Introduction
There should be a good strategic foundation on which a marketing plan is based. A good marketing plan will give the company a competitive advantage (Jobber, 2012). This essay is a development of a marketing plan for Lush Cosmetics, which is based in the United Kingdom; however, it has operations in the United Arab Emirates.
It deals with the production and retail of fresh handmade cosmetics. Founded in the year 1994, Lush Cosmetics, whose headquarters are in Poole, Dorset is a multinational company that has about 800 stores spread in over 51 nations globally. It is a company that has been able to realize immense success in a relatively short period of time since its inception.
Initially, the company was known as the Cosmetic House. It was later renamed to Lush Company in the year 1995. The name Lush came about following a competition that was faced by the founders of the company, Mark and Mo Constantine, when they made a publication of their first newsletter and catalogue (Lush Retail Ltd., 2014).
Lush Cosmetics produce a variety of handmade products. The products are used for body, hair, and skin care. The products are mainly made of natural by-products like honey and vegetables oils. They include lotions and shampoos, among other body care products. The company has stood out in the market as being against the use of animal products.
It also opposes animal testing. Instead, the company tests its products on volunteers (Lush Retail Ltd., 2014). The following areas will be analysed in the development of Lush Cosmetics marketing plan: the environmental context, competitors, SWOT, segmentation and targeting, position strategy, product strategy, pricing strategy, distribution strategy, promotion strategy, as well as customer service and relationship activities.
Environmental Context Analysis
Demographic environment
The demographics of the country are important as they enable Lush understand the needs of people, as well as the number of potential customers they need. The United Arab Emirates is a region that developed tremendously over the last couple of years. The economy has improved greatly and the population has grown significantly. The population of the United Arab Emirates is estimated to be over 8 million people (IndexMundi, 2014).
According to the data given by the United Arab Emiratesâ National Bureau of Statistics in the year 2010, the population was estimated to be about 8,264,070 people. Out of this, 80% were immigrants, according to data released by the UN. The median age of the population in the United Arab Emirates is about 30.3 years.
Most males are in their early 30s, while most females are in their late 20s. This is an age group that favours Lush Cosmetics greatly (IndexMundi, 2014). The people who normally buy these cosmetic products are the youthful people, who are the majority in UAE. It is a factor that gives Lush Cosmetic a competitive edge and contributes greatly to its success in the country. The population growth rate is favourable in the UAE, which will help in the future success of Lush Cosmetics.
Economic environment
The United Arab Emirates is a country whose economic development is highly dependent on petroleum and petroleum products. The country is among those that have the highest GDP per capita globally (IndexMundi, 2014).
It means that most of the people in the country are financially stable and can afford the Lush Cosmeticsâ products with ease. This provides a real platform for the companyâs success. Therefore, the economic environment of United Arab Emirates presents a real opportunity for Lush Cosmetics and gives it a competitive advantage over its international rivals.
Social-cultural environment
The culture of a society has a significant role in influencing the consumer behaviour and their decision making processes. The United Arab Emirates is a nation that is composed of many people from different societies and nations, thus it is a multicultural and a diverse society. There are many ethnic groups that reside in the United Arab Emirates, thus the nation is more tolerant to a variety of products from various regions, compared to those nations that do not have many cultural and ethnic groups (IndexMundi, 2014).
Therefore, there are higher chances that various companies with various types of products will succeed in the UAE. Lush Cosmetics, as a company that produces handmade cosmetics, has high prospects of succeeding in the United Arab Emirates. There are different people of different ethnicities who are likely to buy the products.
Again, this will give the company a good platform to succeed in its market, as the products are acceptable to a significant number of potential, as well as existing customers. It should be noted that cosmetics are acceptable to almost all ethnic groups and cultures.
Political and legal environment
A stable political environment will favour the success of a business, while an unstable political environment will lead to business failure. Basically, the political environment of a nation is the starting point for the national success and business success in a nation (IndexMundi, 2014). The United Arab Emirates is characterised by a stable political environment. It is an environment that has favoured the economic development and the success of many companies.
It is the political environment of this region that has attracted many foreign investors, including Lush Cosmetics. It should be noted that not many foreign organisations will be interested in investing in a nation that the political status is not stable. The legal system of the United Arab Emirates is also a factor that leads to foreign investments in the country, as it offers certain incentives to investors.
This attracts tourists, as well as overseas companies. Lush Cosmetics is a company that is based in the United Kingdom, but it has been able to succeed in the United Arab Emirates because the legal system makes it easy for foreign companies to establish and the political environment is stable.
