Final Assignment 1 Write Up PDF

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Subject: ​Strategic Marketing (MKTG20008)Tutor: ​Shala ​Ahmed (5:15 Thursday)Team Member Name Team Member Student Number1 Olivia Watson 9936182 Phoebe Jackman 9102523 Caitlin Sullivan 9975514 Lucy Dawkins 837375Word count: 2970Executive SummarySunSense is an Australian owned suncare brand competing ...

Description

Subject: Strategic Marketing (MKTG20008)

Tutor: Shala Ahmed (5:15 Thursday)

Team Member Name

Team Member Student Number

1

Olivia Watson

993618

2

Phoebe Jackman

910252

3

Caitlin Sullivan

997551

4

Lucy Dawkins

837375

Word count: 2970

Executive Summary SunSense is an Australian owned suncare brand competing against a wide range of competitors in the suncare industry, establishing a strong position through associating its brand with sensitive skin sunscreen products. This report examines and analyses the internal and external factors that impact the suncare industry and performance of SunSense The report incorporates an in-depth PESTLE analysis, near environment analysis including industry, competitor and consumer analysis, critical success factors of the industry, and an internal analysis on SunSenses current performance (including SWOT analysis). SunSense currently has a market share of 4.8% (Passport, 2019) in the suncare industry. SunSenses competitive advantage lies in their sensitive skin products. This is important as the market has low differentiation, and is highly concentrated, therefore brand loyalty is important to capitalise on the rapidly growing market. SunSense targets a specific demographic; upper/middle-class family orientated, progressive consumers. Consumers are aiming for sun protection as well as quality functional dermatology benefits. In-depth analysis of the industry identifies strong competition and there is a large proportion of international and domestic companies who hold superior brand awareness and percentage of market share. Competitors involve Banana Boat, Cancer Council, Neutrogena and Nivea. An economic factor arises the future issue of an increased 15% in levy costs for companies, allowing competitors to have a competitive advantage over SunSense due to the price increase. This can be a potential threat to the company. In the sunscreen industry, the critical success factors centre on quality of products, attracting local support/patronage, and maintaining a strong brand image. Comparing SunSense to its competitors, SunSenses strength is attracting local support/patronage through a partnership with the Melanoma Institute of Australia and being a domestically produced and owned company. It is also evident Sunsense’s weakness is in the quality of products from the perception of consumers due to the increase in media awareness on the claim Sunsense Sport Sunscreen does not meet SPF requirements. There are a variety of internal activities the company focuses on. Sunsense has a strong focus on marketing enlisting advertising companies to produce campaigns in relation to their products. It is important for Sunsense to continue to focus resources into marketing to provide the opportunity for the brand to gain a better market position and evolve into a star rather than the current position of question markets in the BCG (Strategic Management Insight, 2019). Sunsense ultimately has multiple opportunities in the future to gain a stronger market share, improving its current position through capitalising on environmentally friendly products and focusing on reducing their weaknesses and threats in the SWOT analysis.

Business Scope

3

Remote Environment

4

Political Economic

4 4

Sociocultural Technological

4 5

Legal Environmental

5 5

Near Environment Industry Analysis Strategic Group

6 6 11

Competitor Analysis Critical Success Factors

11 15

Consumer Analysis Consumer Analysis Moodboard

15 18

Internal Analysis Non-marketing Capabilities

19 19

Performance Analysis Value Chain Analysis

19 19

Activity Systems Existing Marketing Strategies

20 21

Performance Analysis Marketing Management

21 22

Review of CSF vs Competitors

22

Problems and Opportunities SWOT Analysis Table

23 23

Opportunity - Current CSF Problems

23 23

Strategic Implication Appendix

24 25

Business Scope SunSense’s mission is to provide products fit for real Australian condition and lifestyle, developed to suit individual needs (Sunsense Ego Pharmaceuticals, 2019). SunSense has a range of products specifically formulated for individual skin types, a driving force for the company (Sunsense Ego Pharmaceuticals, 2019). The company competes in the suncare product category, with two subsections of differing categories: body part and skin type. Competitor analysis will focus on the top 4 competitors in the strategic group closest to Sunsense. These companies, Banana Boat, Neutrogena, Nivea and Cancer Council were shown to be top competitors based on Passport’s current market share in the industry. However, the following graph from Passport shows an overview of competitive brands with a market share in suncare in Australia:

SunSense targets 23-45-year-old females with a relatively high income, situated in the middle to upper social class, who are family orientated, have a busy and active lifestyle and are daily users. This strategic plan will centre on the next year, focusing on the Australian market for 2020 January to December.

