Promotional Marketing and Event Management

Color Cosmetics Promotion Portfolio

Sayaka Brand W14146916

Module Leader: Chris Bestley

Date: 30th April 2014

Word Count: 2498

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Executive Summary

The aim of this report was to evaluate and compare different types of promotional

techniques in the color cosmetics industry in the UK. The industry itself is considered

fiercely competitive, as the short life cycle of the products force companies to

constantly innovate to stay competitive. The main issue, which has slowed down

growth in the past years is the Internet. Not only on social media, but comparison

websties and e-commerce outlets, consumers compare and contrasts offers based

on price and additional incentives. In order to counterbalance the latter, companies

are forced to operate with strong transparency to compete with an informed

consumer.

The use of the five different promotional techniques, price, prize, self-liquidation, free

merchandise and cause related are briefly applied to the industry. The ubiquity of e.g.

3 for 2 offers have also contributed to the slowdown of the industry.

Benefit Cosmetics and Urban Decay are compared, where Benefit triumphantly wins

through the IMC-style promotional strategy it has implemented. Urban Decay, relying

too much on their past tremendous success, will start to crumble if actions are not

taken soon. Even though a brand such as Urban Decay, which has grown through

earned media and maintained its authenticity and credibility needs to deepen their

relationships actively to increase likeability with their followers.

It is recommended, however, that both brands start using cause-related marketing to

leverage their well known brand names and enhance it.

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Table of Contents

1. Introduction............................................................................................................4

2. Methodology...........................................................................................................6

3. Review.....................................................................................................................63.1. Industry Promotion.........................................................................................63.2. Benefit Cosmetics.........................................................................................10

3.2.1. Benefit Cosmetics Promotions.................................................................103.3. Urban Decay..................................................................................................13

3.3.1. Urban Decay Promotions.........................................................................14

4. Analysis and Findings.........................................................................................16

5. Conclusion............................................................................................................16

6. References............................................................................................................17

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1. Introduction

Make up is amongst the oldest universal forms of human expression (Goldhill, 2014).

Consequently, it is no surprise that this market has accompanied humankind for millennia and

has become a immensely profitable industry.

As profitable opportunities are seldom lonely, the sector attracts many market players, old

and new, fighting for a piece of that cake. The cosmetic industry hence underlies a fiercely

competitive nature and forces incumbents to constantly try to drive the market with new

product developments. The product lifecycle of cosmetics are considered to be relatively

short, not only due to the size and expiration dates, but also because the market is heavily

influenced by fast-changing fashion trends (Businesscasestudies 2014). Therefore, the

brands are keeping up with the market, driven partly by necessity, but also by opportunity to

drive the market.

According to a recent study conducted by Space N.K., the UK is the fourth-largest cosmetics

market in Europe and is said to be worth £8bn (Goldhill, 2014, Figure 1). In spite of some

challenging economical times, the industry has proven to be less sensitive by showing steady

growth. In fact, Estée Lauder’s chairman, Leonard Lauder, believes that lipstick sales soar in

times of recessions, as women still try to find more affordable ways to indulge in tough

financial times (The Economist, 2009).

Figure 1, Courtesy of Space NK

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Despite these promising indicators, the industry, like many others, has suffered from a

particular key influence: the Internet. It is no news that social media has fundamentally

transformed the way we live and consume, but has provided the industry with challenges.

The color cosmetics sector, which this report will focus on, saw a slower pace of growth in

2012, reflecting the issue of a rising number of savvy online shoppers, who are on the lookout

to find less pricey deals, as well as the ubiquity of 3 for 2 offers on high street brands. The

market rose by just 3.5% compared to 2010-2011, where a growth of 8.3% was registered. In

2013, the market was valued at almost £1.5bn, however, annual growth is predicted to further

slow, increasing by just 2%(Mintel 2013).

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2. Methodology

This report aims to compare promotional activities undertaken by colour cosmetics

brands in the UK. Specifically, there will be a focus on Benefits Cosmetics and Urban

Decay. Firstly, I signed up for the e-mail newsletter to gain understanding of how the

company chooses to communicate with its subscribers. Moreover, their Facebook

and Instagram pages were liked to examine previous and present updates on social

media activities. The branded websites were also researched, where only MAC and

Benefit offered a UK specific site with online shopping features. Additionally,

department stores were browsed and if available, staff consulted, to explore the in-

store promotional activities. Superdrug and Boots were also visited for a comparison

with high-street products. Female monthly magazines were also browsed to check if

there were any samples included. YouTube tutorials with popular UK bloggers were

also looked at, as companies often provide free products to them in order to get

publicity, also by offering discount codes for the viewers. Lastly, the websites of

popular UK beauty boxes, namely glossybox and birchbox, were consulted to identify

the monthly featured products.

