BB Reference

Buyer Behavior MKTG1052

Table of Contents

Executive Summary.......................................................................................................31. Market........................................................................................................................4

1.1 Size of market.......................................................................................................41.2 Market Share.........................................................................................................51.3 Market Position.....................................................................................................61.4 Depth and breadth of product range.....................................................................61.5 Positioning of the product.....................................................................................71.6 Product life cycle stage.........................................................................................7

2. Competitors................................................................................................................72.1 Indirect Competitors.............................................................................................72.2 Direct Competitors................................................................................................82.3 Size of Competitors..............................................................................................82.4 Positioning............................................................................................................9

3. Identification of Target Market(s)..............................................................................93.1 Demographics Segmentation................................................................................9

3.1.1 Gender/ Age....................................................................................................93.1.2 Income / Occupation.....................................................................................10

3.2 Psychographic Segmentation..............................................................................103.2.1 Social class...................................................................................................103.2.2 Lifestyle........................................................................................................103.2.3 Personality....................................................................................................10

3.3 Behavioural Segmentation..................................................................................113.3.1 Benefit Sought..............................................................................................113.3.2 Usage rate.....................................................................................................113.3.3 Loyalty status................................................................................................11

3.4 Potential Market segment....................................................................................114. External Influences...................................................................................................12

4.1 Culture and Subculture.......................................................................................124.1.1 Values............................................................................................................124.1.2 Adopter Category..........................................................................................13

4.2 Demographics.....................................................................................................134.3 Group Influence..................................................................................................13

5. Internal Influences....................................................................................................145.1 Needs and Motives..............................................................................................145.2 Perception...........................................................................................................14

5.2.1 Exposure.......................................................................................................155.2.2 Attention/ Interpretation...............................................................................16

5.3 Learning..............................................................................................................165.4 Lifestyle..............................................................................................................17

6. Consumer Decision Making Processes....................................................................176.1 Type and Amount of Information and Level of Decision-Making.....................176.2 Evaluative Criteria..............................................................................................186.3 Shopping for Product..........................................................................................186.4 Post purchase dissonance....................................................................................186.5 Disposal of Serum...............................................................................................19

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6.6 Loyalty................................................................................................................197. Marketing Strategy...................................................................................................197.1 Product...................................................................................................................19

7.2 Price....................................................................................................................227.2.1 Value-based pricing......................................................................................227.2.2 Premium pricing...........................................................................................22

7.3 Promotion............................................................................................................237.3.1 Sales Promotion............................................................................................237.3.2 Advertising...................................................................................................237.3.3 Personal Selling............................................................................................24

7.4 Place....................................................................................................................248. Evaluation................................................................................................................248.1. Advertisement.......................................................................................................24

8.1.1 Colour...........................................................................................................258.1.2 Format...........................................................................................................25

8.2. Future Recommendations..................................................................................258.2.1 Product Enhancement and Customer Satisfaction........................................258.2.2 Improved Marketing Communications.........................................................268.2.3 Improved Purchase Experience....................................................................268.2.4 Identifying potential new customers............................................................26

9. Conclusion................................................................................................................27Appendix......................................................................................................................28References....................................................................................................................34

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Executive Summary

The intent of this report is to explore and analyse the impact of buyer behaviour on

marketing strategy through the examination of the team’s chosen product- Chanel’s

Ultra Lift Correction Serum. Both the marketing mix framework as well as consumer

behavioural analysis have been done in order to fulfil the said objective.

A short introduction pertaining to the market that Chanel is in, focusing on areas such

as its market size, market positioning, its depth and breadth of product range, as well

as its product life cycle. Chanel’s direct and indirect competitors have been identified

with Dior being its direct and closest competitor.

An analysis of the market segmentation was also done based on the following

profiles: demographics, psychographics and behavioural in relating to women from

the age group of 30-55 years old (target segment). In addition, potential market

segment has been identified as consumers who purchase Chanel’s products such as

bags and shoes.

Both external influences in terms of the cultural values of society, demographics as

well as group influence and internal influences in terms of consumer’s needs and

motives, marketer’s perception, learning process and lifestyle of the target market

have been covered.

Consumer decision making process was later conjured based on the type of

information needed, involvement level of consumers, evaluative criteria used in

making a purchase decision, post purchase dissonance and how to keep it to a minimal

level, as well as its usage disposal and customers’ loyalty to the product.

Marketing Strategy on Chanel and Dior have been done based on the 4Ps of its

marketing mix approach - Product, price, place and promotion. Evaluation based on

the consumer behaviour theory and future recommendations based on the marketing

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mix were also done in accordance. Lastly, a conclusion was formulated to bring the

report to a closure.