Technological environment
Technology is vital for the success of many organisations. The United Arab Emirates, being one of the emerging economic powers, has embraced technology, which has contributed to the success of organisations in the country. Lush Cosmetics has been highly favoured by the technological aspect of the UAE (IndexMundi, 2014). Advancement in technology in the UAE has helped in innovation and quality production for companies operating in the country.
Natural environment
The natural environment of a nation may favour some business organisations, while it may be unfavourable to others. For instance, in the United Arab Emirates, most parts are dry. However, there are deposits of oil and petroleum products. Industrialisation is more favoured in such a natural environment. Lush Cosmetics, being a manufacturing company, is well favoured by the environment.
Lush Competitors Analysis
Competitive situation analysis
Lush Cosmetics faces stiff competition from other organizations that sell similar products across the world. The cosmetics industry has many players, thus Lush has to ensure top quality products at all times to maintain its competitiveness. Any factor that can help it maintain competitiveness should be considered keenly.
Direct and indirect competitors
There are many competitors in the market who are always striving to get a bigger share of the market. The two major competitors of Lush cosmetics are Origins Cosmetics and the Body Shop International PLC. Just like Lush, Body Shopsâ products are inspired by nature, thus it is a direct competitor. Body Shop is also against animal testing. Origins Cosmetics, on the other hand, is a company that produces its products from natural ingredients, such as plant matter. It is also a direct competitor of Lush cosmetics. The other competitor to Lush is Lipsy London. This is an indirect competitor, as it does not use natural ingredients. Beauty without Cruelty is also an indirect competitor.
Competitive strategy and positioning
Lush is well positioned in the market compared to most of its competitors. Its major competitive strategy is to remain independent and apply differentiation strategy in its production. It produces unique products that are different from most products in the market. It is well positioned to succeed in the future as more people are starting to embrace the green economy.
Competitive advantage
The competitive advantage that has helped the company succeed is the ingredients that it uses for production. Natural ingredients are increasingly being appreciated. Its differentiation strategy and independence also give it a competitive edge.
Lush SWOT Analysis
Strengths
Lush Cosmetics has been able to lower its packaging costs. It is imperative to note that the larger part of costs incurred in the cosmetics industry are packaging cost. This has been one of the reasons why the company is profitable. Lowering the costs means that the expenses will be low and the profitability will be high. The high profitability, on the other hand, gives Lush a financial strength, which enables it to invest and diversify its operations (Fielden & Davidson, 2010).
The company makes good sales in the UAE. With lower costs, Lushâs performance in the country has been unquestionable. In addition to lower packaging costs, Lush Cosmetics has been able to maintain low spending on marketing. It has adopted technology in marketing, as well as other cheap means of advertising. The fact that the products are acceptable in the UAE means that the company does not have to spend a lot on advertising.
Having over 800 stores in over 50 countries gives Lush Cosmetics further financial strength. It has a wide base of customers, which increases the chances of higher sales and profitability. A company that has a high financial power is able to develop its products without strain.
It is also able to invest in more areas that can give it more profits. In addition, the company is able to invest in technology, a move that further lowers the costs of production and helps in improving the quality of production (Fielden & Davidson, 2010). Lush Cosmetics gives customers the freedom to serve themselves in the stores. This is a strong point because the customers can spend the time they wish at the stores making their decisions and serve themselves to their own satisfaction.
Its corporate social responsibility programs are also a strong point for Lush Cosmetics. For instance, the company has been in the front line in opposing animal tests and using animal products in manufacturing its goods. This gives it an advantage over most of its rivals. It shows that the company is responsible and has a sense of humanity, especially for animals. There are people who do not like animal products, thus they will go for Lush Cosmeticsâ products.
Weaknesses
Despite the fact that the company spends relatively little amount of money in its advertising, it does not have a very attractive advertising compared to other multinational organisations. The advertising is also said to be less efficient. Therefore, there are possibilities that the company is not known enough in the United Arab Emirates.
The products of Lush Cosmetics are said to be relatively expensive compared to those of competitors. This makes them not affordable to most people, especially the low income earners. Although many people in the United Arab Emirates are well off, there is a class of people who do not have a high income and they cannot afford to buy from Lush Cosmetics.
The company needs to adopt differentiation and cost leadership strategies simultaneously, so that its products can be affordable to all classes of people. Through cost leadership, it will be able to produce relatively cheap products and enhance affordability to the people who are low income earners (Eldring, 2009).
