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In this report we will provide the marketing plan for Elsve, a part of Loreal cosmetics, for the coming year. Based on various facts we have researched we have developed a strategy aimed at increasing our market share for the coming year, but also laying the groundwork for in the future. The report is split up into the following sections: Analysis Macro Environment Micro Environment Swot Analysis 8 12 Page: 27

Synthesis Goals and Strategy Segmentation Targeting Positioning

Operationalization Product Price Promotion Place

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Note: In one guideline it said the report was to be no more then 12 pages, and in the other between 10 and 15. In total our report is 14 pages long, but this includes a lot of empty spaces. Remove these spaces and the total content is 12 pages, as requested in one of the two guidelines.

Macro analysis
Demographic - Spain currently has approximately 40 million inhabitants: 0-14 years: 15-64 years: 65 years and over:
(2002 est.)

14.5% (male 2,993,747; female 2,812,498) 68.1% (male 13,699,383; female 13,592,717) 17.4% (male 2,922,452; female 4,056,303) 0.09% (2002 est.)

- Growth rate:

- The life expectancy of both males and females has increased recent years. Spain does not face the problem of an ageing population. Because of the fact that the population is gradually growing and the life expectancy is increasing, our market is going to grow as well. Elsve has a feminine image in Spain, since a slightly larger part of the population consists of women, we should exploit this advantage. According to these figures, the largest part of the population consists of people between 15 and 64, which is probably the market where we will sell the most products. Economic situation -Spain has always faced high unemployment. Unemployment has been steadily falling these last years but still remains the highest in the EU at 13% (2001 est.). The government intends to make further progress in changing labour laws and further reducing unemployment. - The current labour force consists of 17.1 million (2001 est.) - Inflation rate: 3,8% (2001 est.) - GDP real growth rate: 2,8% - Capita per head: $18,900 In comparison with other EU countries a capita per head of 18,900 is fairly low, Germany has for example a per capita of $26,200. If the Spanish government is able to reduce unemployment, our market will grow. More people are able to afford our shampoo. Although most economies are in a regression due to certain circumstances, we believe that the economy as a whole will grow.

Natural Environment An important fact is that most of the inhabitants of Spain live near or at the coast. This is approximately 77% of the population. People living near the coast demand special attention because their hair is exposed sea-air and stronger winds all year long. Current environment issues are: Pollution of the Mediterranean Sea from raw sewage and effluents from the offshore production of oil and gas. Air pollution, deforestation and desertification are important issues as well. People in Spain are showing increasing awareness of the harm being done to their environment. Thus they will take environmental impact into consideration when purchasing hair care products. Culture As mentioned before, Elsve is seen as a feminine product. The Spanish market for shampoo as a whole showed a trend toward sophisticated and scientific products focused on specific needs. Hair Features In our view, hair types, hair colour, the length of hair etc. belong to the Macro Analysis because it concerns the entire population, and is thus a demographic statistic. - Hair length: Although a larger percentage of Spanish women have long hair in comparison with other European countries, most women have medium long hair. - Hair type: 15,8% of the Spanish women have greasy hair. This is a significantly larger amount than in other European countries. On the other hand, a very small percentage have normal to dry hair. About 50% has normal hair. Hair look: 50.6 % of the women have just straight hair. There arent any significant differences with other European countries. - Damage to the hair and dandruff are not likely to occur among Spanish women. - Most Spanish women have light brown to dark brown hair. 68.4 % of Spanish men have normal, short hair. Spanish men have less greasy hair than men from other European countries. This differs from the Spanish women, who have

greasier hair than other European women. Most men have straight hair and are not likely to damage their hair or to get dandruff. The most men have a dark hair colour. Spain is the only country in Europe where such a large part of the male population has dark hair.

The company First it is important to see what is important about the business itself, before you can successfully develop and carry out a marketing. Loreal Elsve has a basic division which it implements in all countries across the globe. The advantage of this structure is that is very clear and mistakes are not likely to be made. Loreal is divided into 5 functional areas: Communications and Public Relations, Human Resources, Finance and Administration, Manufacturing and Logistics and Research and Development. Furthermore, Loreal also has a division based upon the four main distribution channels for cosmetic and beauty products: Salon Division: Hair care products for hairdressers and products sold exclusively through salons. Consumer Division: Handles all products and brands distributed through mass-market channels. This is the main channel to be used in the analysis, since most of the consumers are reached through this channel. Perfume and Beauty Division: Commercialized a range of up-market international brands selectively distributed through perfume and cosmetic shops. The Active Cosmetics Department: It produced and marketed several brands of hair treatments and more. which were distributed to a select group of pharmacies. All of the divisions are independent, consisting of different business units that compete with one another.

