MARKETING SUSTAINABILITY WITH REFERENCE TO LAKME INDUSTRY
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APJEM
Arth PrabandK: A Journal of Economics and Management
Vol. 3 Issue 9 September 2014, ISSN 2278-0629, pp. 175-183
MARKETING SUSTAINABILITY WITH REFERENCE TO LAKME
INDUSTRY
LIJI PANDA*, SNIGDHA RANI PANDA** and LUCINA PRIYADARSHINI ROUT***
*,**,***Lecturer In Commerce, Kiss, Bhubaneswar
________________________________________________________________________________
ABSTRACT
. It’s a heritage that women love to be beautiful. People are more open and are not shy of using make-up and are
open with the idea of taking care of their appearance. Lakme has acquired the market share due to its brand value
.This paper gives a clear idea about the global beauty and sustainability of the cosmetic industry at the beginning of
the 21st century. It also provides a basic understanding of the nascent relationship between marketing and
sustainability. In this paper the authors tried to focus on the marketing sustainability of Lakme by studying the
marketing strategy adopted by Lakme through SWOT analysis and porter’s five forces, model.
Keywords: Lakme, sustainability, Marketing Strategy.
Introduction
Now a days in India cosmetic industry is growing enormously. The industry has highly competitive sprit on recent
marketing strategies. It depends upon the ability to introduce rapidly innovative products into the market without
any delays. Sustainability has long been on the agenda at many companies, but for decade their environment, social
and governance activities have been disconnected from core strategies. Association of chamber of commerce and
industry (ASSOCHHAM) prepared a report in 2012 on India’s cosmetic market and showed that it has been growing
at an annual pace of 20 %. In 2013, the Indian cosmetic industry in valued at 29000 crores. From the various
cosmetic industries, I have taken the latest cosmetic industry, which is LAKME. Lakme is a reputed Indian brand
which is owned by Unilever. The company is headed by Mr.Anil Chopra who is the CEO of the company. It was
founded in the year 1952 by JRD Tata. In 1996 the Tata group decided to sell off its stake in Lakme to Hindustan
lever limited. Lakme was also ranked at 47th as one of the most trusted brands in India, according to the brand trust
report in 2011.This brand also sponsors the Lakme fashion week twice a year. In the financial year 202, Hindustan
Unilever Limited had a rise in profit before tax and interest of about 23%. This brand deals with manufacturing and
selling of various kinds of cosmetics. The list includes face cleansers, sunscreens, winter care, hair oils, and
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shampoos. They believe in making their product devoid of chemical-based, synthetic cosmetics. The ingredients
used are extracted naturally from herbs. Moreover the herbs/plants used for extracting raw material are also
monitored from its nascent stage hence the end product is organic.
Objective:
To know the marketing sustainability of LAKME industry by using SWOT technique and porter’s five
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forces model of Lakme.
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To study the strategy adopted by Lakme industry for sustainability in the market.
Research Methodology:
In the present study data was formed on the basis of age, sex and occupation of the respondents for the
collection of primary data. Sample was taken in the area of Bhubaneswar to determine the attitude of
customer towards the modern marketing.
Sample size was taken of 50 respondents and sample techniques were convenience because of time and
cost constraints.APJEM
Arth PrabandK: A Journal of Economics and Management
Vol. 3 Issue 9 September 2014, ISSN 2278-0629, pp. 175-183
This study is based on the analysis of the sustainability system of the Indian cosmetic industry with the
help of secondary data collection. The secondary sources of data are books, journals, annual reports of
cosmetic industry, internet (websites) and research papers etc.
Significance of porter five force models: The Porter's five force method is a simple but powerful tool for
understanding where power lies in a business condition. Porter explains that there are five forces that determine
industry attractiveness and long run industry profitability. Five force analyses help to decide the long run business
activity. This is useful, because it helps company to comprehend both the strength of current competitive
situation, and the strength of a position considering moving into. With a clear understanding of where power lies,
company can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking
wrong steps. Conventionally, the tool is used to find whether new products, services or businesses have the potential
to be profitable.
Significance of 4P’s:
While marketing the products, firm need to create a successful marketing mix the right product sold at the right price
in the right place and using the most suitable promotion. To create the right marketing mix, businesses have to meet
the following conditions:
Product:
The product has to have the right features with broader choice and should Satisfy consumer needs- such as; it
must look well and work well.