1. Market

1.1 Size of market

Table 1 Sales of Cosmetics and Toiletries by Sector: Value 2003-2008

S$ million

2003 2004 2005 2006 2007

2008

Baby care 16.5 16.9 17.5 18.0 18.9 19.4

Bath and shower products 62.0 63.6 64.7 66.1 68.0 69.4

Deodorants 15.2 16.3 17.3 18.0 18.9 19.8

Hair care 103.2 108.6 115.8 122.3 128.8

134.9

Colour cosmetics 102.2 106.5 111.3 116.7 124.8

130.8

Men's grooming products 41.0 44.5 48.1 51.3 55.7 59.1

Oral hygiene 63.6 66.0 68.6 71.1 73.4 76.0

Oral hygiene excl power 60.3 62.1 64.1 66.0 68.0 70.4

toothbrushes

Fragrances 139.6 149.3 158.3 166.7 174.5

182.3

Skin care 211.2 228.2 249.6 272.8 298.9

318.5

Depilatories 3.0 3.1 3.3 3.5 3.7 3.8

Sun care 11.1 11.7 12.5 13.4 14.5 15.4

Premium cosmetics 357.3 387.6 420.0 454.1 492.5

520.2

Cosmetics and toiletries 748.2 792.3 842.4 893.6 951.8

999.3

Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews,

Euromonitor International estimates

Note 1: Premium cosmetic sales are additionally included within Baby care, Bath & shower products,

Deodorants, Colour cosmetics, Hair care, Fragrances, Skin care and Sun care

Note 2: Sum of sectors is greater than market size because the four Men's toiletries subsectors are included

in Men's grooming products as well as in Deodorants, Skin care, Bath and shower products and Hair

care.

Based on the 2008 figures, skincare products make up 31.87% (318.5 / 999.3) of the

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total market share for cosmetics and toiletries. While the focus is on skincare,

different brands are classified differently based on class where Chanel is seen as a

premium brand thus the need to further analyze the premium cosmetic market share.

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Table 3 Sales of Premium Cosmetics by Sector: Value 2003-2008

S$ '000

2003 2004 2005 2006 2007

2008

Premium baby care 279.9 338.4 349.1 415.1 472.7

485.9

Premium bath and shower 5,576.5 6,044.5 6,473.1 6,936.0 7,480.4

7,288.7

Premium deodorants 1,978.9 2,286.7 2,595.3 2,703.6 2,890.7

2,866.4

Premium colour cosmetics 66,458.2 69,754.9 73,429.8 76,991.9 83,598.3

89,607.8

Premium fragrances 122,235.0 132,139.2 141,579.7 150,329.7 158,517.1

166,745.9

Premium skin care 134,101.4 148,348.1 164,742.0 182,800.6 201,762.8

214,003.6

Premium sun care 1,359.9 1,527.2 1,880.5 2,146.4 2,337.3

2,391.7

Premium hair care 25,283.0 27,152.4 28,958.6 31,788.2 35,414.5

36,829.0

Premium cosmetics 357,272.7 387,591.3 420,008.2 454,111.5 492,473.8

520,219.0

Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews,

Euromonitor International estimates

Note: Premium cosmetic sales are additionally included within Baby care, Bath & shower products,

Deodorants, Colour cosmetics, Hair care, Fragrances, Skin care and Sun care

From a micro view, premium skin care products make up 41.14% (214,003.6 /

529,219.0) of the total market share for premium cosmetics.

1.2 Market Share

Table 7 Cosmetics and Toiletries Brand Shares by Retail Value 2005-2008

% retail value rsp

Brand Company 2005 2006 2007

2008

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SK-II Procter & Gamble (S) 3.5 3.5 3.7 3.8

Pte Ltd

Shiseido Shiseido (S) Co Pte Ltd 3.2 3.2 3.3 3.2

Estée Lauder Estée Lauder Cosmetics 2.8 2.9 2.9 2.9

Pte Ltd

Christian Dior Christian Dior 0.8 0.9 0.9 0.9

Singapore Pte Ltd

Chanel Chanel (S) Pte Ltd 0.7 0.7 0.7 0.8

Source: Trade associations, trade press, company research, trade interviews, Euromonitor International

estimates

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Laneige


Market share is based on brand shares which are determined by sales from each brand.

Amidst all the cosmetic brands in Singapore, SK-II has the largest market share of

3.8%, followed by Shiseido with 3.2% and Estee Lauder with 2.9%. Chanel has a

market share of 0.8% which is 0.1% behind its direct competitor, Christian Dior

(Euromonitor International 2009).

1.3 Market Position

Diagram 1

Perceptual mapping

Strong brand image

Weak brand awareness Strong brand awareness

Weak brand image

The market position for Chanel and its competitors is demarcated by brand awareness

and brand image. Brand awareness is based on the recognition of each brand while

brand image is based on class and superiority. Chanel’s brand extension has allowed it

to achieve worldwide recognition as compared to other brands thus being placed

highly under brand awareness. It is also perceived to have a strong brand image where

it ensures quality and performance thus justifying it as a premium brand.

1.4 Depth and breadth of product range

Chanel has many product lines and one of them is the Ultra Correction Lift. It

specifically focuses on firming and lifting of facial lines and ranges from the most

fundamental nanolotion to the serum. There are many other products that come under

this line which is shown in (refer to Appendix A)Page 8 of 39

Bio essence

Loreal

Shiseido

Estee Lauder

Cleu de pau Lancome

Christian Dior

Chanel


1.5 Positioning of the product

Chanel launched its Ultra Correction Lift (UCL) series in August 2009, a

breakthrough from its previous anti-ageing line. What ultimately makes UCL outshine

other anti-ageing products is the use of a patented ingredient to boost tensin

production which aids in regaining skin firmness. Therefore, when cellular tension is

restored, the skin becomes denser, firmer, more toned and appears to be naturally

lifted from within (Chanel Ultra Correction 2010). This breakthrough signifies

Chanel’s innovation in the anti-ageing technology accompanied by the architectural

inspiration of the structural concept of tensegrity. Chanel applies this concept to its

anti-ageing products to provide consumers with the knowledge that restoration starts

from within the skin (Lwee 2010).