Suppliers Loreal has 3 factories which produce their own cosmetics; Productos Capilars Loreal, Productora Albesa and Cobelsa Cosmticos. Productos Capilars is the factory of our interest since it is the factory which specializes in various hair products such as shampoos. This factory is not only used for serving the Spanish market. This center is equipped with the latest technology and employs 400 people. Marketing Intermediaries We have the physical distribution firms, which are; local hairdressers, the big supermarkets, perfume and cosmetics shops and finally the pharmacies. These are the main places in Spain where Elsve can bought by the consumers. Furthermore, Loreal Espaa also has 4 distribution centers, situated on the outskirts of Madrid, and a distribution depot on the Canary Islands. These centers act as internal marketing service agencies. Customers This section of the analysis consist of the consumer markets and the reseller markets. The consumer markets consist of the individuals and households that buy goods and services for personal consumption. The Macro Analysis showed that women in Spain have the most greasy hair (15.1%) and 20% suffers from dandruff. 50.8% has normal hair and 77.6% of the women in Spain are unlikely to have dandruff. Women wash their hair two to seven times a week. This group represents 65% of the women. 12% of the sales has been made through drug stores. The rest has been made through perfume and cosmetics shops. 67% of the sales represented cosmetic shampoos, 16% family shampoos and 10% childrens shampoos. The Spanish market uses larger shampoo bottles in comparison to European standards, so it is important to look at the bottle size. Also, the Spanish market is a mature market, with established brand names, so it is difficult for Loreal Elsve to make a swift impact on the

market. Elsve also has a feminine image, which makes it difficult to target other market segments, although this could just as well provide an opportunity. Competitors Procter and Gamble: Their goal is to create and maintain customer loyalty to its brands, offering quality and value in innovative products backed by heavy investments and advertising. Procter & Gambler owns 25.8% of the market and owns 30.9% of the total market value.

Pantene: Pantene leads the market for cosmetic shampoos in Spain and its formula is based on pro-vitamin B5. Constant research and innovation were key factors for its success. The advertising reinforces its brand image, positioning itself as specialist in hair care. It is aimed at both men and women.

Wash and Go Head and Shoulders: another important P&G brand. Its image used to be fast and practical, but slowly hair care and other features were introduced. This brand also stands above Elsve, giving Procter and Gamble the 2 leading brands in the Spanish shampoo market.

Unilever: The pillar for Unilevers strategy is emphasized on brand names, aimed at offering quality and maximizing the value of both established and new brand names. Unilever holds 9.8% of the market share and 10.5% of its value.

Organics: Is a Unilever brand that communicates the message of healthy hair, in touch with nature. Organics tries to position itself as a shampoo that makes hair strong, healthy and shiny. The target public is exclusively female, but is more focused on cosmetic features rather than healthier hair. Organics has a significantly lower market share in Spain than Elsve does.

Timotei: A Shampoo that is traditionally related to its nature. Its message is that the hair is nourished and protected thanks to natural ingredients which make it more beautiful, stronger and resistant. Timotei is directed exclusively at women. One flaw it has is that the advertisements usually do not mention why the products give such strong and shiny hair. Timotei holds the third place in the market, but it does leave a window for Elsve to gain market share.

SWOT Analysis
Opportunities The population is growing, and thus our market is growing. The market for shampoo is evolving a demand for innovating products, focused on specific needs with a refreshing idea based on scientific research. Spanish people have fairly uniform hair types, making it easier for us to target a large part of the population at once. Threats Proctor & Gamble dominates the shampoo market. A regressing economy is diminishing peoples spending behavior, thus people will be not be as likely to spend on luxury products, and will be much more aware of the pricing of products. Strengths We have managed to build a solid reputation as a premium female product. We have the capacity to launch an effective advertising campaign to promote our products. We have a wide ranged and versatile distribution system. And have a research & development department of a high scientific standard, that can develop innovating products for us. Weaknesses Have not yet managed to upset the market number 1 in shampoo products. Have not yet developed a product that customers can relate to sufficiently, such as the wash & go concept for people that do not feel they want to devote a large amount of time to washing their hair.

