3721986-revise using this paper writing-assignment-analysis

.docx

School

Harvard University *

*We aren’t endorsed by this school

Course

MANAGERIAL

Subject

Marketing

Date

Nov 24, 2024

Type

docx

Pages

15

Uploaded by GeneralInternet11514

Report
1 Writing Assignment #1: External Environment Student Full Name Institutional Affiliation Course Full Title Instructor Full Name Due date
2 Writing Assignment #1: External Environment The cosmetics industry is a diversified company that creates and distributes items designed to improve people's looks. It includes a wide range of beauty and personal care goods, such as cosmetics, skincare, haircare, fragrances, and other self-care items. Key industry players such as L’Oréal, Estee Lauder, Shiseido, and others contribute to the sector's richness and variety (Martins & Marto, 2023) . This industry caters to a wide range of customers, encompassing various demographics. The high demand for beauty products makes this sector intensely competitive, boasting a substantial market size (Bilal et al., 2020) . The cosmetics industry, characterized by its extensive product selection, diverse market players, and considerable economic influence, plays a pivotal role in shaping consumers' beauty standards. The cosmetics industry encounters significant challenges stemming from trends in the general environment, including environmental concerns, economic uncertainty, and regulatory changes. These trends play a crucial role in shaping the industry's strategic decisions and operational landscape. A significant trend within the environmental aspect is the increasing demand for sustainable and eco-friendly beauty products. Consumers are becoming more environmentally conscious, driving the need for cosmetics companies to adopt sustainable practices in their product formulations and packaging. This trend is substantiated by a 30% year-over-year increase in consumer preference for products with environmentally friendly packaging and ingredients (Martins & Marto, 2023) . Furthermore, the importance of this trend is underscored by the fact that nearly 65% of consumers are willing to pay a premium for beauty products that demonstrate a commitment to sustainability (Grand View Research, 2022). The cosmetics
3 industry needs to acknowledge and respond to this rising trend to align with changing consumer preferences and ensure long-term market relevance. Firstly, the escalating environmental consciousness among consumers is a pivotal trend. There is a growing awareness of pollution and climate change, leading to an increased demand for sustainable and eco-friendly self-care products (Martins & Marto, 2023) . The beauty industry's commitment to science is evident, with the biotechnology trend further enhancing this aspect. The biotech movement encourages researchers to explore beauty ingredients that naturally occur (Cubas et al., 2022) . Upon identifying such ingredients, replication and mass production become possible. Additionally, the industry can contribute to waste reduction and pollution control by eliminating unnecessary packaging and incorporating recycled materials. Notably, companies like Lush exemplify sustainability efforts, with 90% of their packaging being recycled, including plastic and paper that's 100% PCR. Furthermore, half of their products require no packaging at all, such as bath bombs, and their Naked shop in Manchester is England’s first plastic packaging- free cosmetics shop (Beauty and Personal Care Products Market Size, Share & Trends Analysis Report 2023). This emphasis on sustainable and natural ingredients underscores the cosmetics industry's commitment to ecological awareness. Another significant trend is economic uncertainty, a persistent concern for the cosmetics industry due to its substantial impact. Economic instabilities, including recessions, inflation, and supply chain slowdowns, can profoundly influence consumer spending patterns (Gutierrez & Gutierrez, 2023) . Historically, the beauty industry was considered recession-proof, with consumers more inclined to invest in lower-priced beauty products while postponing larger purchases—a phenomenon known as the "lipstick effect." This trend held true during the pandemic, evidenced by a 24% surge in nail polish sales (Gutierrez & Gutierrez, 2023) . However,
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help
4 subsequent developments revealed that the lipstick effect was not potent enough to shield the cosmetics industry from the crisis. In June 2022, Revlon filed for Chapter 11 bankruptcy due to intensified competition and disruptions in the supply chain caused by the pandemic. Struggling with a staggering $3.7 billion debt, much of it accrued in attempts to compete with newer brands (Cubas et al., 2022) . Furthermore, in response to global economic shifts, some brands have resorted to price increases. For instance, "The Ordinary" raised its prices amid the global cost-of-living crisis, marking its first price hike in years. This adjustment includes an increase in employee wages and supplier costs. Given the unpredictable economic conditions, cosmetic companies are compelled to adapt and navigate changing consumer sentiments. Additionally, regulatory changes represent another significant trend. The cosmetics industry operates within a framework of evolving standards and