Describe Plenitude's Performance in the Us Market in Early 1996
Essay by anene63 • June 27, 2016 • Research Paper • 1,341 Words (6 Pages) • 1,191 Views
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- Describe Plenitude's performance in the US market in early 1996.
The full Plenitude produce line was launched in 1989. In 1990, they had a pre-tax loss of approximately $25.4M. Although sales doubled from 1990 through 1995, advertising and promotion spending increased, and the brand was operating at a net loss of $12.5M in 1995. The introduction of the Revitalift line in 1995 seemed to contribute significantly to the relative improvement in profitability, however the brand’s performance in the US market was less successful than in France, primarily because of the following factors:
Competitive markets - Plenitude was launched in France in 1982. French women were relatively sophisticated in their use of skin care products and many brands competed in the high end of the market. In the mass market, there were only a few significant brands. By 1987, the brand had leading share in the French mass moisturizer market by a relatively wide margin (19.6% share, as compared to Henkel’s Diadermine at13.0% and Nivea at 8.8%. One reason that this “class to the mass” strategy was more successful in France was the lack of competition in this category in the French market as compared to that in the US market.
Product variety and customization - In France, Plenitude was introduced with a single product developed specifically for the French market. However, in the US, an entire product line was launched through 14 SKUs, with the intent of educating American consumers on skin care and in an effort to bring the department store environment to the masses; however, according to the research studies, it seems that this approach created confusion amongst the consumer base. Specifically, it seems that consumers were confused about the purpose and use of each product within the line. Additionally, although the products were somewhat modified to fit the preferences of the US consumer (thinner, less scented), it does not appear that the products were entirely appealing to consumers the US market (per the surveys in the market research).
Messaging - L’Oreal was spending a significant amount in advertising and promotion. However, the initial ads for the Plenitude products mimicked the French ads, which were targeting a more sophisticated customer. Although the messaging was modified to suit the American consumer (“Reduces the Signs of Aging” vs. “Delays the Signs of Aging”), it is unclear whether L’Oreal was targeting the appropriate customer segment in the US market.
Ad and Promotion Spend - In 1995, Plenitude was third in terms of their dollar shares for moisturizers, and last for cleansers. However, their ad spending was the second highest as compared to their competitors. In terms of moisturizer units sold, Plenitude was second in the Treatment care category, vs the Daily care category. Their market share relative to their ad and promotion spending was clearly disproportionate to that of competitors (assuming that the AC Nielsen data accurately defines actual competition).
- The Plenitude brand seems to be perceived among users as more of a treatment product than a moisturizer, since it maps closely to attributes such as ‘Contains AHA’, ‘Exfoliates the skin’, and ‘Technologically advanced’ (Exhibit 9). Additionally, users of the Plenitude brand (Exhibit 10) are perceived as glamorous, sophisticated, stylish, upper class, likely to spend money on themselves, trendy, adventuresome, and experimental. Both maps indicate that Plenitude is perceived as a brand comparable to more premium brands, such as Clinique and Estee Lauder.
- Exhibit 11 tells us that less of the 3,500 respondents of the survey are aware of Plenitude and its comparable brands, such as Clinique, Nivea, Lancome, and Alpha Hydrox (according to the perceptual maps). Additionally, we learn that the more premium brands generally show lower trial rates, conversion rates, and current usage rates. These results are not surprising, given that “Stressed Out” and “Age Focused” users comprise only 40% of the respondents, and Plenitude and Alpha Hydrox users disproportionately fell into these two categories. Users of treatment products (vs. daily moisturizer products) likely fall under these two categories, and these segments likely reflect consumers that are less price-conscious than the “Unconcerned”, “Ingredient Apathetic”, and “Price-Conscious Socializers” segments. This further substantiates that the Plenitude line is perceived and used as a premium, technologically advanced moisturizer, or a treatment product, as compared to daily moisturizing or cleanser like the Ponds or Olay lines. This presents a unique opportunity for L’Oreal. Since the Plentitude line is perceived as a comparable brand to premium department store brands such as Clinique and Estee Lauder, but has a lower price point, they could compete in that category with their Revitalift line, vs. trying to expand into the drugstore daily moisturizer/cleanser categories.
- The quantitative research seems to generally support the qualitative research (as indicated above). The quantitative research compares Plenitude with more diverse brands, including premium brands, treatment products, and cleansers. The qualitative research focuses on Plenitude as a moisturizer and compares the brand to Pond’s and Olay, both of which seems to be categorized as pure drugstore/mass market moisturizers. Both pieces of information provide different information about the Plenitude brand. Specifically, the qualitative data provides information about the user experience and perceptions, whereas the quantitative data provides comparative figures measuring the Plenitude brand with various competitors. The two types of research combined help us form conclusions about the effectiveness of Plenitude’s customer segmentation and positioning.
It seems that there are issues with target segment identification and positioning. L’Oreal has extended the Plenitude line to all customer segments that fall into the skin care market, when a large portion of the brand’s sales appear to be the “Stressed Out” and “Age Focused” categories. Additionally, they are positioning the Plenitude line as a skin moisturizer similar to Pond’s or Olay, as compared to a treatment product. By doing so, they are trying to get current users of Pond’s and Olay products to buy Plenitude. However, based on the perception maps and market research, it appears that users of Pond’s and Olay products younger, and may fit best into the the Plenitude line should be targeting customers who are seeking age defying treatment products at lower price points (the “Stressed Out” and “Age Focused” categories, specifically). Additionally, they may be able to capture a larger proportion of the “Price Conscious Socializers” and “Ingredient Apathetic” categories if they position the line as a low-priced, technologically advanced age-defying treatment.
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