Answer

International Marketing Management

Introduction

            One of the most renowned cosmetics firms, LUSH ltd is an international organization that started as a relatively small business in the United Kingdom. Increasingly, LUSH is viewed as a hand-made as well as cosmetics firm since it was established by in 1994 by M. Constantine. The company has hundreds of stores in approximately 49 nations. Yet, a proper analysis of global cosmetic industry reveals that markets such as those in Latin American region have potential to drive the firm even further.

Question 1

            The United States represents an excellent market opportunity for LUSH ltd and it is almost impossible to ignore this massive opportunity to grow. In fact, the firm should consider this international market for further expansion. More so, the United States represent one of the several so-called mature markets in which critical factors such as political, economy, and social well-being are relatively predictable. Indeed, a number of factors are seemingly aligned to help LUSH ltd gain a proper foothold in the American market including a booming cosmetics sub-sector, which can help the firm grow even further. According to a recent report from Euromonitor (2016, web), the beauty as well as personal care market in the United States registered considerably healthy performance in 2015. In fact, current value growth in the country has been demonstrated to be stronger than in previous years, which insinuates that LUSH ltd has a potentially ripe market in which it should seek to expand. These predictions are ably supported by healthy figures that LUSH ltd posted since 2013. Fiorletta (2015, web) notes that the company witnessed the most exceptional prosperity in the United States with its sales in the country predicted to hit $402 million by 2016. Worth noting, is that the organization registered just $169 million in 2014. Fiorletta (2015, web) also highlights the fact that e-commerce in the United States has particularly served LUSH ltd well with sales made via this channel expected to make a mammoth jump from just $18 million to approximately $44 million by 2016. It is beyond a doubt that this country is worthy of further expansion. More so, the United States is among the most connected nations of the world with regard to Internet penetration as well as the number of potential consumers likely to use e-commerce. The country has millions of consumers that increasingly take up to the internet not only to search and review products offered to them by a firm, but also to make purchases. As an example, Fiorletta (2015, web) notes that LUSH ltd already has a healthy following over the Internet in the United States as evidenced through Facebook likes that exceed 900,000, approximately 1.5 million Instagram users, as well as hundreds of thousands of Twitter followers. This evidences that the firm and its products is increasingly popular with internet users in the country, which should serve to strategically place LUSH in the local market.

            What is more, the predictions showing that cosmetics e-commerce in the United States  is booming serves to underline the need for further expansion in this market to enable the business capture the seemingly lifetime opportunity. As such, the firm should adopt an e-commerce marketing model to enable it exploit the existing opportunity in the United States market (Yin 2003, p 54). For instance, rather than placing emphasis on the conventional marketing mix involving price, product, place, as well as promotion or commonly referred to as the 4P’s, LUSH ltd could seek to adopt emerging models that are increasingly suited to e-commerce. Model 5C is among these emerging models and it represents clients, company, competitors, collaborators, as well as context (Sfetcu 2015, p 5). This model is increasingly intended to consider such diverse dimensions as technology, markets segments, the buying process, competition, retailers and distributors, macro- environmental factors, and the market size and growth. It must be pointed out that online businesses often neglect to undertake a proper marketing strategy hoping that potential clients will stumble upon their online presence channels (Bernstein Research 2009, p 147). Yet, this thinking has more often than not proved fatal and countless e-commerce businesses have simply failed to realize maximum potential. Nonetheless, the Model 5C can enable LUSH ltd to exploit the opportunity in the United States market because it looks to consider such vital characteristics as user experience and content over the Internet. With regard to user experience, this marketing model looks to ensure that potential consumers can figure out places to visit on the Internet as well as their likelihood to contact messages about LUSH marketing campaign. Altogether, these factors postings that LUSH should seriously consider expanding in the United States market.

            I would consider Latin American nations to be new market that would be suitable for LUSH ltd to explore. In fact, nations throughout this region including Mexico and Argentina represent an enticing emerging market for cosmetics businesses. Lopaciuk and Loboda (2013, p 1080) notes that Mexico and Argentina are some of the markets that have demonstrated incremental growth of billions of dollars in recent years. In fact, marketing trends in cosmetics industry have indicated that Latin American region is increasingly gaining the attention of cosmetic marketers and thus LUSH ltd should come up with a strategy to venture into this market. Indeed, these markets are showing favourable returns in recent years and thus making them suitable for LUSH to try them out. Their potential is increasingly coming to the fore as globalization effects gain a foothold in the region, and the impending boom is mirrored via the various multi-national firms from virtually all sectors that have camped there in the last decade or so.