Goals and Strategy

Goals The goals were planning to achieve all have in common that they are to enlarge the market share of Elseve. Our way to achieve these goals is to attack the market segments in Spain: - Women with medium and short hair. - Women with medium long to long hair. - Women with dandruff problems. The reason we only want to attack the women segment of the market is because Elseve already has a relatively good reputation in this branch, which we want to use to increase market share. Strategies The segments of the market which were planning to attack are the ones mentioned it Goals. The reason why weve chosen these segments is because they compose a large part of the shampoo market, and our reputation of a womens shampoo can be used best in these market segments. The biggest competitor in the market is Proctor & Gamble. Our long term goal is to increase our market share such that we may become the market leader. This opens the door for a more short term goal, which is increasing the market share in the above segments. This will not only concern the conquering of market share that Proctor & Gamble occupies, but also the acquiring of market share occupied by Unilever. One of the reasons why Proctor & Gamble has captured the market is because they effectively attacked the market for greasy hair and woman with short to medium long hair. Our strategy is based on a similar idea, but backed up by more appealing technologies and product types, specifically aimed at relating to the Spanish consumer and their way of life.

Market Segmentation
Buyers have unique wants and needs; each buyer is a potential separate market. But because there are so many individuals it is impossible to design a separate marketing programme for each and every one of them. Instead it is easier to divide all the potential buyers of Elsve into broader classes of buyers who differ in their product needs. This process is called market segmentation. But there are different kinds of market segmentation to choose from: marketing. The best way for Elsve to do this in Spain, is to practice segment marketing. Segment marketing holds that a company adapts its offerings so they more closely match the needs of one or more segments. This way the products can be adapted to the different needs of the customers, but it is not to specialised, like niche marketing or micro marketing, so Elsve can try to improve its total position in the Spanish market for shampoo. But before Elsve can adapt its products, the broad segments have to be formed. Different variables can be used to segment the consumer market. Considering the information presented to us about the Spanish customers there are two major variables that can be used to segment the market: Demographic segmentation. This variable can be used to segment on the bases of age and on life cycle. Because when people get older their wants and needs will change as well. Consumers will respond to another marketing programme if they are 45, then if they are 21. Another way of demographic segmentation that can be used by Elsve in Spain (or any other country) is gender segmentation. Men and women have different wants and needs and will respond to a different kind of marketing programme. Behavioural segmentation. A variable of behavioural segmentation that can be used to segment the Spanish market is the usage rate. Not all people use the same amount of shampoo. Some buyers are daily users; others can be weekly users or even less. The various market segments Female: Females with medium and short hair, which consists of 55.3% of the Spanish females. Women with medium and short hair dont need a different shampoo. Mass marketing, segmenting marketing, niche marketing and micro

Females with medium-long and long hair. This is the other 44.7% of the Spanish females. For women with long hair it is difficult to wash their hair, so they need a different, very good shampoo. Females with greasy to normal and greasy hair. This is 33.6% and so a big segment because consumers with greasy hair need a special shampoo to clean their hair properly. Females with dry hair. This is a rather small segment with 15.3 %, but if all the competitors think like that and no one focuses on this segment, a good profit can be attained here. Females with dandruff likely hair. This is a nicely sized segment with 20.6%. For people with dandruff it is usually a problem. They would like to do something about it by buying anti-dandruff shampoo. Females with hair that damages easily. 23.7% of all Spanish women have this problem. They have to be extra careful when it comes to their hair and will buy special shampoo for it. Often users of shampoo. 37% of the Spanish females use shampoo daily or every other day. This is a growing segment. Between 1990 and 1996 this segment has grown by 17%. Females that use shampoo once or twice a week. This is 53% of all Spanish women. It is a declining segment, but still a very large one. Male: Men with greasy to normal and greasy hair. This is a segment of 34.1%, a big segment. And consumers with greasy hair will probably need a good shampoo to wash their hair often. Men with dandruff likely hair. 30.5% of Spanish men have this problem and need a good shampoo to help them. Men with hair that damages easily. This segment consists of 12.7%. It is quite a small segment. All consumers: Consumers aged 11 to 24. This segment contains 18.4% of all Spanish inhabitants. Over 90% of the people in that category use shampoo at least once a week. And the consumers in this segment are all quite young. 34.9% of all Spanish people are aged between 25 and 44. Over 96% of these potential buyers use shampoo at least once a week. These people are more grown up and there is a good chance that they will have children.

