LABELLO

Slogan
Life should taste as good as Labello.

Mission
Our mission is to make people aware of the best way to have soft, smooth and
well- maintained lips. We believe lips are an important part of an individual’s
personality. Our purpose is to make people aware of this need. We exist not only
to profit, but to play our part to make society healthy in personality, beauty and
care.

Vision
We envisage a community based on love, care and beauty such that Labello
becomes more than just a lip care product; it becomes an acquired need for the
members of society.
Product:
Labello is a brand that deals in lip care products. It is produced by Beiersdorf AG
in Germany and Austria. The company was started in 1909 with caring lip balm. In
1911 labello introduced new innovative slider tin case packaging. They currently
make chap sticks, lip balm and lip gloss. Labello has wide range of flavors of lip
balm and lip gloss. On the other hand they also sell the medicated lip care
products. The most recent additions to the flavored range are “Raspberry Rose”
and “Vitamin Shake” and “Labello Hydro care”.

Texture of our product is fine. It’s shiny, shimmery and the color it leaves on lips
varies from flavor to flavor.

Our product is of high quality because it is made of natural fruits extract. The
ingredients are all natural and of fine quality. Labello tries to provide best quality
for its users.

Fragrance of labello is pleasant. It gives a natural fruity feeling. Fragrance also

varies from flavor to flavor.

Labello has attractive packaging that attracts the eye of the consumer. It is
colorful and attracts the female customers. Labello has a protective case which
saves the product from dirt and germs.

Labello is a feminine product. TVC running in Pakistan arouse the cognitive need
among the customers. Labello has positioned itself in such a way that people get
the feel of affiliation.
People will use labello for positive motive i-e ‘to look beautiful and have shiney,
shimmery lips.

OR

People may use it for negative motive as well i-e to avoid chapped and dry lips.
Placement
“Place refers to how an organization will distribute the product or service they are
offering to the end user.”

'Place' focuses on variety of procedures used for transporting and preserving

Labello, and then making them conveniently accessible for the customer. This
means that how our product will be distributed to the user at the right place and
at the right time which will be done by the distribution system.

Through our survey we came to learn that almost 19% of people preferred to buy
their skin care products from variety of medical stores in this region. The rest of
them opted for hyper markets and superstores. When asked where would they
prefer to buy our product from, 13% of them voted for medical stores while 10%
of them said they would like to buy the product from official Labello’s store. For
this purpose we plan to launch the product in our stores as well as other medical
stores like Dwatson and Shaheen chemist etc; where our product will be available
to people conveniently and at their ease. Place of distribution of our product will
be based on the following crucial factors.

Place Decision
 Distribution Channel
 Market Coverage
 Specific channel members
 Inventory Management
 Warehousing
 Distribution Centers
 Transportation

Distribution Channel:

Distribution channel Labello is easily approachable for the distributor to cover

whole of the target market efficiently.
Market Coverage:

Labello is available at most of the retail shops for the convenience of the
customers.

Specific Channel Members:

We have reasonable number of the specific channel members so that the

company can have good check and balance about the supplying of the product.

Inventory Management:

We have a complete accountability on the management related to the inventory,

so that we can prevent from any kind of error or fraud.

Warehousing:

The environment of the warehouses is appropriate according to the requirement

and protection of our product.

Distribution Centers:

These centers are at accessible places, from where suppliers have easily approach
to loading and unloading products.

Transportation:

Transportation is good enough to meet the time management.

Price

Price, one of the four major divisions of a complete Marketing Mix, is one of the
most variable and intangible elements of a brand. In some cases, however, it may
be very constant. That, however, is an advantage our product Labello doesn’t
boast because we face numerous challenges to our monopoly in the Chapstick
market.

In our consumer research of 50 potential customers, and consumers, we surveyed

respondents categorizing into student, employed and unemployed.

Money, Time and Cognitive Activity play an important part in a consumer’s buying
decisions.

