BRANDSTORM 2015 STRATEGY & MARKETING -...

BRANDSTORM 2015

STRATEGY & MARKETING Professor Giuliano Noci

Lancôme in the Travel Retail

Team “Perler”

Fonti Davide ………………...837960 La Valle Giulia ..…………….833594 Lispi Davide …………………832644

The main purpose of this paper is to analyze the dominant structure of the Travel Retail market, and then understand the role acted by the Lancôme brand in this context. The objec?ve of the first sec?on is to deeply understand what are the elements that characterize the compe??ve arena, its main players, the value offered and the future growing trends. The second sec?on explain more in detail the role of Lancôme in the Travel Retail, its features, its purposes and business performances. The final goal of the paper is to figure out what are the growing opportuni?es for the brand in that market, in order to achieve the L’Oréal board’s objec?ves.

“Perler Team”

INDEX

I - THE TRAVEL RETAIL MARKET 1 FRAGRANCE & COSMETICS 3

“PEST” ANALYSIS 3 THE COMPETITION 4 MAIN COMPETITORS 5

CONSUMERS 6 CUSTOMERS SEGMENTATION 6

THE RETAIL EXPERIENCE 9 II - LANCÔME BRAND IN THE TRAVEL RETAIL CHANNEL 11 BRAND MISSION & VALUES 11 BRAND STRATEGY 11

CRITCAL SUCESS FACTORS 11

TARGETING & CONSUMERS 12 POSITIONING AND IMAGE 12 BUSINESS PERFORMANCES 13 PRODUCTS 13 SWOT ANALYSIS 14 PORTER’S FIVE FORCES 15 DIGITAL STATEGY 16 RETAIL EXPERIENCE IN THE EXISTING POINTS OF SALES 17 OPPORTUNITIES FOR LANCÔME 19

“Perler Team”I - THE TRAVEL RETAIL MARKET

Travel Retail is the business undertaken in all the shops located in duty free areas or any areas dedicated to travelers. This is a growing market, that provides customers with many products through different channels. A powerful statement of Taleb Rifai, UNWTO Secretary General, underlines the importance of shopping for travelers:

“Shopping is becoming an increasingly relevant component of the tourism value chain, shopping has converted into a determinant factor affec=ng des=na=on choice, an important component of the overall travel experience and, in some cases the prime travel mo=va=on.”

The extraordinary increase of the sales, especially aFer 2004, makes the Travel Retail market an interesJng source of profit for a great deal of companies. There are many posiJve external factors that contribute to the growth, including the phenomenon of democraJzaJon, that is the acceleraJon in the growth of travelers from emerging countries (that includes BRIC). The members of a new middle-‐class are the main actors of the phenomenon of democraJzaJon. They are keen to travel outside their country and contribute to the booming trend of the economic rising of women’s power, which effecJvely means more female shoppers with enhanced spending power. Travel Retail market takes place in different contexts, which are airports, downtown duty-‐free shops, airlines and cruises. The chart in Figure 2 shows the relevance of the different channels, on the base of sales volume. It’s clear that the dominant driver of this market is passenger traffic, parJcularly air traffic with a percentage of more than 50%. This channel is conJnuously growing, by +5.0% on average per year, and represents over 6 billion internaJonal flights in 2013. The second relevant area is characterized by

downtown duty-‐free shops, which is mainly developed in Asia and LaJn America, followed by cruises that are typical in Asia,Caribbean and Europe. Certainly Travel Retail market therefore fully benefits from the traffic growth: the overall sales sector has already grown faster than the traffic over the last 10 years and this market is expected to double in the forthcoming years, thanks to the se_lements of new big shopping malls in airports.

Analyzing in details, this market provides to customers a wide offer of goods, arranged in categories that are: fragrances & cosmeJcs, tobacco, electronics, fashion & accessories, watches, jewelry & fine wriJng, wine & spirits, confecJonery and fine food. Figure 3 highlights all of them with the respecJve market share. It’s well noJceable that fragrance & cosmeJcs is the cornerstone of the business. This segment offers different beauty products, the principal are: skin-‐care, make up, perfume, cologne and fragrance. The extraordinary

increasing sales trend, showed in Figure 4, makes this segment of Travel Retail a new source of business opportunity. The huge size of this market is the reason why L’ Oréal, the leader of beauty segment with a level of market share of 21,6%, defines Travel Retail as their “Sixth ConJnent”. It is characterized by: its own borderless territory, economy, flow of inhabitants, populaJon and its own capitals, which are decided monitoring the new preferred consumers’ desJnaJons.

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Fig. 2 Channels

4%

33%

6%

57%

AirportsAirlinesDowntown duty-free shopsFerries and Cruises

Fig. 3 - Product Categories

16,4%

10,4%

13,1%

28,8%

14,6%

8,9%7,9%

Confectionery & Fine FoodElectronics, Gifts & OtherFashion & AccessoriesFragrances & CosmeticsTobacco GoodsWatches, Jewelry & Fine WritingWines & Spirits

US $ millions

“Perler Team”In parJcular, they are: Dubai, London Heathrow, Honk Kong, Paris Roissy, Singapore, Amsterdam, Frankfurt, Seoul, Bangkok and Istanbul (a_ached document 7 in the “Appendix” shows the top 25 airports worldwide in terms of sales for the Fragrance & CosmeJcs segment, according to GeneraJon research). The significant role of this market for L’Oréal is evincible by this statement of Barbara Lavernos, Managing Director of L’Oréal Group Travel Retail:

"The travel retail distribu=on channel is a strategic market for the development and visibility of our brands, and contributes to the quest of one billion new consumers.”

So L’ Oréal aims at maximizing the exposure of travelers from around the world to its brand, in order to increase customer loyalty and recruit one billion of new customers.

Analyzing the distribuJon of sales in all the 5 conJnents, the areas with the highest sales for the business of fragrance & cosmeJcs are: Asia & Oceania and Europe. Even if, considering the first semester of 2014, thanks to GeneraJon analysis, we know that Asia & Oceania’s growth rate is almost double than Europe’s one (10.5% against 5.3%), because European market has reached a degree of maturity. All data referred to these elements are quoted in the a_ached documents at the end of the report (1, 2, 3, 4).

In order to successfully break into this market, a key element is represented by the deep understanding of its future evoluJon.

“The key in forecas=ng is to understand economic and other developments around the world and adjust to new reali=es ever so oEen. This is why we update both our short-‐term and long-‐term forecasts twice a year, more frequently if required.”Yngve Bia, President of GeneraJon Research, uses these words to explain the importance of accurate previsions and forecasJng models. The GeneraJon Research Group has esJmated a growth rate of sales around 7%, that will allow to reach 135 billion US$ IN 2025 (Figure 6). In order to let companies to operate efficiently their business, it is also necessary to analyze the expected growth with respect to the countries and to the channels in which the products will be sold. According to the esJmaJon showed in Figure 7, the Middle-‐East is the most emerging region and the channel with higher increase will be downtown shops. Considering the current most profitable segment, fragrances & cosmeJcs, during the 12 years ahead the expected following annual average growth rates is + 6.4%.

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Fig. 5 Fragrances & Cosmetics

REGION MARKET SHARE

Europe 34%

Americas 20%

Africa 1%

Asia & Oceania 39%

Middle East 6%

CHANNEL CONTINENTS PRODUCT CATEGORY

Downtown shops +7.4% The Middle East +10.0% Watches&Jewellery +8.3%

Airports +7.2% Africa +8.2% Faschion&Accessories +8.1%

Ferries + 4.1% Asia Pacific +7.9% ConfecJonery&Fine Food +8.1%

Airlines +3.0% Americas +6.0% Wines&SpirJs +6.6%

Europe +5.3%. Fragrance&Cosme?cs +6.4%

Figure 7 - Growing trends Tobacco +6.3%

US $ millions

US $ millions

“Perler Team”To sustain growth and outperform the market in the coming years, airports and operators will need to focus on five key success factors that reflect the latest trends:

• Developing the density of the retail surface to maximize performance (sales per deparJng passenger). • AdapJng the offer to reflect the passenger profile. • Using a range of approaches to convert browsers into buyers, and to increase Jme spent shopping. • Extending their price advantage over city-‐center retailers and make premium product affordable to middle class. • Expanding customer target groups to include non-‐travelers and arrival passengers, and diversifying distribuJon channels.

The dynamism and growth of this market is not always easy to deal with. In fact, companies have to rapidly change if they don’t want to fall behind in the compeJJon. The main issue is the transformaJon of the customers’ needs, in fact business models are moving from a luxury segment to a more diversified range of products. So companies have to consider these new trends to provide an adequate service. Moreover, in order to maintain their leadership in the sales channels, airpots have to make air travel more enjoyable and less stressful for example by eliminaJng queue at check-‐in, emigraJon, security and boarding allowing customers to have more Jme to shop. Future travelers can expect a dramaJcally more personalized and easier airport experience, thanks to futurisJc airport technology. These futurisJc airport concepts will definitely make flying much more exciJng, transforming ordinary airport pavilions into wonderfully abstract pieces of architecture. Airports will look like smart ciJes. Moreover, considering the environmental perspecJve of air travel, this futurisJc design will surely deal with sustainable structures. Current concept of these revoluJonary airports are, for instance, floaJng airport in River Thames, London, or spider-‐shaped airport in Mexico. Of course, this huge change will affect the shops inside airports, they will be able to appear like something out of a movie rather than an ordinary store. Furthermore, as we already now, there is a big revoluJon in the way to shop, as physical retail spaces become more virtual. Smart businesses find more ways to get the customer the exact item he wants, with no waiJng.

FRAGRANCE & COSMETICS “PEST” ANALYSIS

The main objecJve consists in giving an overview of the different macro-‐environmental factors that affects Travel Retail market, in parJcular the segment of fragrance & cosmeJcs. Each company has to take into consideraJon this useful tool in order to be_er understand the business environment, the current and potenJal situaJon of the market, in order to anJcipate the possible future obstacles and opportuniJes.

POLITICAL FACTORS

PoliJcal factors include poliJcal stability, tax policy, anJtrust and trade regulaJons which affect an organizaJon in many ways such as how a company operates, its costs and also the demand for its products. The higher number of regulaJons introduced in this market, not always has the hoped effect. In fact, the rules oFen increase difficulJes for manufacturers and confusion for customers, discouraging small manufacturers to enter the travel retail market and this inevitably means less choice for the consumers. Considering the poliJcal stability, it’s simple to understand that it represents a huge threat for travel retail market. In case of poliJcal crisis, wars, the travel rate will decrease and of course this will affect negaJvely the sales and the profit for the companies. Also poliJcal decisions can have negaJve effect on travel retail market. For instance, aFer the terrorist events in London in 2006, poliJcians decided to forbid the sales of all liquid products on the flight, it’s easily understandable how this decision dramaJcally affected the performances of the market. Moreover, there are specific regulaJons for the cosmeJc industry, as the regulaJon No 1223/2009 of the European Parliament, which replaced the “cosmeJc direcJve” from 11 July 2013. It aims at ensuring that consumers’ health is protected and that they are well informed by monitoring the composiJon and labelling of products.

ECONOMIC FACTORS

The poliJcal and economic instability of the last decades caused problems to many airlines, in fact there are many examples of

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“Perler Team”bankruptcy, this of course have had a bad effect on Travel Retail because the air traffic inevitably decreased. However, as explained in the first chapter, the current situaJon is completely different, all the main professional associaJons (ICAO, WTO, TFWA, APTRA) predict a steady growth of air traffic and Travel Retail business. Thus, there are many commercial opportuniJes for the companies within the market to deal with an higher demand. The main reasons of these new trends are the already menJoned growth of the middle class travelers and travelers from emerging countries (BRIC). Focusing on them, there are explained the principal economic characterisJcs of each one:

-‐ Russia is the world’s 9th largest country with 143 million people and the 8th largest economy by nominal GDP. StaJsJcs confirm that it is going to account for 20% of all European Duty Free in 2016.

-‐ Brazil is the world’s 5th largest country with 192 million people and one of the world's fastest growing major economies. Annual Brazilian passenger flow growth of over 12% in the past 8 years: Brazilian Travel Retail market is esJmated $900 million.

-‐ China is the most populous country with 1.3 billion people and the largest economy by nominal GDP, is the world's fastest growing major economy and soon world’s largest luxury market.

