Marketing Strategy for MAC

MARKETING STRATEGY FOR M.A.C COSMETICS

Marketing Strategy for M.A.C Cosmetics Chelsea Elliott Florida State University 2013

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Table of contents

Product and Competitive Environment………………………………………………….3 Marketing Objectives……………………………………………………………………5 Target Segment and Justification………………………………………………………..6 Media Resources and Strategy…………………………………………………………..7 Positioning and Message Strategy……………………………………………………....10 Test of Message and Media Approaches………………………………………………..12 Guidelines for Implementation……………………………………………………….....13 Evaluation of Effectiveness……………………………………………………………..14 Conclusion………………………………………………………………………………15 Works Cited……………………………………………………………………………..16

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Product and Competitive Environment Makeup Art Cosmetics (also known as M.A.C) is a widely known make-up company that was created in Canada in 1984. Since then, M.A.C has expanded its company reach to more than 75 countries and territories with little to no advertising, relying on endorsements and word-of-mouth. M.A.C, which was bought out by The EstĂŠe Lauder Companies in 1998, has faced many challenges in its climb to the top. Not only do they appeal to all ages and races with their wide range of colors to match every skin tone, they also received controversy with adhering to all sexes. This opened many doors for the transgender community and helped broaden their supporting market, but casted a shadow over the markets that are becoming increasingly important, such as the growing Hispanic market in the United States. According to the 2011 US Census Bureau, Hispanics constitute 16.7 percent of the nation's total population, making Hispanics the nation's largest ethnic or race minority. The increase in this market has caught the eye of marketers, having Hispanic advertising surpass all other sectors of advertising, and making it a more than $5 billion industry (AHAA, 2013).

Both Hispanic men and women value beauty, and according to Hispanic Retail 360, many Hispanics dress to the nines. This is especially important to the millennial age group, (who overemphasize in apparel, fragrance, and cosmetics) making them feel the need to get ahead and look good (Garbato, 2011). Hispanic women are an even rapid growing part of the US population, creating more and more buzz for the $32 billion US beauty industry. Cosmetics companies such as Suzi Q Cosmetics, Maybelline (the number 1 selling mass market brand in the US), and Smashbox, have noted the importance of this market and have since then conducted research studies and brand

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positioning to shine light on their products to Hispanic consumers. M.A.C Cosmetics however, has acknowledged their lack of advertising in their approach to the top. This lag will set them behind in their opportunity to successfully reach to the growing female market.

The cosmetic companies that are thriving in the Hispanic market today are those that are willingly spending money on Spanish-language media. According to the latest report from Kantar Media, advertising dollars to Spanish-language television increased 17.8 percent during the second quarter of 2012 (AHAA, 2013). Companies like Maybelline, and Suzi Q (a company created specifically with Hispanic women in mind) have made their product packaging bilingual, advertised with relevant models, and incorporated Latino endorsements. “L'Oreal, which owns Maybelline, has signed multimillion-dollar contracts with Spanish actress Penelope Cruz and Mexican-American actress Eva Longoria to represent their Hispanic beauty ideal� (Medina, 2007). Their quick reaction to not only the growing Hispanic market, but also the increasing US Hispanic women, has given them more revenue and recognition among Hispanic women, setting the bar high for its competitors.

It is essential for a company as big and successful as M.A.C to place a greater importance on the Hispanic market. M.A.C needs to focus on the Hispanic market by gaining popular Latino celebrity endorsements, creating a collections specifically geared towards Hispanic women and their skin tone, and spending ad money on Spanishlanguage media. I believe, with proper research and brand positioning, M.A.C Cosmetics has the capability to strive in the Hispanic market and further their global successes.

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Marketing Objectives While researching the company, it became evident that M.A.C does not believe in advertising themselves. The company relies on unconventional marketing, such as giving away free products to make up-artists, photographers, and models, relying heavily on word-of-mouth. M.A.C is also known for having celebrity endorsements for their Viva Glam campaign that supports the M.A.C AIDS Fund. Celebrities such as Lady Gaga, Cyndi Lauper, Elton John and Nicki Minaj (to name a few) create their own color lipsticks and lip gloss from which the sale of every cent goes towards M.A.C’s personal AIDS fund. So far, this has been a successful way for both celebrities and M.A.C to get their name out there in the world of both pop culture and humanitarianism.