Price:
The price must be right. The price of an item is clearly an important cause of the Value of sales made. Price decides
success of product in market.
Place:
The goods must be in the right place at the right time. Making sure that the goods arrive when and where, as they are
wanted an important operation.
Promotion:
Promotion is the business of communicating with customers. It will provide information that will help company in
making a decision to buy a product or service. However, successful promotion increases sales, so that advertising
and other costs are spread over a larger output.
Significance of SWOT Analysis
SWOT analysis stands for strengths, weakness, opportunities and threats which are method of analysis for auditing
an organization and its environment. SWOT analysis applies to all corporate level, all business which simplify in
marketing plans. The SWOT analysis allows analyzing a company, their goals, business plans and decisions.
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It also implies reviewing the positives and negatives of the industry and the company itself.
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Arth PrabandK: A Journal of Economics and Management
Vol. 3 Issue 9 September 2014, ISSN 2278-0629, pp. 175-183
Figure-1
SWOT ANALYSIS
Source:hrmadvice.com
Strengths and weakness are internal factors that create value or destroy value. They include assets and human
skills compared to its competitors. They can be measured using internal assessments or external benchmarks.
Opportunities and threats are external factors that create value or destroy value. A company cannot control them. It
includes demographic, economic, political, technical, social, legal factors. Any organization must try to create a fit
with its external environment.
Analysis:
Porter’s five forces:
There are five forces that influence the level of competition within a particular market. These forces were
studied with the help of Michael E Porter theory. Michael E Porter a professor of Harvard Business School
in 1979 developed a framework for the industry analysis and business. The theory determines the competitive
intensity and attractiveness of a market called as Porter’ s five forces .The Porter’s five forces include:
The threat of substitute products
The threat of established rivals
The threat of new entrants
The bargaining power of suppliers
Bargaining powers of customers
Figure-2
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Porters Five Forces
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Source: Cosmetics Industry. [Cited 2010 October 25]. Available from:
http://www.bignerds.com/papers/15575/Cosmectic-Industry-5Forces/Cosmectic IndustryAPJEM
Arth PrabandK: A Journal of Economics and Management
Vol. 3 Issue 9 September 2014, ISSN 2278-0629, pp. 175-183
The threat of established rivals: The internal rivalry in Lakme industry is very high. There is a presence of
domestic players and International players in the market. The Indian cosmetic industry is marked by presence of few
companies with global presence, which has the larger share in cosmetic market. The few rivalries are Revlon,
L’oreal, Lotus, Olay, etc.
The threat of new entrants: A new entry into this industry is not an easy trade. New entrants have to compete with
large giant cosmetic companies. Most of the multinational companies invest good amount of capital for research
and development and marketing expenditures. For new entrant a capital required for business is huge. The funds are
required for investment in R&D, production, distribution and marketing which covers advertising cost which is
crucial in this competitive industry. A major challenge for new entrants are advertising and positioning of product in
the minds of consumers, as market is flooded with many national and international brands. Another issue is price
sensitive market. The new entrants have had to work out innovative strategies to satisfy Indian preferences and
budgets to establish a hold in the market. Many cosmetic companies launch their products in smaller pack sizes
to make them more affordable. An opportunity for new entrant is to build a product under a synergy and
collaboration with giant’ s cosmetic companies.
The threat of substitute products: In Porter’s theory threat of substitutes exists when a product’s demand is
affected by the price change of substitute product. The consumers have a lot of brand choice as cosmetic market is
flooded with many brands. Due to this demand, product becomes more elastic. But Lakme is successful in creating a
place in every woman’s heart. So by seeing the preference of Indian women its shows that the threat of substitute of
Lakme is low.
Buyer power: Consumer buying power is very high. To retain consumers is very challenging task. In cosmetic
industry consumers do not always stick to one brand of skincare or hair care because the switching costs are
very low. This means that buyer power is high and demand for favourable prices. Brand awareness is more in
urban India, but brand loyalty is less towards the products, whereas brand awareness is less in rural India and
brand loyalty is more.
