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Molton Brown Bath and Body Product Range- Marketing Report...

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Kingston University

Molton Brown Bath and Body Product RangeMarketing Report

K1707454

Hersi, Kadar 2-22-2018

Contents Page:

Introduction …………………………………………………………………. 1.0 Macro-environmental analysis ……………………….……………………. 2.0 Identify the customer …………………………….…………………………. 2.1 Dimensions of buyers.……………………………………………………… 2.2 Market segmentation …….………………………………………………... 2.3 Molton Brown Perceptual Map…………………………………………….2.4 Creating value through brands…………………………………………….3.0. Are there any service elements associated with the product?..............4.0. Creating value……………………………………………………………….5.0. Conclusion……………………………………………………………………6.0. References…………………………………………………………………...7.0.

1.0.

Introduction

Molton Brown is a British beauty company which Started up in the year 1973 by the founder of the company Caroline Burstein, opened at 58 South Molton Street in London's Mayfair as a hair salon and then moved into the cosmetic industry. They are based in countries around the world being a transnational corporation located in UK, Japan, Australia, USA and the E.U. Over the decade’s Molton Browns has built up a reputation for being London's bath, body and beauty connoisseurs. The Kao Corporation which is a Japanese cosmetic company is the current owner of Molton Brown. Molton Brown was acquired by Kao Corporation for £170 m in 2005. The Kao company on the other hand has more stake in the company owning more than 75% of shares, giving Kao more control power. That 170m was distributed between the shareholders 60% for the private equity firm Bridgepoint. 15% to Michael Warshaw, who is the chairman of Molton Browns. Then £40m had been repaid for the debt. Molton Brown sells many different products from ‘Home fragrances’ to its ‘Bath and Body’ line. The company has an annual turnover of £79.72m which is £9 million more than the previous year), so after this new management and ownership has had a rise in profit margins. (Endole Suite, 2017) Macro-environmental analysis PEST is an acronym used by companies to track the environment they are operating in but also to plan and execute new projects efficiently this is known as macro environmental analysis. The acronym stands for Political, Economic, Social and Technological. Politics plays a major role in how businesses operate for example Molton Brown will have to pay corporate tax in the UK, according to the

UK government website ‘Main rate (companies with profits over £300,000) is 21%’, so a company as big as Molton Brown legally will have to pay 21% of their annual profits to the government. However, it is different in other countries for example in japan it is 30.86% in 2018, so Molton Brown will have to pay an extra 10% over seas. Economics in a country affect businesses arguably the most, as if a countries economy is bad it will be harder to operate in with such slow cash flow. For example, the UKs 2018 GDP is $2.5 trillion and japan at $4.8 trillion so there is money for companies to grow but in LEDCs in places like Gambia with $890 million, so a firm like Molton Brown wouldn’t be able to grow as big as it has now. to make money you need customers, if people don’t like your product they will not by it. Counties like japan, where it is more common for people to use skin care products and have a bigger market there would be a higher profit margin compared to a country like UK where it is not as big figure 1.9 shows that it goes back to ‘key customer requirements’ (Jobber, Ellis-Chadwick, 2016). So companies definitely use social factors to sell products, companies will advertise on social media sites like Facebook and Instagram so people will be able to see and purchase their goods, and that’s what Molton Browns would do pay social media influencers to advertise their product so more people would by the product. Finally, T stands for Technology ending off the acronym. Technology and innovation is need to build a competitive market so if another company like Nivea use better cleaning technology Molton Brown would spend a lot of capital on making theirs better so they become number 1 and people buy their product. This is called “creative destruction”, companies constantly making better products replacing the old ones, the term used by the Austrian economist Joseph Schumpeter (1883–1950). 2.1.

Identifying the customer; B2C or B2B (focus only on one)

B2c stands for business to customers, this when a business gives directly to the customers so that might be selling producing in the case of Molton Brown would be their bath and body products which the customers will buy in shops or online. Business to consumer (B2C) is among the most popular and widely known of sales models. In 1979 Michael Adrich first utilized The idea of B2C, who used television as the primary medium to reach out to consumers. Some people see B2C as mall shopping and eating at restaurants. But since the internet got better and more popular there is a whole new B2C channel. So companies like Molton Brown will actually sell a lot of their products online on their website. 2.2.

Dimensions of buyers

When marketing a product, you must think about what the customers want from you. Consumers are individuals who buy goods for personal use and then organizational buying is companies buying products and use them in organizational activities (Jobber, Ellis-Chadwick, 2016). Sometimes products can be for both consumers and organisations. Companies must have an understanding of what the customers want this can be done by answering some of these questions; ‘who is important in the buying decision?’, ‘how do they buy?’ what are their choice criteria?’ ‘where do they buy? And finally ‘when do they buy?’. Before launching in the Asian Market Molton

Browns would have asked some of these questions to see if the customers would buy the products. * 2.3.

