Jurlique Marketing Essay

1.0 Executive summary The main purpose of this business report is to review the appropriateness of Jurlique cosmetic products for the Australian target market. The key findings are: Australia is a huge market for cosmetic and toiletry industry, while it is full of competition due to the zero duty on American cosmetics; Jurlique is a well established brand for most Australia customers, however, it still needs unique selling points other than natural ingredient to expand its market share. This is mostly based on the product research and development. 2.0 Introduction 2.1 Purpose This report sets out to review the product for a target segment. 2.2 Scope This report first describes the overall cosmetic industry, the market share of Jurlique’s skin care products and the growth trend. Then the macro and micro-environmental analysis are conducted before the detailed description of the products category. Following the target segmentation, some recommendations will be made. 2.3 Methodology This report is created based on the theories from the textbook and the secondary data from websites. In addition, graphs and tables are used to assist the specific analysis. 2.4 Assumption and limitation During the research, some information can not be accessed, however, the information can be found from others as the official website which is formal and perusable to do reference. 3.0 Description of the industry 3.1 Market size and market share According to IBIS World (2010), cosmetics and toiletries industry are based on a solid foundation, with a booming prospect. He also forecasts that global cosmetic industry will embrace an inspiring growth at an average annual rate of 3.2%, within the period to 2012-2013. Graph 1: Global cosmetic industry performance and forecast (Data source: IBIS World 2010) As a key player in the natural cosmetics and skincare industry, Australian-owned Jurlique Company is a well-deserved market leader. It manufactures and distributes a range of skin care and aromatherapy products as well as herbal medicines. Through multi-channel distribution network, the company enters into 20 different countries, where about 60 company-owned concept stores and 5000 or so Jurlique-branded retail outlets are established (Official Website, 2012). Plus, department stores, pharmacies and health food stores, as well as aroma-therapy clinics and beauty salons are also the sales channel of the company’s 75% products. The differentiation in products themselves and diversification in marketing channels both contribute to the company’s profit margins, which are thought to be about 30%, and annual sales, which are estimated to exceed AU$100 million (RAPS, 2011). 3.2 Macro-environment 3.2.1 Overall cosmetic consumption trend Graph2: Total market sale of Australian cosmetic industry Source: Australia Bureau of Statistics The cosmetic and beauty industry has experienced a constant growth the whole world, and Australia is not an exception (see above graph). The Australia cosmetics and toiletries market value is in order of US$1.5 billion, with imports products occupying about half of that (U.S Commercial Service). This suggests that the domestic cosmetic brands are facing relatively fierce competition from cosmetic brands abroad. In terms of market share of cosmetic industry in Australia, the U.S is still maintaining about 30 percent market share (U.S Commercial Service). There are several reasons for this. The U.S is well known for its large proportion of investment in cosmetics research and development; Owing to the Free Trade Agreement between Australia and the United States, the U.S enjoys zero general import duty on cosmetics and toiletries exported to Australia. 3.2.2 Demographic factor The cosmetics and toiletries industry in Australia is closely associated with the people’s paying increasing attention to personal appearance, both for women and men. The emergence of an aging population in Australia, along with a raised awareness of health and environmental issues, stimulated to a certain extent the consciousness of the importance of products that prolong a youthful appearance. For baby boomer generation which is experiencing life changes brought by aging, they have shown increasing interests in cosmetics and toiletries, not only to enhance their appearance but also for other reasons. A simple example is that they use foundation with treatment ingredients to protect their skin against harmful UV rays, and to help a variety of skin problems. 3.2.3 Cultural changes As the consumer attitude gradually changes, people are more in favor of the natural and safe products in cosmetic market. Australia consumers are not exception. They respected green-added cosmetics, namely, they are increasingly in pursuit of natural, pollution-free cosmetics with no chemicals added. Consequently, the products of chemical-free will gain competitive advantages in Australian cosmetic market to meet the consumer’s psychological needs for green, organic skin care products. 