The other weakness of Lush Cosmetics Company is the fact that not many people are aware of Lushâs existence as a brand. This could be attributed to the relatively poor advertisement. It is a factor that leads to the loss of a significant amount of sales. Brand loyalty is very important, thus Lush Cosmetics should build on that not only in the United Arab Emirates, but also in the other countries where it operates to give the company a competitive advantage (Young, 2014).
Finally, the company produces pure products that may not be stored for a long time. The durability of its products is compromised. It may mean a loss to the customers, as the products may go bad after a short period of time. This leaves Lush Cosmetic at a disadvantage, as customers may opt for products that have longer shelf lives.
Opportunities
There are a number of opportunities that present the company with a bright future. For instance, there has been a trend whereby people are opting for fresh and healthy cosmetics for their skin. This increases the acceptance of Lush Cosmeticsâ products by most people. The acceptance is gradual, such that many people will have accepted the products in years to come.
This means that the sales of the company, as well as its profitability are likely to grow significantly in the future (Young, 2014). The company has also had a plan of increasing the number of stores in the various countries where it operates. Increasing the number of stores in the United Arab Emirates will help the company reach more customers and increase its sales.
Threats
There are many alternatives to Lush Cosmetic products, some of them which are cheaper. Customers may look for cheaper options, which will go to the disadvantage of the company as it will lose sales to competitors. Customers may also choose to buy the normally conventional products, rather than the Lush Cosmeticsâ responsible products. The main reason for this trend is that the conventional products are understood well and easy to use. This will further lead to loss of sales for Lush Cosmetics.
Lush Targeting and Segmentation Strategy
Companies need to identify their target markets and divide them according to their various needs. Lush Cosmeticsâ main customer targets are women. The United Arab Emirates is a country that has a high number of women, thus the market for Lush Cosmetics is large enough in the UAE. The company also has products for men, but women are its major target. As mentioned earlier, the average age for most women in the country is between 25 years and early 30s. This represents the class of women who mostly use cosmetic products.
Therefore, in segmenting its market, Lush Cosmetics needs to give more priority to this class of customers and potential customers. However, the company should also have market segments for men products, older women, children, and special needsâ products. Therefore, Lushâs market segments should be; the women segment, menâs segment, the old people segment, children, and the special needs segment (Kossowski, 2007).
This will facilitate the efforts to capture of a large market and help it in establishing a large customer base. Lush Cosmetics has been successful in its market segmentation. It has also been able to identify its target market clearly. However, it has not focused enough on men and children as its customers. This may lead to the company losing part of its potential sales and profitability.
Positioning Strategy
The positioning of a company is what guides the actions that the company will take in implementing its marketing strategy. Lush Cosmetics has positioned itself such that it is strategically ready to face the increasing competition in the international market. As a company that was founded in the year 1994, it has done well to enter and penetrate 50 nations in a span of 20 years. The company has about 800 stores in about 50 nations.
It has adopted technology and innovation, which will give it a competitive advantage in the future. The current business world is dominated by technology, which will be the major tool for competition in the future. In addition, the company is dealing with products that are being accepted in the market gradually. As mentioned earlier, people are slowly moving towards accepting fresh handmade cosmetics for their skin and body.
Therefore, there is a high possibility that Lush Cosmetics will be even more successful in the future than it is today, as many people will have embraced its products in the United Arab Emirates and in the other nations across the world. Establishing itself in the United Arab Emirates is further a strategic position because the UAE is a region whose economy is on the rise to become one of the richest in the world.
The population of the nation is also on the increase. It means that there will be many people in the UAE who will be having sufficient purchasing power in the years to come. The products made by Lush Cosmetics are said to be expensive. From the trends in the UAE economy, it is easy to anticipate that most people will be in a position to afford these products in the future and the company will be making high sales.
Another factor that has strengthened the companyâs position in the market is its advocacy against animal testing. This is a CSR activity that gives confidence to the companyâs potential customers, as well as its existing customers. It is a move that is increasingly being supported by many people.
Therefore, advocacy will have the ability to put Lush Cosmetics in a very strong position in terms of competition in the future. Finally, the companyâs service to the cosmetic industry is taking the industry by storm. In the year 2010, Lush was awarded with The Most Excellent Order of the British Empire (OBE). It is an award given by the Queen to companies that are seen to have a positive influence on the areas in which they operate. This further gives the company a competitive advantage that puts it in a very strong position.
Product Strategy
Lush Cosmetics produces goods that are not widely known by people and whose acceptance is gradually increasing. It has adopted differentiation as a strategy to market its products. The company produces goods that are herbal in nature, a strategy that differentiates its products from those of other companies (Heacox, 2009). There is a high possibility that these products will be highly acceptable in the future, which will put the company at an advantage.
