The study aims to demonstrate the understanding of the strategic management tool developed by the company in order to develop their market strategy. In this assignment, the researcher has decided to consider the business strategies followed by Coty and compare those business ideas with that of Loreal. The researcher has also taken the help of tabular and graphical presentation to outline the positive and negative side of the business. Use of Growth-Share Matrix, General Electric’s Master Strategy, Marketing mix and rest other strategic business models. In addition to these, financial statement analysis including CVP analysis, ratio analysis is done to assist the research works and get the pin pointed conclusion.
Coty is a well renowned beauty industry specialized in fragrance and beauty products including a wide range of skin and hair care products. Initially this particular beauty industry was established in 1904 in Paris. This north American beauty product dealer generated a huge revenue from their sophisticated French perfume for the last ten years. The industry signed many deals and entered into partnership with well familiar brands including Burberry luxury fragrances. Shortly after introducing those products in the market, Coty had received a very good response from their customers.The present CEO of the company heartily welcomes the demand from the customers and encourages its research and development team to work further with skin and hair range. Hence one can say, its luxury fragrance brands gave the kick start to the business which has flourished now with so many beauty products, various departments under one roof with a large number of youth employed. The CEO of the company typically believes in serving a particular class of consumers so that there is limited customer whom the company service at its best. Therefore the company manufactures premium brands with personnelexpertise in classy products manufacturing. All the major credit goes to Francis Coty who turned a small residential villa at the outskirts of Paris to a luxury perfume industry. Initially Coty’s principle was little different and unique from others he believed in richness within affordable range so he hired skilled artists who could design glass wires so that the bottle could be given a classy outlook that could easily drive a large number of customers in terms of packaging. Even Coty never hesitated to employee highly skilled chemists in perfume manufacture. This is how this industry begun and later turned into collection store of almost every kind of beauty products. Gradually with time the business flourished more and Coty opened his new subsidiaries in other countries like London and New York and as history reveals, World War 1 ended up with solders gifted with these perfumes as a token for their beloved. Literature also says that the beautiful fragrance bottles were sculpted so vividly that the bottles became the key stone of success of the fragrance industry (Schloderer and Mezias, 2016, p.1073). The man who was in charge of designing and architecting was a jeweler by profession. Hence Coty’s business generated more revenue because he employed so many people with different skills whose joint effort and skills shook other competitors.
|
year |
Product sales |
Profit% |
|
2012 |
8000 |
82 |
|
2013 |
8020 |
85 |
|
2014 |
8065 |
82 |
|
2015 |
9000 |
94 |
|
2016 |
9015 |
94 |
The main product for which the industry is famous is fragrance hence this product is something for which every individual of different ages craves for. Aroma of perfume can actually change mood rather creates a different environment. The market research team of Coty survey annually for the customer demand and need. Based on those reports products are developed. If perfume sectionis focusedinitially, it is noted that the company has a wide range of fragrances. The fragrancesare prepared from wild extracts, mainly botanical extracts so that it may persist for a long time. The company literally emphasis customer needs, for perfume their target customer falls within 16-50 aged people. It has also been noticed that selection of fragrance mostly depends on profession of customers (Siskos et al. 2016, p.12). A person working with teaching profession will go for light fragrance where a person employed in any glamour industry will look for any impressive lasting fragrance. Similar data are observed between customers of two genders. Most women like fruity fragrance where men mostly go for strong fragrances. Recently the company has launched skin and hair care range which are made purely from botanical extracts. For these products the target market are usually set at the ladies who are engaged with any kinds of profession and have not much time to apply homemade pure remedies to themselves. Every day hectic and busy schedule is making their hair and skin totally ignored ultimately resulting into quality and texture deterioration. Coty completely has taken the initiative to look into this serious issue and take care of beauty of these ladies.Coty comes with chemical free skin care products which do not require any multiple step application, single touch up gives the best result. The shampoos are also available at a verity range considering different kinds of hair trouble faced today. The shampoos include anti hair loss shampoo, anti-dandruff shampoo, anti-freeze shampoo and so on. All these products describes so far received star reviews with increasing demand so the most recent and latest product launch was lipstick range which led a hit target to ladies as well as young girls. Lipsticks are something which are loved by all women and they can’t think of stepping outside home without wearing lipstick. The lipsticks ranges are triggering a fabulous response (Christensen et al. 2016, p.13).