3. Review

3.1. Industry Promotion

The color cosmetics industry employs most of the promotional techniques available.

Price reductions are frequently available and a popular method, as the consumer

secures savings and there is no additional work required for the retailer. This is

usually used until the available stock is exhausted, to reduce the shelf life of products

(Papantoniou, 1992).

Free merchandise are especially applicable in this sector, as brands rely on samples

to convince consumers to purchase their full-size products. Often, a full size product

comes with a sample of another, possibly newer product. Samples can be picked up

at department stores at no charge or be found in female glossy magazines. Also,

offers such as “2 for 1”, “buy 1 get one ½ price”, “3 for 2” are omnipresent in this

industry, as this form of premium embodies an immediate reward to the consumer.

The retailer can cover two main intentions with the latter. Either, it can be used as a

a form of rewarding the customer’s loyalty or encourage trial from customers of

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competing brands, who are purchasers of competitive brands who are willing to shift

choice in order to save money. “Unlike other forms of premiums, which typically

generate relatively low levels of response, these are received heartily by consumers

due to the immediate reward and the attractive savings” (Figure 2; Shimp and

Andrews 2013).

This type of promotion is effective as it underlies the theory of instrumental

conditioning, as the consumer learns to perform behaviours that produce positive

outcomes. The buy X get X free scheme is a fixed ratio reinforcement scheme, where

a reward is only given when the behavior is performed X times, whereas a

continuous scheme rewards the customer continuously, such as with a loyalty

scheme (Solomon 2010). With the “prize” technique, the benefit for the consumer is

determined by whether he wins or not. The advantage thereof lies in the fact that the

costs for such campaigns can be pre-calculated and has no variable cost attached

depending on the number of participants. Further, a far more valuable benefit can be

given to the consumer as the prize, compared to a promotion where the reward is

available to anyone (Mullin 2010). This type of random ratio reinforcement scheme,

where the participant gambles with the chances of winning, can have a strong

persuasive influence (Solomon 2010). Prize promotions in the cosmetics industry

have been strongly facilitated by social media, as it has become very simple and

straightforward to enter competitions. Particularly with technical features such as

hashtags and tagging, the entries can be easily organized and evaluated. Especially

when the contest is taking place through social media, the consumer is usually asked

to do something product related, which can be posted and shared. This not only

engages with the consumer in a positive and creative way, but also increases digital

word of mouth.

“The self liquidating technique is when the planned benefit is handed to the

consumer when they spend proof of purchase plus some money to the sponsor,

resulting in the receipt of an item the price of which is, naturally, much reduced from

the actual cash outlay. (Papantoniou, 1992).” This method does not attract a lot of

popularity, as there is some workload involved for the consumer. Therefore, the

results from self liquidating promotions are always predictably low, primarily since

consumer response is very limited” (Papantoniou, 1992).

Lastly, cause-related marketing has become increasingly important in today’s world

where companies are facing informed consumers, who will challenge the firm’s

activities. Most consumers have a favourable attitude towards a company that

engages through cause related marketing (Shimp and Andrews 2013). Especially in

the cosmetics sector, where often raw materials from developing nations are used, or

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products are tested on animals prior to launch, it is essential to adapt a philanthropist

approach to cover these corporate social responsibility topics. However, there are

also negative voices as consumers can be cynical about corporate sponsoring with a

self-serving motive (Shimp and Andrews 2013).

In terms of supportive, non-price promotions, promotional packaging, point of sale

and display materials are necessary to make the brand stand out in the crowd to

attract the attention of the customer. For the brands chosen, there were no additional

displays other than the normal store layout. In the drugstores, however, different

kinds of stands were decorated. Those are communicational instruments, which are

used to alert the consumers to the product in focus or other promotion instruments.

Frequently, they are being used for grabbing the attention of price promotions (Krafft

and Mantrala, 2006).

Figure 2, Courtesy of Boots.com

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Courtesy of Boots, Superdrug

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3.2. Benefit Cosmetics

“Benefit Cosmetics is the action-packed, beauty brand offering quick fix solutions for

every gal's beauty dilemmas.”

BeneFit cosmetics are famous for high quality products with humorous names, iconic

products and innovative formulas with products that cover all age ranges and the

needs from around the globe. The company was founded in 1976 as a small

boutique in San Francisco, by twin sisters Jean and Jane Ford. They created

products to aid their clients overcome their beauty dilemmas and brought humour to

the world of cosmetics.