M.A.C also has a handful of collections that are continuously changing, bringing in the attention of different ages, sexes and ethnicities. For example, right now they have an “Archie’s Girls” collection, focusing on the colors and vibrancy between the constant rivalry between Betty and Veronica, the “frenemies” from 1940’s comic book. This attracted consumers such as my 52 year old mother, who, having vigorously read the comic book series in her childhood, bought eye pencils and eye shadow pallets after seeing the poster for the collection in a department store, simply because she could relate.

These seasonal collections have been an effective alternative to conventional advertising.

M.A.C’s “Archie’s Girls” Collection eye shadow pallet

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According to M.A.C’s parent company, Estée Lauder, 2012 annual report, “…we [also] have the flexibility to quickly adapt to the fast-changing dynamics of the global marketplace, giving us a strong competitive edge.” However, M.A.C still lacks in their leap into the Hispanic Market. They don’t seem to have any clear objective for advertising to this growing market, and since their general advertising is already vague, adhering to the specific Hispanic market easily slips through the cracks. Since their collections are not specific to regions (they are worldwide) M.A.C needs to amp up their Hispanic flare and get the ball rolling on creating collections that gain the attention of US Hispanic women.

Target Segment and Justification As stated previously, Hispanic women are a rapidly growing bracket in the US population. That being said, the suggested target market for this marketing strategy is the Hispanic female millennials (18 to 29-year-olds). Hispanic millennials are the first generation that is predominantly US born, and they very much embrace their Hispanic culture. Marketers need to come up with creative ways to capture the attention of the increasing demographic because 65 percent of US Hispanics are millennials, and over the next few years Hispanics will account for more than 80 percent of the growth in the overall population of 18 to 29-year olds (Villaneda, 2012).

The target market for most US make-up companies are women of all ages and races, however, according to a research conducted by Mintel, Hispanic women feel underrepresented in the beauty and personal care aisle (PRNewswire, 2012). It’s a known fact that all women want to feel beautiful, so it is an important job as a cosmetics

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company to take advantage of the opportunities that can showcase and highlight the different ways to help emphasize this beauty. For most young women, wearing make-up is essential and most won’t leave the house without at least foundation on, making cosmetics a daily part of any women’s life.

According to HispanicBusiness.com, “In recent market studies by Maybelline New York, the company found that the average Hispanic woman buys more cosmetics than her general market counterpart” (Medina, 2007). This is because Hispanic women have placed a greater emphasis on the importance of how they look. These women believe that the way you look outside reflects your inner beauty, and make-up is essential in instilling confidence. These young women are daughters that were influenced by their Hispanic mothers to take care of their skin and appearance, and also note that they, as mothers, will influence their daughters to value their appearance as well (Mercedes, 2009).

Importance of Beauty to Latina Consumers LATINAS Outer beauty is a reflection 61% of inner beauty Importance of wearing 69% make-up and looking good Wear multiple products a 81% day Importance of looking 40% better than friends when leaving house SOURCE: Univision Communications Inc.

NON-LATINAS 42% 46% 66% 23%

Media Resources and Strategy As the growing number of Hispanic millennials increase, so does modern technology. Over 60 percent of Hispanic millennials are online, and these tech-savvy

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individuals stay up-to-date with the latest fashions and trends by relying heavily on smart phones, television, and social media. The need to stay current is part of being young for any ethnicity, but Hispanics tend to over use more than the mainstream market. This provides various ample opportunities for marketers to attract these consumers. In order for M.A.C to get ahead, they need to invest time and money on relevant media outlets that reach to this demographic.