-‐ South Korea counts among 50 Million people, is the 14th largest economy in the world by nominal GDP. In 2012, 11.1 million foreign tourists visited South Korea, making it the 20th most visited country.

SOCIAL FACTORS

Companies have to carefully take into account the social evoluJon, such as the increase of spending power of some consumers and the change in people’s lifestyles. Focusing on the first one, the economic women’s power rose which means more female shoppers in the duty free shops with enhanced purchasing power. Moreover, the number of unmarried people and married couple without children increased, these two segments spend a lot of money for their personal physical appearance and personal well-‐being. Considering the change in people’s lifestyles, nowadays consumers are looking for products of small size due to the fact that they oFen travel just with hand-‐luggage in order to avoid check-‐in queue and they want to carry them comfortably. Nowadays companies deal with new needs, for instance people are looking for eternal youth: this leads to growing opportuniJes for cosmeJc branding in terms of anJ-‐aging products. Moreover, the consumers are conJnuously searching new olfacJve experiences so fragrance companies have to invest money on research to provide the market with new products. Another important issue to pay a_enJon is the meaning of colors, which is a useful non verbal communicaJon that affects sales. The difficulty is related to the fact that there isn’t a fixed color code, in fact it can vary depending on culture and circumstances, so brands have to careful it.

TECHNOLOGICAL FACTORS

Technological innovaJon has a fundamental role, their changes affect the product available to consumers, in terms of quality and funcJonality. Advanced technologies, such as biotechnology, nanometer technology, informaJon technology, are rapidly applied in the cosmeJc industry and provide a lot of opportuniJes for the development of the market. The best companies improved their approach for the research, they use non-‐invasive techniques (like Biphotonic microscopy), roboJcs, 3D modeling and the way in which they gather informaJon in real Jme, allowing chemists and biologists to save Jme. Technology is an effecJve tool to face the compeJJon and the shorter product life cycle. In fact, between 300 and 500 feminine fragrances are launched every year but only 5 to 8 of them last more than 2 years. While for the male, 15 out of 200 launched fragrances last more than 2 years. Moreover, technologies developed markeJng communicaJon methods and merchandising innovaJon.

THE COMPETITION

Fragrance & CosmeJcs market is characterized by a complex scenario, in which there are many companies with different objecJves and strategies, consistent with the selected segment. Nicolas Hieronimus, President SelecJve Division of L’Oréral, said:

“There are two different growing business models: the mass model, which is more ‘mul=-‐polar’, and the luxury model, which is more ‘ver=calised’ or ‘top-‐down’”

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“Perler Team”According to this vision, there are two different segments that can be recognized: the luxury segment and the mass market. Considering the first one, the dominant drivers of presJge brands are quality and uniqueness, so controlling and maintaining a premium image is a priority. Consumers have a much stronger emoJonal engagement with them, rather than with other kind of goods. They are usually wealthy people, who buy mostly for status, and giF givers, who want to show to someone their high esteem. Comparing with the Maslow’s hierarchy of needs, we can affirm that these goods refer to higher levels of need, about personal pleasure and self-‐expression and not a simple materialisJc view. Thus, the most consistent strategy is differenJaJon because it makes products more a_racJve and recognizable from others. On the other hand, mass market leader brands’ aim differs from luxury one. Their products are designed in order to be bought by as many people as possible, not just by wealthy people with a high spending power. For this reason the strategy is different, in fact it’s more preferable implemenJng a cost leadership strategy than differenJaJon. In order to be_er understand the structure of the fragrance & cosmeJcs market, it is necessary to split this sector in different major segment:

• Fragrance: considered as a grooming accessory, perfumes have metamorphosed into a "feel good" factor, which complements the consumer's need for expressing individuality, and personal style. The wide range of themes and choices enable consumers to choose fragrances that complement respecJve personal and characterisJc traits.

• Skin care: in a melJng-‐pot context like Travel Retail, where can be served people from all ages and status, skin care products catch horizontally all kind of consumers who looks always for their best image.

• Make-‐up: this is an element never gets boring. Everyday, landing in a new place, every woman want to appear always fresh and sophisJcated: thanks to the power of make up this is possible. The focus is on the possibility to believe in your beauty and show it in the best way. Customers enjoy both the product itself and the service provided by make up arJsts.

• Dermo-‐Cosme?cs: it represents a true synergy between healthcare and beauty care, combining dermatology and cosmeJcs. Dermo-‐cosmeJcs make use of medical research to advance cosmeJc goals. The three main funcJons are: protect skin, hydrate and correct.

• Hair care: Haircare products comprise many different brands and varieJes, but they boil down to a handful of specific haircare funcJons: cleaning, condiJoning, styling and coloring the hair. Further than the basic funcJon, a “tailor made” retailing approach and a professional consulJng aim at matching customers’ beauty aspiraJons.

MAIN COMPETITORS

The ranking of the best 5 companies in terms of market share in beauty segment of Travel Retail is: L'Oréal Group, Estée Lauder Companies, LVMH, Procter & Gamble and Chanel Group (to have a complete ranking of the first 50 companies in market share, look at the a_ached document 8 in the “Appendix”, data referred to GeneraJon researches updated at the end of 2012). Their product porvolio includes the most well known brands, here are reported some of them: L’Oréal Group is the leader. It owns a brand porvolio that includes Lancôme, Kiehl’s, Giorgio Armani, Ralph Lauren, Yves Saint Laurent, Shu Uemura, Cacharel, Diesel, Clarisonic, Kérastase, SK-‐II, L’Oréal Paris. Estèe Lauder Companies has reached the second posiJon in the rank. Its offer includes Estèe Lauder, Clinique, MAC. LVMH owns the third step of the podium. It is one of the strongest luxury brand all over the world. Moreover it controls an important distribuJon channel by owning DFR Group, a duty-‐free company. Its brand porvolio, in terms of Fragrances & CosmeJcs product, includes Givenchy, Guerlain, Bvlgari and ChrisJan Dior. Procter & Gamble is a US mulJnaJonal company, reaching the 92th posiJon in the “Fortune 500” ranking. It offers a wide product and brand porvolio worldwide. In Travel Retail its beauty products allows the company to reach the fourth larger market share. Its brand porvolio includes Gucci, Hugo boss and Dolce & Gabbana. Chanel Group, with its luxury mono-‐brand Chanel, reached the fiFh larger Market Share in Beauty sector of Travel Retail regarding company ranking, even if Chanel brand is the leader of the brand ranking in the same market.

The following chart (Figure 8) shows the most recognizable brands, posiJoned in their target sector of the fragrance & cosmeJcs market, taking into account the kind of segment they serve (Fragrance, Skin Care, Make up, Dermo-‐CosmeJcs and Hair Care) and the relaJve posiJon in each secJon (from luxury to mass market).

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“Perler Team”

So considering the most compeJJve brands in travel retail, we report here the top 12 brands, which are: Chanel, Estèe Lauder, Lancôme, Dior, Clinique, Giorgio Armani, Calvin Klein, SKII, Clarins, Dolce & Gabbana, Hugo Boss and Yves Saint Laurent. In the a_achment 9 can be seen the complete ranking. Can be clearly noJce that the top brands are all involved in Luxury segment, as a result of the process of democraJzaJon in which the emerging middle class can afford luxury products.

CONSUMERS

Every day, millions of people have a flight: they are “Global Shoppers” and potenJal consumers for Travel Retail market, which is now evolving from a business model focused exclusively on the luxury segment towards a more diversified range that can meet the needs of customers of different levels in terms of purchasing power. They do not only shop where they live, they shop when traveling and in the markets of their desJnaJon. Customers of diverse cultures and with different expectaJons, but who share a common aspiraJon for luxury and beauty: as is evident in the rise of new consumers from the emerging zones of Brazil, Russia, China and Korea above all. Customers from these countries purchase more items of luxury brands in the Duty Free stores than anyone else.

CUSTOMERS SEGMENTATION

The starJng point is to understand customer’s drivers and variables, in order to develop a Travel Retail B2C market segmentaJon, taking into account customer’s characterisJcs, behaviors and needs. The main point is that the customer universe is the same for all parJes in Travel Retail. To deeply understand customers’ preferences, the objecJve is to define segments by looking at behavioral consideraJons, strictly related to demographic variables. Even if each segment is disJnct from others (heterogeneity), it shares similar shopping behaves, responds similarly to Travel Retail market sJmuli and can be reached by the same market intervenJons. In the following passage are described the 7 most valuable customers categories, detected by a recent TFWA & APTRA study among Travel Retail customers. Since this segmentaJon is referred to all Travel Retail customers, the focus of the following analysis is on each segment’s aytude towards beauty products. To understand the adopted schemes, at the top of the leF side are reported customer’s needs. In the bo_om leF side are explained customer’s behaviors and how to recruit and loyalize them, while in the right side are described customer’s socio-‐demographic and psychographic characterisJcs. These segments are:

“ConvenJonal Seekers”, “Bargain Seeking Self-‐Indulgers”, “Low Income PromoJon Swayed”, “EmoJonal High Spender”, “AuthenJc Product Seekers”, “InspiraJon Seekers” and “Low Budget GiF Shopper”

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FRAGRANCE SKIN CARE MAKE-UP DERMO-COSMETICS HAIR CARE

LUXURY MARKET

MASS MARKET

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Figure 8

“Perler Team”

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LOW INCOME PROMOTION SWAYED are a_racted by promoJons. They like entertainment and going and visiJng a promo site with an acJvity. They like receiving advice and guidance from store staff. They buy expensive product, especially if recommended. The 65% of them buy every trip and almost for any purpose. They buy beauty and cosmeJcs products as a giF to wife, husband or partner. More than on average, they don’t find at airport shops the type of products they usually buy. They demonstrate an high frequency of buying in downtown Duty Free shops at the desJnaJon, when they have spare Jme during the transit, or in airport arrival Duty Free shops aFer the last flight. The 65% of them buy every trip. To recruit and loyalize them: offer significant selecJon of well known brands with top image, present appealing and entertaining promoJons, approach with acJve sales advisors and offer sufficient products for immediate consumpJon.

Purchase frequency

High (Duty Free)

Travel purpose Leisure&Business (63%)

Travel class Economy 70%

Flying frequency Medium

Income < 2’000 ($/month 40%)

Age < 30 years (53%)

Airport shopping benefits: Main airport shopping selec?on criteria:

Most important promo?ons:

Main reason to buy expensive products:

Gender Female (36%) Male (64%)

• Guaranteed good quality • Local products • To use during the trip • Be_er advice

• Most convenient part of trip (66%)

• Best product selecJon (58%)

• Price-‐off • Free accessory • special airport ediJon • scratch card/prise draw

• High quality (59%) • From a top brand • Exclusive/limited ediJon (28%) • Recommended (21%)

Profession (63%)

Management, Professional, Engineer

Smokers Yes (35%)

The BARGAIN SEEKING SELF-‐INDULGERS like to compare the prices of products and buy at airport only if it’s cheaper than downtown shops. They like to browse around airport shops trying to find bargains, good prices and discounts. They like entertainment and are more likely to visit promoJon site with an acJvity. Their main shopping moJvaJon is self-‐indulgence with a bargain. They are convenJonal people who enjoy material possession, or intensive shoppers. The 78% of them buy every trip, that are generally leisure trip with partner or family. They buy beauty and cosmeJcs products to indulge themselves. They generally buy on way back home. To recruit and loyalize them it is necessary to enhance and guarantee high quality products, offer wide range of top brands, an entertaining promoJons and animaJons. It’s also preferable to show price advantage compared to downtown shops and offer wide range of expensive self-‐indulgence products for women.

Purchase frequency

Medium -‐ Low (Duty Free)

Travel purpose Leisure (59%)

Travel class Economy (80%)

Flying frequency Low

Income 1’000-‐5’000 ($/month 69%)




Main reason to buy expensive products: Gender Female (69%)

Male (31%)

• Cheaper prices • Guaranteed good quality • Limited/special ediJons

• Most convenient part of trip (63%)

• Offers the best prices (46%)

• Price-‐off • Good bargain (79%) Profession Middle management or professional (47%)

EMOTIONAL HIGH SPENDERS are generally impulsive and intensive shoppers that easily buy products that catches a_enJon. They enjoy buying to have new things. They like entertainment in shops and prefer airport shops that have novelJes or promoJons. They are a_racted and buy well known brands. They generally enjoy airport shops even they don’t need anything specific and are interested in the selecJon of product available there; someJmes they enjoy browse around different shops trying to find bargains and good prices. Airport shops are their favorite shopping places while traveling because they offer a great experience. The 88% of them buy every trip, that are generally leisure trip with family, friends or alone. They buy beauty and cosmeJcs products as a giF to friends or colleagues. They are high spenders in each of TOP 5 categories and purchase each of them in arrival Duty Free shops. To recruit and loyalize them it is necessary to offer wide range of luxury and expensive self-‐indulgence products, to enhance the “good value” aspect of Duty Free and offer well known brands with a local touch.

