- INTERNATIONAL MARKET ANALYSIS
CULTURAL ANALYSIS
France, located in Western Europe, is over 16,000km away from Australia. It is the largest west European country with a size of over 551,000 km2, and the country’s neighbours include Germany, Spain and Belgium. In terms of languages, French is the predominant and official language in France. Therefore, language is a major consideration in deciding the marketing mix of the product (France census & statistics department, 2004; Lonely planet, 2004).
Due to the country’s size, varied geography, climate in France may vary across by regions. The weather can be unpredictable from being high in humidity, fairly hot in summer and cold in winter and the rainfall patterns appears to be erratics throughout the country. The nightlife within the country also impact on the skin care products to be used by individuals. In France, some 24 hrs night clubs are offered as compared to late-night bars and cafes available in other European countries. As a result, the environment, lifestyle and change of seasons can influence on the skin type individual possessed. Hence, it is essential to market the product to the appropriate target market to sell the product efficiently (Columbus World Travel Guide, 2004; France Observatory, 2003; Lonely planet 2004; Yahoo Travel Guide, 2004).
ECONOMIC ANALYSIS
Population
Population in France estimated at 61.7 million inhabitants as at January 2004. France’s population is concentrated in urban centre and the population density of Paris is 20,000 per km2 while the population density of France as a whole is approximately 110 per km2. In terms of population growth, the year 2003 was marked by a significant rise in the number of deaths to a level not reached in Metropolitan France (mainland France plus Corsica) since 1985, due to the August 2003 heat wave (Eurmonitor, 2004; INSEE, 2004).
Economic Activities
France is the fourth-largest economy in the world and the second largest market in the European Union (EU). French total GDP is $1,547,579.12 in 2003 and GDP per capita is $26,000 in 2002. GDP real growth rate is 0.2% in 2003, which reflects France is a highly developed country. France is a high-income country with personal income per capita of EUR$14,564.35 and EUR$17,255.59 in 2002 for female and male respectively. With household annual disposable income, in 2003 an average household earns in between over EUR$417 (US$500) and EUR$6,250 (US$7,500) (Euromonitor, 2004).
Trade restriction
France as a member of the European Union must abide the obligations within the European Union. European Union has a harmonized trade system and strict laws. Regulations in terms of packaging, registration of formulas and safety tests are time consuming and expensive, and delay the introduction of products in the French market, meaning that only large multinational companies can afford to operate. In the last two years of the review period, no significant new manufacturers entered the French cosmetics and toiletries market.
Channels of distribution
In France, large retailers are required to switch to an intensive growth model whereas before growth relied essentially on generating high volume sales through retail sales area expansion and by offering best selling prices. On the other hand, the discounter sector has expanded intensively over the last 10 years (Euromonitor, 2004). Department stores remain an important retail channel for cosmetics and toiletries with 11.8% of total sales. In 2003, there are 151.99 department stores and 23320.19 chemist and druggist outlets. Department stores generated 55.1% of value sales in 2002, amounting to €4.9 billion. Variety stores represented 44.9% of large retail outlets, amounting to €4 billion. There are 6 main department stores in France, Rallye SA and Grands Magasins Galeries Lafayetta hold the highest share value. However, department stores still remain with the highest total sales in clothing and food (Euromonitor, 2004).
Media
Advertising is very important in the French cosmetics industry. In 2000, 13 per cent of French cosmetics companies’ capital was spent on publicity. On the whole, the cosmetics industry takes up a quarter of the advertising space in France. (Euromonitor, 2004).
MARKET AUDIT AND COMPETITIVE MARKET ANALYSIS
The Product and Market
Organic herbal anti-ageing skincare products are in the trend of the modern cosmetic market. Research in France expects an exponential growth of organic products in all cosmetic sectors, currently estimated at over 20-25% per year, suggests that organic cosmetics could soon turn from a niche to a mass category. Also the middle aged and retired female consumers show the highest interest for organic anti-ageing products.
Organic skincare products provide a more natural alternative. This is the most important reason contributed to the rapid growth of this sector. Since many of them are purely plant-based with little or without any artificial additives, they bring a better perception to customers, as they are increasingly aware about the presents of artificial chemicals in the skincare products that they are using.
In France, this category of product looks really bright in future; it may be able to capture the entire consumer market at the highest end. For anti-ageing, there are solutions which can provide a faster treatment with a more successful result, such as botox injection and cosmetic surgeries. Also, the giant cosmetic companies are capable of investing heavily in research and development on products with good anti-aging result, which need not to be organic products. Consumers will still have faith in them because of the brand name effect.