For example, research shows that Hispanics watch TV about two more hours per month than other groups, and millennial Hispanics watch both Spanish and English networks. “We refer to them as ‘fusionistas.’ They see themselves as 100% Latino and 100% American. They're perfectly comfortable navigating both worlds. They have a sense of pride from back home even if they're born in the US” (Wentz, 2011). Having these young adults watch both Spanish and English networks virtually doubles the opportunity companies are given to get their product heard. A good way for M.A.C to make their product relevant with this age group is by creating TV ads that catch the eye of these young, impressionable “fusionistas”. They can effectively do this by using bilingual Hispanic actors to do the exact same commercial, spoken in both Spanish and English, to be played on both networks. This redundancy will help with awareness and also gain the trust of the influential market.

The Internet is another way to gain the attention of Hispanic millennials.

“Apparel, cosmetics, gaming, and pop culture are the online and mobile topics that draw the most interest across all online and mobile formats for these consumers” (Garbato, 2011). Since this generation is centered around what they deem as “cool”, they use the Internet to investigate up-and-coming trends. Many Hispanic millennials go online to

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research products, prices, and related trends prior to buying anything. M.A.C is already ahead in this department because their website offers the option to view the content in both Spanish and English. That includes prices, store locations, and an overview of their current marketing collection and Viva Glam spokesperson.

However, in order to be effective in the Hispanic community, their collection and Viva Glam endorsement needs to appeal to Hispanic women. For example, just as the “Archie Girls” collection caught the eye of my mother, it would be effective if M.A.C created a collection that catches the attention of Hispanic women. They could call a collection “Mas Bellas” and have make-up pallets that are specific to the distinguished skin tone of Latinas. Creating colors that compliment the different skin tones of Hispanic women will also gain the attention of consumers who have Latin-like features but might not be Hispanic themselves. This will attract different consumers in more than one market and allow for more revenue. M.A.C should also get a popular Latino celebrity to endorse their wildly popular Viva Glam campaign. A great spokesperson would be the beautiful Sofia Vargara because her Hispanic fans have a more personal relationship.

Since the Columbian-born actress is also popular with the general population, this endorsement would get the attention of Anglo consumers as well.

Magazines are another way young women keep in touch with basic trends, and they are also popular among Hispanic millennials. Just last month Glamour magazine launched Glam Belleza Latina, a new beauty magazine aimed at Hispanic women. The magazine covers topics such as skin care and beauty tricks, and since Hispanic millennial consumers are often navigating both English and Spanish-language media, the magazine is written predominately in English, woven with some Spanish to appeal to these young

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Latinas. M.A.C would effectively get their name out there in the Hispanic community by creating ads to use in print media, such as Glam Belleza Latina. They can use Latina models to showcase their make-up, or even advertise “Mas Bellas�.

Positioning and Message Strategy In order for M.A.C to successfully appeal to the Hispanic market, the company needs to go above and beyond in understanding the likes, dislikes, and culture of this demographic. Not just their Hispanic culture but also the American and technological culture that inhabits all young people. The company needs to figure out a way to position their product in such a way that gains the attention of Hispanic females without neglecting their other consumers in different races and age groups. Basically, position the product by gaining the attention of the general popular market (i.e. women) without obviously zeroing in on one target market (Hispanic women).

In order to do this M.A.C needs to have a Viva Glam celebrity endorsement that is favorable with the general public, as stated earlier. With that, they need to evaluate the commonalities all women have. Already, the company prides itself on its broad selection of foundations that are applicable to all ethnicities and skin tones. This is a great startthey are able to gain the trust of all ethnicities and have the availability that competitor companies might not have. This already gives them the edge they need to gain the attention of the demanding market. Aside from that, M.A.C needs to go beyond just creating colors that compliment Hispanic features, and investigate the type of products the market is already using. This can be done by various interviews and focus groups. I asked 10 interviewees what their preferred makeup brand was when they are getting ready for an important event or a night on the town.

