In 1946, a well-known female beautician “Estee” and her husband “Joseph Lauder” established a cosmetic company with the name of “Estee Lauder”. There were four products introduced by this company that includes, Crème, Crème Pack, Cleansing Oil, and Skin Lotion.
The preceding discussion is based on the Ansoff Matrix analysis of the famous cosmetics firm “Estee Lauder”. There are four growth strategies involved in this process that entails, market penetration, product development, market development, and diversification.
Market Penetration
Distribution of the same goods to existing customers. The major objective of this plan is to enhance the market share of a firm. On 5th March 2019, investor day was arranged by Estee Lauder in New York to discuss the prestige beauty, innovation, digital strategy, travel costs and strategic standpoint of three years. In 2009, the market share of Estée lauder’s prestige beauty was 13 %, which has increased by up to 14.4% in 2017. The per capita expenditure on prestige beauty is constantly increasing across the world. Furthermore, it has been anticipated that the middle-class community of buyers will increase by 600 million until 2028 with 50 % purchasing power. This shows that prestigious beauty would have an opportunity to expand its sales growth. It has been recognized that the average sales growth of prestige beauty is 6% for the past five years. Whereas, the growth of Estee lauder company is more rapid than the average market annually. According to the management report, the average net sales of Estée Lauder is increased by 8 percent for the last ten years. In 2018, the company has reported that expansion in prestige beauty has enhanced the net sales up to $1.4billion. The preceding discussion shows that prestige beauty is a strong and fast-developing consumer sector (Vora, 2019).
Product Development
It refers to the development of new products for existing customers. Data analytics and consumer insights are highly influenced by Innovations and the success rate of a company has improved due to the introduction of new product lines. It has been estimated that around 30 % of the company’s net sales are increased through innovations in the mid of 2019. The management of Estee lauder has mentioned a few cosmetics and skincare products that are introduced in the market to expand sales. For instance, a company has introduced Estee Lauder Sakura lotion for Asian consumers by adding local ingredients like cherry blossoms. Estee Lauder has started selling its products by introducing an online shopping system. The company has reported that around 30% of its success in the market depends upon e-commerce strategy. Moreover, the company is expecting double growth in the future (Core sight Research, 2019).
Market Development
Introduction of the same products in the latest market. The company reported that the estimated sales growth is 6-8% in the future. According to the company report, Estee lauder is expecting to have 6-8 % sales growth in the future. The managers of the firm have declared to reduce product prices to earn 2 % growth in annual sales every year. Estee Lauder has decided to operate its business in different parts of the world through travel retail and online shopping. Moreover, the management of the company has identified that travel retail is an opportunity for the firm because the annual growth rate of travel retail is increased by 14% as compared to the last decade. The purpose of focusing on travel retail area is to engage customers during before and after travel. This strategy enables the customer to purchase from duty -free shops, airport kiosks, and pop-ups. Furthermore, social media has also been used by Estee lauder to enhance brand awareness among buyers. The firm is planning to have an acquisition to participate in the one percent growth of the firm.
Diversification
It deals with a plan When a firm intent to create and distribute the new product in a new market. In 2016, the company has reported 8% increase in sales at the Chinese market that is still below the normal growth rate of a company. But still, it is considered as a strong development. Currently, the company has decided to diversify its brand equity by using a diversification strategy to expand its business in some other regions of China. Furthermore, the company has focused to penetrate in those markets of China, where there is no substitute available (Trefis, 2017).
References
Coresight Research. (2019). Estée Lauder Investor Day 2019: Share in Prestige Beauty Growing, Online 30% of Business, Affirms Three-Year 6-8% Net Sales Outlook. Coresight Research.
Driven By Its Strong Brand Portfolio And Distribution Channel Diversification, Estee Lauder Delivered A Robust Q2 FY 2017. (2017). Retrieved 7 January 2020, from
Vora, S. (2019). Innovation Drives Estee Lauder’s Momentum.