BUS5SMM: Marketing - Lush handmade Cosmetics - Report Writing Assessment Answer

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Question: Marketing

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Marketing Assignment

Assignment Task

Describe the marketing background of the company that includes key information about the industry indicating where the company fits and/or positions itself for its target market paying special attention to sustainable practices- environment, society, resources use, etc (10%)

Analyse the current main products, services, suppliers and customers of the company (10%)
Describe the following current marketing strategies used by the company

pricing
promotion
distribution

Compare the marketing mix to its competitors (10%)
Make recommendations for improvement of marketing mix for product(s) to become morecompetitive- Include relevant sustainability aspects (20%)
Your recommendations and conclusions based on your analysis
Appendix: Include a SWOT analysis and positioning chart (perceptual map)
Formatting, professional writing and English expression, referencing

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Solution:

Marketing: Lush Ltd Marketing Background of Lush Mark Constantine and Elizabeth Weir founded LUSH in early 1980s. The two met in Poole, England in mid-1970s and mutually agreed to initiate and sell beauty products and natural hair. A couple of years later, they started creating natural and/or herbal beauty products for both the hair and the skin (Kreß & Dollinger, 2013). When they started, things were not easy for them and they nearly closed down because their products were novelty and extremely distinct from other products offered at that time. Consequently, their commercial value was limited. However, Mark had about Anita Roddick who was running a Body Shop, called her up and informed her about Constantine & Weir’s products (Teather, 2007). She liked the products and made an initial order of about £1,200. This was a good starting point for Liz and Mark who then developed more remarkably exceptional products for The Body Shop, which made them the biggest supplier of the firm for at least a decade. In the 1990s, Roddick’s company bought products formulas from Constantine & Weir worth £11 million, as they wanted to be the only company acquiring its unique products. Consequently, Liz and Mark developed a mail-service business termed as Cosmetics-To-Go (CTG), which ran for about 5 years (Ryan & Jones, 2009). CTG failed in 1995 and Mark and Liz had to do away with it and adapted a ‘hand’ method to make hair and beauty products from vegetables and fresh fruits. They shifted from Constantine & Weir business to LUSH after engaging their customers to helping them come up with a new company name. LUSH started on a high note as several people showed interest and in 1996, Canadians Karen and Mark Wolverton introduced it to the international scene by opening a new store in Vancouver. Presently, LUSH has at least 150 stores in North America and over 800 stores in more than 45 nations. It is among the greatest retail manufacturers of beauty and hair products in the world. It represents the cosmetics sector under the tagline fresh handmade cosmetics. The target group for LUSH Company is women who are inclined towards vegan lifestyle and it believes in making its customers happy (Kreß & Dollinger, 2013). The company is now documented as an excitingly exceptional organic cosmetic manufacturer due to its inventive products. With a key focus on raw or natural products, LUSH preserves a corporate social accountability ethos. It believes in sustainability of the environment through embracing eco-friendly techniques and approaches to production (Paley, 2005). It is recognized not just for its handmade cosmetics but also for its efforts to transform the beliefs of consumers when buying the company’s products. Every aspect of the firm, from manufacturing to selling the products to consumers is environmental friendly. The ingredients used in the company are preservative-free, vegetarian, and acquired from firms that do not engage animals for testing. Moreover, the company never uses plastics and even permits consumers to buy the products ‘naked’ that is harmless to the ecosystem and facilitates the going for ‘green’ packaging choice (Teather, 2007). Recycling is part of LUSH as it recycles everything including in the factory and during transportation, which is done at max effectiveness. Therefore, the adaptation of fresh produce as raw materials for the products has given the company a strong competitive advantage. Internal Analysis The founders of Lush have been working tirelessly to produce their handmade cosmetics and meet the demands of their customers. The company began with few innovative products that attracted the interest of The Body Shop and other consumers. LUSH, which is headquartered in Poole, England, transformed the bathing world through initiation of innovative bath products such as shampoo bars, bath bombs, and massage bars (Randazzo, 2014). Moreover, it offers skin care and body fragrances, shower care, and organic hair care. Some of the body products produced by LUSH include deodorants, dusting powders, lotions, shower soaps, hand, shaving, and feet ointments, massage oils, tints, and cleansers among others. The face products include toners, cleansers, moisturizers, masks, lips, teeth, and shaving creams. The most common hair products include shampoo, treatments, color, styling, conditioners, and shampoo bars. Makeup services offered covers the eyes, lips, and the face in general. In their spa, LUSH offers not just diversified treatments but also music (Kreß & Dollinger, 2013). Its common perfume product is the gorilla perfume, which indicates that the company generates all categories of cosmetics. LUSH services are the best and ranges from makeup and massage to treatments and music. The makeup entails color essentials that give the clients rudiments, which make them fabulous (Lush Fresh Handmade Cosmetics, 2016). The combination of almond oil and organic jojoba oil during skin care gives the skin effective hydration and naturalistic moisturizing. After the makeup, the clients’ skins not only glow but also demonstrate emotional brilliance. The company also offers enduring and moisturizing lipsticks that are made of rose wax, organic jojoba oil, and candelilla wax, which leaves clients with splendid lips (Lush Fresh Handmade Cosmetics, 2016). Treatments feature a variety of services that include but not limited to validation facial, synesthesia, the planets, the sound bath, tailor made sail, the good hour treatment, the spell, the comforter, and the hard days’ night treatment. The fact that all these services integrate organic products makes the