Remote Environment Political Australia has a high rate of skin cancer, with approximately two in three Australian being diagnosed with skin cancer before 70. Cost of skin cancer on the health care system was over $400 million between 2008-2009; the highest cost of any cancer claim within the Australian healthcare system. This figure was again confirmed in 2010 with diagnosis, treatment and pathology costing $511 million, and increasing in 2015 to $703 million (Skin Cancer in Australia, 2018). This brings opportunity as this could lead to more awareness of suncare solutions such as sunscreen. The Australian government has the incentive to promote Australians to use sunscreen, therefore campaigns (including the current proposed levied campaign) could increase sales.

Economic Looking at IBIS, the housing discretionary income is expected to rise in 2019-2020. An analysis of this is higher incomes may result in increased customer willingness to spend more on suncare products, particularly “premium goods” (IBIS, 2019). Consumers may demonstrate their recently higher discretionary income through the purchase of premium products. Implications for the industry should be to focus on marketing premium product lines to facilitate its growth and potentially gain loyalty/repeat purchases on their premium lines. Products will also appear to be ‘premium’ with the new industry levy- a 15% increase in product cost as a result of the new “SunSmart” campaign partially funded by the government and the suncare industry. Whilst previously this may have deterred shoppers from higher-priced goods, having a higher discretionary income encourages customers to feel more comfortable with premium products.

Sociocultural IBISWorld has noted growing consumer demand for ‘clean’ beauty products, particularly organic, natural, local, and eco-friendly products. Analysing the ‘clean beauty’ trend indicates this would also apply to sun care products, meaning consumers are more likely to be “willing to pay a premium for products with sustainable or organic credentials” (IBISWorld, 2019). The insight gained from this knowledge suggests that brands will shift from traditionally formulated products to more natural, plant-based ingredients, and focus on eco-friendly and local manufacturing, in order to take advantage of the growing consumer segment willing to pay a premium for goods with these credentials. Implications to the industry are brands should not only apply these credentials to their products but should also utilise marketing strategies to inform consumers of these credentials in order to differentiate themselves early in the adoption of this trend, thus gaining larger market share over the lifecycle of the trend.

Technological Statista shows that skincare is the “biggest and fastest-growing segment” (Statista, 2018) in the beauty and personal care division globally with an expected $16 (USD) billion dollar increase from 2018-2023. In addition, IBIS outlines how new technology advancements provide the means to access niche markets aiming to target “anti-ageing…. uneven-skin tones, hyperpigmentation and dry skin” (IBIS, 2018). These two facts demonstrate that Sun and UV awareness is a growing concern amongst Australians, ensuring a constant demand for the suncare market; skincare is also a market that promises growing demand. An insight into this is this is that customers will be attracted to products that can serve multiple purposes (sun protection and skincare combined). The implication for the industry is that they could lose customer traffic to skincare brands offering SPF protection, or could capitalise on the growing market and adjust formulas to meet multiple demands rather than just sun protection.

Legal In Australia, sunscreens can only be sold if they are listed on the TGA Australian Register of Therapeutic Goods (ARTG) and are compliant with the Australian Standard for sunscreens. Sunscreen active ingredients and maximum concentrations must be approved by the TGA as being both safe and effective, creating threat as any new products or alterations to existing products will have to be approved by the TGA before launching, adding to the time before launch. This particularly relates to eliminating ingredients such as Oxybenzone in order to market the product as coral reef friendly.

