Foreign Market Analysis

Topics: Brand, People's Republic of China, Luxury good Pages: 12 (7551 words) Published: October 31, 2014

[Foreign market analysis]
International Marketing Assignment The luxury cosmetics market

Table of contents
I/ Product & Geographic description of the market2
II/ Demand estimation3
III/ Business climate assessment – The Coface analysis5
IV/ Competition analysis5
V/ Harrel & Keifer’s matrix6
VI/ SLEPT factors applied on Chinese luxury cosmetic7
Social (and cultural) factors7
Legal factors8
Economic factors8
Political factors10
Technological factors10
VI/ Conclusion of the report11
Additional Information
IX/ Channels of Distribution within foreign markets12
X/ Promotion strategies13
Product & Geographic description of the market
For this report the decision has been made to analyze the opportunities of exporting French luxury cosmetics, whereas the term luxury refers to a certain quality and sense. The product is created, but will also be manufactured, in France. This constitutes the core product and thus the reason for and benefit of the customers purchase. The customer won’t wear any cosmetic, but a French luxury cosmetic – it will make her feel special and desirable. This indicates the typical customer as a woman, and since the price of the products will be above average to confirm its luxury, she has an income above average, or a share of someone else’s income. Cosmetics have reached the stage of maturity in the product lifecycle, the demand is continuously changing - demanding quality and innovation, putting pressure on the actors of the market (Romanowski, 2014). Considering the core aspect of the product and the stage of its life cycle there’s no obvious answer to the question of whether the product should be standardized or adapted. This question will be discussed further in the evaluation of our chosen market. French luxury cosmetics are goods demanded in several regions of the world, but if there is one region truly involved, it is Asia. According to Marketing China, Asians represent the majority of tourists in France, and in average they do also spend more than any other category of tourists when in France. This confirms the fact that the buying power in Asia is high, and there are a lot of business opportunities to seize. The search for new markets will therefore be focused on Asia, and more particularly on China, Japan and South Korea. These three countries are part of the same region, share land and overseas borders and they do also meet a high level of development nowadays (see figure 1 in Appendix 1). This development in the regard of cosmetic industry is shortly overviewed in the following text. The Chinese cosmetics market weighted 18.9 billion USD in 2013 (against 6 billion USD in 2008), according to the Bain 2013 Luxury goods market study, with a growth of around 10% between 2012 and 2013 (see figures 2 & 3 in Appendix 1). The same study says that “the cosmetics perfume, and personal care category, a mainstay of China’s domestic market that generates over one quarter of sales, is down from 15% growth last year to around 10% this year”. Even though its growth has declined, it remains a very strong figure. The Japanese cosmetics market represented around 19.2 billion USD in 2013 but might know a 9% increase in 2015, due to the yen devaluation that makes Japanese products more interesting. However this trend presented by the 2013 Bain & Co study might be nuanced because of companies willing to higher the prices to compensate the loss generated by the yen lower value. In South Korea, the luxury cosmetics market is getting more and more important, it represented a revenue of 8.4 billion USD in 2012, with a growth of 4.8% between 2011 and 2012, according to UBIFRANCE data. More generally, China has become the top luxury nationality in 2012, Chinese consumers are always more interested in buying luxury goods, outpacing other nationalities (see figure 4 in Appendix 1). Demand estimation

When planning on entering a new...

References: Doole, I. & Lowe, R. (2008). International Marketing Strategy - analysis, development and implementation. London: Cengage Learning.
China and Japan’s fragrance markets & culture
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