Market segmentation

When it comes to market segmentation it is split into a three-step process as shown in figure 7.2 from the textbook. Firstly, you have to understand the requirements and characteristics of the consumer. For Molton Brown selling in the UK they need to do a lot of market research first, asking questions and looking at focus groups. Different people like different products so if they do market research in the UK and it works the same ideas and opinions might not be shared abroad in Japan so they would need to do a separate survey over there. Once Molton Browns have found the characteristics of individual customers they will then group them into ‘segments on the basis of having similar characteristics. They can split this in different was for example B2 OR B2C (business to company), there are many different ways to segment the market there are no rules on how to split it (Jobber, Ellis-Chadwick, 2016). Finally, the firm would then pick the segment(s) they will focus on and target shown in the final box in Figure 7.2. as the diagram shows they will focus more on segment three are target those customers as it is seen as the ‘most attractive’ so a marketing strategy will be designed for it. Molton Browns bath and body products are not cheap and are seen as more luxury items. This will mean their target market will be more upper class. For them to have this image they need to market it, so the Molton Brown logo is classy and clean with the stores being well kept and organised appealing more to their market.

2.4.

Molton Brown Perceptual Map

A perceptual map is used to determine the position of a brand in the marketplace, it is a visual representation of what customers think of Molton Brown. Firstly, you identify the competing brands, so for Molton Brown it would be Nivea, dove and other body care brands. Then you would look at the most important attributes that contribute to the consumer’s decision making such as price and if its basic or more expensive. Then you evaluate the brands and plot them accordingly to their score.

As you can see from the perceptual table Molton Brown is more high end as it is in the bottom right being ‘Glamourous’. The Molton Brown products are targeted towards a more expensive market compared to more low end and ‘basic’ products like ‘Radox’. 3.0.

Creating value through brands

One of the most important aspects of a business and to get more customers is to build a brands, the benefits of building a brand include premium prices, achieving distribution more readily, and having high sales and making more profit. Customers tend to go for named brands that they have seen advertised on TV and online then a less popular brand which doesn’t have more marketing. Firms as big as Molton Browns spend millions on market but it is worth the investment. Figure 8.3 pg.253, (Jobber, Ellis-Chadwick, 2016), shows what it takes to create a strong brand. In the middle you will have the core products which are distinctive and unique, so for Molton Brown it is their bath and body products that makes Molton Brown so successful. Then the brand is built by the other factors which drive the products, this would involve physical factors such as packaging and the quality of the design, there is many different body wash brands out there but what separates Molton Brown is the aesthetics and quality which the buyer will look out for. Products that give the option for delivery will have more sales as they can get more shipped around the world compared to actually in store where not as many people will be going to. Molton Browns product is very high quality with their packaging being different colours and designs but still being minimal and ‘classy’, production cost would be higher but it would make up for it with the extra sales the designs get. Service would be the customer support and employee interaction to customers as a happy customer will be likely to come back again and buy more. Guarantees are put on products so if there is damage or the product is not wanted anymore, the customer is able to send the item back and get a full refund if eligible, if it doesn’t have a

guarantee then people are more cautious on buying the product because they cannot return it, this is also great for feedback. Molton Brown will adapt and change some of these factors to suit the needs of the Japanese market as well they will not make one model and use it around the world because different countries prefer different styles and services. 4.0.

Are there any service elements associated with the product?

Positioning of services entails two decisions the first being choice of the target market so where to compete and then secondly the creation of a differential advantage and how they compete with other brands. This can be done for both physical products and services; Molton Brown will look at four 4 primary pieces of information that customers will also be looking out for. Firstly, what the product is, on the website it will clearly show what the product is and used for and even on the back the bottles they will elaborate why their product is one of the best on the market. Next they will look at what the benefit for the customer will be so does it save money and time but also in terms of product is it easy to use and does it do what the label says? Another aspect that customers will look at is what makes Molton Browns better than their competitors the diagram below list cheaper as customers will look for a good product for a lower price, as Molton Browns is a little more expensive it must make up for it in quality to make sales. Abroad in japan where there is a bigger skin care culture and market they are more likely to pay more for the better product so the prices won’t change much. Final group is to prove it. How Molton Brown does this is having certificates, seals of approval and guarantees. These are on the website but also have approvals on the packaging.

5.0.