Purchase frequency

High (Duty Free)

Travel purpose Leisure&Business(43%)



Income 1’000-‐6’000 ($/month 74%)





Male (42%)

• Cheaper prices • Guaranteed good quality • Limited / special ediJons • Compare / try out

• Most convenient part of trip (48%) • Offers the best prices (50%)

• Price-‐off • Good bargain (75%) Profession (57%)

Middle management, Professional, Engineer,

Smokers Yes (33%)

AUTHENTIC PRODUCT SEEKERS are very occasional shoppers. They shops only when absolutely necessary. They have a simplified lifestyle, with li_le emphasis on material possession. They are interested in purchasing only if there are unique, special arJcles available. They visit all kind of shop while traveling, but they prefer shopping in other places than airports because they don’t like to waste Jme at the airports shop. The 66% of them buy every trip, but the 76% of them do not plan in advance the purchase. They buy beauty products as a giF to partner and buy cosmeJcs to stock up, they buy on the way back home. Their most purchased items are spirits and souvenirs.

To recruit and to loyalize them it is necessary to offer range of unique items, not global brands found everywhere and to present local and authenJc products, like souvenirs, and local touch.

Purchase frequency

LOW (Duty Free)

Travel purpose Business (38%)



Income > 6’000 ($/month 59%)

Age All ages

Airport shopping benefits:

Main airport shopping selec?on criteria:

Most important promo?ons: Main reason to buy expensive products:


• Limited special ediJon • Local products • Local touch

• Price-‐off • High quality (58%) • Good bargain (66%) • Special/unusual items (56%)

• Most convenient part of trip (66%) • Higher chances to find something unique (34%)

Profession Various

Children <20 years (62%)

“Perler Team”

In the scheme in Fig. 9 it’s shown the relevance of Fragrances and CosmeJcs purchases for each segment, and the percentage of people inside the segment who buy these kind of products.

Even if the previous categories represent a segmentaJon independent from the country people come from, customers from the same country emphasize the same behavior, especially from the most Travel Retail influent countries.

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LOW BUDGET GIFT SHOPPERS are consumers who prefer buying arJcles that someone recommended them. They visit airport shops frequently to avoid having to think about shopping during other moments of trip, and because airport duty frees offer a great shopping experience. The like shopping alone. GiFing is their key reason for buying and they like to get advice and guidance from store staff or from someone they know. The 66% of them buy every trip, that are generally leisure trip with partner or family. They buy beauty and cosmeJcs products as a giF to wife, husband or partner. They buy on way back home.

To recruit and loyalize them it is necessary to propose a variety of giFing items: purchased by men for partner and friend, or souvenirs and confecJonary. They really appreciate advices so it is necessary to offer recommendaJons.

Purchase frequency


Travel purpose Leisure&Business(67%)



Income < 2’000 ($/month 43%)






• Guaranteed good quality • GiF packaging • To use during the trip • Be_er advice

• Most convenient part of trip • Best product selecJon

• Price-‐off • Free accessory • special airport ediJon • scratch card/prise draw

• Good bargain (56%) • From a name brand • Exclusive/limited ediJon (28%) • Recommended (20%)

Profession Middle management, Professional, Engineer, AdministraJon (58%)

Smokers Yes (35%)

CONVENTIONAL SEEKERS are very careful how to spend money and buy only what needed, in facts they are not willing to pay more for a product just because of the image it conveys to other people. They have convenJonal aytude and behavior. They like to browse around airport shops to try and find bargains, good prices and discounts. They usually compare prices of the product they need and buy only if it’s cheaper than downtown shops. They like to visit all kind of shops while traveling and go to airport shops because they offer a great shopping experience. The 71% of them buy every trip, they are generally leisure trip with family or partner. They buy beauty and cosmeJc products to indulge themselves or as a giF to their children, they buy on the way back home. To recruit and loyalize them it is necessary to assure sufficient convenJonal brands to “stock up” and for giFing, to offer range of items cheaper than downtown and enhance savings, and finally to present a range of convenJonal and tradiJonal products.

Purchase frequency


Travel purpose Leisure (99%)


Flying frequency Low

Income < 5’000 ($/month 68%)

Profession (45%)

Professional, Clerical, AdministraJon ReJred




Male (38%)

• Cheaper prices • Guaranteed good quality • Pleasant shopping

• Most convenient part of trip (53%) • Offers the best prices and shopping experiences (51%)

• Price-‐off • Good bargain (77%) Age > 50 years (33%)

Children 20+ years (44%)

INSPIRATION SEEKERS choose airport shops due to chances of finding something unique or typical from visiJng country. They are stylish people interested in the selecJon of products available in airport shops and like those which provide novelJes, promoJons and let you try new things. They really appreciate airport great shopping experience, and these are their favorite place to shop while traveling. They visit them for quality and service, not for price. They are intensive shoppers and enjoy material possession or geyng new things. They like to buying items that catche their a_enJon, treat themselves and are willing to pay more for products that are consistent with the imagery that they want to convey. The 75% of them buy every trip, without planning the purchase in advance. They are high spender in each category. They buy beauty products and cosmeJcs as a giF to wife, husband and partner or to try out something new; they generally buy during transit and while having some spare Jme. To recruit and loyalize them it is necessary to offer excepJonal and local items in various categories, present good range of limited and exclusive ediJons and offer range of luxury self-‐indulgence products.

Purchase frequency

High (Duty Free)

Travel purpose Business (40%)

Travel class Premium (26%)


Income < 5’000 ($/month 54%)


Airport shopping benefits: Main airport shopping selec?on criteria: Most important promo?ons:



• Limited special ediJons • Exclusive products • Local touch • GiFing packaging

• Most convenient part of trip • Best product selecJon • High chances to find something unique • Best shopping experience

• Special airport ediJon

• High quality (60%) • Exclusive/limited ediJon (49%)

• Well known brands

Profession Management (48%)

Children <20 years (62%)

“Perler Team”The 62% of Russian shoppers can be considered as “Bargain seeker self-‐indulgers”, “Low-‐income promoJon swayed” and “Low-‐budget giF seekers”: so, in order to recruit and loyalize all 3 key Russian segments, it is necessary to give the opportunity to try and test products and offer good range of novelJes. Their preferred desJnaJons are Turkey, Thailandia and Middle East. The 79% of Brazilian shoppers can be considered as “Low-‐income promoJon swayed”, “EmoJonal high spenders”, “Low-‐budget giF shoppers”, “ConvenJonal deal seekers”, and “Bargain seeking self-‐indulgers”. To recruit Brazilian customers assure them a range of items for impulsive shoppers, offer good range of limited ediJons, exclusives Travel Retail novelJes, install acJve and helpful sales advisors and guarantee high quality of products. Their preferred desJnaJons are Buenos Aires, Miami and Lisboa. On the same way, the 70% of Chinese shoppers are considered “InspiraJon seekers”, “Low-‐income promoJon swayed”, “EmoJonal high spenders”, “AuthenJc product seekers” and “ConvenJonal deal seekers”. To loyalize Chinese customers it is preferable to offer wide selecJon of novelJes across categories, assure good personalized service, ideally with Chinese speaking staff, and present creaJve shopping environment and emoJonal packaging presentaJon. Their main desJnaJons are Paris, Los Angeles and San Francisco. It is relevant that 38.6 million Chinese people traveled internaJonally between Jan-‐Jun 2012 (growth of 20%): a typical wealthy Chinese person goes on holiday 3x Jmes/year and Chinese tourists in Europe spend an average of $1,000 on Duty-‐Free each trip. Koreans consumers aren’t homogeneous groups. They travel desJnaJons are in mainly in South East Asia. To loyalize them is necessary to provide special Travel Retail exclusives, emoJonal packaging and to offer them a wide selecJon of novelJes. In order to be_er understand women beauty market, it is reported a specific qualitaJve segmentaJon. The main drivers are the purchasing behaviors and the customers’ needs.

THE RETAIL EXPERIENCE

The importance of experience in the Travel Retail channel represents a complex and profitable challenge which brands must understand in order to cater to customers’ needs and develop their strategies. The first issue is to understand the reasons why costumers buy in a Duty free and Travel retail Stores, reported in the bar graph in fig. 11. Customers are first and foremost passengers, they are exposed to many emoJons. Stress, excitement, worries about missing their flight, physical and psychological Jredness: all these factors can affect their

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Figure 11

20% lower vs downtown pricesMore variety of the productsMore interesting promotions

More products within each categoryBetter selection of gifting articles

Better overall atmosphere in shopBetter service of the staff

More latest product launchesLiquidation/prices of Luxury products

More souvenirsMore local products

More travel retail exclusive10% 20% 30% 40%

Segment Fragrances Cosme?cs

BARGAIN SEEKING SELF-‐INDULGERS 2nd (55%) 4th (38%)

LOW INCOME PROMOTION SWAYED 2nd (38%) 6th (n.a.)

EMOTIONAL HIGH SPENDERS 1st (68%) 3rd (39%)

AUTHENTIC PRODUCT SEEKERS 4th (34%) 5th (22%)

INSPIRATION SEEKERS 1st (49%) 5th (29%)

LOW BUDGET GIFT SHOPPERS 2nd (38%) 5th (19%)

CONVENTIONAL SEEKERS 1st (58%) 4th (33%)

Figure 9 -‐ PosiJon in the MOST PURCHASED ITEMS RANKING. Here is showed the relevance of Fragrances and CosmeJcs for each segment and the percentage of people who purchase them . It considers the most popular categories of items available in the Travel Retail market, such as Fragrance, CosmeJcs, Tobacco, Spirits, Food & Sweets and Souvenirs.

DISCOUNT HUNTER BUSINESS LADY A GOOD FRIEND PASSER BY HABITUAL BUYER JUST FOR ME

Description W o m a n a g e o f 4 0 , housekeeper. She wants to please herself, save money and escape from children.

Self-confident woman who has no time to shop in her home town. S h e u s u a l l y b u y s products to use during the trip.

W o m a n t h a t b u y s products as gifts for her friends.

Traveler that has no intention to buy.

Woman who perceives duty free as a part of the travel.

Woman with nice job but currently on holiday.

Habits C o n s e r v a t i v e , b u y s products that she already t r ied and l i kes . She doesn’t buy often.

S h e b u y s p r e m i u m products regularly. She tries new goods only if she perceives the benefit.

High spender who buys frequently.

She is an impulsive and quite conservative buyer. She purchases only if she really needs the item.

She buys someth ing every tr ip. She buys needed items and 1-2 new goods to try.

She will spend some time in the shop and buys for pleasure.

Expectation Good service and good prices.

Convenient services. Variety of new goods to try, especially fragrances.

Share around. Friendly staff and good choices

Wide variety of goods

Actions Make the atmosphere calm, recruit a polite consultant and provide the client with discounts or presents.

Exper t consul tant to understand customer’s needs, short queues and product avai lable on shelves.

Provide free trial goods. Catch her attention with great offers, only for the certain day.

Exper t consu l tant to understand customer’s needs, product available on shelves.

Polite consultants who show everything she wants.