3.3 Micro-environment 3.3.1 Organization Jurlique is a Sydney-based cosmetic company, boasting its skin care products, all of which are made in the most natural way. Funded in 1985 by chemist and also a doctor-Jurgen Klein, the beauty company was characterized by farm system, which makes the fact possible that all ingredients are cultivated and processed in the Adelaide Hills, and then distributed in Australia and abroad (Pola Orbis, 2011). The company’s mission is to generate sustainability and create mutual benefit between people and nature, with its slogan â€Å"Purest Skin Care Products on Earth through Nature, Science and Innovation†. Jurlique, with its headquarters in Mount Barker in the Adelaide foothills, has planted good names for its natural and chemical free products in Australia. On November 30, 2011, Jurlique International announces acquisition by POLA Orbis, which is the fourth leading cosmetic company in Japan and has been developing its business model around the cosmetics industry with a recurring theme of â€Å"beauty and health† since its founding in 1929. This acquisition makes Jurlique brand well positioned along with a strong presence and compelling momentum in key strategic markets, with a focus on Asia, the Americas and the home market Australia. Table 1: Changes in Jurlique shares held by POLA as a result of the Acquisition Source: POLA’s Share Purchase Agreement 3.3.2 Customers Customers of Jurlique are mainly female who pay a certain attention to their skin condition and are willing to buy skin care products at a reasonable price. In addition, customers of Jurlique need to be aware of the importance of natural ingredient for their skin. As spa gradually gains popularity, Jurlique’s target consumer will be expanded to whoever enjoys a natural and comfortable spa. 3.3.3 Publics Rising concern can be noted by Australian consumers of any cosmetic product regarding health and safety. Greater attention is also being given to natural products in cosmetics. Innovative beauty salon products that incorporate premium and organic ingredients are given warm welcome. This can explain that sales of Jurlique products using natural ingredients are showing steady growth. 3.3.4 Competitions Dominated by industrial players like Luxus, P&G and Unilever in Australian cosmetic and toiletry industry, the main high-end competitive brands in the country include well-established world-famous brands such as Lancome, Estee Lauder, Clinique, Shiseido, Christian Dior, Giorgio Armani, Bobbi Brown and Clarins. Middle end brands contain Revlon, Max Factor, L’Oreal and Olay (U.S. Commercial Service). In addition, newer brands from Japan and Korea are very popular among Australian young girls such as DHC, Fancl, HABA, Mioggi, Lanegie, Skin Food. 4.0 Products Jurlique products can be classified into six categories by the company’s official website. Table2: Jurlique product line (from Official Website) Product line Products detailed by category Skin care line cleansers, deep cleansing, refreshing, recovering, renewing, moisturizing, nurturing, special care, eye and lip care, tools and accessories Body care hand care, body lotion, body oils, shower gels Hair care shampoo, hair conditioners Baby care hypo-allergenic and pH balanced baby care products Essential oils comprises pure essential oils, essential oil blends, and carrier oils Seasonal offers comprises seasonal sets of products containing specific blends Within all these excellent natural products, Herbal Recovery Gel needs to be mentioned more. Belonging to skin care category, it is a light gel concentrate for day and night, which contains natural antioxidants and is suitable for all skin conditions, including oily and problem skin. It works deeply to strengthen and restore hydration, which can help maintain ideal skin moisture balance. 4.1 Three levels of the products 4.1.1 Core level Core level of a product represents the basic consumption benefit consumers can get from the product. Namely, it is the function or efficiency of the product. For skin care products made by Jurlique, they can not only meet the very basic requirements of target audience for better their skin condition  with its natural ingredients, but they also can realize the process in a sustainable manner. 4.1.2 Actual level Apart from the natural and high-quality characteristics, Jurlique products also have a mature packaging chain, which contains three sets of processes: primary packaging, secondary packaging and tertiary packaging (Jurlique International, 2011). All products produced are packed into tertiary packaging for shipment from production to logistics, and from logistics to distributors or direct to consumers. The tertiary packaging utilized is common throughout the supply chain where possible. Just like the packaging, labeling considerations will continue to express the green concept. For example, the use of relevant recyclable symbols such as the â€Å"green dot† and inclusion of the material identification will serve as an important tool in marketing strategy. 4.1.3 Augmented level Customers who buy Jurlique products can enjoy comfortable service from the company. Jurlique has its mature online service and various distribution channels. Products sold through every channel will be delivered timely. In addition, anyone who is interested in this brand can sign up for emails, and become a Jurlique insider. The insiders can get the professional advice in terms of skin care and also free gifts from the company. 