Seeing that LUSH ltd already has hundreds of stores in the United States, Latin American market is identified as the most viable given its impending socio-cultural boom that is being brought about through globalization. Indeed, a SWOT analysis for the region reveals that countries such as Mexico and Argentina represent strong markets for cosmetics such as LUSH ltd seeking to conquer these emerging markets. The following SWOT reveals why Latin America is identified as the most viable market for LUSH Ltd: 

Strengths

Mexico and Argentina are increasingly recognizing the need for government incentives for Information Technology services. In particular, this should serve to attract e-commerce businesses such as LUSH because government intervention means that the region’s Internet potential is about to be realized. Indeed, government involvement in improving Information Technology services will almost inevitably lead to more local residents using the Internet to make purchases due to increased connectivity.

Weaknesses

Over-reliance on the United States economy- which simply implies that the entire Latin American region increasingly relies on socio- economic performance in the United States. In fact, it has been observed that economies of such nations as Mexico is almost controlled by events in the United States and pitfalls for businesses may soon emerge as United States performs unfavourably. It can be said that any international business operating in the country ought to be on the lookout for both local and international events likely to destabilize the region. As well, cultural factors are likely to negatively affect attempts by international firms to make inroads in the Latin American region. In fact, it has been identified that local populations increasingly need persuasion to take into brands that are not considered to be wholly local (Michel et al, 2015, p.316). This is because local residents increasingly recognize the need to make purchases from businesses they consider their own. More so, the region is renowned for widespread perception that international businesses exploit the region in terms of resources all of which point to challenges in gaining a foothold in the expansive Latin American market.

Opportunities

Government support represents an excellent opportunity for international businesses (Moulin 2012, p 2). More so, government support in the area of Information Technology services means that businesses such as LUSH ltd seeking to establish online presence will likely face fewer challenges in the near future as far as making inroads is concerned. In fact, government support will mean that the percentage of local population using Information Technology services will increase and thus strategically placing any firm involved in e-commerce to create a sizable client base. What is more, maturing economies throughout Latin America means that international businesses venturing into these markets are likely to take advantage of socio-economic developments. Indeed, maturing economies in the region will likely lead to local population embracing international firms as their own and thus making foreign companies to prosper.

Threats

Potential of United States economic slowdown means that LUSH and other international firms operating throughout Latin America constantly face uncertainties. In fact, the economy in this region increasingly depends on the performance in the United States and this does not bond well for businesses trying to make inroads (Gümüş et al 2016, 2110). Labour rate increases also represent threat simply because the impending socio-economic boom throughout the region will see the associated costs of operating make unprecedented increase.

Question 2

            With respect to standardisation and adaptation for its international markets, I would advice LUSH ltd to strategically place itself in all markets through localizing its image to ensure that it is viewed as a local company out of which local population benefit and can identify with. The products must be sold as standardized to drive home the message that quality is always observed irrespective of the market LUSH ltd products are found. More so, the message should be that all subsidiaries around the world share common beliefs even as they try to practice them differently. As an example, LUSH subsidiaries globally have been at the forefront encouraging consumers to use reusable shopping bags even as their design varies in different markets. Indeed, Lin (n.d, p 4) notes that though LUSH ought to have globally standardized products, the need to be localized is imperative if the firm is to conquer particular markets segments. This is because each market segment around the world presents unique characteristics, which indicates the need for the business to adapt its strategy to meet the diverse market requirements (Leonard 2011, p 6). As an example, LUSH USA ought to adapt itself for this market via offering added value that is market-specific. During Halloween period, the firm could market itself accordingly via offering Americans with cosmetic products that are likely to prove popular for this period (Walker 2012, p.16). On the other hand, Asian consumers increasingly prefer light coloured skin and thus the firm could localize itself including selling its products as able to clean as well as lighten users’ skin.