1.6 Product life cycle stage

UCL with its new specialised formula and patented ingredient for firming led to the

discontinuation of the previous anti-ageing line, Ultra Correction. As it has been in the

market for less than a year, the product is still in the growth stage. It will likely remain

in this stage for a long period as it is only recently that younger consumers started

being concerned about premature ageing thus the potential to grow (Euromonitor

International 2009). Coupled with the needs of the older consumers, the retail sales for

the UCL Serum is predicted to increase. This range will face the end of life in a few

years when a more advanced formula and technology is discovered.

2. Competitors

2.1 Indirect Competitors

Brands Product

Bio-Essence Face Lifting Cream

L’Oreal Revitalift

The above table shows various brands with products which perform similar functions

as our chosen product-UCL Serum. However, these two brands have different

psychographic groups and price which limit their competition with Chanel.

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2.2 Direct Competitors

Brands Product

Shiseido Super Lifting Formula

Estee Lauder Perfectionist [CP+] Wrinkle Lifting Serum

Cleu de pau Revitalizing Emulsion

Laneige Perfect Renew Essence

Lancôme RÉNERGIE MORPHOLIFT R.A.R.E

Christian Dior Capture Totale- One Essential

Among all these direct competitors listed above, we have chosen Christian Dior as the

main competitor to Chanel due to the many similarities both brands share. Firstly, the

market share for both brands is close to each other where both companies do not have

any sub-brands unlike Estee Lauder and Shiseido. Secondly, both brands are well

established and sell similar skincare products of a similar price range. Thirdly, both

brands sell their products exclusively and do not distribute their products to external

retailers.

2.3 Size of Competitors

Based on the market data, Dior holds a brand market share of 0.9% in the cosmetics

and toiletries industry globally while Chanel holds 0.8% of it. The difference of 0.1%

could be due to the difference in their different promotion methods or their wide range

of products (Refer to Appendix A).

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2.4 Positioning

Diagram 2- Perceptual mapping for Anti – Ageing products.

Christian Dior is positioning as a high price product with high awareness. It is well

known for its fragrance and luxury fashion apparels. Using the recognition they have

gained over the years from the fashion runway, they have also broadened out to the

cosmetics segment, selling both skincare and makeup products.

3. Identification of Target Market(s)

3.1 Demographics Segmentation

3.1.1 Gender/ Age

Both UCL serum and Dior Capture Totale One Essential Serum target professional

working women whose age ranges from 30- 55 years old. Woman of these ages have

started ageing and therefore place greater emphasis on maintaining their youthful

look. Therefore, Chanel and Dior have created a line of anti - ageing skincare products

specially catered for them (Refer to Appendix A).

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High priceLow price

Weak brand image

Dior Capture Totale One Essential

Chanel Ultra correction lift serum

Strong brand image


3.1.2 Income / Occupation

Both UCL serum and Dior Capture Totale One Essential Serum focus on the affluent

consumers who can afford to pay for these premium products. These consumers are

usually working professionals with a high level of income thus increasing their

purchasing power.

3.2 Psychographic Segmentation

3.2.1 Social class

Generally, people fall under the same demographic group could have distinct

psychographic makeup. However, both UCL serum and Dior Capture Totale One

Essential Serum mainly target the upper class society. This group of consumers

usually share similar values, interests, and behaviour such as in the products they

purchase and use. They prefer brands which epitomizes class and sophistication,

showing their exquisite and luxurious taste (Kotler et al, 2009).

3.2.2 Lifestyle

According to the VALS lifestyle model, the psychographic of the primary target

segment for both products are people who are known to be ‘high achievers’. They are

successful in their career, showing high commitment to their jobs which provide them

with material rewards and prestige. Moreover, this group of people are image

conscious and tend to purchase products whose brand enhances their prestige and

class (Quester et al. 2007).

3.2.3 Personality

Consumers usually choose brands whose personality complements their own. The

brand personalities of Chanel and Dior are usually associated with sophistication

which represents high status and charm. However, in terms of strong representation of

brand personality, Chanel is perceived as a more sophisticated brand as compared to

Dior. Therefore consumers who wish to be seen as classy and prestigious may be

motivated to purchase Chanel products.

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3.3 Behavioural Segmentation

3.3.1 Benefit Sought

This target segment moves beyond the fundamental search to eliminating wrinkles,

dullness and sagginess. They seek for the maximum precision of the skin using all

natural ingredients, science and advanced technology.

3.3.2 Usage rate

Basically, anti- ageing regime is a long and routine process and therefore, the target

market can be categorized as high usage user. Both Chanel UCL Serum and Dior

Capture Totale One Essential serum are applied twice everyday on face and neck

which also explains the heavy usage.

3.3.3 Loyalty status

Consumers will remain loyal to the product if it is able to deliver satisfactory results.