Environmental Environmental impact is a rising concern with sunscreen ingredients (i.e. oxybenzone) affecting the biodiversity and functioning of coral reefs (Danovaro et al, 2008). This may cause consumers to have perceived lower switching costs and move to more environmentally friendly products. Sunsense should take advantage of a potential new niche market and be aware of new products that may emerge into the market. (More PESTLE in appendix figure. 1)

Near Environment Industry Analysis When exploring the past, present and future forecast for market size through sales in suncare there is a large discrepancy between Passport and MarketLine. Whilst Passport’s 2018 figure shows $293.9 million (AUD) for sales of suncare and a future growth rate of 5.7%, MarketLine sits

at $242.9 million (AUD) with a future growth rate of 7.4%; leaving a $50 million-dollar discrepancy (MarketLine, 2019). This is due to unnamed products that fit under the umbrella of ‘suncare’ as Passport does not explicitly detail all products which contribute to sales. It is more conservative to assume passports’ data because it has a smaller growth rate. Therefore, we can make the assumption that the size of the future market sales will sit around $328.2 million in the calendar year of 2020 (Passport, 2019); a steady and promising projection.

Looking at trends of predicted growth rate (as shown in the appendix), this analysis also explores the skincare market as a point of comparison, which much like suncare displays a decline from 2013-2018 6.1% to 2018-2023 5.7 %, the skincare market also declines with their 2018-2023 predicted growth rate sitting at 7.1%. However, note that the future market size is promising due to the significant difference in growth between suncare and the Australian economic growth rate,

currently sitting at 2%.

Competitiveness: LOW

OVERALL – HIGH ATTRACTIVENESS

Strategic Group -

Each

group is separated by Barriers of mobility – factors that would prevent firms/brands moving from one group to another

(Further analysis in appendix figure. 2)

Competitor Analysis The competitor analysis comprises of SunSense’s top 4 competitors, based on the strategic group closest to Sunsense, similar in market segment and breadth of product lines. These companies, Banana Boat, Neutrogena, Nivea and Cancer Council also were shown to be top competitors based on Passport’s current market share percentages in the industry.

Brand

Neutrogena owned by Johnson and Johnson; Current market share 2019 3.8% (Passport, 2018).

Current Strategy

There are multiple customer groups, Men/Women and Baby/Millenials, offering a wide range of products to suit all demographics. The income group they focus on is the middle-income social class and individuals who take advice from dermatologists.

Global strategic focus: “Improving the lives of women and children, strengthening the healthcare workforce, preventing disease” (Our Giving, 2019). Promotion: - The last video posted online Nov 13, 2017, for ultrasheer sunscreen, no new product advertisement in suncare since then. The last release of a new product was 2018. - 2016, “See What’s Possible” campaign, focusing on efforts towards female-empowerment, specifically for the brand (not product-based) Product: Majority of Neutrogena sunscreens contain oxybenzone or retinyl palmitate linked to skin damage. Price: Ranging around $15.00 for 88mL (Priceline Sunscreen, 2019). Neutrogena is a luxury suncare product with its price range. Place: Distribution channels include supermarkets, pharmacies and online (Chemist Warehouse, Priceline, Coles, Woolworths, Super Pharmacy, Amazon). Future Strategy

In the future, Neutrogena is likely to strengthen their position through sunscreen for sensitive and acne-prone skin. These products are their main selling point, and are likely to increase this range of products.

Current Objectives

Neutrogena’s objective is to “create a line of safe, mild, premium quality skincare products.” (Why Neutrogena, 2019).

Current Resources

Neutrogena captures a large proportion of potential consumers due to loyalty involved in their product range outside of suncare. Consumers trust Neutrogena and are more inclined to purchase their sunscreen products. Johnson and Johnson, Neutrogena’s parent company have strong financial resources demonstrated by their 2018 Full-Year Sales of $81.6 Billion, increasing 6.7% from the previous year (Johnson and Johnson Reports, 2018).

Brand

Cancer Council; Current market share 2019 12.1% (Passport, 2018). A non-profit organisation investing in researching cancer solutions and treatments by selling sunscreen and donations (Marketline, 2018).

Current

Cancer Council has a wide target market providing products made for all

Strategy

ages - they have kids sunscreen as well as sunscreens for consumers such as sporty people, sensitive skin etc.