Question 3

Local manufacturing within the nation of sale is can go a long way in helping firms to drive down expenses related to production process. More so, local manufacturing presents a business with a number of advantages including the fact that it eliminates the massive costs of moving raw material as well as finished products globally (Kleindl, 2006). It must be noted that in manufacturing industry material costs may easily dominate product expense, and thus it places emphasis on a firm to seek ways to procure materials for less funds as well as take the product to eventual consumers for less funds (Zhang and Schmitt, p 317). Local manufacturing comes across as best suited to help a manufacturing company to minimize expenses in the nation of sale. In fact, local manufacturing can greatly drive down expenses because it means that a firm is strategically placed to purchase materials in relatively large lots and thus driving down unit costs. It must be noted that unity costs increase as firms move raw material as well as finished products around the world due to various factors including differences in taxation (Cardiff-Hicks et al 2015, p 656). This means that setting up production in a country of sale is plausible given that the diverse, often incremental costs associated with moving products are virtually eliminated. Yet, even as organizations seek to establish local manufacturing to drive down related costs it is always best to manage the production in-house. In fact, studies have consistently pointed out that managing the production in-house if a company is to convince its consumers that quality and standardization are met. Sullivan (2015, web) notes that production in-house is crucial for companies seeking to maintain competence as well as quality and also keep costs down. More so, it is widely accepted that in-house staff more often than not provide organizations with better services and at lower cost. This is because production in-house means that an organization retains flexibility, which may come in handy in a swiftly changing business environment (Ghauri and Cateora 2014, p 48). It can be said that it is best to manage the production in- house simply because an organization retains the control rather than having to contact other businesses the other side of the planet. As such, managing the production in- house means that the company can react to market swiftly and thus likely make savings on expenses that would otherwise arise if an organization opts to outsource.

Question 4

            LUSH ltd should concentrate on opening more high footfall stores of its own in the high street of main conurbations. More so, this strategy has already proved successful over the years and consumers have most likely come to associate the firm with such stores. While there is always the need for businesses to strategically place themselves in areas such as transport locations in which potential clients are increasingly likely to notice them, there is also the risk of them suffering from bad image due to poor locations, which may in turn make the firm seem to present substandard products. Bell (2014, p 6) notes that a company ought to consider a number of factors when choosing location. This includes style of operation in which an organization must decide if their operation is going to be elegant and formal. Indeed, location of a business ought to remain consistent with the particular style as well as image, which insinuates that LUSH ltd needs focus on opening footfall stalls in the high street of main conurbations. This is because doing so means that the business, as a retailing organization, maintains the conventional, formal, as well as elegant style and image that consumers have come to link to quality products on offer (Tavassoli 1999, p.176). It must be pointed out that shifting focus on taking up franchise space would likely mean that LUSH operates from booth or kiosks, which would in turn lead to different operating style as well as presentation of products and the firm overall. What is more, other factors such as demographics increasingly play part in location decision making (Drum 2009, p 8). The implication is that businesses such as LUSH ltd that have always marketed themselves as offering quality products must consider who the consumers are as well as their location. It follows that the firm should focus on opening more high footfall stores of its own in the high street of main conurbations simply because potential clients are likely dwellers of such places. The demographic profile in major cities of the world where LUSH has stores dictate that emphasis should be on opening footfall stores of its own in the high street of main conurbations from which consumers can visit and perhaps make purchases. Indeed, the firm markets its products locally and thus opening stores in local areas around urban areas if it is to satisfy needs of the targeted market.

Question 5

            The future promotion strategy will involve digital/social media. In fact, this strategy signifies that contemporary promotion strategy will increasingly be utilized as populations of the world increasingly become connected. Social media represent multi-dimensional communication channels in which the firm can disseminate its advertising messages and increase its chance of delivering the right content to the right clients notwithstanding their location globally (Boone and Kurtz 2015, p 105). This is because social media as a permits individuals around the world to be increasingly connected than ever. Indeed, promotion is swiftly changing as new information technologies emerge and businesses seek to harness the so-called social web to promote themselves (Mühlbacher et al 2006, p 94). LUSH should seek to mix it up through social media and conventional promotion strategy including printed advertisements in local magazines. Example of activities making up this campaign strategy includes localized banners over the social media platforms and leaflets to be included in local magazines. As such, the firm will require to adapt the promotion messages to appeal to local consumers. The budget will be $2,100.

Conclusion

            LUSH ltd is operating in an industry in which pointers indicate an impending boom around the world. In fact, the firm can expand its reach in nations that it already has a presence including the United States. What is more, other emerging cosmetics markets in Latin America mean that the firm can position itself to become a global leader. The emerging markets present particular challenges, but globalization as well as increased government support means that international firms such as LUSH ltd are finding it relatively easy to make inroads and prosper.