27.7 % of the Spanish inhabitants are matured adults between 45 and 64. Their children have most likely moved out, but they are still working. A rather small segment is the people aged between 65 and 74. This consists of 8.6% of all Spanish people. But they do respond to a separate marketing approach. They are quite old and look for a safe, reliable product. Nothing flashy.

After Elsve has set up its goals and strategy and finished segmenting the Spanish market, the next step is to decide which segments to attack. Elsve must use a differentiated marketing strategy for the market targeting. This holds that a few market segments must be chosen for which Elsve designs separate offers. The benefit of this strategy is that this way, Elsve can attain a stronger position, and thus higher sales in every segment it chooses. Two dimensions must be evaluated when choosing the target segment: attractiveness and company fit. A segment must be big enough to be profitable. And a company must have the resources to attack a segment. The best segments for Elsve in Spain are: Designing a shampoo for women with greasy hair. Elsve is seen as a female product and greasy hair is a big segment in Spain. 33.6% of all women have this problem. So it is a big market and a good chance to have a bigger market share. Designing a shampoo for women with hair that damages easily. 23.7 % of all Spanish women have hair that damages easily. So a very good shampoo has to be created to take care of that hair. Designing an anti-dandruff shampoo for women. This is a big problem and the consumers that have dandruff would like to wash it out with a good shampoo. Of all women 20.6% have dandruff likely hair. There are already competitors with the same idea, but with a good product that market can be attacked and proven to be quite profitable.

The strategy we have chosen relies on the fact that we need specialization to succeed in a market we want to be leader in. Some possible competitive advantages

12 of being the market leader are of course more profit and more goodwill. Well try to attain this goal by offering more and new benefits to the products at a relatively low price in the premium product segment, which is one of the things Elsve is known for. The specialization contains the following products: For women with short to medium long hair: Shampoo for greasy to normal hair. Anti-Dandruff Shampoo.

For women with medium long to long hair: Shampoo for greasy to normal hair. Anti-Dandruff Shampoo.

For women with hair that damages easily.

Our way of positioning is pretty straightforward. In the coming year we want to swiftly improve our reputation for the products described above. Good research and development should result in a high quality product for a reasonable price in the premium product segment. Trying to take our customers needs into account as much as possible, this strategy should help improve our market share not only in the initial year, but also in the long term.


Spanish people see Elsve as female product; we want to exploit this. In order to do gain more market share we want to compete with Unilevers Organics and Timotei, also seen as products designed for women. We are trying to come up with a convenience good designed specifically for women. A product for daily use that is an innovating and scientific product focused on the specific needs of Spanish women. These specific needs are a shampoo for women with greasy hair and a shampoo to solve the problems of dandruff. In order to offer an innovating product; we will add natural ingredients to the shampoo, for example: Sea minerals. Why sea minerals? 77% of the entire Spanish population lives near the coast, thats why these natural sea ingredients should appeal to a large amount of the Spanish population. We will offer our product at the standard size we use for the Spanish market: approximately 450 ml.

We mentioned already that we want to compete with Organics and Timotei. We have a slight advantage over them looking at the price of existing products. We are slightly cheaper than both these products. The Spanish population is aware of this. Our plan is to use market penetration pricing. So we initially set a price lower than Unilever does for Organics and Timotei, in order to penetrate the market quickly and effectively. We will thus attract a large number of buyers quickly and obtain a large market share. This high sales volume results in more revenue, allowing the company to find a more lucrative price at a higher production amount.

14 Do be aware that we do not want to lower the price too much. It is our aim to be a relatively affordable premium class product.

As we mentioned in the Product part, our new product is a convenience good. Our products will thus be sold in supermarkets and cosmetic stores. We must keep one thing in mind though, because we have a premium product we should not sell our product in every supermarket. We will try to make our products available in supermarkets with at least an average reputation, to link with the fact that we supply a premium product.

Which strategy should we use in order to promote our existing products and our new product line? We decided to use the Pull Strategy for our new product line; using advertisements like TV commercials, and sales promotion. These advertisements should emphasize the existence of natural ingredients and the results for greasy hair and people who suffer from dandruff. Most logically seen, it is crucial for us to advertise with elaborate media, because it will make it possible for us to have our customers relate to our product as well as possible. The most ideal solution for this is a combination of various media types (television, internet and magazines), providing a broad but linked basis of promotion.