Today, Benefit is a global brand with stores in 29 countries at over 2000 locations

and an e-commerce outlet. It was taken over by Louis Vuitton Moët Hennessy in

1999. (LVMH 2014)

3.2.1. Benefit Cosmetics Promotions

Benefit uses a range of promotional activities. Their social media activities are

particularly strong. In the time of this research, there were no buy x get x free

promotions. Benefit’s main activities were prize and free merchandise driven.

Mother’s Day

The only “price reduction” was this gift set for mother’s day, whose value would have

been higher if the items were purchased individually.

Courtesy Instagram of Benefitscosmetics UK

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On Facebook and Instagram, a contest was launched to win a hamper worth £150 for

mother’s day. Participants could enter through social media and websites and

needed to know the name of their latest product, the “Big Easy BB Cream”

(Benefitcosmetics.com 2014)

Courtesy of Benefitscosmetics.com

Prize

Benefits collaborated with Marie Claire magazine online- the participant has to sign

up to the Marie Claire newsletter and answer where Benefits cosmetics is originally

from ( San Francisco). The prize, which can be won is a benefits hamper worth £200.

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Courtesy of marieclaire.co.uk

A less conventional, more engaging and relevant prize contest was found on

benefit’s homepage. The contest was held on instagram- participants needed to take

a selfie, emphasizing their lashes with the use of the benefits “they’re real!” mascara,

and enter with the use of the #realsies hashtag. The very relevant reward in this case

was a year’s supply of that same mascara.

Self Liquidating

The only promotion, which comes close to a self-liquidating concept is the one of

beauty-boxes. These are services, to which customers can subscribe and pay a

monthly fee in order to receive a box with normal to deluxe size samples of trending

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as well as unknown beauty brands. A benefit product was featured in the January

box of birchbox. As users pay a fee to receive samples, which are usually free, it

could be argued that this is a form of self-liquidating promotion.

Free

The UK website also embeds a online shopping feature. When an item is purchased,

the shopper can choose “2 free samples”, which will be shipped with the order.

Below, one can get the make up kit for “free”, if there is a minimum spend of £62.

Moreover, this page has the option of applying a discount code, which can be

obtained through discount sites, university codes or bloggers who were given a

unique code to distribute to enable tracking.

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3.3. Urban Decay

“Urban Decay is more than just beauty products: it transcends beauty and mixes

femininity, audacity and fun. From its brazen names and avant-garde shade range to

its innovative, ultra long-lasting products, the company has been shaking up the

industry and exciting beauty junkies and makeup artists alike for more than 15 years.

(L’Oreal 2014)” Urban Decay was acquired by cosmetics giant L’Oreal in 2012. The

company gained enormous popularity through their “Naked Palettes”, which are eye

shadow palettes in the nude colour scheme. As YouTube “beauty gurus” started

spreading the word, the products were sold out in an instant.

Courtesy of youtube.com/fromheadtotoe

Courtesy of youtube.com/LIVforstyle

3.3.1. Urban Decay Promotions

FreeAs aforementioned, it is often the case that a new or existing product sample gets

attached to the main purchase to encourage trial. With all of their eye shadow

palettes, which is the second most used product in the UK after foundation (Mintel

2013), Urban Decay attaches a sample of other cult products. The first one shows an

eye shadow base that keeps the colours in place for a considerably extended time,

whereas the second palette includes a lip-gloss, and the third a sample kit of all their

eye shadow bases, which come in different colours. However, when asked for a

sample at the department store, I was told that the brand does not offer samples for

clients.

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Courtesy of Ubran Decay

Despite being a well-known in brand in the UK, it is very disappointing that Urban

Decay does not have a UK dedicated website, nor social media page like Benefits. If

items want to be purchased online in the UK, the site reverts to the Debenhams

page. The US site shows free shipping over 50 USD and a shampoo gift with

purchases over USD 50.

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Courtesy of urbandecay.com

4. Analysis and Findings

The direct comparison of the two brands facilitated an evaluation. It became quickly

evident that Urban Decay only engaged in little to none promotional activities. As

they were strongly popularized through earned media, the necessity for advertising

and promotion was almost made redundant, as the loyal followers community, such

as bloggers, are informed through public relations and consequently spread the

word. This allows the brand to maintain their authenticity in a world where many

companies struggle to get on that path. However, this success is not guaranteed

forever. Even though Urban Decay has retailers, such as Debenhams, in the UK,

they do not have a UK friendly website, nor social media websites dedicated for the

market. As they belong to L’Oréal for 2 years now, they should be able to make use

of a consolidated larger advertising budget. It needs to be considered that the brand

targets a relatively young audience, but is premium-priced. By regularly offering

giveaways and contests, the brand will enhance the overall experience the customer

perceives from them, not only through the product.