With this, they will be more receptive to try the other products under this line which

complements the serum, resulting in more prominent results. Aside from product

loyalty, consumers will stay loyal to the brand so as to perceive status that is

congruent with the classy brand image.

3.4 Potential Market segment

The potential market segment we would recommend would be women who are users

of Chanel products such as bags, clothing, accessories etc. This potential market

segment will exhibit high willingness to try UCL Serum due to their past positive

purchase experience. Moreover, the target group which range from 25-29 years old

seem to be more conscious about preventing ageing (Euromonitor International 2009).

Generally, this potential target segment is classified as innovators and they make up of

the younger consumers. They are open- minded and keen about the latest technology

and will exhibit high willingness to try and test on the effectiveness of the products

which makes them a potential critical target group in the market (Sandberg 2008).

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4. External Influences

4.1 Culture and Subculture

4.1.1 Values

According to the research done by Datamonitor to examine consumer attitudes and

behaviors in Asia Pacific, it was found that consciousness about appearance is more

prevalent in society today, emphasizing the self-oriented values of people. This is

known as a visual culture.

Trends Implications

The high prevalence of appearance and

body shape anxiety is at the core of

‘appearance based wellbeing’ (or lack of

it)

appearance concerns impact consumers’

emotional and physical wellbeing so

looking good has arguably never been

more important

A more holistic pursuit of beauty

through more diverse appearance

management tactics is occurring among

Asian beauty shoppers.

health, wellbeing and beauty are

becoming inextricably linked in

consumers’ minds

Adopting structured and sustained

beauty regimes

consumers globally attach considerable

importance on their oral, skin and hair

health respectively which drives spend

and the adopting of beauty regimes

The polarization of beauty

ideals/attitudes reflects the conflict

between natural beauty and more

‘manufactured appearances’

manufacturers are retailers must adopt

diverse product portfolios on order to

meet the polarized beauty ideals among

global consumers

Source: Datamonitor 2009

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The above trends indicate that people desire to project a more confident and favorable

image, thus investing more money in beauty and skincare products.

4.1.2 Adopter Category

The target market is identified to be the early majority, who adopt products earlier

than most of their social groups. As the product could potentially change one’s

appearance, great emphasis is placed on information search. Consumers obtain

information from interpersonal sources and observe and study the product innovation.

Hence, they will only purchase after the innovation has proven successful with others.

4.2 Demographics

UCL serum is skewed towards female of thirties and above, who fear that age will

catch up on them, thus they are highly concerned about getting wrinkles and sag lines.

This concern means that they are willing to spend money on skin care products.

Chanel has successfully positioned itself as a luxury brand; hence it appeals greatly to

the mature and affluent females who have high purchasing power.

4.3 Group Influence

The three types of influence include informational, normative and identification. We

have identified the reference groups of UCL serum to have informational and

identification influence on consumers.

For consumers who regard the behaviours and opinions of reference group members

as constructive knowledge to them are said to have informational influence (Quester

et al. 2007). For instance, some consumers may be highly influenced by the positive

word-of-mouth by opinion leaders to use the product that they recommend. Some

consumers may be influenced in purchasing the product upon seeing the success of

the product on their social groups.

Consumers who use perceived group norms and values as a guide for their own

attitudes, values or self-image, are called identification influence (Quester et al. 2007).

It occurs when some consumers notice an increasing number of their friends or people

in the same social group using UCL, hence inducing them to use the same product.

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5. Internal Influences

5.1 Needs and Motives

Maslow’s Hierarchy of Needs consist of five stages of human needs where there is a

‘hierarchical effect’ in which if the lower fundamental needs are not fulfilled, a person

cannot progress up (Changing Minds 2010, Maslow's Hierarchy section). Normally,

skincare products would fall under the lowest level of need where there is a

physiological need to feel clean and look presentable. However, anti-ageing products

are a step above the basic skincare requirements and some do not see it as a necessity

thus its departure from the lowest level- Physiological needs. Furthermore, Chanel is a

premium, high end brand where its prices are steep thus some may find it a luxury.

Women of age 30-55 tend to be conscious of their image and appearance, and find the

need to upkeep and enhance their appearances which can be aided by UCL serum,

This boosts their self-esteem and self-confidence thus falling under the need for self-

esteem (penultimate level).

5.2 Perception

Perception is peoples’ way of making sense of the world. The process of perception

consists of three stages namely exposure followed by attention and then interpretation

of the stimuli (Refer to Diagram 3).

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Diagram 3

5.2.1 ExposureChanel’s advertisements can mainly be found in women’s fashion magazines only.

This deliberate exposure in limited advertising platforms signifies the brand’s

exclusive image. While Chanel’s cosmetics has its loyal customer base, advertising in

magazines alone is not viable especially with its 2005 - 2008 brand shares below that

of its competitors like Shiseido and its main competitor Dior (Euromonitor

International 2009, Table 7). Furthermore, with the outlook of sales over the next

three years predicted to grow, Chanel should capitalise and broaden its advertising

platforms (Euromonitor International 2009). It can place counters in the exclusive Page 17 of 39

Consumer is deliberately exposed to Chanel Ultra correction serum’s advertisement through selected magazines.