Therefore, Lush is likely to realise a very significant growth in the future. The company has also been working on its product development. It has been improving the quality of its products every day.
The quality level of Lush Cosmetics products is unprecedented. Product development is vital for the success of any organisation. As people continue to accept herbal cosmetic products, there are higher chances that the company will be in a position to further improve the products, as it will be making enough profits for the activities (Kossowski, 2007).
Lush Cosmetics has been against the use of animal products or by-products in manufacturing its products. This is a way of strategizing its products, as they have unique features that may not be in other products. The products are also more acceptable, as it is a show of responsibility for the company.
To further strengthen its product strategy on this, the company has been involved in campaigns that advocate for animal rights. It has also been funding groups that advocate for the same. This creates further awareness about the companyâs stand and its raw materials used in making the products. Generally, the products made by Lush Cosmetics have many benefits to the users compared to other products. For instance, the products provide undoubted skin care for the user.
They are moisturizers for the skin, a feature that makes them more special because they are from fresh materials. The organic ingredients make the customer fell fresher and cleaner. Therefore, the products are going to be widely accepted in the United Arab Emirates and make the company a force to reckon in the industry.
Pricing Strategy
As mentioned earlier, Lush Cosmetics has concentrated more on womenâs products compared to menâs products. However, the company also needs to try the menâs products, as they will further broaden its market target. Penetration pricing is the most appropriate for Lush Cosmetics to use in determining the prices of cosmetics targeting men. This is a pricing strategy that is used by companies that are entering a new market in a new geographical area, or introducing a new product in the market.
The aim of a company that wants to penetrate a new market is to make the product accepted (Eldring, 2009). People are likely to buy more if the price is low; especially if it is a product they do not know. However, after the product has been known and has been accepted, the company can then hike the price.
The products of Lush Cosmetics are unique and have some special features that are not found in most of its competitorsâ products. As such, the company will adopt prestige pricing on the womenâs products, while keeping the prices relatively low. The pricing strategy for the company is value based, rather than cost based. Given the economic status of most people in the UAE, the high price for a high quality would be an ultimate strategy.
Distribution Strategy
The degree of market exposure for Lush Cosmetics in the United Arab Emirates can be classified as being relatively low because the advertisement of the company has not been highly efficient. There are still many people who are not aware of Lush Cosmeticsâ products. The distribution strategy heavily relies on the market exposure.
Products need to have a wide market exposure for them to achieve better distribution. Therefore, the company will need to improve is market exposure in the UAE. Its basis in these nations is only primary. It may need to increase the number of stores in various towns to reach more people. This will be a positive move for its distribution. Lush Cosmetics is a retail company, thus it should open more retail shops in the UAE.
Promotion Strategy
Promotion will be important as it will make the products well known (Wormeli, 2007). The objective of promoting the products in the UAE should be to further create the awareness of Lush Cosmetics. Therefore, the right promotion mix should be selected. Among the ways in which the company can do its promotion include communication, media, public relations, personal selling, as well as sales and promotion plans. Adopting this mix in the UAE will definitely give the company a good market exposure and its products will be known widely.
Customer Service and Relation Activities
Customers need to realise the highest possible value for the money they spend on a product or the services they get from a company (West, 2009). Therefore, Lush Cosmetics should offer the best possible services to its customers. Service quality has been excellent for the years the company has been in operation.
Lush has had good relations with its customers, as well as the employees. However, it should continue improving the relations with its customers. To do this, the company may establish a feedback channel through which customers will be giving feedback about the companyâs products. It should maintain constant communication with its customers to create loyalty, which will give it a competitive advantage.
Conclusion and Recommendations
Marketing is an activity that has the ability to bring high sales to the company if well executed. It is an activity that can define the success of an organisation. Lush Cosmetics has been in operation for a relatively short period of time, but it has been able to penetrate 50 nations within that duration. This is a sign that the company is doing well. The outstanding performance could be attributed to smart marketing, among other factors.
The company has had a good marketing strategy that has helped it grow in a speedy manner. However, there are areas that it needs to improve to help it grow further. For instance, Lush should work on its advertisement because its adverts are not as good as compared to those of other multinationals. The adverts are also less efficient compared to those of its competitors.
Moreover, Lush Cosmetics should open more stores in the countries where it already has operations because it only has a primary basis in most countries. Opening more stores will be an effective move in boosting its distribution network. These are among the key areas that will help the company succeed further in the United Arab Emirates, as well as in other nations.
References
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