Figure 10

“Perler Team”state. Customers’ relaJonship with travel is a key factors that influences their purchasing behavior and their aytudes towards duty free and Travel Retail. Figure 12 shows the average Jme spent at airport before a flight. Here is clear that only 1/5 of the Jme spent at the airport is dedicated to shopping, more or less 21 minutes per flight. This implies the importance of a_racJng customer's a_enJon in this short Jme and leads him into a new duty free “store concept”. In fig. 13 is measured the level of saJsfacJon in duty free shops thanks to the available services. A “store concept” helps customers moving within the shop, providing enjoyable and relaxing atmosphere. Companies are engaging consumers with easy, fun and convenient acJviJes. In this way customers idenJfy the space through brand recogniJon, seeking their preferred products. The objecJve is that each global shopper has to feel the airport experience as unique, giving them something that they cannot get anywhere

else. In order to deeply involve the customer in the shopping experience, it is fundamental to engage all five senses in a sensorial melJng pot. All these elements aim at catching customer’s a_enJon and making him aware about the duty free offer. In fig.14 is described the dedicated areas in the duty free shops that are essenJal to help customers to shop. To improve the Travel Retail customer experience it is necessary to surprise the audience, provide customer services understanding local culture and offering a tailored approach for each locaJon. The cosmeJcs brands offer also a range of complimentary ‘express’ beauty treatments, including new make-‐up looks, skincare consultaJons, mini facials and massages. All of them are designed to be quick and informaJve, in order to allow customers to discover new products and techniques, enjoying a relaxing pre/post flight treatment. In fig. 15 can be overviewed the most interesJng available services. Since half of the Fragrances

& CosmeJcs purchases are giFs, travelers find the giF wrapping as the most appealing service. Furthermore, the shop staff plays a relevant role in Travel Retail. MulJ-‐lingual employees, deeply trained and empowered, support customers in the decisional process feeling at home. Future Travel Retail shops will provide a unique digital markeJng and merchandising approach. Several elements such as high definiJon feature, walls with digital signage, mood audio ambient, quality merchandising and live events, will be combined in innovaJve plavorms. FuturisJc atmospheres will be characterized by primer screens that welcome passengers at the main walkway and interacJve animated entrance portals. In the connecJvity era “characterized by internet of things”, it is fundamental to aim at innovaJng interacJve applicaJons, digital points of sale and informaJon tools designed to engage customers in a quick and accessible way.

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Figure 12

7%7%6%

8%

10%13% 21%

26%

2%In the smoking loungeIn the business executive loungeGo shoppingEat/drink somethingWaiting at boarding gateWaiting in line for security checkBefore security checkSitting anywhere to work/readWalking to boarding gate

Figure 14

Special offers/promotions

New products

DF exclusive products

Ideas for gifts

Bestsellers per category

Super luxury goods

Local products/souvenirs

0% 20% 40% 60% 80%

18%

18%

26%

35%

41%

53%

71%

Figure 15

Gift wrapping service

Loyalty program

Personal shopping consultant

Pre-order internet opportunity

Pick-up return opportunity

0% 15% 30% 45% 60%

11%

25%

31%

48%

51%

Key to challenge & opJmize current offer per airport regarding:

-‐ GiFing range

-‐ TR exclusives

-‐ NovelJes

-‐ Packaging

-‐ PromoJons / Offers

-‐“Local touch” / Souvenir value

-‐ DesJnaJon relevant items

Figure 13

Atmosphere

Store entrance

Variety of articles/brands

Gifting

Price level

Offers and promotions

Duty-Free Shops overall

6 6,5 7 7,5 8

7,6

6,4

6,8

7,1

7,3

7,3

7,4

Buyers

“Perler Team”II - LANCÔME BRAND IN THE TRAVEL RETAIL CHANNEL

Iconic brand of the L’Oréal group from 1964, Lancôme was founded in 1935 by Armand PeJtjean and immediately well performed in selling perfume, beauty care and make-‐up to an internaJonal clientele. Its values are inspired by “French Touch”: French women’s femininity, elegance and “joie-‐de-‐vivre”. The name and insignia are inspired by the wild roses in the Chateau the Lancosme in the central France, and its philosophy is focused on “Beauty with an unmistakable French accent”.

BRAND MISSION & VALUES

Lancôme’s mission is to introduce women of the world to top Fragrance & CosmeJcs products, which are innovaJve and desirable make-‐up as well as emoJonal fragrances, and to offer them the possibility to enhance their beauty and femininity, whatever their age and whatever their skin color. In Travel Retail, Lancôme has the same purpose to spread all over the world the “French Touch” with ultra-‐femininity, happiness, beauty and joie-‐de-‐vivre. All these elements create its vision:

“Every woman who come to Lancôme to be more beau=ful, always leave happy”.

So Lancôme affirms that happiness is the most a_racJve form of beauty. It aims at providing luxury soluJon to “every woman who believes in beauty”, with the highest quality products and services that fulfill customers’ quest and enthusiasm for their own individual beauty, consistently with this statement:

“Offering women the best in beauty by combining crea=vity, innova=on and know-‐how.”

Lancôme sets precise strong brand values, such as:

Frenchness -‐ Quality -‐ Beauty -‐ RomanJsm -‐ Reliable -‐ ExperJse -‐ Elegance -‐ Timelessness Efficacy -‐ Affordable Luxury -‐ OpJmism -‐ EssenJality -‐ Predictability.

BRAND STRATEGY

The Travel Retail distribuJon channel is a strategic market for L’Oréal in order to maximize the exposure of travelers to its brands. The final goal of the company is to reach one billion of new customers all over the world. L'Oréal idenJfies a strict brand segmentaJon across its porvolio to retain its exclusive brand idenJty. For each of its brands, it maintains disJnct retailing channels to keep its brand image intact. Lancôme strategy is consistent with the L’Oréal’s one: it aims at rising its market share towards Travel Retail. The Maison Lancôme’s focus is on luxury product lines: they covers perfumes, make-‐up and skin care. In Travel Retail the brand pursues a differenJaJon strategy. It strives to provide value by unique product characterisJcs and presJgious sense of exclusivity, taking into account the relevant aspect of a rapid technological innovaJon. The main focus of the intangible differenJaJon is the “tailor-‐made” approach exploited in each country in which it operates, considering the main features of the naJonality and the cluster of customer they aim to serve. According to this excepJonal experience, Lancôme diversifies employees’ skills in order to offer a superior service. Lancôme plans on mulJplying their temporary collecJons to provide soluJons to each woman’s need. Moreover, the brand will conJnue to underline its iconic products in order to reinforce its presJgious image and its savoir-‐faire.

CRITCAL SUCESS FACTORS

CSFs are strongly related to Lancôme’s mission and strategic goals of its business. Managing effecJvely all of these vital factors ensure a huge success. The most important are: • CreaJvity and innovaJon • ProducJon of premium good and high-‐touch personal service • Tailor made experience

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“Perler Team”• Enhancing digital capabiliJes • Having markeJng experJse • Select MulJchannel DistribuJon These CriJcal Success Factors are the key values in order to adequately engage customers targeted by Lancôme, thus the brand takes into account these CSFs to develop its posiJoning and image strategy.

TARGETING & CONSUMERS

Lancôme targets global customers, especially those women from Middle East and Asia Pacific. But Lancôme tradiJonally was focused on mature women due to its reputaJon of being a luxury brand, having products that a_ract mainly women in their 40s. Its target market is becoming far from age-‐specific, because it wants to include anyone who could use Lancôme to enhance her own beauty. Indeed the brand is looking to conJnue its ascension by targeJng younger customer from all over the world, introducing new lines like Lancôme Hyp. Françoise Lehmann, Lancôme’s CEO, explained:

“The goal is not to rejuvenate the brand, only to target a wider popula=on of women”.

Lancôme Global Shopper profile includes middle-‐high class women, experience lovers, intelligent, ambiJous, educated and looking to be inspired. They are classy, elegant and ultra-‐feminine women, most impulsive buyers and travelers of every age and personality. Lancôme targets a populaJon with a relaJvely high standard of living, its client has a higher purchasing power than the average, and this is what the brand is trying to change. In fact, the brand is trying to reach customers from new middle classes by creaJng different types of products in different scales, with different prices but sJll maintaining its luxury image: this is the heart of the democraJzaJon.

POSITIONING AND IMAGE

Lancôme strives to achieve a high-‐end premium posiJon in the beauty industry by promoJng a luxurious markeJng strategy. The brand has two important elements: funcJonal characterisJcs and emoJonal qualiJes. Focus on tangible benefits, Lancôme’s Maison strives to conJnuously innovate. The brand wants to express the product’s superior technological level and its performance. The product is presented as a small jewel of cosmeJcs with two fundamental aspects of the desire for luxury and, at the same Jme, the search for quality. Considering intangible benefits, the individualism and sense of unicity are the most relevant values that the brand wants to deliver to its customers. In favor of establishing the strong image of the brand in the dominant segment of the Travel Retail, the rewarded cosmeJcs house has chosen to be represented by inspiring ambassadresses, like Julia Roberts, Kate Winslet, Penélope Cruz, Lupita Nyong’o, Lily Collins, Daria Werbowy and the most recent Emma Watson. They are icons who love life, who are talented and full of energy: icons every woman can relate to. Through a radiant, confident and universal representaJon of beauty, they strongly contributed promoJng the elegant and professional image of Lancôme's products. Moreover, the unique symbol, Lancôme Fragrance Rose, helps to establish an easily recognizable brand image based on French cultural values. The strength of the brand idenJty is dynamically successful on a world-‐wide scale. This success is reinforced by the spirit of conJnuous innovaJon, that has been amplified thanks to the extraordinary capaciJes of the L’Oreal laboratories. In order to point out the features associated with the brand, it has been defined the point of parity and the point of difference:

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Upstream POD Downstream POD

Most advanced technologies Trend se_er

Tailor made service Wide product porvolio

L’Oréal’s top distribuJon Frech culture

Experience benefits

Use of “aromachology”

Virtual experience

Deep knowledge of TR

Category POP Compe??ve POP

Pleasant long-‐lasJng flavor A_racJve packaging design

PromoJng a_racJveness Availability on shelf

No toxic ingredients Investment in adverJsement

‘Colour-‐ care’ formulaJons TesJmonials

Legal conformance Digital Strategy

Fashion fragrance Logo recogniJon

Versality of the perfume ConJnuous innovaJon Figure 16

“Perler Team”BUSINESS PERFORMANCES

During its almost 80 years of success, without considering Travel Retail performances, Lancôme has become the leading brand in the women selecJve cosmeJcs market, operaJng in more than 130 countries. In 2013 the brand registered a whole growth rate of the 3.8%, that is superior to the market average. With the 8,5% of global market share, Lancôme surpassed its most influenJal compeJtors, such as Estée Lauder (8%) and Chanel (7,6%). Actually it is the number 90 on Forbes List for World’s Most Valuable Brands in 2014. Its brand value is nearly 6,3 Billion dollars. In the Travel Retail context, L’Oréal whole company is the most relevant actor, achieving the larger market share of 21,6%, with a growing rate of about 10%. Analyzing Lancôme brand, it has a strong posiJon in the beauty Fragrance & CosmeJcs market, achieving the third posiJon for market share, with a growing rate of 14,57% compared with the previous year (source: GeneraJon). As previously said, Chanel is the leader brand, followed by Esteé Lauder.

PRODUCTS

Lancôme has become the first brand in the women selecJve cosmeJcs market by offering unique and complementary skin care, make-‐up and perfume with the purpose of seducing the customers and giving them the feeling that they are receiving exclusive products. Lancôme products are sold under one brand name for all segments, but with an extended product line, implemenJng a differenJated market coverage strategy. Giving a product classificaJon, products offered by the company are shopping goods with a low durability and that they are mixed tangible and intangible offering because both products and service are significantly relevant. Here are explained the 5 different product levels:

-‐CORE BENEFIT: the products are applied to the human body for cleansing, beauJfying, promoJng a_racJveness and giving a pleasant scent.

-‐BASIC PRODUCT: make up, fragrance and skin care. -‐EXPECTED PRODUCT: the essenJal characterisJcs that a customer look for are: luxury

product, brand image, recognizable logo, high quality of ingredients, design of the shape of the bo_le and the packaging.

-‐AUGMENTED PRODUCT: service tailored to the naJonal preferences, mulJlingual support material, celebraJon of the different cultural events and specific naJonal products lineups.

-‐POTENTIAL PRODUCT: the future addiJonal products will be sustainable.

AFer this general descripJon, we want to focus on the wide offer of Lancôme idenJfying for each product all the available collecJons and their relaJve range of price, analyzing what are the top rated products and how they perform in the overall ranking in terms of sales in travel retail.