(Cancer Council Annual Review, 2018) Promotion: - No tan is worth dying for - 2010

-

Slip Slop Slap Seek Slide - 1981

-

Skin Cancer Action Week is held annually at the start of Summer

and aims to raise awareness of skin cancer in Australia. (Campaigns and Events, 2019). Price: Generally cheaper than its competitors for a general 30+ SPF sunscreen. Ranging around $11.99 for 110mL (Priceline Sunscreen, 2019). Place: Distribution channels include the Cancer Council Website, Supermarkets, Chemist Warehouse, Pharmacies, Priceline. Product: Their product range includes active, everyday, sensitive, kids and moisturising products. Future Strategy

Cancer Council is likely to continue producing products towards their target demographic and meet a wide number of consumers needs in the market. Their strategy will continue to increase sales to fund their research and provide information on cancer, threatening to obtain a large majority of Australia’s consumers.

Current Objectives

1. Improving cancer outcomes for Australians 2. Supporting a high functioning Cancer Council federation 3. Ensure Cancer Council is performing as the not-for-profit leader in Cancer Control to maximise our impact 4. Support and enable the work of state and territory Cancer Councils 5. Leverage the skills and services of state and territory Cancer Councils (Annual Report, 2018) Continued work aligned with our national vision of a cancer-free future (Annual Report, 2018). Cancer Council is Australia’s leading cancer charity (Annual Report, 2018). 2016, CEO changed from Jim L’Estrange to Jeff Mitchell who was already apart of the role (Annual Report, 2018).

Current Resources

$62.3 million in revenue in 2018 (Annual report, 2018).

(Additional Competitor Analysis in Appendix figure. 3)

Critical Success Factors

The table demonstrates Sunsense is excelling in the critical success factor of local support due to being a domestically owned brand but is disadvantaged in its quality due to previous reports of not reaching the SPF test criteria.

Consumer Analysis Industry Consumers There is not a specific demographic in the industry, it is spread out over all consumer groups. Essentially anyone (of all ages) who want to avoid getting sunburnt, or is spending long hours in the sun and is worried about sun exposure. Consumers who use sunscreen (as opposed to protective clothing or shade) often want to have their skin exposed (i.e. for temperature regulation reasons) while also being in the sun (either for enjoyment, or unavoidable reasons i.e. surfing). There are many segments within Sunscreen brands to cater to these different consumer groups,

with some being low-cost focus (i.e. Banana Boat) and some being differentiated products (i.e. Cancer Council, Neutrogena). Consumer segmentation

When referring to Roy Morgan Helix Personas, the main persona that is targeted is the leading lifestyles (e.g. ‘bluechip’, ‘social progressives’, ‘having it all’, ‘visible success’, ‘humanitarians’, ‘worldly and wise’, ‘savvy self-starters’), with some crossover with Metrotechs (particularly ‘healthy, wealthy and wise’, ‘libertarians’, ‘fit and fab’, and ‘future focus’ personas) Product diversification

Product usage

● ●

To protect skin from the sun and UV rays causing long term damage and skin cancer Prevent sunburn

● ● ● ● ●

Specific to SunSense: Improve skin quality Have sunscreen developed for specific skin types Doesn’t irritate skin Isn’t overly thick or oily Sinks into skin better and feels good on skin

● ● ● ● ● ● ●

As an everyday skin protector Long days exposed to sun Going to the beach or going swimming Outdoor sports and exercise Outdoor activities Culture activities (e.g Music Festivals or Amusement Parks) To moisturize or use as an anti-aging product

Choice Criteria

Functional Benefits: ● Effectiveness of sun protection ● High-quality ingredients ● Doesn’t irritate sensitive skin ● Not overly oily or thick, for comfortable use ● Quickly bonds to skin ● Can be layered with makeup ● Locally manufactured ● Natural or organic ingredient content ● Developed for daily use ● Different formulas for different skin types ● Added antioxidant and/or moisturising benefits Emotional Benefits: ● Association with dermatology ● SunSense’s brand image as Australias ‘number one’ sunscreen ● The brand image of being conscious of children’s sensitive skin, thus parents using this brand appear conscious of children ● Australian owned and made ● Association to high-quality skincare ● Charity link to Melanoma Institute Australia

Price

Relatively high for chemist sunscreens, but not as expensive as high-end sunscreens from department stores

Purchase Timeframe

As face sunscreens generally come in 200g packaging, the face sunscreens should last approximately a month with dai...