Is it possible for Aesop to enter into Chinese Market?

Aesop is an Australian company established in Melbourne in 1987 who manufactures and sells organic skincare products. The company is committed to using both plant-based and laboratory-made ingredients of the highest quality and proven efficacy – particularly those with the greatest anti-oxidant properties (Aesop, 2016).

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Chinese Skincare Industry Overview

In the last decade, China was experiencing constant rapid growth in terms of its economy and index of living. Chinese women are receiving higher education, getting equal employment opportunities, and gaining increasing financial independence. They spend more money on skincare products (Mintel Group limited, 2012). In addition, the Mintel’s Global New Products Database points out that the skincare products revenue is increasing from 52 % in 2008 to 73 % in 2011. The company also forecasts that the skincare products revenue will continue to grow and reach RMB 104 billion in 2017 (Mintel’s Global New Products Database, 2012). As a result, there are reasons to believe China is an attractive market for new skin care manufacturers to participate in and Aesop has full of opportunities to access this market.

 

STP and SWOT Analysis

In order to develop a successful marketing plan for Aesop to enter into Chinese market, it is important to construct both STP and SWOT analysis. Those analyses are the indispensable elements for marketing planning.

Segmentation

Marketing segment is a group of customers who share a similar set of needs and wants (Kotler & Keller, 2015). In general, segmentation can base on elements in terms of 4Ws: who the customers are, what they buy, where they buy and why they buy (Reed, 2006). We will mainly focus on brief level and use the fundamental segmenting methods: geographical segmentation, demographical segmentation, physiographical segmentation and behavioural segmentation (Kotler & Keller, 2015).

 

Geographic Segmentation

According to the difference of the economic development level, Chinese market can be separated into three tiers. The first-tier cities, include Beijing, Shanghai, Guangzhou, Shenzhen and Tianjin, which develop fastest and enjoy the most modern and advanced lifestyle. The second-tier cities led by Hangzhou and Nanjing where people are living with a relatively comfortable, slow-pace style. The third tier cities are the least developing cities mainly located in the western part.

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                                   Figure 2 – First-tier cities in China

Demographic Segmentation

Based on the age, Chinese female can be separated into different groups. The first group is the women aged from 18 to 25. Most of them are students or new recruits with limited income. The second group are aged from 26 to 35. They have fixed jobs and stable salary. The third part of women are aged from 36 to 40. Most of them get married and have a family to take care of. The last level is female in 46 to 55 year-old who are preparing to or have already retired.

 

Psychographic Segmentation

In psychographic segmentation, buyers are divided into different groups on the basis of psychological/personality traits, lifestyle, or value (Kotler & Keller, 2015). The new Chinese generation becomes more independent, enthusiastic and impulsive that seeks for change and excitement. In contrast, the old generation are more conservative and stereotyped.

 

Behavioural segmentation

Behavioral segmentation divides buyers into groups on the basis of their knowledge of, attitude toward, or response to a product (Kotler & Keller, 2015). Some buyers are enthusiasts who buy things without much thought. But some are savvy shoppers. They only purchase things that they really want and need.

 

Targeting

Aesop’s target customers will mainly be those who are aged from 26 to 35 females in first tier cities with fixed salary that can afford relatively high price cosmetic products. These customers are passionate in skin caring with interests in green organic products.

 Positioning

It is wise for Aesop to position itself as a high-end product with a higher price and differentiate itself from others by its brilliant image. Aesop can build itself as natural, green, organic, professional and unique. The perceptual map is constructed and presented in Figure 2.

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                                    Figure 3 – Positioning of Aesop

SWOT analysis

Strengths

  • High quality products with natural ingredients are harmless to health.
  • Unique product packaging is easy to give people deep impression and differentiated from other brands’ products.

 

Weaknesses

  • Direct competitors like Jurlique and L’Occitane have already gained a large portion of market share in the natural skin care market.
  • Price is less competitive compared with other competitors.

 

Opportunity

  • Organic products are emphasized in China in recent years and Chinese customers tend to buy natural products because of the harmless property.
  • Chinese consumers are increasingly willing to spend more on environmentally friendly products and middle class consumers are willing to pay more for higher-quality goods and expect to try new, trend products.

 

Threats

  • There are a lot of competitors who have already obtained high brand awareness and reputation in China.
  • More and more pretenders try to produce similar products and pronounce the same brand concept as Aesop.

 

After conducting marketing research and analysis, it gives us a deeper understanding of both market and product. We believe that it is definitely possible for Aesop to enter into Chinese market. The analysis also enables us to set a clearer objective and develop a more feasible marketing plan. We can then follow the position we set think about the tactical plans including product strategy, pricing strategy, distribution strategy and promotion strategy to target the customer.

CHANGCHANGKANG   ID:213589093

Reference List:

1. Kotler, P., Keller, K.L., Manceau, D. and Hémonnet-Goujot, A., 2015.Marketing management (Vol. 14). Englewood Cliffs, NJ: Prentice Hall.

2. Mintel’s Global New Products Database., 2012. Natural Skincare Products in High Demand in China

Retrieved from:

http://spaandclinic.com.au/2013/04/natural-skincare-products-in-high-demand-in-china/

3. Mintel Group limited., 2012. Skincare – China – September 2012 (Research Discussion Paper RDP 2012–09)

Retrieved from:

http://store.mintel.com/media/samplereports/sample_consumer_report_liqueurs_uk.pdf

4. Reed, P.W., 2006, Strategic marketing planning, 2nd ed, Thomson Nelson, South Melbourne, Vic

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