IT Applications in Marketing - Research Paper Example

Product JADORE is a website that sells cosmetics and other skin care products made entirely from herbal and organic ingredients. The internet is one of the fastest growing communication channels and has created markets where none existed before. Cosmetics products are used mostly by women, which makes competition even tougher. This is because women are prone to be very choosy about their cosmetics and skin care products. A niche has been created recently, stemming from concerns regarding skin after effects of continuous cosmetics use. According to Mintel 16% are interested in buying products from the ‘free from’ market, with a dominated portion being of Paraben free products. Cosmetics are high end user products and therefore differentiation is a key focus for our business. JADORE will enable online purchasing for the working class women who do not have enough time to spend countless hours in shops trying out cosmetics. Our business will provide all types of products such as Perfumes, lotions, lipsticks, eyeliners, mascaras etc. Wearing makeup is an integral part of being a woman; therefore we can safely say that there is a strong demand in the market for makeup and skin care products. Moreover, with increasing awareness through media and internet, fashion trends have become very unsteady. These changing trends make cosmetics business even more attractive, because with each new trend in fashion a demand for newer products is generated. As mentioned before a high degree of differentiation is typical to cosmetics. This also makes it possible to introduce newer products in the market and charge premium prices. Therefore products offered will be diverse and intended to cater a wide customer base. Moreover specialized products will also be offered on request. For example for customers that are susceptible to allergic reactions, products containing Jojoba oil will be provided. Target Market In third wave societies, concepts of mass production have become obsolete and outdated. The concept of mass customization has become order of the day. This concept of mass customization has created new concepts such as USP (Unique Selling Proposition) and Target Market. A target market is a group of people (of a particular age, ethnicity, gender etc) to which a product is marketed. The main focus of JADORE is on females looking for ways to become more attractive. Television shows have created awareness in women about new ways to look better. A very famous show on BBC lifestyle is 10 years Younger1. The program helps couples who are style-challenged or simply do not have time because of work. These types of shows are increasingly making it possible for women to look good without going to beauty parlors. The main aim of these shows it to enable women to learn more about their personal skin textures and style deficiencies by looking at real life examples. This is basically a very effective way to impart education on styling to women. There are two major segments of JADORE’s target market. This has been done because even in a target market there are different customers and the only way to cater their needs it to differentiate needs of different segments. Segments have been identified on the basis of age. A segment can only be identified if it’s identifiable, accessible, substantial, unique needs and durable. The major market segment is working women greater than the age of 30. According to Mintel women of this age group are the wealthiest among women and also conscious of products they use. These are professional women and have a need to look presentable and attractive because of their lifestyle. With hectic and busy schedules they do not get enough time to spend on outdoor shopping. Another important factor is their income generating capabilities which allow them to spend heavily on cosmetics and skin care. The smaller segments of our target market are younger women under age of 25 studying in colleges and universities. Television shows like 90210 are pressing younger girls to look good in order to be liked by other. This mania has increased peer pressure among teens, which compete on basis of better cosmetics etc. Moreover increased awareness from internet and seminars are prompting more and more university students to boycott products that harm the environment. This segment of our market although larger in size does not have enough money to spend on cosmetics. Target Market Research There are many factors which need to assessed, or order to determine attractiveness of a target market. These factors have been discussed in detail below: Size of target market Females are more than fifty percent of world population. According to Feminism and Women studies institute of American from a total population of 100 million that is above ages of 16, 58 million are active labor force participants2. This shows that a high portion of female population in developed countries is engaged in income generating activities. This income generating capability increasing their buying power and thus the budget spent on cosmetics. Another factor to consider is size of online retail industry. According to Mintel online shopping has reached a high of £ 3 billion pounds. This