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COLLECTION Génifique Rénergie Absolue Visionnaire DreamTone Bienfait Cleansers &

Toners Nutrix Eyes

RANGE OF PRICE 65-134 $ 72-155 $ 47- 600 $ 55-111 $ 98 $ 39- 66 $ 25- 67 $ 30-65 $ 28-38 $

BENEFITS Cleanse,Anti-Aging Treatment,Serums,Moisturize, Eye Care, Night Treatment, Masks & Exfoliators, Body Treatment

COLLECTIONLa vie

est belle, Trésor

MiracleTrésor Midnight

Rose, and in Love

Poême Hypnôse Maison Lancôme

Ô Fragrances, Magie Noire

RANGE OF PRICE 42-108 $ 67-87 $ 47-77 $ 67-98 $ 52- 82$ 175-180 $ 62- 65 $

LIPS & NAIL EYES FACE BRUSH & TOOLS

PRODUCTS

Lip Sets Lipstick

Lip Gloss Lip Liners & Pencils

Lip Brushes

Mascara Eyeshadow

Eyeshadow Primer Eyeliners & Pencils

Eyelash Primer Eyelash Curler Eye Brushes

Foundation Primer

Tinted Moisturizers Concealer

Powder Blush & Bronzers

Makeup Brush Sets Brushes

Makeup Tools & Accessories

RANGE OF PRICE 15-42 $ 20-55 $ 30-75 $ 17-70 $

FRAGRANCE

SKINCARE

MAKE UP

Figure 17

Figure 18 -‐ Lancôme’s offer of products

“Perler Team”The three most sold Lancôme’s lines in the beauty Travel Retail general ranking are: in the 6th place Genefique Skin Care Face, in the 22nd Genefique Skin Care Sets and in the 48th Miracle. However, the a_aches document 9 shows all the top 50 sold lines, according to GeneraJon research 2012. Moreover, the three most sold Lancôme’s products are: in the 4th place Genifique Youth AcJvaJng Concentrate 100ml, in the 50th Miniatures CollecJon and in the 57th Absolute Premium Bx Set. In the same way the a_ached document 10 shows the ranking of the top 106 sold products. SWOT ANALYSIS

STRENGTHS

The dominant strength element that characterizes Lancôme brand is its excellent reputa?on and brand professional name. The brand has succeeded in achieving a powerful professional image thanks to its markeJng acJons and its famous ambassadresses. Moreover, innova?on is the heart of Lancôme’s success. It sets up several excellent research centers which collaborate with the medical community. There are more than 2000 experts working in these centers who are professional in innovaJng and developing high quality products, which gives Lancôme the chance to reach an extremely powerful network of loyal customers. Considering its business performance, Lancôme can be consider as one of the industry leader. Its high reputaJon and product quality allows it to become a trend se_er for its specific target market. Backed by the detailed distribu?on given by the powerhouse L’Oréal, Lancôme products can be found in every channel of Travel Retail context. Another key strength is the ability to understand the necessity to diversify the offer according to the different customers’ naJonality. In fact, the Tailor Made experience is the core of Lancôme strategy towards the “6th conJnent”. All these strengths allowed Lancôme to reach an extremely powerful network of loyal customers. WEAKNESSESDespite the rich experience of producing cosmeJcs products for adults, Lancôme is a new entrant in younger cosmeJcs market in the age group of 25-‐35 years customers. The lack of experience in this segment may negaJvely affect its image among customers. In fact its long-‐term professional image has been fixed and it seems to be inflexible over the years. Even if its brand has an high reputaJon, it is mainly designed for targeJng adult women in their 40s. In order to appeal to younger cosmeJcs market, Lancôme needs to rejuvenate its image by developing new product lines or promoJng new younger ambassadresses. Furthermore, the idea of beauty is pushed to the extreme up to perfecJons and could be observe in the over retouched beauty ads. This convey unrealisJc results that insJll a sense of inappropriateness for a normal woman. Another weakness is that Lancôme doesn’t have a well known repeated slogan, this could be a problem to capture the a_enJon of the audience it is trying to reach. A slogan is part of the producJon aspect that helps create an image for the product.THREATS The major threats for Lancôme appear in brand compe??on: in Travel Retail it is becoming even more intensive. Many cosmeJcs companies have started to promote their products through all kinds of media, seyng new trends among customers. Other make-‐up giants are successful thanks to their limited ediJon collecJons promoted by the latest celebriJes. PromoJons

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INTERNAL ASPECTS

• Excellent ReputaJon & Brand Image • InnovaJon • High Quality Products • Industry Leader -‐ Trend Se_er • Top DistribuJon • Focus on Tailor Made Experience • Special Product Created For TR

• Difficulty in A_racJng Younger Customers • Fixed and Inflexible Brand Image • Over Retouched Beauty Ads • No Well-‐Known Repeated Slogan

EXTERNAL ASPECTS• Fast Rising Travel Retail Market • New Consumers (younger women and men beauty) • Growing Rate of Skin Care Market

• Intense Brand CompeJJon • Fast Changing Consumer Trends • Difficulty in Accessing to Relevant Data • Airport LimitaJon and TaxaJon

S W

O T

“Perler Team”catch taste of a dominant slice of the new consumers market. Since Fragrance & CosmeJcs markets represent a growing a_racJve context towards Travel Retail, sharing relevant data is becoming harder. Informa?on about consumers and compeJtors are expensive and hardly accessible for companies. There are professional companies who work on geyng and elaboraJng these data. Another threat that could compromise the sales is the Airport limita?ons and taxa?on, Lancôme should check in real Jme this aspects. OPPORTUNITIES The fast rising growth of the Travel Retail market represents a great opportunity for Lancôme, in order to reach more customers and increase its revenues. This situaJon may offer the chance to diversify its offer and target different types of customers. There are two main categories whose demand for beauty product is rapidly increasing: men’s and young girls’ Fragrance & Cosme?cs markets. Brand’s success in men beauty market depends on its ability to adapt to this new customers. For this reason, some major players have stepped up their efforts to launch new products. The other growing opportunity is branding a tween’s product line. Lancôme does not sell products that addresses the skincare needs of pre-‐teen girls: acne and basic hygiene are common adolescence problems. According to the experJse of L’Oréal laboratories, Lancôme might target this segment and develop products that could match the interest of middle-‐class mothers to buy products for their daughters. Finally, the global shopper in beauty is sJll looking mostly for fragrances, that represent almost the 50% of purchases today. It is significant to work for new fragrances, but there are more growing opportuniJes for the skin care product category.

PORTER’S FIVE FORCES

NEW ENTRANTS

Threat of new entrants is quite slow, because Lancôme has already built a love-‐mark, which is very difficult to surpass in customers’ perspecJve in short Jme. It’s difficult to enter and survive in a such compeJJve market because brands as Lancôme conJnuously invested large amount of money in innovaJon and communicaJon. Moreover, the new entrants are manly new designers who start a new brand on their own, so if they can really represent a threat for the biggest companies, they will be quickly acquired. Otherwise if they will remain independent they cannot be so dangerous.

BARGAINING POWER OF BUYERS

The bargaining power of buyers in Travel Retail market is relaJvely slow, because there are many small-‐consumers who purchase highly differenJated products in low volume. But, considering that there aren’t switching costs, companies have to carefully pay a_enJon to possible change in customer’s trends. In fact, if it’s true that rich customers are very loyal, this is not exactly the same for the growing middle classes. These can represent both a great opportunity, because they show no price sensiJvity when they buy the most fashionable luxury goods, but also a threat. Indeed, they are more demanding, selecJng and less brand loyal than rich consumers. So, companies have to cauJously manage the trade off between saJsfying a smaller number of loyal customers and a larger number of more volaJle ones.

BARGAINING POWER OF SUPPLIERS A Lancôme’s milestone is the premium quality of its products. Thus, it is necessary that the products are not harmful to the

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“Perler Team”skin and are created using the best chemicals. For this reason, maintaining a good relaJonship with the suppliers is crucial for Lancôme’s success. Moreover, in the cosmeJcs segment the number of suppliers are limited so their bargaining power increase.

COMPETITION FROM SUBSTITUTES Lancôme is an historic brand that has very loyal consumers. The target market demands products that are unique, all of them are patented and are developed in the technological L’Oréal labs which guarantee the highest quality possible. Consequently, there are no equivalent subsJtutes products which are able to provide the same remarkable results and funcJons. Thus, it is reasonable to assume that the threat of subsJtutes is quite unsubstanJal.

EXISTING COMPETITORS The compeJJveness in Travel Retail industry can be qualified as relaJve high. This struggle is not on price but rather on the quality and image percepJon, as well as on the ability to a_ract talented human resources. The main reasons are: the high margins provided by products and the fact that customers, who come from middle-‐high class and have a relaJvely high power of spending, don’t need strong price advantage. Lancôme’s main compeJtors are Chanel, Estée Louder, Dior and Guerlain.

DIGITAL STATEGY

With the rapid growth of online shopping and acceleraJng penetraJon of mobile devices, social media have become an essenJal markeJng tool for cosmeJc brands to promote their products and interact with their customers. “Tailor made” service is one aspect that Lancôme strives to replicate online. In fact, it is regularly named as one of the top 10 brands with the highest digital budget. The main digital instruments used by Lancôme are B2C online store, micro-‐blogs, video sharing, mobile plavorms, online virtual tours and social networks in order to engage customers in the internet retailing experience. In parJcular:

-‐ Facebook page aims at involving the customers by sharing insider informaJon, asking opinions and promoJng events. -‐ Youtube channel provides the customers with insights on the best way to use products and shares the company’s

commercials. The brand is adding its own commercial adverJsing into the Youtube user-‐generated content: this way of promoJon appears more authenJc and persuasive to the community-‐minded users of Youtube.

-‐ Instagram and Twi_er are digital plavorms used to engage women. -‐ A weekly newsle_er is sent to all the registered customers, highlighJng the currently best-‐sellers. -‐ Blog collects all the news, videos and Jps about the Lancôme world, in order to let the customer be always updated about

the latest beauty trends. -‐ Lancôme Virtual Pale_e app simulates a realisJc make-‐up. -‐ “LivePerson’s LiveEngage” plavorm, rolling out “Click to Chat” that is a proacJve chat for sales support. Live chat now has

the highest conversion and customer saJsfacJon rates of any channel, resulJng in significant live chat-‐assisted revenue for the company.

“Our website is a place where you can be engaged and start a beauty conversa=on that is not necessarily driven by the products themselves” (Alessio Rossi -‐ InteracJve & e-‐business markeJng Lancôme)

Lancôme has capitalized on the popularity of “Key Opinion Leaders”, famous people who can successfully exert a certain degree of social influence to the consumer decision process: Lancôme can quickly capture more customers through opinion leaders huge fan base. This phenomenon has a strong appeal to Chinese customers. An example of successful digital campaign has been proposed by Lancôme for the launch of a new skincare product called Advanced Génifique. The main objecJve was to drive brand awareness and engage the target group of women through mulJple touch points. InMobi helped Lancôme bring Advanced Génifique into life on the mobile screen with rich media animaJon effects. The campaign generated engagement with the visitors by leading customers to the event mobile site, watching the video clip of the TV commercial, enabling the sharing funcJonality through the Kakao Talk messaging app.

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“Perler Team”RETAIL EXPERIENCE IN THE EXISTING POINTS OF SALES

Lancôme has decided to strongly focus on the Travel Retail stores, which are at the forefront of its omni-‐channel strategy. Travel Retail is not only an opportunity to showcase Lancôme, but there is a underlying will to be a leader in this channel. For this reason the Maison has developed a precise understanding of the traveling consumers, shop by shop, allowing them to target the best locaJon. In the travel retail experience must be integrated different factors: store environment, product price, frequency of promoJon, available loyalty card and good quality of service. The store environment, which is the most important factor, is necessary for the markeJng success and store longevity. In fact, the customers immediately noJce the store locaJon, store layout and in-‐store sJmuli, which have a key roles to show the Lancôme’s luxury codes. Another important aspect is the good quality of service, achieved by the “tailor made” approach, which allows customers to live a full and emoJonal experience. The “tailor made” approach is and essenJal and personalized experience to be_er engage the global shoppers wherever they are, with beauty consultants who speak their language and offer services tailored to their naJonal preferences, with specific products that suit their needs, with mulJlingual support materials and also by celebraJng key cultural events. These events are for instance the celebraJon of the Chinese New Year, the end of Ramadan and Diwali fesJvity. Common features of the different Lancôme’s store atmosphere, which are possible to perceive, are the aura of presJge, exclusivity and glamour. Thanks to these elements, customers are persuaded that the products, which are going to buy, are worth. For luxury segment, in Travel Retail stores, in which Lancôme belongs to, the cosmeJcs are sold through medium or short distribuJon channels. In parJcular it is possible to disJnguish four type of stores: department stores, store-‐Within-‐Store, mono brand bouJques and Pop-‐up Stores.