5.0 Target segment 5.1 Demographic segmentation The majority of target customers Jurlique are females, specifically Generation X and Baby Boomers who are looking for beauty products which can help reduce wrinkles, better skin dark and contain natural or pure ingredients (Phosphagenics Newsletter, 2009). In Australia, Women between age 25 and 39 staying workplace have the strongest purchase power. They are  value and quality conscious, prepared to pay a little more for a prestige product that works. For those female seeking natural and quality products, Jurlique is undoubtedly a perfect choice whose claims match product performance. 5.2 Behavioral segmentation Different people seek different benefits from Jurlique products, and according to the product itself and the behavioral habits of Australian consumer, the market can be segmented into: 1. Single brand loyalty: it is of difficulty to break the previous loyalty for a certain brand, however, it this group have faith in Jurlique, the loyalty will last long. 2. Multiple brands loyalty: this group is willing to try new brands, but the loyalty can not be assured. 3. No brand loyalty: this group tends to be price sensitive or efficiency sensitive. 5.3 Geographic segmentation In geographical version, the whole Australian market can be segmented into several divisions. The five biggest cities in Australia: Sydney, Melbourne, Brisbane, Perth and Adelaide should be the major target markets which all have advantages of large amount of working female and strong purchase power. Cities with more than a hundred thousand populations in New South Wales, Queensland, Victoria and Tasmania etc will be the second largest target markets for Jurlique. The remaining cities with less population but relatively big purchase power should also be considered. 5.4 Psychographic: Based on people’s life style and value, the market can be segmented  psychologically. The research concerning people’s life style should be based on AOI: 1. Activities: this refers to where and when people use their time on skin care. 2. Interests: how much attention would people pay to the change of skin condition. 3. Opinion: this refers to what people think of the brand. 6.0 Key needs The mainstream trend in Australian cosmetic and toiletry industry is that consumers are willing to pay the higher price for those technologically advanced products because they perceive the ingredients to be expensive, uniquely manufactured based on intensive research and develop. Therefore, the innovative initiative of Jurlique based on its laboratory R&D is in need. In addition, market for color cosmetics, hair care products and beauty salon based products unsaturated to a certain degree. This is mainly for the reason that those products are not the mainstream business scope for the major competitors from the U.S and France. Consequently, Jurlique could stretch its product line or emphasis the manufacture and market capture of those products. 7.0 Recommendations 1. Adjust the shift of distributional channels in Australia The retailing of cosmetics and toiletries in Australia has experienced a remarkable change in recent years. Supermarkets are beginning to play a major role in selling cosmetics and toiletries, replacing traditional retailers and pharmacies (Market Overview, 2010). Major supermarkets such as Coles, Safeway and Woolworths have become the sites where 45 percent of cosmetic products are sold in Australia. Pharmacies and cosmetic retailers are showing more and more presence in cosmetic market. Jurlique should take this change into account when it come to adjusting marketing strategy. 2. Professional technologic certification shows its increasing importance It should be realized that natural or organic ingredients are no more than distinctive selling points which add value to the products. Consumers today tend to expect assurance through product certification, especially for new or unfamiliar products, just as Jurlique for Australian consumer. Therefore, it is highly recommended that Jurlique obtain professional certification from authorized certifiers to enhance product credibility. 8.0 References IBIS World (2010). Cosmetic and Toiletry Retailing in Australia, Melbourne: Arna Richardson, Exporter Guild, Australian, Organic Market, P11(ix), April 2011 Jurlique official website. Retrieved from: http://www.jurlique.com.au/ U.S Commercial Service. 2010, Retrieved from: http://www.trade.gov/cs/ RAPS (2011). Beauty environmental scan. http://175.107.146.153/~rapstcco/wp-content/uploads/2011/12/Beauty-Industry-Environmental-Scan-2011.pdf Phosphagenics Newsletter. (2009). Retrieved from: http://www.docstoc.com/docs/45622966/PHOSPHAGENICS-concealer Asia-Pacific Cosmetics and Toiletries Market Overview. 2010 Pola Orbis (2011). POLA ORBIS HOLDINGS enters into a Share Purchase Agreement to acquire all outstanding shares of Jurlique International Pty Ltd[R].2011. New Zealand Trade and Enterprise (2011). Export guide: Organics and green market in Australia. Jurlique International (2011). Australian packaging covenant action plan. Retrieved from: http://www.packagingcovenant.org.au/documents/File/Jurlique%20International%20Pty%20Ltd%20AP_10_15.pdf