Looking at the aspect of money first, research suggests that the method a
consumer earns money from affects their buying behavior. Our respondents were
mainly from the Upper and Middle classes from reputable
Universities/Workplaces, making them of those who would be less price sensitive
to relatively high priced products in regard to the product’s use. Whether student,
employed, or unemployed, they fit into the above described category. The
conclusion of a person from an Upper or Middle class studying in (or working at) a
reputable Institute/Organization may be well off (even if not too much), is based
on observance of incomes, buying behavior and generally perceived information
on society.
The factor of Time and Cost are important. Cost of purchasing Labello may be
divided into:

1. The price itself

2. Money and Time invested into behavior leading to making the purchase

Almost all the respondents of our questionnaires belonged to a category of the

population which had no difficulties spending as much for Labello as priced, and
also did not have difficulties travelling to Medical, General, or Departmental
Stores (or any other shop) to purchase a chapstick. This conclusion is based on
general behavior, practices, and purchasing habits observed within the population
we surveyed from.

Cognitive Activity refers to the processing of variations of the product inside a

consumers mind, influencing behavior of purchase decisions. Labello features
various flavours, of different coloured packaging, scent, and taste, which attracts
consumers of different choice of colour, scent, and taste. People belonging to our
surveyed population display different interests and personalities, which lead us to
believe they will be influenced by variations of not only our product but also our
competitors.

The Strategic Approach to Pricing

(Model adapted from “Consumer Behaviour and Pricing Strategy”, by Peter, J.P,
Olson, J.C – McGraw Hill Education; a Education and Research Company)

The first step taken is to analyze the consumer-product relation. This goes into
the product itself and the need for a consumer to purchase our product. Needs
may not be creatable, but can surely be explored, and consumers who believe
chapsticks are a need (more often than not female) attach to a chapstick high
importance and suitable for everyday usage.
Labello has many competitors who are discussed in other areas of this report,
which means that in analyzing the environment situation our Product must be
placed not higher than our competitors; competitors being referred to those high-
end products targeting the same classes of population. Cognitive activity is
triggered inside our customers mind when they are faced with variations in the
product; different brands and differences in pricing too considering imported
products are expensive comparing with local produce.

In determining the role of price in the marketing strategy it needs to be

understood that price has to be congruent with the rest of the marketing mix.
Labello is a product targeted at Upper-Middle class, and thus must be priced on a
relatively higher end but not too high as inflation and other economic factors and
the size and demographics of our target market must also be kept in mind.

Production costs, including marketing and salaries, are unknown to us. Similarly,
the Pricing Objectives of the parents company are not disclosed to us. Which lead
us to strategically maneuver through the process working on the above three
main approaches in addition to the results from the surveys conducted.

The price for Labello Chapsticks is PKR 250, which for the majority was also the
Internal Reference Price, or the price they thought first. According to our survey,
the majority of people purchase chapsticks from a Medical Store. For a person of
Upper class, PKR 250 for a elegantly displayed product at a Medical Store (keeping
in mind the efforts/cost of travelling to the store) should not be an issue as they
have access to vehicles easily and usually purchase products for homely and
personal use in bulk. Also, it was believed that most of the people who would buy
Labello are aged between 21-30, which goes with the above ideology that they
would purchase in bulk and be willing to invest the required time and money to
purchase and consumer Labello.

Special Promotions/Occasions

During occasions such as Christmas, Eid or other events, shopping which would
for some be a hectic experience, becomes a pleasure. Normally, consumers dislike
waiting in lines and spending time thinking (as this increases travel and effort
costs) about purchasing decisions and are willing to pay a higher price (but not
too high) to escape the inconvenience of waiting in lines or making their way
through populated areas. However, on Special Occasions (especially Islamic
Events such as two events of Eid and the start of Ramadan) most of the same
consumers would shop willingly. Islamabad/Rawalpindi is a growing area
population-wise and regardless of an urge to shop or not, consumers will still pay
a relatively higher price to escape populated stores. However, this was found to
be truer for grocery stores and stores where consumers shop without having to
think much and where they visit often.

