marketing and promotions so as to increase the brand positioning of the company. The marketing strategies of Lush targets many online as well as offline marketing channels like social media sites, newspaper, television advertisements, sponsored searches, e-mail marketing and many other different initiatives as well (Wakefield-Rann 2017). The current marketing activities of the company Lush are based on the following principles that are discussed below:

• 4Ps marketing mix strategies of the company focuses on the product and promotion aspects. The company provides a varied range of beauty products worldwide, the products of Lush are very diverse and attractive to customers in the market. The company targets the higher class segment present in the market.
• The process of targeting, segmentation and positioning are linked focusing on the premium customers present in the market. The brand positioning of the organization helps them to attain the concentration of the skimmed customers in the market (Komatsu Cipriani 2017).
• The Unique Selling Proposition (USP) of Lush Cosmetics includes a wide range of products that are made of natural and vegetarian products and the process is environmental friendly as well. In order to promote the brand, the company never make use of brand image of celebrities and models to increase the sales of the company. These aspects combine together to help the company to gain competitive advantage in the market. The Unique Selling Proposition of the company overlaps with their competitive advantage as well(Chun 2016).

From the above mentioned stanzas, it can be clearly seen that the company Lush is making use of effective marketing strategies to gain a significant position in the target market. The Unique Selling Proposition of Lush helps them to gain power over the competitors in the market. Some of the brands like, The Body Shop, Revlon, Sephora and Shisheido etc. compete with Lush in the market. The company works to increase the quality of life of their customers in response to which they offer environment friendly, natural and vegan products to the customers (Khan 2014). These aspects also increase the competitive advantage of Lush in the market. In addition to this, CSR activities of Lush assist various campaigns as well in order to make the brand more strong globally. The Unique Selling Proposition of an organization helps to compete in the international market as well. Thus, the USP of Lush to offer natural and organic product helps them to easily deal with competition in the market. Most of the companies do not act as a direct competition for Lush as the company itself faces challenges in controlling the process of animal testing to protect the environment (López-Gamero, and Molina-Azorín 2016).

Differential Positioning

Further, it should be noted that the values of the company also helps them in enhancing brand positioning. The values and social practices of Lush also contribute in the promoting the business functions activities of the company.

Estee Lauder is recalled as one of the biggest competitor of the company Lush. The company is centred in New York and provide skincare, makeup and hair care products to the customers in the target market. As the company provides a wide variety to product in the market due to which they easily attract the sales of Lush as well. Total revenue of Lush in the year 2017 was £497.8 million and Estee Lauder earned $326.1 million (Lush 2018).

Further, another competitor of Lush is The Body Shop that also deals in skincare, perfumes and beauty products. The company was formed in year 1976 and current serves more than 1000 products in 66 countries worldwide. Revenue served by The Body Shop in the year 2017 was US$ 1.4 billion. However, Lush might come behind in terms of numbers due to its placement in less countries but it is certainly not behind in terms of competitive advantage and demand of customers in the market. Thus, it should be noted that the company should to expand the products in the international market base and introduce new product stream as well (Ni, and Van Wart 2015).

Part one of the report elaborates the description about the company, its competitors and ways in which it earned competitive advantage in the market. Although, the company Lush provides a wide range to differential products in the market but still there is scope of improvement so as to adequately target the customers present in the international market. The company Lush is aiming to introduce a new product line of natural face cream for babies in the market. The skin of newly born babies is very soft and sensitive and they get allergic to almost everything. Due to which, the product introduced is formed using natural and vegan ingredients that helps in protecting the babies skin. Parents nowadays have started taking more care about the products that they use for their babies (Ryan 2016).

Also, it should be noted that the environment nowadays is getting polluted due to which babies get rashes on their skin. After analysing the increasing concern of the parents, the company Lush introduced a natural cream specially designed for the soft skin of babies. It is a handmade cream that is made up of all natural and chemical-free substances. This cream can be used by both baby boys and girls. Looking at the market, it can be seen that there are already many companies present that deals in baby product but they do not serve natural, handmade cream in the market. Generally, parents prefer to buy products that are made using less toxic chemicals and are least reactive to skin and they protect skin as well (Schwartz 2017). Thus, the natural face cream introduced by Lush helps in making the skin of babies more soft and are purely natural as well. The product introduced by Lush will directly attract the customers due to the increasing demand of natural products. The benefits of new product line introduced by Lush are discussed below:

• The baby cream will be made up of ingredients that are natural and vegan; cream will also provide adequate amount of moisture to the babies skin.
• The cream will maintain adequate amount of nourishment
• Safety Assured Product
• It is made use of natural ingredients and will keep the babies skin healthy for 24 hours.
• The cream will cure chapped cheeks and tender nose(Singhal, Rajput, and Jha 2017)
• Does irritate the skin or provide rashes
• Dermatologically tested

Sustainability

BCG matrix tool is a strategic analysis tool that helps in evaluating the product portfolio for the organization according to the performance. The tool also differentiate the product on the basis of star, cash cow, dog and question mark. All the four aspects have their own significance (West, Ford, and Ibrahim 2015).