body to relax and become healthy (Paley, 2005). The music features fresh handmade soundscapes that plays in Lush spa to make clients to feel good when receiving treatment services. As mentioned earlier, the main customers of Lush Company are women who majorly use cosmetic products. They love makeups done by the Lush professionals and enjoy various treatment services including massages. At least 80% of the products generated by the company target women customers (Teather, 2007). They fancy beauty more than men and that is why the make up the largest percentage of Lush’s customers. They range from 20 to 35 years old although older women also come for massage and other treatment services. Marketing Strategies Pricing The company runs by its mission statement, which asserts that everything within the firm spins around it, including its pricing rules. The main theme that drives Lush’s pricing is first-rate pricing for first-class products (Ryan & Jones, 2009). It means that its products are priced slightly higher than its competitors are because they far much better in quality compared to the products of their competitors. However, different products have different price tags depending on their size/quantity, use, effectiveness, and production cost. According to Kreß and Dollinger (2013), the prices range from $5.00 to $75.00, which is slightly higher, compared to main competitors such as Aubrey Organics who prices range from $3.00 to $40.00. The company emphasizes on price/quality relationship as its main pricing policy. Consumers relate high prices as a symbol of high quality. This relationship provides the company with another chance to present itself as a forte quality merchant. The belief of the quality/price association is particularly significant to Lush due to its product line (Liu & Zhang, 2016). Personal care and beauty products depend on the quality/price association because they cannot be tested until after they are purchased. It makes them extremely complicated and experimental, and it offers consumers a sense of hesitation. The greater indecision surrounding a product, the more customers rely on the quality/price theory and the bigger the premium they are prepared to pay. Promotion Initially, Lush was highly criticized for its limited advertisements, which made its brand unfamiliar to many people. Due to its unique products, the company did not engage in extensive marketing promotion but still had sufficient customers who enabled it to make good returns. The situation is different today because the company engages in various promotional activities (Paley, 2005). It also engages in extensive corporate social responsibility campaigns, no animal testing, and green initiative, which enhanced its brand awareness. In addition, Lush is among the few companies that have highly comprehensive website. Its website contains information about every aspect of the company from its inception history to the latest product innovated as well as the price tags of different products with several features. The wide range of information provided on the website makes it extremely informative (Teather, 2007). A complete stranger can learn and understand everything about Lush by just going through its website. Most of all, Lush has recently adapted to a new promotional strategy called Lush coupons and promo codes. The system works by reducing certain percentage of the price tag of an item when the consumer accepts certain condition. For instance, the Bogo code encourages consumers to purchase shampoo by rewarding a free shampoo for each shampoo bought. The 25% off code encourages consumers to purchase products through the online market because for each product bought, the customer gets a commission of 25% (Kreß & Dollinger, 2013). Therefore, Lush has advanced its promotional strategy as it targets to increase its customer base. Other aspects include printed advertisements primarily in magazines such as Cosmopolitan and on spinoffs of websites of TV channels whose viewers are mainly women including Lifetime, CWTV, and Oxygen among others. Distribution Lush has over 800 stores in more than 45 countries across the globe. Each continent is well represented with at least 5 countries offering Lush products and services. With this in mind, Lush uses its widespread stores as distribution channels. They are located in essential areas, which permit customers to easily access them and acquire their favorite organic cosmetic products (Krautter, 2010). Once a new product is generated, the company advertises it to create awareness to the consumers. It then distributes them to all the stores in different countries so that the customers can access them. Moreover, Lush also distributes its products through wholesale channel, which is extremely significant. Different wholesalers acquire the products and sell them to the retailers who in turn sells them to the customers (Paley, 2005). One of the key benefits of wholesale distribution is that it purchases the products in bulk and sells them in large quantities. Wholesalers also offer warehousing of the products and transportation to different locations. A good example of a wholesaler that worked with Lush was The Body Shop, which transacted business with Lush through bulk buying and mass selling. At one point, it bought products worth £11 million, which promoted Lush’s business venture extensively (Kreß & Dollinger, 2013). Therefore, Lush’s distribution mechanism is highly effective and contributes to its superiority in the marketing field. Comparison of the Marketing Mix to Competitors Baker (2012) defines marketing mix as a business tool that relies on either the 4Ps or 7Ps and helps the business people to understand the right combination of the promotion, product, price, and place. As observed, the 4Ps of Lush have already been discussed because all the products are mentioned and the places (stores) through which the company reaches out to consumers have been discussed. Moreover, the aspect of promotion is analyzed extensively while all the pricing strategies are mentioned. However, they are not analyzed in line with the company’s competitors. Its main competitors are Proctor & Gamble Company, Johnson & Johnson, L’Oreal, which acquired The Body Shop, and Aubrey Organics (Randazzo, 2014). Unlike Aubrey and L’Oreal Company that recently started dealing with organic cosmetic products after acquiring The Body Shop, the rest of the competitors deal with a wide range of non-organic cosmetics products (Liu & Zhang, 2016). Note that The Body Shop was one of the key competitors of Lush despite having conducted business together for decades. The following positioning map shows the level of competition that Lush receives in the UK market. Positioning Map: Lush’s Competition in the UK Market