Comparing to the similar other companies dealing with beauty products, Coty gives them a competitive rivalry as because Coty has the potential and it has achieved the global business strategy and proved itself as the effective competitor in glamour industry in terms of beauty products. The company has beautifully inherited the risks involved and associated licenses of transactions. Coty has always implemented the decision of its expert team so that no such risks are generated in the business which may include loss of cash and similar unpredictable circumstances (Fossan and Saebi, 2017, p.210). Coty regularly monitors the managerial, operational, integration and legal risks involving if any, fixes them immediately. This particular approach makes this company stand different from others. Another important aspect is it always maintains what it claims therefore till date neither of its valuable customer has turned off from using any of the products. Coty among its competitors such as L’Oreal does not hold the top most position but its name has been enrolled in the list of top ranking beauty companies. Unlike other similar companies Coty maintains good rapport with other brand partners and Burberry has achieved its ability to penetrate the current market, protecting their own intellectual property which includes brand name, logos and company seal those which has made Coty a ‘luxury brand’.Coty maintains a large number ofdistributors and suppliers which reduce their gray market distribution to a large extent. Not only this Coty offered career options as per vacancy comes out, thus employing many young people (Stead, 2016, p.101). The employment section also offers paid internships to students. Therefore, apart from pleased customers the employee reviews are equally important in creating the brand image in market (Bocken et al. 2016, p.311). Every single change made in field of law and business regulations for example rise in GST are implemented immediately which reflects the transparency followed by the company.Coty has secured its position in market among many other beauty brands because its brand loyalty at the same time introducing different and effective product range which includes daily use items at reasonable cost. This drives mass to shop these quality products of daily use. At times, they declare lucrative deals for short period on luxury items this particular timeCoty gets more customers than usual. Customers who cannot afford luxury perfumes and beauty products, often becomes regular customer during this period. In this way Coty gets hold of customers belong to different section of society (Steenkamp, 2017, p.80).
The five P’s of marketing which are primarily focused while running the business in case of Coty are as follows:
Price: when the business was originated initially, the price of the items were kept quiet reasonable in order to attract mass. Although the business tried to sustain in the market with a single product at the very beginning, the best quality within affordable price gave it a kick start. Gradually the fragrance and perfume collection of Coty became very popular and demand increased. As discussed in the previous sections, the proprietor of the business equally focused on the packaging. Hence with the increasing demand it became little difficult to meet the manufacturing costs at a low price. Therefore, to assure the previous high quality to customers, the management had to raise the price. Now the perfumes and toilette are mostly of upper range unless any special offer called.
Product: the signature product of Cotywas introduced first but later onwards the quality made customers demanded for other beauty products at an affordable price. Coty launched skin care and hair care range which all are not premium brands except few such as Calvin Klein. These beauty brands became quite popular and were accepted in the market within few days.
Promotion: already discussed in the previous section that Coty wants entire society to use their signature product along with other regular products. Therefore at times the company calls off season discounts or special offers so that premium brands can be made affordable to everybody. When the regular products were introduced in market, celebrity brand ambassadors were appointed to receive good response from the mass awareness.
Place: Coty has opened a few of its official stores across the mega cities of UK, France and US. It has further plan to widen the business to many other countries. Other than visiting the store, it has online official website so that people in other cities can reach them directly sitting at home.
People: Coty marketing and research team is trying more to develop brands which can deliver similar service at reasonable price. May by the company is trying to come up with small quantity at low cost. The target customers of Coty are mostly working men and women. Women customer holds much more volume.
