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Table of Contents

Table of Contents.....................................................................................................................1
Executive Summary..................................................................................................................3
1. Market ..................................................................................................................................4
1.1 Size of market..................................................................................................................4
1.2 Market Share ..................................................................................................................6
1.3 Market Position................................................................................................................8
1.4 Depth and breadth of product range................................................................................8
1.5 Positioning of the product................................................................................................9
1.6 Product life cycle stage....................................................................................................9
2. Competitors...........................................................................................................................9
2.1 Indirect Competitors........................................................................................................9
2.2 Direct Competitors.........................................................................................................10
2.3 Size of Competitors.......................................................................................................10
2.4 Positioning.....................................................................................................................11
3. Identification of Target Market(s) ........................................................................................11
3.1 Demographics Segmentation.........................................................................................11
3.1.1 Gender/ Age............................................................................................................11
3.1.2 Income / Occupation...............................................................................................12
3.2 Psychographic Segmentation........................................................................................12
3.2.1 Social class.............................................................................................................12
3.2.2 Lifestyle...................................................................................................................12
3.2.3 Personality..............................................................................................................12
3.3 Behavioural Segmentation............................................................................................13
3.3.1 Benefit Sought........................................................................................................13
3.3.2 Usage rate..............................................................................................................13
3.3.3 Loyalty status..........................................................................................................13
3.4 Potential Market segment..............................................................................................13
4. External Influences..............................................................................................................14
4.1 Culture and Subculture..................................................................................................14
4.1.1 Values.....................................................................................................................14
The above trends indicate that people desire to project a more confident and favorable
image, thus investing more money in beauty and skincare products...............................15
4.1.2 Adopter Category ...................................................................................................15
4.2 Demographics...............................................................................................................15
4.3 Group Influence.............................................................................................................15
5. Internal Influences...............................................................................................................16
5.1 Needs and Motives........................................................................................................16
5.2 Perception ....................................................................................................................16
5.2.1 Exposure.................................................................................................................17
5.2.2 Attention/ Interpretation ..........................................................................................18
5.3 Learning........................................................................................................................18
5.4 Lifestyle.........................................................................................................................19
6. Consumer Decision Making Processes ..............................................................................19
6.1 Type and Amount of Information and Level of Decision-Making....................................19
6.2 Evaluative Criteria.........................................................................................................20
6.3 Shopping for Product.....................................................................................................20
6.4 Post purchase dissonance............................................................................................20
6.5 Disposal of Serum.........................................................................................................21
6.6 Loyalty...........................................................................................................................21
7. Marketing Strategy..............................................................................................................21
7.1 Product..............................................................................................................................21
7.2 Price .............................................................................................................................24
7.2.1 Value-based pricing.................................................................................................24
7.2.2 Premium pricing......................................................................................................24

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7.3 Promotion .....................................................................................................................25


7.3.1 Sales Promotion......................................................................................................25
7.3.2 Advertising..............................................................................................................25
7.3.3 Personal Selling......................................................................................................26
7.4 Place.............................................................................................................................26
8. Evaluation...........................................................................................................................26
8.1. Advertisement..................................................................................................................26
8.1.1 Colour.....................................................................................................................27
8.1.2 Format.....................................................................................................................27
8.2. Future Recommendations............................................................................................27
8.2.1 Product Enhancement and Customer Satisfaction..................................................27
8.2.2 Improved Marketing Communications.....................................................................28
8.2.3 Improved Purchase Experience..............................................................................28
8.2.4 Identifying potential new customers........................................................................28
9. Conclusion..........................................................................................................................29
Appendix.................................................................................................................................30
Appendix A..............................................................................................................................30
Chanel Ultra Correction Lift.....................................................................................................30
1. Capture Totale One Essential .........................................................................................31
2. Capture Totale Multi- Perfection Creme ..........................................................................31
3. Capture Totale Multi- Perfection Eye Treatment .............................................................31
4. Capture Totale Multi-Perfection Concentrated Serum ....................................................31
5. Capture Totale Haute Nutrition Rich Creme ....................................................................31
6. Capture Totale High Definition Serum Foundation 15 SPF .............................................31
7. Capture Totale Haute Nutrition Multi-Perfection Nurturing Oil Treatment .......................31
8. Capture Totale Haute Nutrition Refirming Body Concentrate ..........................................31
9. Capture Totale Hand Creme Multi-Perfection .................................................................31
10. Capture Totale Multi- Perfection Nighttime Soft Peel ....................................................31
11. Capture Totale Multi- Perfection Intensive Night Restor ................................................31
12. Capture Totale Multi - Perfection Refining Base ...........................................................31
13. Capture Totale Multi-Perfection Eyezone Fiber Patch ..................................................31
14. Capture Totale Multi- Perfection Concentrated Lotion ..................................................31
15. Capture Totale Haute Nutrition Multi-Perfection Rich Lotion .........................................31
16. Capture Totale Instant Rescue Eye Treatment .............................................................31
17. Capture Totale High Definition Loose Powder ..............................................................31
References..............................................................................................................................36

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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

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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
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

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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
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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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
Chanel

Christian Dior
Estee Lauder

Cleu de pau Shiseido


Laneige Lancome
Weak brand awareness Strong brand awareness

Loreal

Bio essence

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)
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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.