regulations, impacting various facets such as product formulation, labeling, and marketing (Bilal et al., 2020) . Notably, the European Union banned animal testing in all phases of cosmetic products in 2009, and in 2022, the FDA Modernization Act 2.0 mandates researchers to develop new products exclusively using nonanimal models (CITE - mattek.com). Dermatologists emphasize the safety of most products but acknowledge that some ingredients may pose risks such as allergic reactions, poisonings, damaged DNA, hormone disruption, or increased cancer risk (Bilal et al., 2020) . The recent enactment of the Modernization of Cosmetics Regulation Act in 2022 introduces stringent requirements, including mandatory biennial registration for domestic and foreign cosmetic manufacturers with the FDA (Dubé & Dube, 2023) . Manufacturers must maintain substantiated records proving product safety, and cosmetics companies are obligated to provide detailed information on fragrance allergens. Additionally, clarification on professional use and the
5 obligation to record and report adverse events to the FDA within 15 days are now part of the regulatory landscape (Gutierrez & Gutierrez, 2023) . These developments, together with the FDA's introduction of criteria for testing cosmetics items for asbestos, highlight the industry's need to address environmental concerns, handle economic uncertainty, and adapt to regulatory reforms. The threat of new entrants into the cosmetics industry is relatively low, indicating a strong force. This conclusion is supported by various factors, such as high entry barriers and the need for new entrants to establish high-quality products and brand trust (Bom et al., 2019) . Established brands like L’Oréal, Unilever, Estée Lauder, P&G, and Shiseido dominate the market, generating billions in sales (Howarth, 2023). In the cosmetics industry, the bargaining power of suppliers is moderate. The strength of this force is influenced by factors such as the availability of alternative suppliers and the uniqueness of certain raw materials. While large cosmetic companies may have considerable influence over suppliers, consumers, in this context, refer to end-users and not businesses. This distinction is important as the bargaining power of consumers is a separate force. The industry's overall dynamics in terms of supplier power require a nuanced understanding beyond sales figures (Cubas et al., 2022) . The bargaining power of buyers in the cosmetics industry is high. This is evident in the vast array of available products and the ease with which consumers can switch brands. Additionally, the increasing trend of consumer consciousness regarding environmental impact and sustainability adds to their bargaining power. Companies need to adapt to evolving consumer preferences and maintain competitive pricing to retain market share. The threat of substitutes for the cosmetics industry is moderate. While individual products may have substitutes, the industry as a whole is not easily replaceable (Bom et al., 2019) . Consumers may switch between different brands and types of cosmetics, but the industry's
6 unique nature, focused on enhancing appearance and self-care, makes it less susceptible to direct substitutes. Rivalry within the cosmetics industry is high, driven by numerous brands competing for market share. Market concentration and share figures indicate the competitive landscape. However, it's essential to delve deeper into market share percentages, innovation capabilities, and brand loyalty to gain a comprehensive understanding of rivalry (Bom et al., 2019) . The presence of both established and emerging brands contributes to the intensity of competition. Considering the forces at play, the overall profitability of the cosmetics industry is influenced by the high rivalry among existing brands, the bargaining power of consumers, and the moderate threats from both new entrants and substitutes. This suggests that companies in the cosmetics industry must continually innovate, address consumer preferences, and navigate competitive pressures to maintain and improve profitability. The cosmetics sector includes businesses that manufacture and distribute personal care products aimed to improve appearance, maintain cleanliness, and promote self-care. This broad category includes skincare, makeup, haircare, fragrances, grooming products, cosmetic procedures, and more (Gutierrez & Gutierrez, 2023) . Analyzing Porter’s Five Forces in the cosmetics industry reveals a complex landscape. The threat of new entrants is low due to high entry barriers, including the necessity to establish high-quality products and build brand trust.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help