Stimulus factors such as contrasted colour of Chanel’s advertisement caught the attention of consumer.

The signature black and white advertisement stimulates an affective interpretation, inducing consumer to feel closely associated with Chanel’s brand image of being sophisticated. .

When Chanel Ultra correction serum becomes rewarding for the consumers, they are more likely to purchase and repeat similar behaviour.


Chanel’s boutiques that carries its bags and purses or near to them so as to increase

the awareness of its skincare line to create a larger customer base.

5.2.2 Attention/ Interpretation

Chanel’s predominantly black-coloured advertisements (Refer to Appendix E)

enhance the only coloured image in the advertisement – the model’s classic good

looks and her flawless, wrinkled-free face. This represents ‘colour-highlighted’

advertisements where colour is used ‘selectively to highlight certain elements such as

the featured product or objects that convey the product image’ (Meyers-Levy &

Peracchio 2005, p. 121).This brings out the main message of UCL without distracting

viewers and stimulates an affective interpretation that creates a desire for the product.

Black is also interpreted as ‘powerful’ and ‘expensive’ (Madden, Hewett & Roth

2000, p. 93) as well as considered an ‘elegant and prestigious colour’ (Colour Wheel

Pro 2010, Color Meaning section), which has close association to Chanel’s brand

image. Therefore, Chanel’s signature colours enhance its brand image and stand out

amongst other colourful advertisements.

5.3 Learning

The target segment for Chanel Ultra Correction Lift Serum is women from the age

group of 30-55 of years. As a well-established brand, the prices of Chanel’s products

are expensive, hence making it a high-involvement product. High-involvement

products are products that command a higher degree of consideration from consumers

before making their purchase (Baker 2003). In this case, operant conditioning would

be of most relevance. It is most common in high-involvement situations and it

requires trial before the actual purchase. Since the UCL serum requires consumers to

consider it carefully before purchase, product samples should be given out to them for

trial. During trial, consumers get to experience the product and this is likely to induce

their liking towards it. With further positive reinforcements such as entitling

customers to a free gift for their purchase of a certain amount will aid in encouraging

customers to buy the product. In addition, Chanel could also sell the serum at a

promotional price for a certain period which could in turn increase sales and generate

more revenue for the brand.

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5.4 Lifestyle

UCL serum acts as an anti-ageing tool that helps to improve the quality of collagen

and skin elasticity as well as prevent premature ageing or the skin from losing its

lustre and elasticity. The purpose of the serum complements the lifestyle of the target

segment as mentioned below.

The target segment comprises of mainly working adults who lead a busy life. They

have to juggle between both work and family, which could eventually result in

additional stress and premature ageing. Furthermore, the skin’s renewal process slows

down when one gets older thus all these factors contribute to need for anti-ageing

products to maintain their youth and skin elasticity. Due to these reasons mentioned

above, women of these ages are more willing to splurge on expensive products that

encompass the advanced technology and unique ingredients used, as they believe that

these qualities are what differentiate a high-end brand from a regular drugstore brand.

6. Consumer Decision Making Processes

6.1 Type and Amount of Information and Level of Decision-Making

When the target segment thinks of anti-ageing products, they will place Chanel in the

evoked set thus limiting the informational search to within the set.

Consumers can use internal or external search for information of the product. Internal

search refers to information in an individual’s learning like past purchase experience

that is stored in the memory and used during the next purchase. However, if internal

search alone is not sufficient to provide a solution, external search which focuses on

external stimuli is necessary (Quester et al. 2007).

Since UCL serum is a specialty and expensive good, consumers engage in a high

purchase involvement where external information search (extended decision making)

is required before a decision is reached. As consumers are highly concerned about

their complexion and appearance, more effort will be made in searching for

information on the product, reducing potential post-purchase dissonance.

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However, as consumers learn more about the brand and its products after sometime,

they slowly develop trust and loyalty, thus likely to move on to limited decision

making, which means selecting a product without seeking information beyond internal

memory, with no other alternatives in consideration.

6.2 Evaluative Criteria

Consumers depend upon the decision rule to evaluate different brands in the category

and to select one desired brand.

Cut-off-Points Chanel Dior Estee Shiseido

Price (3) 3 3 4 4

Quality (4) 5 4 3 3

Brand image (4) 5 4 4 4

Since skincare products are high involvement products, consumers can use the

conjunctive decision rule to select the desired brand. Firstly, minimum standards have

to be established, which is based on individual’s subjective views. Those brands that

fail to surpass the minimum standards would have to be eliminated from the choice.

From the table as shown above, consumers are left to choose between Chanel and

Dior, as both surpass the minimum criterion but Chanel will eventually be chosen as it

is superior to Dior in terms of quality and brand image.

6.3 Shopping for Product

As they go through extended-decision making, they become knowledgeable, thus will

first look out for particular brands in the market that interest them before proceeding

to the outlets/department stores to purchase them.

6.4 Post purchase dissonance

Post purchase dissonance may occur if product does not perform up to the

expectations of consumer. This may be due to individual consumer’s subjective

judgment on level of satisfaction obtained from product (Quester et al. 2007). As

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stated in the brochure, the lift serum will show its effects after four weeks of use.