Since starting of the business Coty has been following direct sales as well as Freemium model. Apart from the official stored and head office, Coty is well known beauty brand who are known to offer their business online mode so that people across countries can easily purchase their product (Harrington et al. 2017, p.560). As it is known in freemium model any service is provided at zero cost so here when Coty is making transactions online, customers are relieved from the high tax which need to be paid while visiting large storied shopping malls.
Direct sales generate 50% of the revenue as in case of Coty as there are always much options as well as variety in official stores. Sales assistants are always present there at service to assist every customer individually. Here in this case the beauty product sales generate revenue where the sales assistants build a network who become a direct link between manufacturer and customers. Although in most cases it is observed that there is not any fixed location for any retail outlet in case of direct sales, hence the sales personnel are connected with parent companies who wish to become independent entrepreneurs (Luo et al. 2016, p.26). Coty mainly follows demonstration method in direct sales model. Here the business owners of every retail outlets of Coty earn a fraction of revenue where Coty provides the product which retains the remaining revenue.
If one observes the strategy canvas of Calvin Klein for example, one can see the graph plots all the factors as well as functions for Coty that overlays all kinds of competitors involved as well as its bench marks. This graphproves to be the effective tool to construct formulations for a competitive strategy (Daspit et al. 2016, p.12). As in case of Coty different graphs are plotted for every individual product so that any kind of risks or any deficiencies can be figured out before it may affect havoc. Hence constructing different strategy canvas has helped Coty to widespread its business and communicates to mass indirectly. Hence the strategy canvas of Coty provided the simplest way to visualize how to hit target and challenge its competitors.
The core activities of Coty are marketing, as it can be seen from the above analysis of marketing strategy of the company that Coty invest majority of its profit on strengthening marketing. It knows which customers to target, how to convince them and how to retain them in the parameter of their product segment. According to Stead and Stead (2016), the 7P’s of marketing mix contributes to the expand their product line and to generate profit with slight hike in the price of the products especially in case of demographic segment.
The tabular presentation of resource and capability evaluation is given below.
|
Resource and |
Capability |
Evaluation |
|
Material |
The available raw material is capable enough to produce double the finished goods of last year production |
So far, the cost of raw materials and cost of processing them into finished goods is concerned, the company follows FIFO method, also they purchase raw material at a discounted rate from the existing supplier. |
|
Machinery and Equipment |
The advanced machinery and equipment are easy to use and efficient to produce goods in huge quantity without compromising the quality. In addition, the depreciation amount of these machinery is quite less. |
In this case, the company manage well, the equipment with the help of efficient and skilled workers also keeps timely maintenanceof the machinery. Moreover, they do not necessarily compromise with the cost of buying. |
|
Human |
The HR department of Coty is well organized and hence the employs of the company feels almost no problem in working such environment. |
The human resource department of the company is well organized, almost all the critical problems, whether may be related to salary, or disputes among the employee relationship. The special HR team takes good care of it. |
In this case Coty has revamped and declared plans to exchange administration workplaces to London as it starts the way toward incorporating brands it has procured from P&G. These acquisitions have made Coty a best stunner player in a few classes and the pioneer in aroma. Presently, Coty’s new CEO, Camillo Pane, will be entrusted with coordinating the greater part of the organization’s brands.
Camillo, who at present fills in as official VP of Coty’s classification advancement, will have his arrangement happen in October when the merger of P&G Specialty Beauty into Coty is shut. Bart Becht, current CEO and board executive, will keep on serving as the director of Coty’s board. In addition to these, Pane will administer Coty’s income motivation while Becht keeps on concentrating on the post-merger mix of brands.
Pane has been with Coty since 2015 and already held parts with Reckitt Benckiser plc.
“I am respected to wind up noticeably the CEO of Coty at such an extraordinary minute for the organization,” said Pane. “The new Coty will have a solid arrangement of purchaser cherished magnificence brands with brilliant potential and an exceptionally experienced administration group, which it will be my benefit to lead.”