7 Writing Assignment #2: Internal Analysis Supply Chain Management and Sustainable Sourcing Estée Lauder's commitment to sourcing high-quality raw materials for its cosmetics and beauty products is a meticulous process aimed at ensuring a consistent supply of premium ingredients. The company has forged enduring relationships with suppliers, underpinned by a shared commitment to quality and ethical standards (Supplier, 2023). To achieve this, Estée Lauder employs a comprehensive approach in selecting suppliers, prioritizing those who adhere to strict ethical and quality standards. The company engages in thorough vetting processes, assessing suppliers not only for the quality of their materials but also for their sustainability practices. By fostering such ethical supplier relationships, Estée Lauder not only secures a reliable source of top-tier materials but also contributes to industry-leading innovation and sustainability within its supply chain. This dedication to ethical sourcing not only aligns with consumer values but also adds significant value to the end product, ensuring that customers receive cosmetics and beauty products of the highest quality, thus reinforcing brand loyalty. Efficient Distribution and Market Reach The cornerstone of Estée Lauder's value chain lies in its well-organized distribution network, a strategic activity aimed at efficiently reaching a diverse customer base. This includes an extensive presence in various distribution channels, with the company doubling its distribution capacity to enhance market reach (Rozario, 2022). This expansion ensures Estée Lauder's products are accessible to a broad audience, creating value by meeting diverse consumer preferences and demographics. The company achieves this by optimizing its distribution strategies, including timely product launches and strategic seasonal promotions. For
8 instance, the increased distribution capacity allows for more efficient and widespread product launches, enhancing brand visibility and consumer engagement. The complexity and scale of replicating such a distribution network make it less imitable, contributing to Estée Lauder's sustainable competitive advantage in the cosmetics and beauty industry. Overall, the focus on efficient distribution not only increases market reach but also enhances brand visibility and consumer engagement, ultimately maximizing value creation for the company. Innovative Operations and Product Development At the core of Estée Lauder's value creation lies its innovative approach to operations and product development. The company makes significant investments in its research and development (R&D) teams, allocating substantial funds to fuel innovation. In 2022, Estée Lauder invested $307 billion in R&D, and this commitment continues with a budget of $344 billion for 2023 (Petruzzi, 2023). This substantial financial commitment empowers Estée Lauder to continually refine and create cutting-edge beauty products. The emphasis on R&D ensures the introduction of groundbreaking products, such as the iconic Advanced Night Repair and the Double Wear Foundation, renowned for their skin rejuvenation benefits and long-lasting coverage, respectively (Chin, 2023). These innovations showcase the company's unwavering commitment to delivering high-performance cosmetics that meet evolving consumer demands. The quality control measures implemented at Estée Lauder's manufacturing facilities further guarantee product consistency, reinforcing consumer loyalty. This dedication to providing high-performance and prestige beauty products positions the company as a leader in the cosmetics and beauty industry. Luxury Marketing and After-Sales Service
9 Efficient distribution is fundamental to Estée Lauder's value chain, playing a crucial role in reaching a diverse customer base. The well-organized distribution network ensures products reach consumers efficiently, expanding market reach and making Estée Lauder products accessible across various channels (Rozario, 2022). The company's products are available in retail outlets, department stores, and e-commerce platforms, catering to different consumer preferences and demographics. This multichannel approach simplifies the purchase process for customers and facilitates timely product launches and strategic seasonal promotions, boosting brand visibility and consumer engagement. Estée Lauder's marketing and sales strategies are strategically built on luxury, brand image, and personalized experiences, effectively creating value. The emphasis on luxury is evident in celebrity endorsements and collaborations, such as the partnership with Kendall Jenner, resonating with a younger demographic seeking high-end products (Fashion, 2014). The company has established a brand image synonymous with quality, trust, and sophistication, attracting consumers who prioritize these attributes in beauty products. Moreover, Estée Lauder's marketing strategies are supported by a substantial financial commitment. The dedication to personalized shopping experiences, both online through quizzes and in-store through consultations, contributes to customer engagement, addressing approximately 71% of consumers who express frustration with impersonal shopping encounters (Qi, 2022). Estée Lauder has also begun adopting AI-driven interactive content to assist customers in identifying the most suitable product within their range, further enhancing personalized approaches that strengthen brand loyalty. These strategies collectively attract and retain consumers, ultimately contributing to the company's success. Comprehensive After-Sales Service
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help