Moreover, French consumers are fashion oriented and willing to try out any new products especially when the products are endorsed by celebrity on television advertisement. In terms of using skin care products, they still remain highly brand conscious and are not willing to take any chances on unbranded products. Recent years, anti-ageing products in France has shows strong growth in the cosmetics and toiletries industry, this in turns is the causes consumers to spend on such high-end items despite economic uncertainties.
Competition
There are many leading brands in France that are local owned, not only because of the traditional culture of couture and make-up in France, but also because of strict laws. The French cosmetics and toiletries market is characterised by a host of long-established companies and brands that benefit from large resources for research and development, as well as advertising and promotion. Brand that are already present in the organic category include, Doux me - products made of 100% organic essential oils, floral waters, and vegetable oils; Sanoflore - product range which commercialising essential oils destined for medical use and; L’Occitane - products are based on essential oils and natural ingredient, ingredients are from nature if possible.
Final Recommendations
After reviewing business opportunity in France, is proved to be a bad market for Jurlique skincare products. Although the sales sector of skincare product in France is very huge, there are some set backs which makes France is an unsuitable market for the product.
One common advantage for French market at the moment is the strong growth on organic cosmetic products after an increase of awareness in the goodness of natural herbal products in recent years. On the other hand, a common disadvantage is the extremely competitive cosmetics market, with almost 50 major brand names currently existing in each market. Also, the small degree of trade openness in France makes foreign products harder to enter and to explore the market.
For France, the strict regulations on foreign imports contribute one of the most severe disadvantages. The protection on local products and tariffs on foreign imports in France are widely known. Regulations in terms of packaging, registration of formulas and safety tests are time consuming and expensive, and delay the introduction of products in the French market, meaning that only large multinational companies can afford to operate. Researched has shown that in last two years no significant new manufacturers entered the French cosmetics and toiletries market.
Even though the product can successfully enter the French market, it still needs to face the heavy competition from the local cosmetic giants, along with the local brands that produce organic cosmetics. Consumers in France are also more likely to choose local brands rather than foreign imports. Particularly, for anti-aging products, more consumers in France are willing to pay for quick-fixed solutions such as botox injection and cosmetic surgeries.
Recommended strategies for exporting Jurlique skincare product to France
Product considerations
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Type: due to consumers’ willingness in testing new products, the trend with increasing demand in anti-aging skin care and organic cosmetic products, Jurlique’s Day & Night moisturisers & treatments should be the product to export within the company’s product range.
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Size: Using the standard size of the product, as follows:
Herbal Recovery Gel – 30mL & 100mL
Eye Gel – 16mL
Neck Serum – 30mL
Winkle Softener Beauty Cream – 8mL & 40mL
- Design: using white porcelain cylindrical bottle could be recommended due to the originality of the design. The bottle will be put into a purple box which is the signature colour of Jurlique.
- Labelling: French language could be used to communicate the quality, functionality and nature of the fragrances.
Price considerations
- The pricing strategy should be compare with the products having similar purposes from other local premium brands.
- In addition, the logistics and distribution costs should also be considered.
Communication considerations
- Concentrating on the main and most valuable attributes of the product: organic, herbal and purity from the country of origin.
Promotional considerations
- Advertising: television networks and gossip magazines.
- Sales promotions: packages with gift packs and samples (e.g. mini facial)
- Sponsorships: celebrities promoting the products
- Internet: web site with description of products in French
Physical distribution
- The product should be delivered by ship to France. Once arrived, the product can be easily distributed through the well developed road network. As the container of the product is made of porcelain, special cushioning might be needed.
- The distribution effort will initially be on a counter of major
Key issues to consider
- Sufficient testing on the products must be conducted in order to maintain the highest quality.
- It is important to consider that French consumers have a higher demand in skin whitening products rather than anti-ageing product. In addition, people are reluctant to use both products at the same time.
SELECTION CRITERIA
The following criteria described in this section of the report includes factors in which it is considered important in making decisions regarding the exportation of herbal skin care product from Australia to France.
Cultural Selection Criteria
Location:
France geographical location is an important element to consider. Reasons due to the distance from Australia to France would affect the speed of the delivery. The longer it takes for an order to be filled, the more accurate sales forecast need to take place in order to avoid stock out. On the other hand, it would also affect the price of the product positioned in the specific countries.
Climate:
The factors in which specific type of skin care products to be chosen and used by consumers depend on the changes of temperatures and seasons within the country.
Languages:
The official language of the destination can influence the marketing mix of the product. The features and the packaging of the product would also be highly dependent on the languages which communicate within the country.
Economic Selection Criteria
Population:
Total population, growth rate, density and birth/death rates characterize the size of the market which is an important indicator for cost benefit, reach of economy of scale and market demand and potential. On the other hand, distribution of population (the segment of the market) can gives the company directions to follow and reveal possible implications.