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Interviews: Favorite Makeup Brand (For going-out purposes) 1. Denise Malavé, 21, Venezuelan- Bobbi Brown 2. Barbi Sánchez Galeno, 18, Chilean- Smashbox 3. Cecilia Castañeda, 22, Chilean- M.A.C 4. Monica Gonzalez , 28, Mexican- Sephora 5. Haydee Galeno, 20, Columbian-Smashbox 6. Leilani Espinoza, 26, Chilean- Bobbi Brown 7. Vivi Leemhuis, 21, Cuban- Urban Decay 8. Jaqueline Manterola, 24, Ecuadoran- Smashbox 9. Cata Muñoz, 22, Mexican- Bobbi Brown 10. Lola del Canto, 19, Venezuelan- Smashbox From my own personal interviews I have found that most Hispanic women prefer quality make-up and are willing to spend extra money for it. Of the 10 millennials I interviewed, all the make-ups are found in up scale department stores, and none of them mentioned drug store make-up as their favorite. This showed me that Hispanic women don’t put a price on beauty and even struggling college kids are willing to pay the extra cash to have quality makeup. The most common among these young women was Smashbox, followed by Bobbi Brown. Only one of the interviewee’s preferred M.A.C, but this is not all bad news because it was still in the running next to all premiere brands.

The message that M.A.C will be sending to their Hispanic consumers is that they are not a forgotten market. The company realizes that US Hispanic millennial women are a growing market and values their opinion and satisfaction. Their message to these women will be to feel comfortable in your own skin, proud of your heritage, and

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beautiful. Hopefully the Hispanic consumers will acknowledge and appreciate M.A.C’s attempt to relate to them, and continue to not only purchase their products, but also spread word on its quality.

Test of Message and Media Approaches Focus groups are a crucial way to get unbiased and helpful insight into determining the future success of a company’s marketing campaign. The company can conduct these focus groups in two different ways: they can show the company logo on all the mediums they present, or they can hide the logo. This gives the company a chance to see where they rank in branding and also get genuine feedback from groups that don’t see the logo, respectively.

In order for M.A.C to be successful in this they need to conduct multiple focus groups that have a combination of Hispanic and Anglo consumers. This is important because since they are a company with broad consumer markets, it’s crucial that one ad is applicable to all the markets. They might show the integrated focus group a commercial with a Hispanic female that is using the product with her Anglo friends, as they get ready for a night out. They might also show print media with a mix of relevant models or celebrity endorsements in the same picture. Within these focus groups it would be wise for M.A.C to hand out questionnaires to it’s participants asking them questions about the products they currently use on an everyday basis, whether it be face wash, lotion, foundation, etc. Knowing these facts about each consumer can give the company insight in the total care and necessities women look for in a product. M.A.C should also ask their participants the type of social media they use the most: find out how they stay connected and what type of medium they prefer, whether that be TV, print, or radio. This can help

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M.A.C find out which outlet has the most female following.

After conducting these focus groups and showing the participants their new collections and Viva Glam campaign, it is important for M.A.C to ask the consumers questions that can help modify their campaign to better effect their desired market. For instance, they can ask the consumers if they could relate to the ads, or if they felt the ads best represented what they already know about the product. The company could ask the consumers the things that didn’t work, or maybe offended them, making it easier to change their campaign and eliminate the future possibility of bad PR. They might also ask the focus group for their insight on different ads that do catch their eye and incorporate some of these ideas into their own campaign. With conducting the right research and correct analysis of the focus groups it’s possible for M.A.C to come up with a phenomenal way to showcase their products that can appeal to both Hispanic and nonHispanic consumers alike, increasing their sales and mainstream market.

Guidelines for Implementation After compiling the research collected from the various focus groups conducted, M.A.C will have a clearer picture on the best direction of their future campaign. Before putting the entire campaign out there, it might be effective if M.A.C launched the new marketing campaign in areas that have both high and low populations of Hispanic women. This is where M.A.C can go back to it’s original style of unconventional advertising by handing out samples to both people in the professional world of make-up and Average Joe’s, allowing their products to speak for themselves through word-ofmouth. Providing a few areas with the campaign and assortment of products will give M.A.C the opportunity to test the effectiveness of reaching both markets in one fell

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swoop.