10 Estée Lauder's value chain places a strong emphasis on comprehensive after-sales service, essential for enhancing the customer experience and nurturing lasting brand value. This multifaceted approach is pivotal in sustaining customer satisfaction and creating loyalty. The core of this strategy is the "Estée E-List" loyalty program, which rewards customers with early access to new products, personalized gifts, and exclusive promotions (Sagar, 2023). This program ensures initial satisfaction and repeat business by fostering trust and gratification. Moreover, robust online customer support and beauty education resources guide customers beyond the point of sale, emphasizing Estée Lauder’s dedication to value throughout the entire customer journey. This comprehensive after-sales service not only instills trust and confidence but also stimulates positive recommendations and persistent customer relationships. By prioritizing customer satisfaction and support, Estée Lauder ensures that customers keep returning for their beauty needs, generating long-term value for the company. VRIO Characteristics and Sustainable Competitive Advantage Estée Lauder's supply chain management, operations, and distribution activities possess VRIO characteristics that support a sustainable competitive advantage. These resources and capabilities are valuable, relatively rare, difficult to imitate, and effectively organized, contributing to the company's continued success in the beauty and cosmetics industry. Estée Lauder's supply chain management is a key resource that contributes to its sustainable competitive advantage. It holds immense value in ensuring the consistent supply of high-quality raw materials, a commitment to sustainable sourcing practices, and maintaining quality standards (Segal, 2021). This resource enhances the overall quality and ethical standards of the brand's products, which is of high importance in the beauty industry. Additionally, the company's
11 emphasis on sustainability and strong supplier relationships is rare within the industry. This makes Estée Lauder a brand that stands out for its ethical and quality standards (Baker, 2022). The rarity of these practices further consolidates its competitive advantage. The imitability of its sustainable sourcing practices and supplier relationships is limited, as these require time to develop. The supply chain management is effectively organized, contributing to the overall efficiency of product delivery. Estée Lauder's operations, with their strong focus on innovation and product development, are a key driver of its sustainable competitive advantage. The value of these operations is evident in the continuous introduction of beauty products, exemplified by products such as the iconic Advanced Night Repair. This value creation gives Estée Lauder a competitive edge in the market, attracting consumers who seek high-end beauty products. The rarity of in-house research and development capabilities and a commitment to product excellence is relatively unique in the industry, setting Estée Lauder apart (Research, 2023). The difficulty in copying the company's culture of innovation and continuous product development decreases imitability. Estée Lauder's operations are effectively organized, ensuring strict quality control measures and the consistent quality of its products, thus enhancing its competitive stance. Sustainable Operations and Competitive Edge Estée Lauder's operations, marked by a strong focus on innovation and product development, serve as a cornerstone for its sustainable competitive advantage. The continuous introduction of beauty products, notably exemplified by successes like the Advanced Night Repair, distinguishes Estée Lauder and gives the company a significant edge in the market. This value creation appeals to consumers seeking high-end beauty products, solidifying the company's position as a market leader. The rarity of in-house research and development capabilities and an unwavering commitment to product excellence set Estée Lauder apart within the industry
12 (Research, 2023). The unique company culture fosters innovation and continuous product development, making it challenging for competitors to imitate. Estée Lauder's operations are not only innovative but also effectively organized, ensuring strict quality control measures and maintaining consistent product quality, further enhancing its competitive stance. Distribution Network and Market Success Estée Lauder's well-organized distribution network is a vital resource that significantly contributes to its sustainable competitive advantage, ensuring wide market success through strategic initiatives such as product launches and seasonal promotions (Rozario, 2022). This network creates value by expanding market reach, making products accessible to a diverse audience, and enhancing brand visibility. The complexity and scale of replicating such an extensive distribution network make it less imitable, reinforcing Estée Lauder's position in the market. The effective organization of this distribution network ensures products are delivered precisely when and where they are needed, further solidifying the company's position and streamlining its ability to respond to market demands. This strategic approach to distribution is a crucial element in Estée Lauder's value chain, contributing to the overall success of the company in the beauty and cosmetics industry.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help
