Name : Sakul Bethany (23)

NIM : 105021210002
Date : Tuesday 3rd December 2013

Management Science
case study

Estee Lauder companies 2008

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Este Lauder is a manufacturer and marketer of four cosmetic

product lines: 1) skin care, 2) makeup, 3) fragrances, and 4) hair care products.
Este Lauder Companies has 26 brands, sells products in over 130 countries and
territories, and employs over 22,000 people worldwide.
Este was always interested in beauty and began her business selling the skin care products her chemist
uncle, John Schotz, developed.

Cont
Este Lauder Company was founded in 1946 by EsteLauder and her husband
Joseph Lauder.
Este Lauder first products were sold to beauty salons and hotels.
In 1948, Este Lauder established their first department store account with Saks
Fifth Avenue in New York.
In 1960 the company globalized their operations with the introduction of Este
Lauder products at Harrods in London.
Additional brands such as Aramis, a line of prestige fragrance and grooming
products for men was launched in 1964.

Cont
Mrs. Este Lauder was named one of ten Outstanding Women in Business in
theUnited States by business and financial editors in 1967.
A year later she received the Spirit of Achievement Award from Albert Einstein
College of Medicine at Yeshiva University.
In 1983, their products were introduced in the Soviet Union.
In 1998, Este Lauder began selling a variety of products over the Internet and
was one of the first major cosmetics firms to offer online shopping.
In 2004, the companys teen-oriented Jane business was sold and Este Lauder
launched Beauty.

Cont
Mrs. Este Lauder passed away in April 2004, she witnessed the growth of a small
home operation into a worldwide corporation with annual revenues of more than
$5 billion.
She was very proud that her company went public in 1995 and today is led by
Este and Josephs children and grandchildren.

STRENGTHS

Este Lauders range of skincare products for women and men include
moisturizers, creams, lotions, cleansers, sunscreens, and self-tanning products.
Skincare products account for about 37 percent of net sales as compared to makeup
products that account for about 39 percent of sales.
Fragrances for women and men comprise about 19 percent of sales. Fragrances are
sold in perfume sprays and colognes, as well as lotions, powders, creams, and
soaps.
Finally, Este Lauder sells hair care products in salons and freestanding retail
stores. In fiscal 2006, hair care products accounted for about 5 percent of sales.
The management systems at all Este Lauder manufacturing operations conform to
the ISO 14001 standards.
Este Lauders 2006 sales increased 3 percent to $6,463.8 million due to growth in
their makeup, skin care, and hair care product categories, which was partially offset
by lower sales in the fragrance product category.
Este Lauders final 2007 sales increased 7 percent to $7.037 billion.

WEAKNESS
Operating income decreased 15 percent to $619.6 million, and the operating
margin was 9.6 percent of sales in fiscal 2006 as compared with 11.6 percent in
the prior year.
Este Lauders long-term debt decreased 4.6 percent to $431 million in 2006
Net sales of fragrance products decreased 4 percent or $47.3 million to $1,213.3
million as the company continue to struggle in this product category, particularly
in the Americas region.
In Europe, the Middle East, and Africa, net sales increased 2 percent to $2,147.7
million.
These increases were partially offset by decreases of approximately $26 million in
Spain and Italy.

OPPORTUNITIES
Este Lauder markets more than 9,000 quality products under its portfolio of
brands.Exhibit 6 summarizes the various products and dates of product launch or
acquisition.
Este Lauder was the first cosmetics company to offer free samples and gift-withpurchase and continues this strategy today.
Este Lauder was the first major prestige cosmetics firm to offer shopping via the
Internet.
Dan Brestle, COO of Este Lauder, stated that distribution channels in North
America, sales on TV, and sales in doctors offices are growing.
Much of the expected growth in the personal products industry will be fueled by
the rising demand from emerging and developing markets.
The worlds aging population will multiple by 2.5 times in the next 40 years,
representing over 33 percent of the total population.

THREATS
Top competitors in the cosmetics business are diversified with many brand names
and a wide range of products.
LOreal is one of the worldwide leaders in cosmetics and distributes products in
130 countries with 19 global brands and offices in 58 countries.
Procter & Gamble has consistently pursued globalization with over 135,000
employees working in over 80 countries and distribution of consumer products in
140 countries.
Unilever, the Anglo-Dutch food and personal products group, has 400 brands that
span over 14 categories of home, personal care, and food products.
Colgate-Palmolive, who marks their 200th year in 2006, markets a variety of
products in the oral, personal, and home care segments.

Cont
Avon Products Incorporated sells beauty and related products consisting of
cosmetics, fragrances, skin care, and toiletries. As the worlds largest direct seller
of personal products (primarily cosmetics),Avon markets their products in over
100 countries through over 5 million independent sales representatives.
Alberto- Culver Company operates a beauty supply distribution network and
develops ,manufactures, and sells consumer beauty products with a strong
presence in the professional salon market.
Revlon Worldwide Corporation offers a variety of cosmetic and beauty products
under multiple brands. Revlon is one of the best known brand names in the world
and the company excels at mass marketing.

STATEMENT OF PROBLEM
Estee lauder company has a product that known as the branded name.
Estee lauder companys heyday as seen when this companys started to sell their
product in store hotel and into many contries.
The triumph of the company begin to decline with some factors :
1. Debts of this company (Estee lauder).
2. The product started lose.
3. There is some new Cosmetic company or competitor.

ALTERNATIVE COURSE OF ACTION

This company have to Optimization of their brand portfolio

This company have to Strengthening of the their product categories
This company have to Strengthening and expansion in global markets
This company have to Diversification and strengthening of channels of
distribution
This have to develop the Operational and cost excellence.

RECOMMENDATION
The existence of Estee lauder company already known in cosmetics world, this
company need a new innovation and full evaluation about the goal to sell their
own cosmetic product.
To lift up this company, they have to reanimate the quality of the product that
would be sell.
Many company success at the beginning but at the end their companies lost their
existence.Estee lauder company just need to compete with other company fairly
so that their products can receive benefit witout having to pay more than the
benefit the get.

ACTION PLAN

Optimize their plan for the new innovation.

Always makes the evaluation for new look for the product.
Reanimate the quality of product in official.
Makes the fairly competition with the other cosmetic companies and makes
expansion in global markets.
Prepare their brand portfolio.
Develop the Operational and cost excellence.