is a staggering increase of over twenty percent from the previous year. Moreover most of these sales have been made to women in the ages of 35 to 40. Competition The competition in the cosmetics industry is stiff. There are number of premium brands that are offering skin care solutions and cosmetics, such as L’Oreal, Chanel, Avon, P&G etc3. These competitors of JADORE are providing two different types of products. The relatively less expensive mass brands cater to as the name suggests, medium income classes. The premium brands however have been developed for the elite. From the mentioned brands, Avon is the largest direct selling brand. It is currently selling its products in over a hundred countries. The biggest threat to JADORE will be from Avon because it has the same direct selling business model as JADORE. Brand loyalty The changing market trends have minimized concepts of brand loyalty in the cosmetics industry. The customers are more concerned about trends and latest fashions rather than brand loyalty4. This has made market entry for newer products such as JADORE easier. Profit margins The profit margins in the cosmetics industry are very high. This is because customers are very peculiar about quality and reliability. The major cost for a cosmetics retailer is advertisement and promotion. L’Oreal is the market leader in spending on advertisement. Marketing mix Product The brand of JADORE is a new brand and would need time to create its unique identity. Like other products which have high visibility, quality is an important factor for cosmetics. Exhibit 1 shows that cosmetics are in the maturity stage. The conditions for entry are however favorable therefore we have aimed a strategy of differentiation and industry growth. This differentiation will stem from unique and wide range of product offerings i.e. herbal products. JADORE will also attract customers by its free delivery, for products worth over £ 70. Pricing Strategy The price will also be a differentiation factor for JADORE. The business will save distribution cost and commission that drive prices up for brands like Chanel. These savings will be transferred to the customers. Annual sales days will also be attractions as they will give discounts of up to fifty percent on products. Marketing and Promotion Marketing and promotion are a very highly important factor for any startup business. This is even more important for firms operating in industries that are in the mature stage of their product life cycle. This is because stiff competition forces organizations to differentiation. This is because for organizations operating in mature markets, there is usually no significant increase in the total customers, therefore to increase sales they have only the choice of fighting it out for the existing customers or increasing price. To attract existing customers, organizations have to create more brand awareness for their products. This requires increasing brand awareness and emphasizing on introducing new products into the market. The only way to do these is through marketing and promotions. To increase price through sales also requires extensive marketing, this is because to differentiate a product organizations have to inform of the customer through proper channels of their differentiation. Marketing for a website is different form marketing typical items such as consumer products and services. In the initial stages marketing for websites is usually limited to the internet. After success other channels of marketing can also be used. Competitors Strategies According to Mintel, L’Oreal is the leader in industry when it comes to advertising costs. The total adspend in the cosmetics industry was constantly increasing up until 2008. This is because in the recessionary environment decreasing sales have forced companies to cut back on their advertisement costs, in order to remain profitable. This has reduced adspend/sales percentage from 5.9% in 2007 to just 4.1% in 2008 according to Mintel5. Most big brands are currently relying heavily on above the line marketing, to stimulate demand in the cosmetics industry. Smaller brands however have been forced to find alternate and less costly marketing channels e.g. internet, editorials etc. The leader in above the line marketing in once again L’Oreal with 35% of its adspend invested in above the line marketing6. The next competitor is P&G with only 12%. A recent issue in the cosmetics marketing strategies has forced competitors to rethink their strategies. This is basically the heavy emphasis on bringing reality into the cosmetics promotional campaigns. Dove has taken the initiative by introducing real people rather than model in their advertisements. According to Mintel research publications, magazines are still the top choice for cosmetics marketers, with 62%. The second place is held by televisions commercials etc with 32%. The leading magazines in attracting advertisers are Elle, Cosmopolitan, Glamour, OK!, Vogue and Marie Claire, according to Mintel. The focus of most brands is on advertising with a product focus whether its television or magazine advertisement. As the stats show, the well established brands are spending millions of pounds annually on advertisements cost. Most of