This, an the prediction that Sales may fall in the month long time of Ramadan
because of religious and social beliefs of not consuming any product which may
be tasteful to the person, can be used to maintain the same profitability.
Promotion
To us, promotion is getting our idea across in the most effective manner. Our
promotional strategies, aimed at the upper-middle class female, include using a
range of mediums fine enough to convey our message the way not only us but
our consumer perceive as appropriate for the product we sell them and to whom
we sell.

Our selection of mediums is chosen keeping in mind the consumer’s five

communication effects. Consumers must have a recognized need for a chapstick
for their lips. They must also be aware of our brand; something we are working on
to improve Labello’s awareness. Also, our messages are meant to create a
favorable and relatable image in the mind of the consumer. Lastly, our marketing
minds have tried making our messages are attractive and persuasive to make the
consumer want. Then only, can the consumer perform the behaviors necessary to
avail their stock of the perfect chapstick.

Target Market:

Labello is a lip care product and most females are genuinely concerned about
their looks and appearance so we are targeting our product specifically to females
who are hygiene conscious as well as look conscious. Labello targets customers
with acquired and extrinsic needs. Our target market is the upper-middle class
females. This target includes working women as well as housewives, who are
willing and able to spend money on lip-care products and see it as a necessity of
their everyday life.

While variations of our product target men too, our research suggests that
launching the men’s lipcare product range in Pakistan will not help our aim of
enough profitability.

ATL promotions:
Our basic form of communicating with our audience is through informal means as
that is what most of our audience base suggested through the questionnaires and
focus group. But while targeting the audience through any medium it is very
important to keep the mood of consumer in mind, to set and encourage a positive
attitude towards the product by entertaining them with a positive and innovative
message.

Social Media:

Ever since the emergence of social media, while marketers kept at their research
on how to influence consumer behavior, social media brought so much power in
the hands of the consumer that Peer influence can make or break a brand. We
understand that consumers turn into customers most by complying to the advices
and suggestions of those around them.

We will cater our customer base by promoting Labello on Face ook and by
introducing its official website for Pakistan. On our Facebook page we will ensure
that our customers are well aware of our latest promotions and also if any new
flavors are introduced. This will provide Labello the benefit of positive word of
mouth through its existing loyal customer base. Moreover, we will have our social
media team bring out answers to problems of worried consumers through
discussions with experience lipcare product users on public forums, ofcourse,
trying their best to maintain a positive image.

On our official website we will provide detailed information about the quality of
Labello and its uses. Later onwards we will also make available online sales
package for our platinum and gold customers providing them with door-to door
delivery services.

Television:

We are planning to promote Labello in Pakistan through 2 main TV

advertisements one which is a general advertisement focusing on a perfect smile
with soft and smooth lips. And second advertisement is particularly targeting our
target market of upper-middle class females to ensure them that Labello will
provide them with all the quality features that will give them soft and smooth lips.

The advertisement focusing on perfect smiles and soft and smooth lips may not
directly propagate our product but spreads the idea for having soft and smooth
lips. In the very first phase of the communication effect model we find that we
need to create a need for soft and smooth lips before customers will be willing to
consume our product. Our advertisements on television target towards making
people, regardless of whether they are part of our target market or not, realize
the importance of the utility the consumption of our lipcare product may have in
the person’s routinely life.