Economic statistics:
It is essential to under the economic indicators in order to determine the market potential for the feasible country. GDP is examined to identify the purchasing power of the customers within the market. Both household and personal incomes can provide possible market potential for the products. Nevertheless, inflation is an issue which can affect industrial customers and consumer’s buying habits and encompass the ability to introduce any uncertainties to the company and the consumers.
Labour force:
Employed and unemployed population and rate, cost of labour and level of salaries are factors which can influence the company’s decision when selecting entry mode, for example, whether to export or set up a new factory.
International trade statistics:
It is vital to recognize the kind of products which exports and import to and from the countries as it gives the marketers the knowledge to understand the current trade markets prior to determine which markets the product should be enter into.
Trade restrictions:
The presence of unfavourable trade restrictions, such as quotas, import and export tax, tariffs, licensing and customs duties can reduce the profitability and growth developed within the country. Therefore, it is important to recognise the trade restrictions in the market in France to make exportation decisions to the most beneficial.
Channels of distribution:
The structure of the distribution channel can affect the speed and efficiency of introducing and selling the product. Taking into account the types of distribution channels (retail or wholesale), firms will also need to decide whether any intermediaries will be appointed in the process of launching the product. In addition, it will affect the amount of potential consumers the company can reach.
Media:
Unless the distribution channel is extremely efficient, a wide range of communication media (Print, Transit, TV, radio, etc.) must be utilised to enhance the sales of the products. The availability of media and its coverage within the market will impact on how the company promotes the product.
Market Audit Selection Criteria
The product:
For the product to succeed in the target market, it is necessary to study how herbal skin care product is perceived and consumed. The product’s image in the society and the consumption habits of the consumers in the market are important information that the company should recognise. By acknowledging these relevant factors, the potential of the product would be clearly identified.
The market:
It is essential to recognise the types of moisturisers which consumed by the target market and to examine which form of skin care product (natural or artificial) is view more preferable in the target market.
Consumer behaviour:
By understanding consumer behaviour, it would allow the company to understand the attitude of customers towards the purchase and the use of the moisturiser. How often is the product being used and the reason for buying and using this product. As a result, this will give the company an indication of the kind of moisturisers consumes by the customers as well as to understand the reason for buying the product. This will influence the product size, packaging and promotion strategy.
Distribution of the product:
The company must be acquainted with how the product reaches the customers before deciding the promotional strategy and the mode of entry (e.g. joint venture with local firm to access its distribution network).
Advertising and promotion:
The current advertising and promotional strategy used in the market can reflect the product’s image and perception viewed by the consumers. In order to attract consumers’ attention and to encourage these consumers to have positive attitude towards the marketed product, it is critical to use appropriate type of media to deliver its message to the target audience. As a result, it can help the company to position itself and organise its own promotional strategy and if used effectively the company may be able to differentiate itself from the competitors.
Pricy strategy:
The average price for the variety of moisturiser in the market can identify the demand and knowledge of the consumers about the moisturiser. As a result, the company can have information to fix a pricing strategy after reviewing export expenditures. Moreover, the company may develop advertising and promotion strategies from this source.
Competitors:
By identifying the competitors within the industry in the chosen market, it allows the company to understand the conditions in which the product is experiencing. It is beneficial to recognise how other competitors compete in the market with their product offering, positioning, pricing and distribution strategies.
Market size:
One of the best indicators that can point out the current market size and forecast sales is the historical consumption per capita in volume and in dollars. It will help the company to find out a minimum demand of moisturiser in order to make effective investment.
Reference
Australia Trade Commission – Austrade (2004). Retrieved on Sep 10, 2004, from http://www.austrade.gov.au
Clifton, W. P. (2004). MSN Encarta – France. Microsoft® Encarta® Online Encyclopedia 2004. Retrieved on Sep 10, 2004, from http://encarta.msn.com/encyclopedia_761561507/France.html#s17
CIA – The world factbook (2003). Retrieved on Sep 8, 2004, fromhttp://www.cia.gov/cia/publications/factbook/geos/fr.html
Doux Me. Retrieved on May 21, 2004, from http://www.douxme.com
Education and Manpower Bureau (2004). Retrieved on May 6, 2004, from http://www.emb.gov.fr /index.aspx?nodeID=92&langno=1
Embassy of France – Canberra (2001). Retrieved on May 9, 2004, from http://www.ambafrance-au.org/aboutfrance/index.en.htm
Embassy of France in the US (2001). Retrieved on May 9, 2004, from http://www.info-france-usa.org/atoz/culture.asp
Euromonitor Database. Central Queensland University. Retrieved on May 6, 2004.
France Census & Statistics Department (2004). Retrieved from May 4, 2004, from http://www.info.gov.hk/censtatd/eng/hkstat/index.html