Department stores The department store is a mulJ brand bouJque dedicated to the wo r l d o f pe r f umer y and cosmeJcs, that offers the great opportunity to provide a wider selecJon of brands under one store concept. This allows customers to have only a one-‐stop shopping experience. Every stores is characterized by many corners each one dedicated to a presJgious brand. This kind of stores play an important role for Lancôme in order to front the fierce compeJtors. Store-‐Within-‐StoreThe major difference from department stores consists in

renJng a space inside the department store chain and in building a mini-‐stores. Here Lancôme is able to decide how to display their own products, their prices, when gives a promoJon and furthermore decide to hire its own staff.Mono brand bouJques Mono brand bouJques offer passengers a total brand experience, thanks to the larger space that allows a wider selecJon of products in respect a shop-‐in-‐shop soluJon. These kind of shops help to promote and maximize the brand image, ensure high quality services and standardize the prices. The objecJve is to fully sJmulate all women’s senses, include olfactory, audio, touch and sight. The experiencing acJvity it’s becoming more significant than the buying acJvity.

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A “Tailor Made Experience”: • Customized service by naJonality • Adapted product’s assortment • MulJlingual material • Customer’s favorites by naJonality • Events by naJonality

Figure 19

TRAVEL RETAIL

STORESDepartment

stores Store-‐Within-‐

StoreMono brand bou?ques

Pop-‐up stores Internet retailing

Number of brands

provided

From 10 to 60, depending on the size of the store

Lancôme corner Lancôme:caring, innovation, expertise and the “French touch”

Lancôme: caring, innovation, expertise and the “French touch”

Platform B2C: LancômeB2B: all the brand

Service

Product presentation:• Average

cosmetic consultation delivered at brand’s counseling counter when applicable

Wide range of services:• Professional

services• Counseling in

the purchasing process

• Product presentation

Wide range of services • Product

presentation• Tailor made

services• professional

services• counseling in the

purchasing process • Membership

program

Wide range of services • Product presentation• Tailor made services• professional services• counseling in the

purchasing process • Membership

program

Interior design

Simple:-Counters rapresenting each brand-No other sensory Experience

Sophisticated:Broadcasting the brand image through different attributes

Sophisticated:Broadcasting the brand image through different attributes (light,forniture design,colors,smell)

Messy:-In the middle of the path-Noisy

Figure 20

“Perler Team”Goods are displayed on uncrowded shelves, so individual items are highlighted. Staff is extremely well-‐dressed and well-‐trained. The enJre atmosphere is luxurious and elegant and gives consumers the feeling of exclusiveness.Pop-‐up stores Pop-‐up stores are another way for connecJng people looking for short-‐term space. This concept enables airport to shiF from a funcJonal desJnaJon to an experienJal retail. Pop-‐up shops are the perfect channel for retailers to create excitement in store, animate their surroundings and acJvate the staJc travel retail environment. They provide the opportunity to have a personalized service such as a last minute make-‐up.

VIRTUAL EXPERIENCE Digital technology reshaped the world of Travel Retail, opening up for new fronJers in consumer engagement. Lancôme brand evolved in this direcJon: for example it introduced a new 3-‐D technology called “Wonderland”. It is an interacJve exhibiJon, which leads visitors on a virtual journey over Jme. It uses MicrosoF's Kinect body movement recogniJon and giant screens to allow visitors to virtually interact with the spaces and objects without any form of manual controls. Thanks to this system, you can enter in a immersive exhibiJon space, which is decorated to resemble an elegant Haussmannian apartment, and immediately enjoy a virtual stroll through Parisian streets and gardens. During this journey customers reminisce about the values and history of Lancôme, even meeJng the famous ambassadresses.

MERCHANDISING

When Lancôme’s woman buys her cosmeJcs, she wants to find pleasure, improve her comfort and saJsfy her desires, but above all live a dream. The merchandising exploits and complies all this natural inclinaJons of women appealing to their impulses which influence the final decision of purchase.The objecJve of Lancôme’s merchandising is to offer to each customer the best possible selecJon of products and accurate service available at the right Jme, place, price and quanJty in order to let the customer understand the full value of its luxury product. In parJcular, “Visual merchandising” includes the way in which the products are arranged, their shelf posiJon in the store, the availability of testers and the amount of space a brand has in the shop. All of these have the sole purpose to a_ract, engage, and moJvate the customer towards a purchase. In order to reach all these aspects, it is crucial to create a comfortable environment involving color, lighJng, space, product informaJon, sensory inputs, as well as technologies such as digital displays and interacJve installaJons. The multy-‐sensory sJmulaJon is also important to ensure the wellbeing of customers. There are visual, auditory, olfactory, tacJle, gustatory sJmulus that cause different emoJons depending on the culture,

tradiJons and economic resources of the client consistently with the Lancôme’s tailor-‐made experience.The internal layout of the shop, as part of the visual merchandising, is really important. For this reason, Lancôme sets a standard planogram, a visual diagram that provides in detail where every product in a retail store should be placed. The aim is to make the selecJon of products look more desirable and adjust their visibility and appearance. Lancôme's walls fixture present images of its elegant ambassadors, in order to reassure the costumers that their trusted models are near them. The products are immersed either in a luxurious mix of white light, back painted glass or in bright and shin gold and white corner.Furthermore,Lancôme has recently designed and installed a range of big digital displays in its stores which have enabled to increase the power of the brand in-‐store in a way which actually enhances the retail experience for the customers.Moreover, Lancôme offers different promoJons in order to reach all the pockets and to stress the importance of its benefits in meeJng all skin care need: this can include incenJves and special offers meant to push sales in a specific place and during a specific Jme. In line with contemporary Jmes, Lancôme employs also the “Virtual Merchandising” using on-‐line stores that provide a wide variety of products and an intuiJve order form with an interacJve live chat to take care of the costumers’s needs.The final analyzed aspect of merchandising is to consider the shop’s staff and service in order to effecJvely represent the brand

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Figure 21

“Perler Team”image. About this, Lancôme’s consultants can display to the consumer the wide variety product lines uJlizing its benefit of high quality services and increasing consumers’ knowledge of the brand.

OPPORTUNITIES FOR LANCÔME

Thanks to the deep analysis of the Travel Retail context and a detailed study concerning Lancôme brand and its aytude towards this market, a wide range of opportuniJes have been idenJfied. Certainly the new consumers’ trends, the fast growing rate of travelers and the increase in purchasing power of emerging middle class offer to every cosmeJc houses hints to develop new business ideas. “Perler Team” decided to focus just on the opportuniJes considered as most relevant ones, in order to develop a new strong idea for the French house in Travel Retail. The team decided not to analyze all opportuniJes offered by the context because some of them may not match Lancôme’s goals, strategy and image: for example Lancôme’s products and commercial messages are for women, a men’s line could cause confusion among customers. In parJcular, the team focused its a_enJon to those elements that supports the objecJves set by the company, in terms of profitability and market share. These opportuniJes are given by:

- Growing importance of new technologies to catch new customers’ a_enJon. - Relevance of social networks to improve services. - Lancôme products should become more affordable for emerging middle class consumers. - Engage younger middle-‐class women with new products and services. - Rejuvenate brand image In order to exploit these emerging trends and strive to reach Lancôme’s goals, “Perler Team” developed a new 5-‐steps idea for Lancôme in the Travel Retail. This one is explained in details the following passage.

IDEA: “Total Beauty Treatment”As already highlighted in the precedent secJons, the most a_racJve requirement wanted by the customers consists in a full personalizaJon. For this reason, our intenJon is to allow clients to live a unique experience, that they cannot live yet. We suggest a “Total Beauty Treatment”, which includes specific cosmeJc treatments, make up and manicure using advanced technology. Here women can take a break for a quick revitalizing experience, with the purpose of increasing the self confidence and esteem by people around them. This path is composed by 5 steps, which are represented in the fig 22:

STEP 1 -‐ BOOKING In the first stage customers have the possibility to download LancômeTR App and create a free account, simply using a personal email and password eventually synchronizing social networks. The main funcJons allow consumers to reserve or cancel “Total Beauty Treatment” for free, finding the most comfortable travel retail shops where completely relax. Customers are not forced to book the cosmeJc treatment using the app, but this is the only way to be sure to have it.

STEP 2 -‐ TREATMENT In the second step, customers enter in a wellness corner within the shops, where they will be welcomed by famous and experts beauJcians and make up arJsts. The offered tailor made treatment, based on customers’ needs, includes facial care, manicure and make up using all the wide Lancôme’s range of products. In our concept, service will be strongly combined with technology, in fact make up arJsts will wear Google Glass, so they will

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VIP CARD

Figure 22

“Perler Team”be able to record the enJre session from their point of view. Later on, customer will received an email with the make-‐over video and a list of the used products, which will allow her to relive the experience and to repeat alone all the make up session in detailed.

STEPS 3 – COFFRET In the third step, the clients will have the possibility to buy a coffret, which contains all the products that have been used during the treatment according with the respecJve desires. The customers who purchase it will have the right of a treatment for free, otherwise they will have to pay a cheap fee. The key characterisJcs of the mini-‐set are both the pocket-‐sized of the products, which are suitable for the needs of a traveller with a limited space, and the affordable price especially for the emerging middle classes. The coffret will have a tailored made package according to the locaJon where customers have lived the experience, each set will have a stamp illustraJng the main symbol of the town, for example Paris will be represented by Tour Eiffel, London by Buckingham Palace and so on and so forth for the other ciJes. In this way, customers could start a package collecJon of the coffrets for each different town. Moreover, in a dedicated area of the package it will be possible to engrave a message on a plaque_e, becoming a perfect giF for a friend or a kin, an inscripJon for your lover and a reminder for yourself.

STEP 4 – SOCIAL NETWORKS Nowadays considering the huge potenJal offered by social networks in terms of brand visibility is important to spur the clients to keep in touch with Lancôme’s pages in order to be conJnuously informed of the new available products. Our proposal consist in taking a picture with a professional camera aFer the treatment and later, if the customers give the consent, Lancôme’s staff will upload the photographs in social networks tagging the customer. This would have a double advantage for Lancôme, because it will allow a huge exposure of its brand among non-‐customers and promote all its products among clients who have a limited knowledge of its enJre porvolio. Each photograph will be characterized by Lancôme logo and the name of the city where customers have had the treatment, allowing them to tangibly experience a day like their admired ambassadresses. Every picture you share is a chance for someone to react, and every reacJon could lead to a side visit, and eventually enjoy higher loyalty from consumer.

STEP 5 – VIP CARD Customers, who accept to upload their photographs, can have a VIP CARD as graJtude of their loyalty and their importance for the company. Each treatment will give 100 points, which will be transformed in discounts by the end of the year. In parJcular, if the customers will have 500 points, in other words will have done 5 treatments, will be rewarded with a “Total Beauty Treatment” for free. Instead, if the customers will have just 100-‐200 points will get a -‐10% discounts and finally if they will have 300-‐400 points will get 20% of discounts.

The strength of our idea is its feasibility, indeed the technologies, that we suggest, are already implemented also within other L’Oréal’s brands, this is a posiJve aspect because the technologies are simply tools and not final goals. The necessary iniJal investments are limited, the major expense is concentrated on the development of the LancômeTR App but it could also complement the previously exisJng App in order to save money. The pocket-‐sized set is already available in Lancôme’s product porvolio, so the investments in R&D are constant. But our concept has the advantage to make this mini set customized to the customers’ preferences. The “wow-‐factor” of our idea consists in offering a new customer-‐centric experience in Travel Retail Market, which can differenJate Lancôme from the compeJtors who don’t offer the same service. The company can reach new clients increasing its market share, thanks to the more accessible prices and thanks to the free adverJsements on social networks and can make the brand more familiar and recognizable for exisJng customers. Moreover, it can collect a lot of important informaJon about what customers think of its products and what they are really searching on the market. In conclusion, this concept can enrich the customer service level making customers easier to understand how much Lancôme care about them and their wellness.