Strong brand image

Chanel Ultra correction lift serum

Dior Capture Totale One Essential

Low price High price

Weak brand
image

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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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 appearance concerns impact consumers’


body shape anxiety is at the core of emotional and physical wellbeing so
‘appearance based wellbeing’ (or lack of looking good has arguably never been
it) more important

A more holistic pursuit of beauty health, wellbeing and beauty are


through more diverse appearance becoming inextricably linked in
management tactics is occurring among consumers’ minds
Asian beauty shoppers.

Adopting structured and sustained consumers globally attach considerable


beauty regimes importance on their oral, skin and hair
health respectively which drives spend
and the adopting of beauty regimes

The polarization of beauty manufacturers are retailers must adopt


ideals/attitudes reflects the conflict diverse product portfolios on order to
between natural beauty and more meet the polarized beauty ideals among
‘manufactured appearances’ 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

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.

5.2.1 Exposure
Chanel’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
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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

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

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

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

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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.

Strong brand image

Chanel Ultra correction lift serum

Dior Capture Totale One Essential

Low price High price

Weak brand
image

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
effectiveness of the products unless it is personally tested by the individual. Chanel’s
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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 Dior Capture Totale One
serum Essential
Ingredients • It contains an • It contains the Pearl
exclusive of Longoza
PolyFractionated • Centuline
Active ingredient • Aminolumine
( PFA) originated • Detoxinyle
from Bay Cedar
trees.
Benefits • Immediate lifting • Eliminates toxins
and shaping effect deep down for a
• Protects against double boosting
breakdown of effect
elastin • Reactivates cellular
• Anti- free radicals regeneration, skin
intensively and
lastingly repairs
itself
• Boosts and prolong
the effectiveness of
skincare.
Application • Twice a day ( day • Twice a day ( day
and night) on face and night) on face

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and neck area 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 pricing


Generally, 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
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

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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
taken the test as well as the sustainability of the product each day. This helps
customers gauge their experiences against these results.

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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.

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
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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
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
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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
innovators who are willing to buy new products thus the rate of the early majorities
(target segment) purchasing the product will increase.

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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)

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Appendix

Appendix A

Chanel Ultra Correction Lift

1. Ultra Correction Lift


Sculpting Firming Concentrate

2. Ultra Correction Lift


Lifting Firming Day Fluid SPF 15

3. Ultra Correction Lift


Lifting Firming Day Cream SPF 15

4. Ultra Correction Lift


Ultra Firming Night Cream

5. Ultra Correction Lift


Total Eye Lift

Source: Chanel (2010)

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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

Source: Dior (2010)

Appendix B

Front view

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Bottom view

Appendix C

Marketing Considerations for Consumer Products

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Marketing Type of Consumer Product


Convenience Shopping Specialty unsought
Considerations
Customer Frequent Less frequent Strong brand Little product
buying purchase , little purchase, preference and awareness,
behaviour planning, little much planning loyalty, special knowledge( or,
comparison or and shopping purchase if aware, little
shopping effort, effort, little or even
effort, low comparison of comparison of negative
customer brands on brands, low interest)
involvement price, quality, price
style sensitivity
Price Low price Higher price High price Varies
Distribution Widespread Selective Exclusive Varies
distribution, distribution in distribution in
convenient fewer outlets only one or a
location few outlets per
market area
Promotion Mass Advertising More carefully Aggressive
promotion by and personal targeted advertising and
the producer selling by both promotion by personal
the producer both producer selling by
and resellers and resellers producer and
sellers
Examples Toothpaste, Major Luxury goods, Life insurance,
magazines, appliances, such as Rolex red cross blood
laundry televisions, watches or fine donation
detergent furniture, crystal
clothing

Source: (Kolter et al. 2009)


Appendix D

Tricomponent attitude model

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Source: (Quester et al. 2007)

Appendix E

Advertisment of Chanel

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Source: CLEO October 2009

Advertisement of Dior

Source: Women’s Weekly January 2010

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