However, if consumers fail to see the effects within four weeks or their expected

period, uncertainties may occur. In order to reduce post purchase dissonance,

marketers should never overpromise.

6.5 Disposal of Serum

Chanel designs the product packaging to be made of recycled materials and can be

recycled (Refer to Appendix B). UCL serum is an airless pump bottle dispensing a

precise dose and eliminates air contamination (Herlihy 2005). Therefore, the bottle is

not reusable and non-refillable in order to maintain high product quality.

6.6 Loyalty

The potential segment differs in its loyalty to the existing product as compared to the

target segment. This is because the potential consumers are characterized as

innovators who are flexible and not loyal to one particular brand whilst the target

segment, with its positive experiences with Chanel is loyal. Brand loyalty should be

used to target the potential segment as loyalty to a brand has a greater effect as

compared to loyalty to a product. By bring loyal to a brand, if one particular product

is not effective, the consumer will find other alternatives within the brand thus

retaining the consumer base. In the case of UCL serum, if it is not as effective, there

are other products from the UCL range which consumers can try. To cultivate brand

loyalty among innovators, innovators must first have a good experience and

impression of Chanel thus marketers need to ensure that service provided should be of

high quality. To further enhance the experience, Chanel can follow up with post-

purchase service such as providing advice and tracking the process of the consumer's

experience.

7. Marketing Strategy

7.1 Product

A product is anything that can be offered to a market for attention, acquisition, use, or

consumption that might satisfy a want or need of a consumer. Generally, products are

categorised into three different levels respectively to enhance the customer value.

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There are the core benefits which represent the most basic level, followed by actual

product and augmented product which helps to enhance the customer value. (Kotler et

al. 2009, pp. 200-201) Chanel’s lifting serum fulfilled all the three levels by providing

women with a solution to reduce sag lines and retain firmness (core benefits) through

the use of a patented ingredient and latest technology. Chanel strong branding and

exquisite packaging (actual product) further add on to the core benefit of the product.

Moreover, Chanel’s official website provides the consumers with product knowledge

as well as the technique to apply the product which adds on to become augmented

product (Kotler et al. 2009). Another product characteristic of the UCL serum is that it

is a specialty consumer product which is illustrated in Appendix C.

Based on the perceptual mapping shown in Diagram 4, Chanel's strong brand image

and high pricing of its product further explains its characteristics in Diagram 4.

Diagram 4

Perceptual mapping for Anti – Ageing products.

As shown in Table 1, we can see that Chanel Ultra correction lift serum and Dior

Capture Totale One Essential have their own patented ingredients and technology to

tackle the problem of sagginess. Therefore, it is very subjective to judge the Page 22 of 39

High priceLow price

Weak brand image

Dior Capture Totale One Essential

Chanel Ultra correction lift serum

Strong brand image


effectiveness of the products unless it is personally tested by the individual. Chanel’s

powerful brand image and luxurious packaging which was voted as the most

prestigious packaging in year 2004 (Herlihy 2005), also plays an important role in

attracting consumers to purchase Chanel products. As the patented ingredient (Bay

Cider PFA) is what differentiates Chanel from Dior, if the Bay Cider Botanical

becomes extinct, it would impede the rapid diffusion of UCL serum.

Table 1

Comparison of products specifications and benefits between Chanel Ultra

correction lift serum and Dior Capture Totale One Essential

Products

Area of comparisons Chanel Ultra correction lift

serum

Dior Capture Totale One

Essential

Ingredients It contains an

exclusive

PolyFractionated

Active ingredient

( PFA) originated

from Bay Cedar

trees.

It contains the Pearl

of Longoza

Centuline

Aminolumine

Detoxinyle

Benefits Immediate lifting

and shaping effect

Protects against

breakdown of

elastin

Anti- free radicals

Eliminates toxins

deep down for a

double boosting

effect

Reactivates cellular

regeneration, skin

intensively and

lastingly repairs

itself

Boosts and prolong

the effectiveness of

Page 23 of 39


skincare.

Application Twice a day ( day

and night) on face

and neck area

Twice a day ( day

and night) on face

and neck area

Price $210 $230

Quantity 30ml 50ml

Packaging

Source: Ultra Correction Collection & Dior Capture Totale One Essential Brochures

7.2 Price

Chanel incorporates both value-based pricing and premium pricing as their strategy.

7.2.1 Value-based pricing

Both Chanel and Dior’s pricing strategy are based on the value- based pricing

whereby the price of the products is set based on buyer’s perceptions of product value

rather than the seller’s cost (Kotler et al. 2009). As a well established brand , both

products are of high quality and highly valued by consumers. The UCL serum is an

example of this as it incorporates both the patented ingredient (PFA) as well as the

advanced technology used to develop the product. As these exclusive characteristics

of UCL serum are valued by consumers thus they are willing to pay a high price.

7.2.2 Premium pricingGenerally, both also adopted the premium pricing strategy based on setting high prices

to attract status- conscious consumers (Rao 2009). For example, consumers who

perceive Chanel as classy and prestigious would purchase their products as an indictor

of their status.

As reflected above, consumers’ beliefs are influenced by both Chanel and Dior’s

Page 24 of 39


pricing strategies. This cognitive attitude affects their buying decision (Refer to

Appendix D).