Radio:

Radio promotion is one of the major types which put a wow factor. It can help
boost up our brand awareness

BTL Promotions:

Magazines:

Print media is a better way to engage with your target audience. Branded print
magazines, encompasses every niche. Labello is going to place its ad in top Ladies
magazines like glamour and vogue. These magazines are considered to be
credible and trustworthy by our target market. Placing a 3-D ad after every two
weeks regarding the launch of new flavor will create a curiosity among the
viewers. It provides an opportunity to create something different that the digital
world cannot provide. We can reach the audience personally through magazines.
The advertisement will be displayed in the two middle pages of the magazine, as
soon as the customer opens the page the fruit pops out as a 3D model.
Billboards:

Even though Billboards is a common way to promote a product but recently by

using 3D modeling they can be made more attractive and appealing and that is
what labello aims to do.

Sales Promotions:

They are direct enticements to the consumers to make a purchase of your

product. Labello is going to offer a wide range of incentives to its customers. The
first 50 customers are going to get free Labello (own outlet). Other techniques
that we are going to use include discounts on various occasions (Women’s day),
coupons, premiums and gifts for the loyal customers. Sampling will be done
whenever a new flavor will be launched.

Brand awareness:

Labello is going to use various promotion strategies to create brand awareness.

• Colorful price discount signs.

• A big Labello chap stick shaped rack in which chap sticks will be displayed in
Medical stores.
 Porter’s Five force Model

Threats from Potential New Entrants:

1. No such competitors in Pakistan offering Lip-care products.

2. Whereas as there is still no competition so a monopoly can be made.

As Labello is the first lip care product that will be launched in Pakistan and in
future when Labello will be fully established it will benefit from economies of
scale and customer loyalty which are the major threats for any new company
entering the market.
The lip care industry has a low threat of new entrants as it requires a huge cost
to enter the market and to develop unique lip care products it requires a lot of
resources for research, development and manufacturing process. Another
important factor which is a threat for the new companies entering the market
is the brand name of the already established products. Since Labello is sold
under the name of Nivea as-well which is one of the internationally leading
companies for skin care products this is a great threat for new entrants as
customers will not be willing to switch.

Bargaining Power of Customers:

1. Customers don’t have much choice in lip care products.

2. Brand-loyal customers may be reluctant to switch even if new products
come in the market.
3. Local chap sticks are available in lesser price but do not offer best quality
and variety to the customers so the threat of switching to another lip care
product is very low and so is the bargaining power.
4. As customers in our case are not price sensitive and are very health
conscious and Labello being the only lip care product offered, the
bargaining power of suppliers is low and we can charge a higher price from
them.
Threats from substitutes:

1. No such substitutes except Vaseline, Petroleum Jelly and they don’t offer
such variety.
2. No flavors introduced by them.
3. Labello for men. No single brand in Pakistan offers a lip care range for men
so in such a case threat from substitutes is very low.
4. Local chap sticks are available in lesser price but do not offer best quality
and variety to the customers so the threat of switching to a local lip care
product is very low.

Competitive Rivalry:

1. A relatively new market with no competition and no such direct

competitors. So competitive rivalry does not exist.

Bargaining Power of Suppliers:

1. As it’s a relatively new product so there are large number of suppliers in the
market.
2. The bargaining power is low as we have alternative suppliers. And we can
switch from one supplier to another very easily.
3. As it is the only lip care product, we have complete control over the
suppliers.
 PEST Analysis
Political:

1. We are launching labello in Pakistan and the economy of this country is

controlled by the government. Tax rates are constantly rising.
2. There is instability in the market also. Prices of the products are constantly
rising. As we will be targeting the upper middle and elite class price will not
be an issue.
3. We are importing our product so the political instability could be an issue
for the product availability.

Economic:

1. Fluctuation of rupee can affect the sales of the product.

2. Inflation rate is rising and therefore the prices but our target market is not
affected by the rising rates.

Social:

1. The trend of socializing in the youth has increased and has made people
more conscious of their social image. They buy labello for better lips that
enhances their personality.
2. We will launch our product according to the local need.
People opt for labello for the protection of their lips from UV rays.

Technological:

1. All labello products undergo detailed R&D process before it is launched.

2. Labello is an innovative company with variation in products according to
the needs of consumers.