Market Growth Rate (Cash Usage)	High	Relative Market Share (Cash Generation)
		High	Low
		Stars	Question Marks
		m Lush Skin Fresh Cleanser m Fresh Face Mask m Shampoo Bar m Bath Bomb	m Therapy Massage Bar m Serum Bar m Toothy Tabs
	Low
		Cash Cows	Dogs
		m Hand and Body Lotion m Toner Tab m Rose Lip Balm m Ocean Salt Face and Body Scrub m Cream Hair Conditioner m Baby products	m Bubble Bar m Eyeliner m Lipsticks

Post introduction of the baby creams, the product will come under the dimension of cash cows as the product will raise demand in the market. The baby care products are highly demanded in the market so this product will also show successful results to the company in the target market. It will also help the company to gain higher profits in the target market (Zieli?ska, and Nowak 2014).

In order to be successful in the target market, Lush needs to target the customers using STP process. Segmentation, targeting and positioning refers to the process that helps the company to target the right type of customers in the market. Segmentation refers to the process that helps the organization in organizing the market into smaller groups according to the demand, preferences, lifestyle, geographical aspects of people. This group is further segregated and targeted by the company to present the product in the market. For the natural baby cream, Lush is going to target people on the basis of their geographical, behavioural, psychographic features. In the demographic segmentation, the company is going to target babies from 0-7 and their parents as well. The product is specifically designed for the new born babies using natural face cream to prevent rashes. As the product target new born babies so the company will focus on convincing the parents to purchase the products from the company (Busatlija, Land, and Mathieu 2014). Further, on the basis of geographical segmentation, the company is going to target people living in UK or nearby. The company will circulate its products in both rural as well as urban areas. On the basis of psychographic segmentation, the company will target the people from upper middle class families who invest their money on expensive as well as hygienic and real products. Lastly, under behavioural segmentation, the company Lush will target new parents and new grandparents who want to take care of their child’s skin (ZHANG 2017).

After initiating the process of segmentation, the company will look forward to the process of targeting the appropriate group in the market. Presenting the product right in front of the adequate target customers will adequately position the product in the market. Further, while positioning the product, the company will clearly differentiate the point of difference and point parity. The point of difference for the product would be that it is handmade up of natural and vegan products. Further, point of parity is moisturizing, soft and lustrous skin of babies (Zentes, Morschett, and Schramm-Klein 2017).  

Real handmade

The company will also create some marketing objectives that will help them to new product appropriately in the target market. The marketing objectives of Lush are discussed below:

• Attain competitive advantage over other non-herbal cosmetic player present in market
• Increase brand awareness among customer segments
• Increase market share of company by 20% in upcoming 2 years.
• Attract large number of customers for the products

Specific: Marketing objectives of Lush are very specific as they aim to increase the customer base by selling more and more products in the market. The specific goal of Lush is to comply with the need of customers for their babies (Sahota 2014).

Measurable: The objectives along with performance can be looked after through the sales of the new product and with the number of customers coming to the company as well.

Attainable: The company is already working in a differential and effective manner so there is no aspect that the company cannot achieve. Further, Lush will initiate efficient strategies to make the above objective attainable. By offering baby care products, the company will easily increase the customer base as well.

Relevant: The objectives defined by Lush are related to the core strategies of the company. These goals will help Lush to capture the core business objectives that is to initiate competitive advantage and along with profitability (Nava-Martinez 2017).

Time based: The company aims to achieve the given target within the give time frame of two years only.

The products of Lush are defined by customer using three simple words that are fresh, verdant and green. The company produces 100% vegan items that are good for the body of people. Further, looking at the changing environment, the company needs to introduce baby cream to the customers in the target market. The new product should be made up of 100% natural ingredients like lavender, rose, coffee, butter etc. These products will enhance the quality of skin of babies. The company should package the cream in an eco-friendly manner (Pappas 2016).

The company currently target the premium range customers through its prices in the market. The product of Lush are costly because they are manually made up of natural and herbal ingredients. For the new product line, the company should set adequate price so that middle income people could also buy the product. This aspect will also reduce the level of competition present in the market. Lush should its prices considering the prices of other competitors present in the market.

Place is very important for the business because it make the product closer to reach of customers present in the market. With an aim to introduce a product line in the business, the company should also aim for expansion in the international market. Currently, Lush uses various channels for distributing its products in the market but it is still not up to the mark because they are unable to meet the demands (Schwartz 2017). So, the company should aim to open various outlets in the market that will adequately help them to supply the products to the customers.

Ingredients

Promotion plays a significant role in helping the companies to succeed in the target market. The company Lush highly uses word of mouth marketing channel to increase the sales of the company. However, apart from this, it should also make use of other channels to increase the sales of the company and promote the new product in front of the customers as well (López-Gamero, and Molina-Azorín 2016).

Conclusion

Thus, in the limelight of above mentioned events, the fact should be noted that the company Lush can easily overcome its weaknesses and threats using the new product range developed in the target market. Lush is one of the best beauty and hair care brand that is known for serving handmade, natural and vegan products to the customers in the target market. The environmental analysis of Lush explains that the company is unable to fulfil the demand for the products present in the market. Introduction of new product line in the market will help the company to attract more customers in the market and increase competitive advantage as well. This will also initiate the expansion strategies of the company.

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