Analysis of Competitiveness of Estée Lauder

Abstract：Estée Lauder， as a worldly well-known company， enjoys a great popularity in more than 140 countries in the world with various famous brands and multifunctional products. This report is divided into three parts. In the first part， Five forces is used to analyze the competitiveness in cosmetics industry followed by the analysis of current competitive strategies adopted by Estée Lauder with the framework of value chain. In the final part， by using Resource-based view the sustainability of the competitive strategy of Estée Lauder will be evaluated.

Key words ： Estée Lauder competitiveness cosmetics industry

It can be seen that the USA and Japan are leading the global makeup and skincare market，meanwhile，China， Germany， France， the UK etc are developing in a fairly fast speed. In terms of companies within the industry it seems that cosmetic industry has been possessed by a few companies such as LOreal， P&G;， Estée Lauder， Unilever and Shiseido and the like. During 2004-2012， the world sales of makeup and skincare increase round 24% each year. However， within the context of deteriorating economic conditions the increase seems to slow down. Industry concentration reflects the market structure in an industry. The top ten global cosmetic companies make up of more than 50% of the market share and keep stable. This means the market structure is monopolistic competition， which reflects a significant scale economic character. In total， cosmetic industry has characters of products diversity and high innovation ability， the competitive structure of cosmetic industry of some leading companies and lots of SMEs has been established， in mid-ranged and high-end market of cosmetic industry， companies get monopoly position by differencing products and service； while in low-end market the competitors focus on expand production to earn profit since they may not have capital and ability in innovation and marketing. Therefore， the core competitive advantages come from the differentiation strategy of positioning， quality， service， technology and brand.

Estée Lauder focuses on adding value in marketing and sales activities， especially brand management. Creating strong brand resources and value could increase customer value significantly. Kotler and Keller pointed the competitive advantages of a brand were brand image， symbol， purchasing experience and feeling rather than price. Estée Lauder adopts multi-brand strategy in brand management， which is an important way to implement the product differentiation in segment market and expand new market. Estée Lauder has developed the social and digital media like Twitter， Facebook to enlarge its e-business market and make better communication with the consumers in order to increase its sales.

To add value for customers in technology development activities， Estée Lauder has been focusing on ‘building and consolidating its strength in research and development （R&D;） in last few years（2011）. The large investment in R&D; makes Estée Lauder a leading position of technology. In general， one third of the annual sales came from the products exploited last 3 years. The areas of global R&D; consist of biophysics， product exploitation， customer assessment， regulatory affairs， and process development and so on. Estée Lauder intends to identify and create more products that it can customize for its international beauty clientele， and then spread them out around the globe. The company established regional Innovation Centers in Asia （e.g. Shanghai， China） and Europe （e.g. Oevel， Belgium） to complement the team in North America. In addition， since products often have similar function with different quality in cosmetics industry， Estée Lauder also develops existing technology and process to improve products quality. Through such strong R&D; capabilities， Estée Lauder was able to develop popular products） and expand its competitive advantages of differentiation in product function and types successfully.

According to the analysis written above， it can be concluded Estée Lauder use focus differentiation strategy to compete with others in order to develop its competitive advantages which are brand management and innovation capability. Based on the evaluation of this strategy， it shows that for Estée Lauder focus differentiation strategy is sustainable.

References：

Company Spolight ：The Estée Lauder，Inc.（2011）， Marketwatch： Personal Care， Journal of Business， 10（5）， pp. 15-21.

Estée Lauder Companies Annual Report （2016）， New York： Estée Lauder Companies.

Estée Lauder Companies （2016），Investor fact sheet. New York： Estée Lauder Companies.

Estée Lauder Companies Annual Report （2017），S&P; Capital IQ. Dollar amounts in millions. FY=Fiscal year. TTM=trailing 12 months， New York： Estée Lauder Companies.

Grant， R.M. （1991）， “The Resource-Based Theory of Competitive Advantage： Implications for Strategy Formulation”， Journal of California Management Review，33（3）， pp.114–135.

Kotler， P. and Keller， K. （2008）， Marketing Management. 13th edn. New Jersey： Prentice Hall.

'Make-Up Industry Profile： Europe' 2011， Make-Up Industry Profile： Europe， pp. 1-40， Business Source Complete， EBSCOhost， viewed 11 March 2012.

作者簡介：楊琇嵐（1988—），女，漢族，籍貫：四川省涼山州西昌市，單位：西昌學院經(jīng)濟管理學院，研究方向：管理學。