Existing surveys about Lancome were utilized to discover the differences in customer acceptance in the two countries. To countercheck the findings of surveys, online articles, annual reports of L’Oreal, the mother company of Lancome, and other reading materials were considered as references.
Primary survey of 20 Chinese respondents and 20 American respondents revealed the impact or brand management, brand equity, and brand equity value in terms of 65% of total demand for luxury cosmetics among the Chinese and 50% for the Americans.
Findings showed that other than differences in preferences about what is considered beautiful and the differences in attitude as well as behavior of consumers with regards to luxury cosmetics, indeed the brand management theory is practiced in both countries. It states people value quality, consistency with good experiences with a product, and would also appreciate gaining added value from the same brand. Its value is initially gained from discoveries of risks with using the product. Since there are more competitors in the USA which are also branded and known to be safe and the market is saturated, Lancome in the USA faces price competition, whereas in China, due to less competitors that are known to be similarly safe cosmetics and many more cities do not have such a quality cosmetic, Lancome China has been growing faster in spite of the much higher prices of its products. Lancome cosmetics in the USA are known as Privilege Cosmetics while in China, it is a luxury with the best quality – safest to use, best value, consistent and predictable with the many years of its existence. Chapter 1: Introduction 1.1 Background Globalization of businesses and the need for developed countries to look for new markets have been challenging marketing managers to find ways and means to penetrate economies for quality products to be appreciated, accepted, and established. One effective way has been brand marketing. France, the home of Lancome brand managed by its mother company L’Oreal, had formulated this luxury cosmetics since 1935. It was Armand Petitjean who invented it while L’Oreal decided to own it by 1964. The success of this brand in the world market has reaped for the company $5.5 billion worth of brand value, according to Forbes (2012). Lancome was named # 75 most powerful brand covering all products worldwide. As of 2012, its sales total had reached $ 3.8 billion. L’Oreal brand is # 25. Avon is # 70. These three are under the same consumer packaged goods industry. Lancome has outperformed Avon in China through brand marketing management strategies since Avon is more on direct selling which is said to be “25% about the brand and 75% about the sales channel” (Kowitt 2012, par. 9). In North America, L’Oreal’s Clarisonic cosmetic brand experienced a “double-digit growth” in 2012 (L’Oreal 2012). 1.2 Objectives The overall aim is to prove that the principles in brand