13 References "Culture and values. – The Estée Lauder Companies Inc. (2023)". https://www.elcompanies.com/en/who-we-are/culture-and-values#:~:text=We%20are %20Prestige%20Beauty.&text=We%20continue%20to%20build%20and,innovation %20in%20everything%20we%20create. "Estee Lauder (EL) - market capitalization. CompaniesMarketCap.com - companies ranked by market capitalization. (2023)". https://companiesmarketcap.com/estee-lauder/marketcap/ "Fashion Network. (2014). The rise and Rise of Kendall Jenner: Model signs for Estée Lauder". FashionNetwork.com. https://us.fashionnetwork.com/news/The-rise-and-rise-of-kendall- jenner-model-signs-for-estee-lauder,530187.html "Research & Development. – The Estée Lauder Companies Inc. (2023)". https://www.elcompanies.com/en/careers/research-and-development-jobs "Supplier code of conduct. – The Estée Lauder Companies Inc. (2023b)". https://www.elcompanies.com/en/our-commitments/working-with-our-suppliers/supplier- code-of-conduct "Supply chain. – The Estée Lauder Companies Inc. (2023b)". https://www.elcompanies.com/en/careers/supply-chain-jobs Baker, J. (2022, October 18). "79% of beauty shoppers have doubts about sustainability claims – how can brands Rebuild Trust?". Forbes. https://www.forbes.com/sites/jessibaker/2022/10/17/79-of-beauty-shoppers-have-doubts- about-sustainability-claims--how-can-brands-rebuild-trust/?sh=21013902e8d6 Beauty and Personal care Products Market Size, Share & Trends Analysis Report by type (Conventional, organic), by product (Skin care, hair care, color cosmetics, fragrance), by
14 distribution channel, by region, and segment Forecasts, 2023 - 2030 . (n.d.). https://www.grandviewresearch.com/industry-analysis/beauty-personal-care-products- market Bilal, M., Mehmood, S., & Iqbal, H. M. (2020). The Beast of Beauty: Environmental and health concerns of toxic components in cosmetics. Cosmetics , 7 (1), 13. https://doi.org/10.3390/cosmetics7010013 Bom, S., Jorge, J., Ribeiro, H. M., & Marto, J. (2019). A step forward on sustainability in the cosmetics industry: A review. Journal of Cleaner Production , 225 , 270–290. https://doi.org/10.1016/j.jclepro.2019.03.255 Chin, L. (2023, July 25). "18 facts about Estee Lauder". Facts.net. https://facts.net/general/18- facts-about-estee-lauder/ Cubas, A. L. V., Bianchet, R. T., Reis, I. M. a. S. D., & Gouveia, I. C. (2022). Plastics and Microplastic in the Cosmetic Industry: Aggregating Sustainable Actions Aimed at Alignment and Interaction with UN Sustainable Development Goals. Polymers , 14 (21), 4576. https://doi.org/10.3390/polym14214576 Dubé, M., & Dube, S. (2023). Towards sustainable color cosmetics packaging. Cosmetics , 10 (5), 139. https://doi.org/10.3390/cosmetics10050139 Gutierrez, L., & Gutierrez, L. (2023, April 4). Beauty at what cost? The environmental impact of cosmetic ingredients and materials - Sustainable Earth . Sustainable Earth - Where People and the Planet Thrive. https://sustainable-earth.org/cosmetic-ingredients/ Odoardi, V. Driving brand growth in the chinese beauty industry through licensing agreements: L'Oréal and the Armani case study.
15 Martins, S. a. M., & Marto, J. (2023). A sustainable life cycle for cosmetics: From design and development to post-use phase. Sustainable Chemistry and Pharmacy , 35 , 101178. https://doi.org/10.1016/j.scp.2023.101178 Petruzzi, D. (2023, September 8). "R&D expenditure of Estée Lauder Worldwide 2015-2023". Statista. https://www.statista.com/statistics/609083/randd-expenditure-of-estee-lauder- worldwide/#:~:text=This%20statistic%20depicts%20the%20research,dollars%20on %20research%20and%20development. Qi, J. (2022, April 25). "How estée lauder uses interactive content to provide personalized consumer experience". Medium. https://medium.com/marketing-in-the-age-of-digital/how-est%C3%A9e-lauder-uses- interactive-content-to-provide-personalized-consumer-experience-aca22e794419 Rozario, K. (2022, August 15). "Estée Lauder Doubles Distribution Capacity, $4.5b new channel". BeautyMatter. https://beautymatter.com/articles/estee-lauder-doubles- distribution-capacity-to-supply-4-5-billion-travel-retail-channel Sagar, M. (2023, January 29). "What is Estee Lauder e List Loyalty Program - Peaches and Blush". What Is Estee Lauder E List Loyalty Program. https://peachesandblush.com/what-is-estee-lauder-e-list-loyalty-program/ Segal, M. (2021, September 22). "Estée Lauder to implement Sustainable Packaging Technology, starting with Clinique Bottles". ESG Today. https://www.esgtoday.com/estee-lauder-to-implement-advanced-molding-technology-for- more-sustainable-packaging-for-clinique-bottles/
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help
Recommended textbooks for you
Text book image
Management, Loose-Leaf Version
Management
ISBN:9781305969308
Author:Richard L. Daft
Publisher:South-Western College Pub
Text book image
MARKETING 2018
Marketing
ISBN:9780357033753
Author:Pride
Publisher:CENGAGE L
Text book image
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Text book image
Principles of Management
Management
ISBN:9780998625768
Author:OpenStax
Publisher:OpenStax College
SEE MORE TEXTBOOKS
Recommended textbooks for you
Text book image
Management, Loose-Leaf Version
Management
ISBN:9781305969308
Author:Richard L. Daft
Publisher:South-Western College Pub
Text book image
MARKETING 2018
Marketing
ISBN:9780357033753
Author:Pride
Publisher:CENGAGE L
Text book image
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Text book image
Principles of Management
Management
ISBN:9780998625768
Author:OpenStax
Publisher:OpenStax College
SEE MORE TEXTBOOKS