With respect to products, Lush seems to have an upper hand because it primarily generates organic cosmetic products as opposed to its competitors who focuses on non-organic products. Aubrey Organics generates organic beauty products but it is still a minor competitor because it is not widespread compared to the other competitors (Krautter, 2010). Moreover, its production is purely manufacturing using machines in the factory as opposed to Lush’s hand technique. The only difference is that companies such as P&G do not just deal with cosmetic products but also products such as toilet papers and diapers (McGuigan, 2015). Therefore, Lush strives over its competitors in terms of quality products due to its adaptation of organic handmade products. When it comes to distribution, P&G and L’Oreal seem to have an upper hand because they have stores in more countries than Lush and have more stores as well. The two are present in more than 50 countries worldwide compared to Lush’s 45 (McGuigan, 2015). Both of them also have more than 1000 stores in various countries compared to Lush’s 900 or so. However, Lush is more satisfying to the customers because it supplies purely natural beauty and hair products as opposed to the competitors who supply other products as well. The difference is also observed in pricing where Lush uses a completely different pricing policy compared to the competitors. As mentioned earlier Lush uses the ‘premium price for premium products’ slogan which creates a quality and price relationship (Teather, 2007). On the other hand, the competitors use the ‘lower price’ strategy to attract more customers. With respect to promotion, the competition is very stiff because the companies use nearly same promotion strategies as are all in media advertisement and offers strategy. Recommendations and Conclusion Lush has achieved a lot over the years and that is why it has grown immensely. However, there are few areas which it can improve and transform the beauty industry completely. First, Lush has not done enough in terms of promotion because despite using nearly all the common promotional platforms, it has done it in moderation. Its brand name is still not as popular as names such as L’Oreal and P&G (McGuigan, 2015). For instance, advertisement through print media is insufficient because it only uses magazines. In fact, other than Cosmopolitan magazine, it is not clear whether it uses other brands or not. It has not ventured into social media extensively, which is significant in today’s world. It is important for Lush to maximize on promotion by integrating advertisements on more television stations not just in Great Britain but also other regions because it is a global company. Other than magazines, it should adopt other platforms such as billboards, brochures, and newspapers and use them extensively. For magazines and newspapers, Lush should utilize at least three different companies for each category. For television advertisement, it should integrate international channels such as BBC and CNN to reach out to the global population (Liu & Zhang, 2016). The venture might prove to be costly, but it is worth it because Lush will eventually acquire millions of new customers and improve its performance greatly. Furthermore, Lush needs to capitalize on its strengths to create a stronger competitive advantage. No other company in the world generates handmade cosmetics products in the world. People are used to machine-manufactured products, and since everyone loves to exploit, they would love to test the handmade beauty products (Krautter, 2010). Proper promotion would attract those who love to exploit to try the new products. Moreover, the company concentrates so much on women, but it should understand that the world is changing since men are also learning to integrate beauty products. For instance, presently, men engage in massage activities more than women, especially in the developed world. Therefore, the advertisements should integrate universal platforms where they reach out to both men and women.

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