Pane’s successor as Coty’s official VP, classification advancement, will be declared later.
“I’m extremely satisfied to see Camillo selected as CEO of Coty,” said Becht. “He has a magnificent reputation of quickening development, enhancing business execution, and reinforcing abilities to make a best-in-class association. At Coty, he has just shown himself to be an exceptionally solid pioneer with an extreme drive and energy to make Coty the new worldwide challenger in excellence for the advantage of the two buyers and investors alike.”
In the course of the most recent a year, Coty Inc’s. (COTY) stock cost expanded 67.1% to $27.24 on October 6, 2015, contrasted with $16.30 on October 6, 2014. The expansion in stock cost is essentially because of Coty’s consent to converge with Procter and Gamble’s (PG) 43 magnificence brands. Coty offered $12.5 billion for the 43 brands. To take in more about this arrangement, please read Procter and Gamble Divestitures: Is 43-Brand Coty Deal the Last
Coty has a solid innovative work (or R&D) group, which helps in new item advancement and development by joining front line research and innovation. Research and development uses totaled 1.1% of net incomes in monetary 2015.
Coty has a solid brand portfolio that is very much situated to take part in the recovery of buyer spending. As indicated by IPSOS, referred to in Statista, Adidas was the most expended aroma mark for men in Russia in 2013, with a 14.3% offer of respondents. Avon’s (AVP) and Gillette’s (PG) offer of respondents came in at 11.9% and 10.9%, individually, in 2013.
An expansion in expendable wages and the impact of Western culture drove expanding interest for excellence items in developing markets. In any case, the upgrades in the economy could lead a few customers to spend more on excellence administrations and, accordingly, compel interest for certain magnificence items, for example, hair colorants.
Coty, similar to peers Estée Lauder (EL) and L’Oréal (LRLCY), offers an expansive scope of items through travel retail channels, for example, aircrafts and journey lines.
Aside from retail (XRT) dispersion, web based shopping is picking up ubiquity. As indicated by an A.T. Kearney report referred to in Statista, 27% of studied respondents in the US obtained aromas online in 2014. For shading beauty care products, 29% of the overview’s respondents revealed purchasing these items on the Internet.
Developing customer dispensable wages and declining joblessness rates have helped in developing the beautifying agent’s industry. The organization plans to grow in developing markets with a target of creating more than 33% of its income from rising economies.
It has been observed that both the organizations have been implementing certain new and innovative methods in order to enhance their sales quantity and attract more customers. The Coty focused primarily on Quality rather than Quantity that led to the popularity of the brand as a good quality and expensive product manufacturer. However, the sale quantity of this company has not been as good as its other competitors. The manufacturing of perfumes of Coty packed inside a beautifully made bottle has played the role of a catalyst in increasing the sales and popularity of this brand. However, there are certain recommendations that can be followed by the organization to further enhance the profit and services quality to its customers.
The above study has successfully discussed the fundamentals of strategic management with respect to the marketing of various products manufactured and launched by an organization. This has included the different strategic management tools that are very important in marketing any particular product of a company. The assignment has clearly mentioned the various business strategies that are being followed by Loreal and Coty. The methods and techniques used by these two companies in order to stay ahead in the market competition have been discussed in the assignment along with the strategies that are superior to one another in terms of marketing effectiveness. The significance of these strategies have been demonstrated by the usage of various models including Growth-Share Matrix, Marketing Mix, General Electric’s Master Strategy and certain other business models. The assignment has also included the financial statement analysis that consists of ration analysis, CPV analysis. The customer target analysis has been a significant analysis in this assignment. In addition to this, the direct sales model and Strategy of Canvas Klein have also been considered. Moreover, the evaluation of resources and capability of the organizations have been discussed. The outcomes of these analyses have been utilized to calculate the accurate conclusions related to the marketing statistics.
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