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“Perler Team”BIBLIOGRAPHY AND SITOGRAPHYG.Azzone U. Bertelè, l’Impresa:sistemi di governo, valutazione e controllo, Parma, Rizzoli Etas, 2011

G. Azzone, Sistemi di controllo di ges=one. Metodi, strumen= e applicazioni, Parma, Rizzoli Etas, 2006

P.Kotler,K.Keller, Marke=ng Management (14th Edi=on), Pearson, 2011

R.M.Grant, L'analisi strategica per le decisioni aziendali, Bologna, Il Mulino, 2011

No=zie/World Duty Free Group in h^p://www.worlddutyfreegroup.com/it/media/no=zie/

SegmenJ di ayvità/World Duty Free Group in h^p://www.worlddutyfreegroup.com/it/group/ac=vi=es/business

China’s Cruise Market is Going Full Speed-‐China Travel Retail in h_p://www.chinatravelretail.com/news04072014

Sephora’s store navigaJon kiosk “Retail InnovaJon” in h_p://retail-‐innovaJon.com/sephora-‐store-‐navigaJon-‐kiosk/

Airport Retail Trends of Business Travelers in Europe, North America, Asia-‐Pacific in h_p://www.slideshare.net

Contact HPCi Publisher of business to business magazines and websites in h_p://www.cosmeJcsbusiness.com/contact/

Travel retail Scoop.it in h_p://www.scoop.it/t/travel-‐retail

Airlinetrends.com consumer behavior in h_p://www.airlinetrends.com/category/consumer-‐behavior

L’Oreal Travel Retail to introduce hair care and dermocosmeJcs in h_p://www.moodiereport.com

Travel Retail Industry-‐Business News-‐Duty Free and Business Data in h_p://www.trbusiness.com

LVMH strengthens posiJon in cosmeJcs and perfumes market through acquisiJons in h_p://www.cosmeJcsdesign-‐asia.com

Travel Retail Barometer – The Moodie Report in h_ps://www.pdffiller.com

Travel retail type in h_ps://www.rolandberger.com/media

FT Global Conferences & Event:FT Business of Luxury Summit 2011 in h_p://www.Fconferences.com/luxury2011

Estèe Lauder, Lancome sweep up compeJtors on digital in h_p://www.luxurydaily.com

Luxury Brand Management: A world of Privilege – Michel Chevalier, Gerald Mazzalovo in h_p//books.google.it/books?

Brands Analysis, The favourite perfumes of French Women-‐Womenology in h_p://www.womenology.com

L’Oreal :makeup, cosmeJcs, haircare, perfume in h_p://www.loreal.com

Dior Company Directory of Business Contacts from Data in h_ps://connect.data.com/directory/company

Perfumes and CosmeJcs, presJgious brands, LVMH:world leader in high-‐quality products in h_p://www.lvmh.com

Luxury Society – Privacy Policy in h_p://luxurysociety.com

Shopcade: Top trends. Best Deals in h_p://www.shopcade.com

Added Value-‐ Luxury Travel Retail: in conversaJon with Luxury Expert Catherine Jubin in h_p://added-‐value.com

Estee Lauder: Success Story, Case Study and key lessons in h_p://www.1000ventures.com

The Shilla duty free in h_p://sg.shilladutyfree.com

Travel retailing. Analisi, strategie, best pracJces in h_p://www.francoangeli.it

Lancôme Free Essays in h_p://www.studymode.com

L’Oreal Thailand in h_p://ajc.sagepub.com

Taylor & Francis Online: Analysis of the online and Management Systems in h_p://www.tandfonline.com

Colour CosmeJcs in Sweden in h_p://www.euromonitor.com

MarkeJng & CommunicaJon for Luxury – Hffa – Haute Future Fashion Academy in h_p://www.hffa.it

Lancôme -‐ Uma Thurman Fan in h_p://www.umathurman.org/

CompeJJon in China’s CosmeJcs Market Remains Fierce -‐ Red Luxury in h_p://red-‐luxury.com/beauty

CosmeJcs Industry in China – StaJsJcs & Facts-‐ StaJsta in h_p://www.staJsta.com

China CosmeJcs Industry Report 2013-‐2016 in h_p://ww.prnewswire.com

Get to Know: Estèe Lauder’s VP of Corporate Digital MarkeJng Marisa Thalberg in h_p://markeJngland.com

Lancôme CosmeJcs, Skincare and Fragrances Shop Dillard’s in h_p://www.dillards.com/shop/Lancome

Lancomeusa on Instagram in h_p://instagram.com/lancomeusa

Lancôme – Beauty, makeup and perfume: free beauty Jps, skin care, anJ ageing by Lancôme in h_p://www.lancome.com.my

InnovaJon Excellence Lancôme – Engaging Women Through ExploraJon in h_p://www.innovaJonexcellence.com

Key compeJtors of L’Orèal Paris and Nivèa – beautyfulbrands in h_p://www.innovaJonexcellence.com

Chanel and L’Oreal CompeJJon : MarkeJng Market CompeJJon Perfume CosmeJcs in h_p://www.123helpme.com/

Lancôme 3D beauty experience in h_p://www.byouJfulyou.com

Wonderland, the Wonderful World of Lancôme in h_p://www.fronJermagazine.co.uk/

�21

http://www.worlddutyfreegroup.com/it/group/activities/business

http://www.chinatravelretail.com/news04072014

http://retail-innovation.com

http://www.slideshare.net

http://www.scoop.it/t/travel-retail

http://www.moodiereport.com

http://www.cosmeticsdesign-asia.com

https://www.pdffiller.com

https://www.rolandberger.com/media

http://www.ftconferences.com/luxury2011

http://www.loreal.com

https://connect.data.com/directory/company

http://www.lvmh.com

http://luxurysociety.com

http://www.shopcade.com

http://added-value.com

http://www.1000ventures.com

http://sg.shilladutyfree.com

http://www.studymode.com

http://ajc.sagepub.com

http://www.umathurman.org/

http://red-luxury.com/beauty

http://www.statista.com

http://ww.prnewswire.com

http://www.dillards.com/shop/Lancome

http://instagram.com/lancomeusa

http://www.innovationexcellence.com

http://www.innovationexcellence.com

http://www.123helpme.com/

http://www.byoutifulyou.com

http://www.frontiermagazine.co.uk/

“Perler Team”APPENDIX

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A_achment 1

A_achment 5 A_achment 6

“Perler Team”

�23

A_achment 2

A_achment 4A_achment 3

“Perler Team”

�24

A_achment 7

“Perler Team”

SEGMENTATION INTEGRATIVE INFORMATION

SegmentaJon data comes from the study “The Travel Retail Industry's 1st Global & Cross-‐Category SegmentaJon Study” upon Travel Retail, developed in 2013 by “TFWA” and “APTRA”, which are Travel Retail analyst associaJons, supported by “Nestle internaJonal Travel Retail”, “BriJsh American Tobacco InternaJonal” and “Procter & Gamble Travel Retail”. Their study refers to the whole Travel Retail market, including Fragrance & CosmeJcs, Tobacco, Spirits, Souvenirs and Food: the segmentaJon portrayed in this paper concerns data from Fragrance & CosmeJcs market, that is the focus of the “Brandstorm” compeJJon.

METHODOLOGY

The TFWA and APTRA segmentaJon research background aims to locate groups of Travel Retail shoppers sharing characterisJcs that causes them to have similar shopping needs. Each segment:

-‐ Is measurable in terms of size and buying power (Measurability) -‐ Is disJnct from other segments (External Heterogeneity) and shares internally the same needs and behaviors (Internal

Homogeneity). -‐ Behaves consistently regarding Travel Retail shopping -‐ Responds similarly to Travel Retail market sJmuli and is it possible to obtain the segment using markeJng acJons

(Accessibility) -‐ Is large enough to jusJfy a targeted markeJng acJons (Importance) -‐ There is the possibility of exploiJng the segment for a parJcular period of Jme (DuraJon)

The study involved the recruitment of travellers at 28 airports worldwide and online quesJonnaire. The sample size of customer involved a populaJon of 4300 people worldwide. Travellers involved in the study are from Europe, Pacific Asia, Middle East, North America, South America and Africa. The quanJficaJon of the sizes of segments comes from a regional and individual airport basis, considering 25 key Travel Retail airports in 2013.The focus is on the four geographical emerging markets, that includes customers and travellers from Russia, Brazil, China and Korea, this because they purchase more items of luxury brands in the Duty Free stores than buyers from any other countries. In parJcular perfumes, cosmeJcs & luxury goods purchases trend grew at a rate of +28% in past 3 years and the expected trend for the next 2 years is +25%.

SegmentaJon outcomes reveal some segments are perfectly adapted to current airport offers and others are far from delivering their full spending potenJal. Receiving quanJtaJve and qualitaJve informaJon about ideal category & product mix as well as supreme promoJons & offers is crucial to maximize Travel Retail sales. The results allow the matching of each airport’s Travel Retail offer according to the shares of the segments needs & expectaJons at an airport & regional level. Moreover another relevant outcome of the study define what are the drivers for the recruitment of each different segment and what are the characterisJcs of the offer that each cluster want to receive.

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“Perler Team”

�26

Aiachment 8 -‐ Company TR ranking by market share -‐ Genera?on researchFragrances & Cosme?csPeriod: 2012Category: AllSub-‐Category: AllSor?ng: Company

1 L'Oréal Group 10,98%2 Estée Lauder Companies 15,55%3 LVMH 8,64%4 Procter & Gamble 5,47%5 Chanel Group 10,51%6 Coty -‐2,80%7 Puig 9,50%8 Shiseido 7,72%9 Clarins Group 13,14%10 Bvlgari Parfums 6,24%11 Elizabeth Arden 9,49%12 Hermès Parfums 110,05%13 La Prairie 11,30%14 L'Occitane 15,00%15 Amorepacific 29,67%16 Inter Parfums 9,12%17 Sisley 18,33%18 LG Household & Health Care 18,34%19 Euroitalia -‐3,72%20 Jurlique Int L PTY LTD 34,72%21 Kanebo 18,38%22 Richemont 10,94%23 Amouage 68,52%24 Bourjois 4,25%25 Mäurer & Wirtz -‐2,38%26 E’quipe LTD 6,62%27 Creed Fragrance 34,59%28 Ferragamo Group 56,34%29 Johnson & Johnson 3,50%30 Paul & Joe 0,20%31 Revlon Int'l CorporaJon 2,59%32 Bare Escentuals 4,06%33 Korres Natural Products 45,64%34 Designer Shaik 27,47%35 Parlux -‐16,73%36 Rituals 68,59%37 Ajmal Perfumes 68,20%38 Kose NM39 Fusion Brands Inc. -‐20,99%40 Micys Company -‐21,64%41 Hawaiian Tropic -‐31,61%42 Collistar -‐23,35%43 Perfume Holding 111,20%44 Romella -‐24,51%45 Parfums M. Micallef -‐8,02%46 Unilever NM47 Lalique Parfums 5,17%48 Gianfranco Ferré S.p.A -‐12,46%49 Lolita Lempicka -‐32,13%50 Make Up Store -‐33,18%

“Perler Team”

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Aiachment 9 -‐ Brands and Products line TR ranking by market share -‐ Genera?on researchFragrances & Cosme?cs Fragrances & Cosme?csPeriod: 2012 Period: 2012Category: All Category: AllSub-‐Category: All Sub-‐Category: AllSor?ng: Brand Sor?ng: Line