While price is an important evaluative criterion as an indicator of status, it does not

reflect their buying behaviour.

However, if both Chanel and Dior’s products were to undergo price reduction, it

might risk eroding their own brand equity. Generally, consumer usually perceives

product of higher price with better quality. Thus, if the price of Chanel and Dior‘s

products were reduced, the targeted segment would not be greatly affected as price is

not as important as compared to quality.

7.3 Promotion

Marketers for both Chanel and Dior have adopted ways to promote their products

based on the values of their target audience. As beauty products enhance appearance,

the quality and reliability are of utmost importance to consumers thus marketers have

focused on quality and reliability.

7.3.1 Sales Promotion

Giving out free samples of products is one of the sales promotion tools that Chanel

uses. Free samples are usually given out when new products are launched in the

market. This is to create awareness of these new products. By providing free samples,

it shows that Chanel is confident of its products and this is passed on to consumers as

assurance that Chanel products have quality.

7.3.2 Advertising

The primary purpose of advertisements is to create awareness and interest. Using

brochures as a promotional tool is an example of advertising. These brochures contain

valuable information on the product as well as the results after using the product. It

even provides reliable test results on tests conducted by dermatologist where the

success rates are stated after the minimum four week period in which the product will

take effect (Chanel Ultra Correction 2010). Quality of the product is also asserted as

shown from the results of the expected effect of the product by volunteers who have

Page 25 of 39


taken the test as well as the sustainability of the product each day. This helps

customers gauge their experiences against these results.

7.3.3 Personal Selling

Personal selling is done by the beauty consultants who promote the product. They are

equipped with product knowledge to aid in answering the queries of customers. This

has been facilitated by the product training they go through as well as their

experiences with the product. This implicit information can only be conveyed by the

beauty consultants thus based on quality, they are more informative as compared to

other promotional tools.

7.4 Place

Consumers can get their products from the cosmetic counters located in various malls.

Both Chanel and Dior cosmetic counters are usually located near each other in

shopping malls in the city and near to the Central Business District (CBD) which are

highly accessible by the target segment. As the majority are mainly working women,

their offices are usually located at Raffles Place, Orchard or Somerset (CBD). Thus,

by having counters at the various shopping malls near them, it not only increases their

exposure to the product but also aids in the convenience of going down to make their

purchases.

For example, Dior’s promotional make-over sessions are located in Takashimaya

(Offerstation 2010) while Chanel’s is at Raffles City. These two particular malls were

chosen as most of the luxurious brands can be found there; it suits their status and

helps in targeting the right audience. As mentioned, professional women who falls

under the target age range have greater spending power, thus they would frequent

these malls compared to malls such as Far East Plaza where most of the apparels and

products are catered to the younger generation with lower spending power.

Page 26 of 39


8. Evaluation

8.1. Advertisement

Chanel and Dior use the same advertising medium- magazines. Their advertisements

are usually on women’s magazines such as CLEO and Women’s Weekly. Dior’s

advertising campaign is more effective in targeting the segment based on how it is

more applicable to the target segment as compared to Chanel.

8.1.1 Colour

Both advertisements use mainly black and white which signifies sophistication and

prestige. This is congruent to the brand images that both brands want to portray, which

is associated with the ‘achievers’ category in the VALS lifestyle model that epitomizes

the target segment. While both are similar in color, Chanel’s advertisement is more

effective as black and white is their signature color therefore consumers can relate the

advertisement to Chanel.

8.1.2 Format

Looking at the format of the advertisement, Chanel’s advertisement reflects simplicity

and straightforwardness thus focusing the attention on the message whereas Dior’s

advertisement is more descriptive in nature (Refer to Appendix E). Effort is needed to

‘process the message’ which ‘decreases attention’ to the main focus of the

advertisement (Quester et al. 2007). Based on the high retail price and high purchase

involvement, extended decision making is usually necessary where consumers require

more information on skincare products. This complements Dior’s informative

advertisement where it provides the necessary information about the product. As the

target segment is classified as early majority, they usually seek additional information

about the product before purchase thus Dior’s advertisement is more suitable as

compared to Chanel.

8.2. Future Recommendations

8.2.1 Product Enhancement and Customer Satisfaction

Chanel can enhance the lift serum by increasing its functions and benefits through

Page 27 of 39


increasing the hydration factor. As people age, they are more susceptible to

dehydration therefore by incorporating this additional benefit, women may find this

product even more ideal. This form of product differentiation helps give Chanel an

edge over its competitors. In addition, it helps to justify Chanel’s high product pricing.

Aside from increasing its benefits, Chanel can provide a direct feedback channel

where its consumers can give suggestions and opinions on the product as well as on

ways to improve the lift serum. According to Gitman and McDaniel (2005), customer

satisfaction is measured by how the company meets or surpasses customer

expectations with its product or service. By allowing consumers to express their

opinions, Chanel can act on these feedbacks which will make customers feel valued

hence fostering good customer relations.

8.2.2 Improved Marketing Communications

To cater to the specific needs of customers, customers can provide their requests and

needs in which beauty consultants can get back to them during promotions and new

product launches for specific products. This not only fosters better customer

relationships but also enhances the brand as one that focuses both on product

development and customer welfare.

