Jill Rose Lauren Ruegemer
Lancôme follow a differentiated market coverage strategy by introducing Lancôme Hyp. Lancôme change consumers’ perceptions and preferences for higher quality consultation service and a wider product line, while only changing consumers to prefer higher innovative technologies.
The Problem Solving Format allowed us to analyze Lancôme's current business plan. We determined that Lancôme should switch from an undifferentiated market coverage strategy to a differentiated strategy. This differentiated approach will potentially increase consumer preferences for wider product lines, higher consultation quality and innovative technologies. Lancôme will accomplish this by focusing on advertising and promotional campaigns that address the product and brand benefits described in the core benefit proposition. In addition, our recommended MAGIC strategy will help Lancôme defend itself strongly against competitors.
Overall Market: Cosmetics and Skin care Focus Market: Skin care
We began our Lancôme analysis by defining the market which is cosmetics and skin care. This market can be further divided into the following categories: body care, makeup, hair care, and fragrances. Since Lancôme focuses on keeping women looking healthy and young, we chose skin care as the focus market, which enables us to eliminate brands that are not substitutes for skin care, such as L'Oreal and Almay. Within this skin care focus market, Lancôme's main competitors are Clinique, Perscriptives, Mac, Estee Lauder, Olay, Neutrogena, Clearasil and Clean and Clear. These competitors act as substitutes to our Lancôme brand.
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Marketing Mix Sensitivity
In order to determine our market coverage strategy, we must first consider variables that can segment our focus market. Any company could potentially use these segmentation variables to segment the skin care market. We believe the relevant segmentation variables are: benefits sought, demographics, and marketing mix sensitivity.
We believe that women seek the benefits of both intensive skin treatments and less intensive, basic skin care products. Older and younger women are becoming increasingly interested in anti-aging products, while many still prefer basic skin care. The skin care market can also be segmented based on marketing mix sensitivity. With price sensitivity, consumers’ reactions to various levels of price are taken into consideration. Demographics, in terms of age, is another way to segment the skin care market by considering both older and younger women.
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After dividing the focus market into segments, we developed a segmentation circle that visually depicts how this market can be segmented for all competitors. These segmentation variables not only help determine how to segment the market, but also help formulate a company's market coverage strategy.
There are three possible market coverage strategies: undifferentiated, differentiated and concentrated. With an undifferentiated market coverage strategy, a company offers a single brand to satisfy all market segments. A differentiated market coverage strategy offers multiple brands to satisfy all consumers in the market. A concentrated market coverage strategy uses one brand to satisfy one particular market segment.
After analyzing our segmentation circle, we can determine which market coverage strategy is most applicable for Lancôme to implement.
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Actual and Recommended Market Coverage Strategy
Lancôme is currently using an Undifferentiated Market Coverage Strategy All Lancôme products are sold under one brand name for all segments.
We recommend Lancôme use a Differentiated Market Coverage Strategy Extend the Lancôme product line by...
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