After a few months of allowing the campaign to cultivate, the company needs to take in the sales results of those specific areas they targeted. After a thorough evaluation, if there is a clear increase in revenue and consumer following, it means the campaign was a success and it can be launched nationwide. If the campaign had some lags in revenue or declines in consumer following, it’s back to the drawing board. M.A.C will need to reevaluate the campaign and modify it so it’s more successful in the Hispanic market place. This might mean conducting new focus groups showcasing the tailored campaign and again redistributing it to areas to retest its efficiency. Hopefully with a successful cycle of trial and error, M.A.C will perfect its campaign and send sales shooting upward.

Evaluation of Effectiveness In order for M.A.C to evaluate how successful their campaign was, the company needs to compare it to its past campaigns. M.A.C has had extreme success all over the world, and their past marketing strategies have worked thus far. It would be wise for M.A.C to compare and contrast the current campaign with previous successful ones to rate the accomplishment of the new one.

M.A.C can also compare their new campaign to its competitors to evaluate how they’ve done thus far. This can give them the push or pull they need to stay ahead of the game. M.A.C needs to be constantly keeping up with the sales the campaign makes, the moment they start noticing a decrease and it takes more money to run the campaign than its bringing in, they need to pull it off the shelves and start all over from scratch. This might mean conducting completely new research and focus groups to better adhere to the growing market. Going along with that, M.A.C needs to constantly be updating the

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campaigns and researching this particular market. Sales will only take you so far, and people and cultures are always changing. M.A.C needs to stay current with the latest trends and fashions for all cultures since this is a worldwide company.

After the product has been out for quite some time, it might be valuable for M.A.C to pull participants from the original focus groups to ask them new questions and evaluate its effectiveness thus far. This will help the company stay on top. After thorough research and comparative analysis with this market group M.A.C will hopefully have positioned it’s product in the correct light that will help bring in a plethora of new Hispanic consumers.

Conclusion In conclusion, by M.A.C allowing themselves to spend ad money on different medium, they give themselves the opportunity to be heard in a valuable, growing market.

However, positioning a product to shine light on a itself can only go so far because ultimately the consumer has the power: not the advertising agencies, and not the marketing department of companies that are trying to sell them products. Consumers pretty much reject or accept things that they like. It is up to M.A.C to continue to create good, sustainable, quality products that Hispanic women prefer against all other companies.

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Works Cited Garbato, Debby. “Hispanic Millennials: The Next Consumer Boom” Hispanic Retail 360.

2011. 29 March 2013 <http://www.hispanicretail360.com/articlehispanic_millennials__the_next_consumer_boom-2370.html> Wentz, Laurel. “With an Ever-Growing Population of 'Fusionistas,' Consistency Is Key” Advertising Age. 2011. 29 March 2013 <http://adage.com/article/news/growingpopulation-fusionistas-makes-consistency-key/230390/> Villaneda, Rebecca. “Hispanic Millennials--Who Are They?” Hispanic Business. 2012.

29 March 2013 <http://www.hispanicbusiness.com/2012/7/18/hispanic_millennialswho_are_they.htm> “Hispanic Fast Facts” AHAA. 2013. 17 April 2013 <http://ahaa.org/default.asp? contentID=161#3> “Hispanic Women Want Beauty Marketers to Speak Their Language, Reports Mintel” PRNewswire. 2012. 17 April 2013 <http://www.prnewswire.com/news-releases/hispanic-women-want-beauty-marketers-tospeak-their-language-reports-mintel-96316814.html> Mercedes, Rosemary. “Univision Releases New Research Showing the Importance of Beauty to Latina Consumers” Univision Communications Inc. 2009. 29 March 2013 <http://corporate.univision.com/2009/press/univision-releases-new-research-showingthe-importance-of-beauty-to-latina-consumers/#axzz2PiOmj0QK> Medina, Hildy. “Made in the Shades” Hispanic Business. 2007. 29 March 2013 <http://www.hispanicbusiness.com/2007/5/4/made_in_the_shades.htm>