Bargaining supplier power: Supplier’s bargaining power is moderate. Suppliers in cosmetic industries are
fragmented. They are interlinked together. Suppliers are often insignificant in scale compared to major cosmetic
manufacturers. Chemical producers have wide variety of sources to earn revenues; they are not completely
dependent on cosmetic manufacturers. Overall the role supplier in cosmetic industry is adequate.
Marketing Strategy:
Marketing mix analysis:
4P’s:
Product, Price, Place, Promotion To understand the competition in the Indian cosmeceutical market for various
brands, the product of main competitors were examined.
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1. Product
The Unilever brands have the main competitors of L’Oreal, Himalaya herbal healthcare Ayur,Zydus Wellness,
Lotus herbals and VLCC .The high growth in cosmeceuticals market is mainly because of various companies trying
to incorporate same attributes and features in their product. Further we noted that competitions in the skin care
products are high. Product analysis of cosmeceutical brands are discussed below.
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Among International cosmeceutical brands Less to moderate competition is observed in
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.Anti -acne products
Moderate to high competition is seen in
Moisturizing products
Anti-aging products
Sun care products
Skin whitening products
Among Indian cosmeceutical brands:APJEM
Arth PrabandK: A Journal of Economics and Management
Vol. 3 Issue 9 September 2014, ISSN 2278-0629, pp. 175-183
Less to moderate competition is for:
Skin whitening products
Anti-aging products
Moderate to high competition is evident in
Moisturizing products
Sun care products
Anti-acne products
Price: The more similarity in pricing strategy, Lakme industry has the higher market competitiveness. Skin
care products are categorized for analysis as:
Low price segment (45 to 200 INR)
Numbers of available products are more in moisturizing, sun care and whitening categories,so intense competition
observed in these categories. In anti-acne category only few products are available, so less competition is observed.
No company is offering anti-aging products in low price range. Except Estee Lauder all major companies are
following mass marketing.
Moderate price segment (200 to 800 INR)
More products are available in sun care and anti-aging categories but not as that of low price segment, so
somewhat more competition in this category. In moisturizing, anti-acne and skin whitening categories very few
products are available, so less competition in this category.
High end price segment (800-5000 INR)
Only two cosmetic companies are focused on this segment. They are L’Oreal and Estee Lauder, that too not in all
categories. No product is available in anti-acne category, so less competition in this category. Where as in other
categories products are available but not as that of low price segment, so moderate to low competition is seen in this
category.
Overall price analysis: In India most of the cosmetic companies launch their products at low price. Some
companies like L’Oreal are not only focusing on low price market but also focused on premium market and
companies like Estee Lauder are mainly focusing on premium market. As India is price sensitive market, so
companies should price their products accordingly.
Promotion: More the cosmetic companies are the same distribution channel, the higher the competition in the
market. The competition between Lakme, L’oreal, Lotus etc.is high because they adopt the same distribution
channels. Various methods of product promotion adopted by Lakme.This Company promote or advertise their
products through special magazines and through websites. For magazine advertisement it prefer special magazines
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compared to television advertisement. That’s why this company as to retain the exclusive image of the product since
they are high end brands.
SWOT ANALYSIS:
Strengths
1. Lakme is the most trustable Brand of HUL.
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2. Due to Good brand and recognition, Lakme has been in beauty and cosmetics Segment since long duration so
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people are aware of its existence.
3. Inspite of all brands People will rely and feel good by using Lakme, as Indian brand is good in terms of its
qualities, price, range of products and service.
Weaknesses
1. Like other brands, Lakme has no different range of hair care products, which makes them aware as well as
reluctant to use the brand products.
2. People have a misconception and pre assumption that Lakme services are highly priced.
3. Lakme has advertised its products very well but there is no visibility through media, so it lacks awareness.APJEM
Arth Prabandh: A Journal of Economics and Management
Vol. 3 Issue 9 September 2014, ISSN 2278-0629, pp. 175-183
Opportunities
1. Lakme has established and very renowned brand towards elites, now we are also targeting the middle and upper
middle class people.
Threats
1.Our competitors include various brand names lotus,Revlon,garnier etc.and enrich which also offer same services
in the market.
2. We have commoners as our brand ambassador, no prominent face:-Due to having common faces, it may act as a
threat as there would not be any prominent face to look upon and the continuity of recognition would be lost.