Creating value

For a company to make continuous sales they must create Customer retention. A company can do this through relationships often through customer loyalty and brand loyalty initiatives. Companies must identify their most loyal customers and give something back being points or deals, this will keep them coming as it makes them feel ‘special’ and much closer to the brand.

For a company to grow they need innovation, new products constantly put out better than the one before. There is a continuous process within capitalist economies where new products are replacing the old ones to make them better this is called “creative destruction” the term used by the Austrian economist Joseph Schumpeter (1883–1950). Schumpeter alleged that capitalism would ultimately be destroyed by its successes and that this ‘creative destruction’ was just part of the prediction of capitalism’s future (Baskerville, 2011). Molton Brown could use the ‘facelift’ strategy for product replacement so they can make minor product changes but with little or no change to the rest of the marketing or target market (Jobber, Ellis-Chadwick, 2016). This ‘facelift’ could be changing the design of the bottles or as they have a market in japan doing something for their culture like putting more cultural designs on the products. Remerchandising is another possibility for Molton Brown to think about this could be a modification to promotions and packaging. When opening up stores in a different country it is a perfect time to do a relaunch and getting new unreleased products which are exclusive this makes more people attracted to products. In a market that is very competitive with different brands, firms will start to undercut competition by lowering their prices this is known as a ‘price war’ (Investopedia,2018). However certain companies which are big players in the market can actually have a huge influence. If Molton Brown lowered its prices to the same as other lower costing brands they would get a lot more customers meaning it would take customers from other brands. Of course Molton Brown wouldn’t lower their prices too much as it will affect the quality and that’s what they use to market the product. It is hard to make the best quality products at the lowest price. In recent years due to technology and especially the internet it, has had an impact on the prices. Spawning price comparison websites so people can get them for cheaper and bigger more expensive companies like Molton Brown would not be searched as much as cheaper items (Jobber, Ellis-Chadwick, 2016). Pricing is also due to the rate of inflation in the country so in the 2008 the stock markets crashed putting the UK into a recession meaning prices dropped as people couldn’t afford the products. Molton Browns would have lowered their prices then and then put them back up once the economy got better (telegraph,2018). The prices for the Japanese may differ due to factors like tax overseas, trading tax but also the economy over there. If the Japanese people don’t buy the products, then the company will not be able to sell over there. IMC stands for integrated marketing communication this is when organisations actually communicate with their customers, back 50 years it was easier to get company names out if they had access to radio and television, there was no internet back then so bigger companies are still competing online with other smaller brands and cannot exert as much power. Companies like Molton Brown could communicate with customers in different ways; one of which could be using tools like advertisements, personal selling, sales promotions and digital marketing. Molton Brown can also use the internet and social media sites, using cookies to match customer interest and tailor it towards them. Another core element of IMC is the actual people this includes account manager, clients and web service providers. Media channels get a lot of traffic so if people see the product they might get

interested and look into the brand and the products so Molton Brown can have advertisements in newspapers and also in broadcasts (Jobber, Ellis-Chadwick, 2016). A distribution channel is a chain of businesses that a good or service passes until it reaches the end consumer. In terms of Molton Brown, they would take the channel of producer to retailer in their stores selling directly to the customers without any other brand but they can also distribute to wholesalers then go to the another retailer such as John Lewis that will buy large bulks for a cheaper price then sell them in stores. This would be the same in japan, Molton Brown would sell to Japanese companies which will then resale this will boost profits as its not solely sold by the company. 6.0.

Conclusion

Molton Brown is a high end cosmetics brand in the bath and body market. It has done this by building a brand which is recognisable around the world. If Molton Brand has spent millions on marketing strategies over the years but has paid off bring in more sales with +£9 million turnover from the previous year. If Molton Brown wants more success it will have to invest more into marketing and getting the products seen, that’s what separates the smaller brands that don’t have a near as many sales. In the future we will have to see if the success of the company continues.

7.0.

References:

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Investopedia. (2018). Price War. [online] Available at: https://www.investopedia.com/terms/p/price-war.asp [Accessed 18 Feb. 2018]. Telegraph.co.uk. (2018). UK Recession: Timeline of how the British economy has been hit. [online] Available at: http://www.telegraph.co.uk/finance/recession/4320827/UK-Recession-Timeline-ofhow-the-British-economy-has-been-hit.html [Accessed 18 Feb. 2018]. Suite.endole.co.uk. (2017). Molton Brown Limited - Company Profile - Endole Suite. [online] Available at: https://suite.endole.co.uk/insight/company/02414997-MoltonBrown-limited [Accessed 20 Feb. 2018]....