this is being spent on above the line marketing using magazines and televisions as their main channel. Therefore JADORE will have to use more innovative marketing strategies, which can maintain its differentiation strategies while keep the cost affordable for a startup business. The marketing tools and strategies discussed below are ideal for JADORE as a cosmetics and makeup retailer operating in a mature market. Internet Blogs A new and innovative way of creating goodwill and gaining market exposure are discussion blogs. These functions similar to chat rooms, in providing an interactive environment where JADORE’s brand image can be built. The business will need makeup experts and also experts on latest happenings in the fashion industry to make this work. The links to this internet blog will be provided on different ‘awareness’ websites. This will basically be a very important factor in channeling customers with tendency of using herbal products. The blog will play a very effective role in maintaining a healthy traffic to JADOREs website. This is very important because in our case the website functions similar to a shop. The number of visitors will therefore directly impact volume of sales. These blogs will also be used to promote new solutions to skincare issues. The customer feedback will then be used to understand market dynamics in greater depth and make product specific decision based on observations. Internet promotional tools Internet promotional tools are becoming increasingly famous because of their low cost and high flexibility. There are many different online promotional tools available to JADORE such as search engine results pages, banner ads, Rich Media Ads, Social network advertising, interstitial ads, online classified advertising, advertising networks and e-mail marketing, including e-mail spam. The most famous, reliable and effective promotional tool is ad sense. This is an application by Google. This system will allow JODARE to appear on all websites that related to cosmetics. These can be any sort of websites involving women, such as forums and discussion blogs. The most attractive aspect of Google ad sense is cost per click system. This will only cost money, whenever a potential customer clicks on the advertisement. This is a method to ensure that every penny spent on advertisements is invested in gaining potential customers. The cost is very low (£1.71), JADORE plans to use adsense for the initial six months7. The links will be provided on other websites which provide natural solutions and herbal products to other problems facing the customer. Word of Mouth The most effective marketing tool that has been in practice for thousands of years is indeed word of mouth. This form of marketing has many advantages. First of all it is usually free (there have been cases in china where women are hire to create good word of mouth) and secondly it has a very high reliability factor. This business will try to create a good word of mouth for itself by giving keep a friendly and informative relationship with customers and potential customers through information channels. Critical Analysis of Adverts The two adverts that will be displayed on the website are Clarks and Valentine gift shop. This has been done to produce an attractive image of JADORE. Clarks is a very high end and respected brand in the consumer industry. The association of Clarks with our brand will give it a positive image as well. The other choice i.e. Valentine gift shop will provide a positive association to the website. This is because Valentine is an event of festiveness and celebration. Association with Valentine will bring customers into a shopping mind frame when visiting our website. As we have a RECIPRICAL LINKING AGREEMENT with these websites, therefore we will also benefit from their customers and brand image. The adverts not chosen are The Body Shop and L’Oreal. This has primarily been done because these are direct competitors of our brand. Placing links with direct competitors especially ones which do not provide herbal and natural cosmetics will give our brand negative association. The image will be passed as if JADORE was a sub brand of these famous brands. Moreover customers of JADORE will possibly be diverted towards them. Embryonic Growth Mature Aging Dominant Fast grow, Start-up FAST GROW Attain Cost Leadership Renew Defend Position Defend position, Attain cost leadership, Renew, Fast Grow Defend position, Focus, Renew, Grow with industry Strong Start-up, Differentiate, Fast-grow Fast Grow Catch-up Attain cost Leadership Differentiation Attain Cost Leadership, Renew, Focus, Differentiate, Grow with industry Find niche, Hold niche, Hand-in, Grow with industry, Harvest Favorable Start-up, Differentiate. Focus, Fast-grow Differentiate, Focus, Catch-up. Grow with industry Harvest, Hang-in, Find niche, Hold niche, Renew, Turnaround, Differentiate, Focus, Grow with industry Retrench, Turnaround Tenable Start-up, Grow with industry, Focus Harvest, Catch-up. Hold niche, Hang-in, Find niche, Turnaround, Focus, Grow with industry Harvest, Turnaround, Find niche, Retrench Divest, Retrench Weak Find niche, Catch-up, Grow with industry Turnaround, Retrench Withdraw, Divest Withdraw Exhibit 1 Read More