Benefit Cosmetics, on the other hand, makes well use of the tools available. The

brand efficiently targets the consumer through various angles, from social media

through magazines to beautyboxes. Moreover, the fun and colorful image of the

brand is consistent throughout all promotional activities. Their approach is adapting

an exemplary integrated marketing communications approach, by using each

channel for its strengths to offset others’ weaknesses (Kitchen et all 2004).

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5. Conclusion

It can be concluded that in this fiercely competitive environment, it is crucial to gain

the customer’s trust and loyalty and constantly reinforce it. As previously explained,

consumers are less loyal to brands these days as they have become more price

sensitive and aware of the compeittors products and pricing as most consumers

conduct research online before they shop (Brandweiner, 2012) Urban Decay seems

to be resting on their previous success stories and will suffer if they do not start

making steps towards the customer through relevant and rewarding incentives. Both

Urban Decay and Benefit could implement a cause-related strategy, as Body Shop

and Lush are for example emphasizing on. Ethically sourced and natural ingredients

have gained tremendous importance over the last decade and could be successfully

leveraged to further gain likeability.

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6. References

Benefitcosmetics.co.uk, (2014). Benefit Cosmetics > Official Site and Online Store. [online] Available at: http://www.benefitcosmetics.co.uk/?ext_id=ppc_0191_benefit%20cosmetics&gclid=CLWDr-uhh74CFaoewwodn4AAvA [Accessed 30 Apr. 2014].

Brandweiner, N. (2012). Study reveals 90% of consumers research before buying online | MyCustomer. [online] Mycustomer.com. Available at: http://www.mycustomer.com/topic/customer-experience/study-reveals-90-consumers-research-buying-online/158345 [Accessed 30 Apr. 2014].

Businesscasestudies.co.uk, (2014). The Product LIfe-cycle - Maintaining The Competitiveness Of A Global Brand - Amway | Amway case studies and information | The Times 100. [online] Available at: http://businesscasestudies.co.uk/amway/maintaining-the-competitiveness-of-a-global-brand/the-product-life.html#axzz30J2hnDES [Accessed 29 Apr. 2014].

The Economist (2009), The lipstick index: Lip service. Available from: http://www.economist.com/node/12998233 [Accessed: Accessed: 29. Apr., 2014].

Goldhill, O. (2014). Germany the biggest European cosmetics market - Telegraph. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10606609/Germany-the-biggest-European-cosmetics-market.html [Accessed 29 Apr. 2014].

Kitchen, P.J., Brignell, J., Lit, T., and Jones, G.S. (2004) The emergence of IMC: a theoretical perspective. Journal of Advertising Research, 44 (1), p.20

Krafft, M. and Mantrala, M. (2010). Retailing in the 21st century. 2nd ed. Berlin: Springer.

 Loreal.com, (2014). Urban Decay: makeup, cosmetics - L’Oréal Group. [online] Available at: http://www.loreal.com/brands/loreal-luxe/urban-decay.aspx [Accessed 30 Apr. 2014].

Lvmh.com, (2014). BeneFit Cosmetics, Perfumes and Cosmetics, prestigious brands - LVMH. [online] Available at: http://www.lvmh.com/the-group/lvmh-companies-and-brands/perfumes-cosmetics/benefit-cosmetics [Accessed 30 Apr. 2014].

Mintel (2013) Colour Cosmetics - UK - July 2013. [online] Available at: http://academic.mintel.com/display/638122/ [Accessed 29 Apr. 2014].

Mullin, R. (2010). Sales promotion. 1st ed. Philadelphia: Kogan Page Limited.

Papantoniou, P. (1992). Marketing the complete awakening. 1st ed. [Y.y.]: P.A.S.S. Publications.

Shimp, T. ,Andrews,C., (2013), Advertising Promotion and OtherAspects of Integrated Marketing Communications, USA, Cengage Learning

Solomon, M., Bamossy, G. & Askegaards, S.(2010), Consumer Behaviour: A European Perspective, 4th ed, Pearson Education, Essex.

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Urbandecay.com, (2014). Our History | Urban Decay. [online] Available at: http://www.urbandecay.com/about-us/about_us.html [Accessed 30 Apr. 2014].

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