1 CHANEL 10,51% ESTÉE LAUDER Advanced Night Repair Skin Care Face 71,07%2 ESTÉE LAUDER 16,46% CHANEL Coco Mademoiselle 5,93%3 LANCÔME 14,57% ESTÉE LAUDER Advanced Night Repair Skin Care Sets 3,57%4 DIOR 6,89% CHANEL Chanel No.5 -‐0,59%5 CLINIQUE 8,36% SK II Facial Treatment -‐10,48%6 GIORGIO ARMANI 3,71% LANCÔME Genefique Skin Care Face 33,16%7 CALVIN KLEIN -‐9,06% DOLCE & GABBANA Light Blue 2,29%8 SK II 15,29% PACO RABANNE 1 Million -‐0,89%9 CLARINS 18,55% GIORGIO ARMANI Acqua Di Gio PH 17,28%10 DOLCE & GABBANA 3,34% DIOR J'Adore 11,03%11 HUGO BOSS 0,50% CHANEL Blue De Chanel 0,63%12 YSL 4,34% CHANEL Allure Homme Sport 39,33%13 BIOTHERM 4,27% HERMÈS Terre d'Hermès 125,98%14 GIVENCHY 12,23% CHANEL Chance Eau Tendre 15,99%15 CAROLINA HERRERA 12,25% ESTÉE LAUDER Re-‐Nutriv Skin Care Face 35,87%16 GUERLAIN 9,61% GIORGIO ARMANI Code Men 1,27%17 PACO RABANNE 2,66% CHANEL Chance 8,52%18 L'ORÉAL PARIS 13,93% DIOR Miss Dior Cherie 1,97%19 SHISEIDO 5,14% CRÈME DE LA MER Moisturizing 14,87%20 GUCCI 5,21% PACO RABANNE Lady Million -‐3,30%21 BVLGARI 6,24% CHLOÉ Signature 15,90%22 HERMÈS 110,05% LANCÔME Genefique Skin Care Sets 18,72%23 CRÈME DE LA MER 35,59% CHANEL Chance Eau Fraïche 22,86%24 RALPH LAUREN 9,85% DOLCE & GABBANA The One For Men 2,58%25 M.A.C 18,34% DIOR Addict Make-‐up Lips 22,25%26 L'OCCITANE 14,96% ESTÉE LAUDER Cyber White Skin Care Whitening Products 49,96%27 LA PRAIRIE 11,22% BOSS Bo_led -‐0,96%28 KIEHL'S 42,66% CLINIQUE DramaJcally Different Moisturizing Skin Care Face 57,97%29 ELIZABETH ARDEN 3,71% LA PRAIRIE Cellular Skin Care Face 8,70%30 MARC JACOBS -‐4,88% SHISEIDO Benefiance Skin Care Face -‐0,67%31 KENZO 0,58% ESTÉE LAUDER PerfecJonist [CP+] Skin Care Face 59,26%32 ISSEY MIYAKE 7,18% ISSEY MIYAKE L'Eau d'Issey Pour Homme 12,72%33 CHLOÉ 13,80% ESTÉE LAUDER NutriJous Skin Care Face 65,45%34 DONNA KARAN 0,45% JEAN PAUL GAULTIER Le Male -‐2,21%35 LACOSTE 2,16% CALVIN KLEIN Ck One 5,67%36 JEAN PAUL GAULTIER -‐0,37% ESTÉE LAUDER Resilience LiF Skin Care Face NM37 SULWHASOO 29,67% LG HOUSEHOLD & HEALTH CARE Mel White 18,21%38 DAVIDOFF -‐19,50% GIORGIO ARMANI Code Women -‐1,06%39 THIERRY MUGLER 6,84% DIOR Diorskin 12,92%40 BOBBI BROWN 18,08% KENZO Flower By Kenzo -‐5,23%41 LANEÍGE 29,67% ISSEY MIYAKE L'Eau d'Issey -‐10,52%42 SISLEY 18,33% GUCCI Guilty 5,06%43 NINA RICCI -‐8,78% DAVIDOFF Cool Water Man 1,43%44 SHU UEMURA 14,07% CAROLINA HERRERA 212 Vip For Men 118,17%45 HELENA RUBINSTEIN 17,73% GIORGIO ARMANI Acqua Di Gioia -‐12,85%46 CACHAREL -‐11,93% CAROLINA HERRERA CH 57,49%47 DIESEL 4,37% DOLCE & GABBANA The One -‐6,36%48 JURLIQUE 34,72% LANCÔME Miracle 9,76%49 VERSACE -‐1,03% DONNA KARAN DKNY Be Delicious -‐0,77%50 VIKTOR & ROLF 25,42% CAROLINA HERRERA 212 Men -‐2,33%

“Perler Team”

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Aiachment 10 -‐ TR ranking by market share for single products -‐ Genera?on research Fragrances & Cosme?cs 51 BIOTHERM Lait Corporel AnJ-‐Drying Body Milk 400ml -‐3,72%Period: 2012 52 HERMÈS Terre d'Hermès EdT 100ml 132,70%Category: All 53 CLINIQUE Even Be_er Clinical Dark Spot Corrector 50ml NMSub-‐Category: All 54 ESTÉE LAUDER Resilience LiF Day & Night Set * 93,61%Sor?ng: Product 55 GUCCI Guilty EdT 50ml 1,98%

56LG HOUSEHOLD & HEALTH CARE PH Pure Perfect Clear Moisturzier * 18,64%

1ESTÉE LAUDER Advanced Night Repair ProtecJve Recovery Complex 100ml 69,27% 57 LANCÔME Absolue Premium Bx Set * 9,55%

2 DIOR Scents * 8,05% 58 ESTÉE LAUDER PerfecJonist [CP+] Wrinkle LiFing Serum 100ml -‐16,35%3 ESTÉE LAUDER Advanced Night Repair Eye Duo (2x15ml) 30ml 11,47% 59 CRÈME DE LA MER The Eye Concentrate 15ml 29,00%4 LANCÔME Genifique Youth AcJvaJng Concentrate 100ml 37,26% 60 CHANEL Coco Mademoiselle EdT 50ml 9,22%5 ESTÉE LAUDER Advanced Night Repair Face & Eye Set * -‐1,48% 61 CRÈME DE LA MER Moisturizing Cream 60ml 2,77%6 SK II Facial Treatment Repair Essence 15ml -‐24,59% 62 GIORGIO ARMANI Code Men EdT 50ml -‐4,02%7 CHANEL Coco Mademoiselle EdP 100ml 7,78% 63 CAROLINA HERRERA 212 Vip EdP 80ml 20,77%8 PACO RABANNE 1 Million EdT 100ml -‐4,55% 64 DONNA KARAN DKNY Women Scents * 2,23%9 CHANEL Bleu De Chanel EdT 100ml -‐12,90% 65 JEAN PAUL GAULTIER Le Male EdT 75ml -‐2,56%10 DOLCE & GABBANA Light Blue EdT 100ml -‐6,22% 66 DIOR Miss Dior Cherie EdT 50ml 71,22%11 DOLCE & GABBANA Light Blue EdT 50ml -‐1,17% 67 DIOR J'Adore EdP 75ml 2,42%12 GIORGIO ARMANI Acqua Di Gio PH EdT 100ml 8,22% 68 CHANEL Chance EdT 50ml 9,74%13 CHANEL Coco Mademoiselle EdP 50ml 6,06% 69 CHANEL Les 4 Ombres De Chanel Quadra Eyeshadow Pale_e 5g -‐1,70%14 CHANEL Bleu De Chanel EdT 50ml 12,51% 70 CAROLINA HERRERA CH For Men EdT 100ml 9,84%15 SK II Skin Care Set * 172,68% 71 CALVIN KLEIN cK One EdT 200ml 7,15%16 CHANEL Chance Eau Tendre EdT 50ml 6,25% 72 DIOR J'Adore EdP 50ml 46,67%17 CHANEL Chance Eau Tendre EdT 100ml 10,02% 73 SK II Facial Treatment Repair Essence 150ml 4,47%18 BOSS Bo_led EdT 100ml -‐8,82% 74 MARC JACOBS Daisy EdT 50ml -‐11,68%19 CRÈME DE LA MER Moisturizing Cream 100ml 27,91% 75 CHANEL Rouge Coco Shine HydraJng Sheer Lipshine LipsJck 3g 38,36%20 DOLCE & GABBANA The One For Men EdT 100ml 10,48% 76 DAVIDOFF Cool Water Man EdT 75ml 1,52%21 CHANEL No.5 EdP 100ml 5,50% 77 MARC JACOBS Daisy Eau So Fresh EdT 75ml -‐31,37%

22 ESTÉE LAUDER Miniatures * 26,59% 78CLINIQUE DramaJcally Different Moisturizing LoJon With Pump 125ml -‐7,61%

23 CHANEL Allure Homme Sport EdT 100ml -‐3,48% 79 DOLCE & GABBANA The One For Men EdT 50ml -‐4,56%24 ESTÉE LAUDER Advanced Night Repair Eye Recovery Complex 15ml 89,73% 80 PACO RABANNE Lady Million EdP 80ml -‐31,91%25 CAROLINA HERRERA 212 Men EdT 100ml 10,05% 81 CALVIN KLEIN Beauty Eau Sublime Scents * NM

26ESTÉE LAUDER Advanced Night Repair ProtecJve Recovery Complex 50ml 55,22% 82 CHANEL No.5 EdT 50ml -‐6,08%

27 CHANEL No.5 EdP 50ml 6,58% 83 LANCÔME Renergie Power Of 3 Set * -‐6,70%28 PACO RABANNE Lady Million EdP 50ml -‐12,68% 84 ESTÉE LAUDER Resilience LiF Firming/SculpJng Eye Creme 15ml NM

29 CHANEL Chance Eau Fraïche EdT 50ml 15,14% 85ESTÉE LAUDER NutriJous Night Vita-‐Mineral Intense Nourishing Creme Mask 50ml NM

30 CAROLINA HERRERA 212 Vip For Men EdT 100ml 115,76% 86 ISSEY MIYAKE L'Eau d'Issey EdT 50ml -‐13,58%31 GIORGIO ARMANI Code Men EdT 75ml 6,61% 87 CHANEL No.5 EdT 100ml -‐5,58%32 PACO RABANNE 1 Million EdT 50ml -‐10,67% 88 HUGO EdT 150ml 19,20%33 CAROLINA HERRERA CH EdT 100ml 62,47% 89 DOLCE & GABBANA The One EdP 50ml -‐4,37%34 CHANEL Coco Mademoiselle EdT 100ml 2,18% 90 LANCÔME Hydra Zen Power Of 3 Set * -‐3,35%35 CHANEL Chance Eau Fraïche EdT 100ml 17,34% 91 LANCÔME Genifique Face & Eye Set * -‐8,13%36 ISSEY MIYAKE L'Eau d'Issey Pour Homme EdT 75ml 14,80% 92 YSL Touche Eclat Concealer 2ml -‐4,10%37 CALVIN KLEIN cK One EdT 100ml 9,35% 93 CLINIQUE DramaJcally Different Moisturizing Gel 125ml 42,46%38 CALVIN KLEIN Speaker Set EdT Ltd EdiJon * -‐11,15% 94 CHANEL Le Vernis Nail Colour 13ml 10,85%39 LG HOUSEHOLD & HEALTH CARE Mel White/Enlht Two Way Cake * 18,13% 95 CHANEL Lèvres ScinJllantes Glossimer For Lips 6ml 15,30%40 CHANEL Chance EdP 100ml 10,96% 96 CHANEL Egoiste PlaJnum EdT 100ml -‐1,10%41 CLINIQUE DramaJcally Different Moisturizing LoJon Duo Set 250ml -‐14,53% 97 CHANEL Chance EdT 100ml 10,11%42 CHLOÉ Signature EdP 50ml 159,48% 98 JEAN PAUL GAULTIER Le Male EdT 125ml -‐0,41%43 SK II Essence Kit * NM 99 HERMÈS Terre d'Hermès EdT 50ml 141,71%44 CHLOÉ Signature EdP 75ml NM 100 GIORGIO ARMANI Acqua Di Gioia EdP 50ml -‐14,05%45 LG HOUSEHOLD & HEALTH CARE Mel White Make-‐Up Base * 18,30% 101 ESTÉE LAUDER NutriJous Vita-‐Mineral Moisture Creme 50ml NM46 DIOR J'Adore EdP 100ml 5,14% 102 GUCCI Guilty EdT 75ml -‐5,30%47 DIOR Miss Dior Cherie EdP 50ml 24,20% 103 LANEÍGE Water-‐Sleeping Pack * 29,67%48 GIORGIO ARMANI Acqua Di Gio PH EdT 50ml 20,30% 104 GUCCI Guilty Pour Homme EdT 90ml 1,04%49 ESTÉE LAUDER NutriJous Vita-‐Mineral Energy LoJon 200ml 26,67% 105 L'OCCITANE Happier Hand Kit * 16,98%50 LANCÔME Miniatures CollecJon * 25,11% 106 DOLCE & GABBANA The One EdP 75ml -‐2,94%

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