Regarding the choice of this product the researchers tried to analyse it with the help of questionnaire among 50
respondents in Bhubaneswar.
Questionnaire:
1. Do you use Lakme Products?
Usage
Yes 80%
No 20%
Out of 50 respondents it will be going to know that 80 % of respondent use Lakme product and 20% are not using
this product.
2. For what purpose you use Lakme product?
Series 1
60%
50%
40%
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30%
Series 1
20%
10%
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0%
Eyes 25% Lip colour 10% Nail enamel 15% Face 50%
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Most of the respondents are using Lakme’s face product rather than all of the other the products. 25% of customers
use Lakme’s eye product and very less i.e. 10% of customers are using lip colour of Lakme.
3. Do Lakme provides quality products?APJEM
Arth Prabandh: A Journal of Economics and Management
Vol. 3 Issue 9 September 2014, ISSN 2278-0629, pp. 175-183
Sales
Yes 90%
N0 10 %
Out of 100%, 80% of customers have said that Lakme has provided quality Products. For this reason Lakme’s
product have more demandable in the market.
4. What do you think about the price level of Lakme product?
Price Level
High 15%
Medium 80%
Low 5%
Lakme’s price will not be more than other companies. It has medium price that’s why all class of people use that
product. 80 % customer has accepted it. So it has been sustaining in the market since a long period of time.
5. Are you satisfied with Lakme product?
Satisfaction
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Yes 75%
No 25%
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75% of respondents have told that they are satisfied with this Lakme product and 25% are not satisfied with this
product. Due to quality, quantity and price purpose they are satisfied with that product.
6. What changes you would like to see in the Lakme product?APJEM
Arth Prabandh: A Journal of Economics and Management
Vol. 3 Issue 9 September 2014, ISSN 2278-0629, pp. 175-183
Expectation
60%
40%
Expectation
20%
0%
More Product More shades Better Package all of the
Range above
For the betterment of this product the customer suggested that Lakme has to improve and more conscious about the
better quality of variety product with medium range.
Suggestions:
Promotion by local advertisement can also help the company for sales promotion of the product.
More promotional schemes should apply for the customers for better sales.
For customer satisfaction the company should reveal all the complaints of the customer.
Timely feedback should be taken so that all problem should be vanished.
Conclusion:
The increase in the use of cosmetics by Indian women has created more competitors in the market. To sustain in the
market the effective communication requires effective strategy which is a coherent plan of action. From the above
study it has been found that the marketing strategies adopted by Lakme made the company to sustain in the market.
Lakme has sustained economically, socially and environmentally since 20 years. Lakme is more successful in
making a place in every women’s make up box.
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future. In-cosmetics. Milan. Retrieved from: http://www.in-cosmetics.com/ RXUK/RXUK InCosmetics/
documents/IC11 EuromonitorInt GlobalBeautyAndPersonalCare
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2. Booming Cosmetics market in China. (2005), CNCIC, Li&Fung Research Centre, Bejing-Hong Kong.
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4. Bucalo A. (1999). State of the industry. The emerging markets march forward. Global Cosmetics Industry.
5. China’s cosmetics market. 2011. (2012, February). Li&Fung Research Centre.
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Retrievedfrom:http://www.funggroup.com/eng/knowledge/research/industry_series20
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6. China’s retail industry development prospects (2011, March), My Decker Capital.
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8. Bernstein Research. (2009). Cosmetics & fragrances: Analyzing sales growth prospects within the global
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11. Porter’s five forces assessing the Balance of Power in a Business Situation. [cited 2010 December
15]. Available from: http://www.mindtools.com/pages/article/newTMC_08.htm 4. What is SWOTAPJEM
Arth Prabandh: A Journal of Economics and Management
Vol. 3 Issue 9 September 2014, ISSN 2278-0629, pp. 175-183
analysis? Description.[cited 2011 June 5]. Available from:
http://www.12manage.com/methods_swot_analysis.html
12. Marketing mix. Product, Price, Place, Promotion. The 4ps of Marketing.
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papers/15575/Cosmetics-Industry-5-Forces/Cosmetics Industry
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from:http://www.wikiswot.com/SWOT/4_User_Generated/cosmetics.html
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