2 question of Product management

This is my pre-exam question, I will send you some lectures slides of mine, they might help.

Question 1
Background”Male Cosmetics on the Rise
The usage of male cosmetics has grown considerably over the last two decades. 89% of men polled in the United States and Europe believed good grooming was important for their professional success, and 70% of them shopped for their own skincare products, as opposed to only 48% in 2008. Cosmetics companies have even begun to penetrate the over-40 market, which is not as saturated as the women’s and young men’s markets. L Oreal has particularly focused on expanding its men s skincare segment in Asia.

There are two key reasons why the male demographic is receiving so much attention from cosmetics companies: first and foremost, it is still not as saturated as the female market. More importantly, men have proven to be more loyal to specific products and brands than women are, who are more likely to switch to whatever the next trend is. Therefore cosmetics companies are trying to appeal to the male market in order to secure long-term loyal customers. With some exceptions (Maybelline, Lancôme, Shu Uemura and Kérastase) L’Oreal’s brands cater to both men and women. L’Oreal also spans different income levels, from affordable lines (Matrix) to luxury products (Yves Saint Laurent).

Source:
http://www.wikinvest.com/stock/L%27oreal_%28LRLCY%29#Male_Cosmetics_on_the_Rise

The in-house magazine for the Fitness First chain of health clubs reported the following in its May/June 2011 edition, p. 20. When it comes to guys and grooming products, the average Aussie guy is spending $20.20 per month, valuing the Australian men s grooming market at $1.99bn annually. This is forecast to grow”currently younger Aussie men (25 to 34 years) spend $25.60 per month on grooming products. But despite this, Australia still has a long way to go before the metrosexual man becomes truly mainstream. Currently under half of Aussie guys (44%) are moisturising, just 17% exfoliate and under one in ten use any kind of facial treatment.

The Scenario
L Oreal employs the services of an external sales promotions firm to complement internal marketing expertise. You are the L Oreal Account Manager at the New Millennium Sales
Promotions Team and L Oreal has just handed you your toughest assignment. It released a range of male cosmetics (called PEAK Performers) six months ago targeted at 18-24 year olds but the sales have been disappointing to say the least. Despite a $1m national TV launch campaign which was followed by intensive radio advertising ($0.5m) on highly targeted music and sport stations, sales are only 25% of budget”sales reached $125,000 for the six months.
Forecasts sales were as follows.
Year 1 $1m
Year 2 $3m
Year 3 $6m
Year 4 $10m
The product range consists of exfoliation, cleansing and moisturising products. The products (in
100g packs) can be bought individually or in a combined package and the prices were:
Exfoliation $25
Cleanser $22
Moisturiser $18
All three $58
2
The bulk of the $125,000 sales were for the moisturiser.
The TV campaign focused on skin protection (by regularly using all three products) featuring local male models that appeared to fit the target market. The product range was available at the major department stores (Myer and David Jones) and at major pharmacy chains.
L Oreal has given you the following information:
1. there will be no more TV or radio support for the next 6 months;
2. the objective is to gain sales of $0.5m through the sales promotions campaigns you
develop;
3. L Oreal s marketing manager has allocated $250,000 for you to work with; and
4. your ability to retain this prestigious account will depend heavily upon turning around the
sales situation.
Required
Devise an innovative marketing promotions campaign, incorporating (but not limited to) elements such as push and pull strategies, for L Oreal for the coming six months.
25 marks

Question 2
A major contributor to success in customer relationship management (CRM) is having a solid understanding of the economics of customer loyalty”generally captured by the concept known as customer lifetime value (CLV).

a. Define CLV.
1 mark

b. Describe fully the six aspects that are taken into consideration when explaining why loyal customers are considered to be more profitable.
12 marks

c. Provide a diagram/chart that includes these six aspects to help illustrate your understanding of the economics of loyalty.
3 marks

d. Relationship marketing programmes specifically designed to retain customers include customer satisfaction, customer service and loyalty programmes. Describe and discuss the problems associated with loyalty programmes.
9 marks
[1 + 12 + 3 + 9 = 25 marks]

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