For more efficient communication, Chanel may attempt to text all their listed

consumers on latest product launch or any upcoming promotions or events.

8.2.3 Improved Purchase Experience

Chanel can contribute to enhancing one’s purchase experience by implementing a

loyalty program. With each purchase, members will accumulate points in which after

a certain number of points, they can redeem a product of their choice. However, to

ensure that only customers who are loyal benefit from this program, the accumulation

of points must be high.

8.2.4 Identifying potential new customers

Besides targeting women between the age of 30 – 55 years old, Chanel can consider

younger consumers who seem to be more concerned about premature ageing

(Euromonitor International 2009). Younger consumers today are considered

Page 28 of 39


innovators who are willing to buy new products thus the rate of the early majorities

(target segment) purchasing the product will increase.

9. Conclusion

The ever-changing environment causes the attitudes and behaviors of consumers to

change accordingly. Therefore, the constant study of consumer behavior is important

as it helps marketers understand the pre-purchase, actual purchase and post-purchase

patterns of consumers. Marketers also have to consider the situational, internal and

external influences that may affect consumers’ choice of purchase. With these

understandings, marketers are able to develop effective marketing strategies. Without

an effective marketing plan to reach out to its target segment, it will be difficult to

establish a product in the market as well as sustain long-term growth.

(Word count: 4781)

Page 29 of 39


Page 30 of 39


Appendix

Appendix A

Chanel Ultra Correction Lift

1. Ultra Correction Lift

Sculpting Firming Concentrate


Lifting Firming Day Fluid SPF 15


Lifting Firming Day Cream SPF 15


Ultra Firming Night Cream


Total Eye Lift

Source: Chanel (2010)

Page 31 of 39


Dior Capture Totale

1. Capture Totale One Essential

2. Capture Totale Multi- Perfection Creme

3. Capture Totale Multi- Perfection Eye Treatment

4. Capture Totale Multi-Perfection Concentrated Serum

5. Capture Totale Haute Nutrition Rich Creme

6. Capture Totale High Definition Serum Foundation 15 SPF

7. Capture Totale Haute Nutrition Multi-Perfection Nurturing Oil Treatment

8. Capture Totale Haute Nutrition Refirming Body Concentrate

9. Capture Totale Hand Creme Multi-Perfection

10. Capture Totale Multi- Perfection Nighttime Soft Peel

11. Capture Totale Multi- Perfection Intensive Night Restor

12. Capture Totale Multi - Perfection Refining Base

13. Capture Totale Multi-Perfection Eyezone Fiber Patch

14. Capture Totale Multi- Perfection Concentrated Lotion

15. Capture Totale Haute Nutrition Multi-Perfection Rich Lotion

16. Capture Totale Instant Rescue Eye Treatment

17. Capture Totale High Definition Loose Powder

Page 32 of 39

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/untitled-4.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capt-totale-flash-defatiguant-regard-15-ml-tube-6.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-hte-nutri-lot-riche.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-multi-perfection-concent.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-multi-perfection-eyezone-2.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/multi-perfection-refining-bas-4.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-multi-perfection-intensi.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-multi-perfection-nightti-3.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-hte-nutri-cr-mains.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-hte-nutri-ctr-corps.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-hte-nutri-huile-soin.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-high-definition-serum-fo-030.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-hte-nutri-cr-riche.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-multi-perfection-concentr-6.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-multi-perfection-eye-tre-2.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-multi-perfection-creme-2.html

http://beauty.dior.com/hk/en/woman/woman-skincare/woman-skincare-anti-aging/woman-skincare-anti-aging-global-skincare/capture-totale-one-essential-30-ml-pump.html


Source: Dior (2010)

Appendix B

Front view

Bottom view

Page 33 of 39


Appendix C

Marketing Considerations for Consumer Products

Marketing

Considerations

Type of Consumer Product

Convenience Shopping Specialty unsought

Customer

buying

behaviour

Frequent

purchase , little

planning, little

comparison or

shopping

effort, low

customer

involvement

Less frequent

purchase,

much planning

and shopping

effort,

comparison of

brands on

price, quality,

style

Strong brand

preference and

loyalty, special

purchase

effort, little

comparison of

brands, low

price

sensitivity

Little product

awareness,

knowledge( or,

if aware, little

or even

negative

interest)

Price Low price Higher price High price Varies

Distribution Widespread

distribution,

convenient

location

Selective

distribution in

fewer outlets

Exclusive

distribution in

only one or a

few outlets per

market area

Varies

Promotion Mass

promotion by

the producer

Advertising

and personal

selling by both

the producer

and resellers

More carefully

targeted

promotion by

both producer

and resellers

Aggressive

advertising and

personal

selling by

producer and

sellers

Examples Toothpaste,

magazines,

laundry

detergent

Major

appliances,

televisions,

furniture,

Luxury goods,

such as Rolex

watches or fine

crystal

Life insurance,

red cross blood

donation

Page 34 of 39


clothing

Source: (Kolter et al. 2009)

Appendix D

Tricomponent attitude model

Source: (Quester et al. 2007)

Page 35 of 39


Appendix E

Advertisment of Chanel

Source: CLEO October 2009

Advertisement of Dior

Page 36 of 39


Source: Women’s Weekly January 2010

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