Insead Loreal Case Study

DISCUSSION QUESTIONS:

1.What are the pros and cons of a lifestyle positioning compared to a more concrete positioning on functional benefits?

There are several benefits, as well as corresponding costs, for a brand that chooses lifestyle positioning versus functional positioning for their products. One of the most important benefits is that your consumer base is more likely to be brand loyal because the firm is appealing directly to the consumer’s identity; if this resonates with them then the brand has the potential to become a de facto extension of how they express themselves. A drawback is that in order to maintain that level of brand loyalty they must constantly be innovating along with the trends and preferences that correspond to the lifestyle of that consumer which, if not done correctly can lead to a relatively short brand or product lifetime. Functional benefits are not exposed to this risk unless there is a major disruption in the industry that causes a shift to an entirely new product. For example, the functional benefits of a horse were apparent for a very long time but once Ford introduced the Model T, the entire personal transportation market was disrupted and forced to change.

Another major benefit to lifestyle positioning is that consumers who are buying a brand because of the lifestyle they wish to promote are generally less price sensitive than a consumer who is only seeking the functional benefits of a product. A disadvantage to the lifestyle positioning strategy is that fewer people in the consumer base as a whole fall into this category. However, if a brand chooses to emphasize the functional benefits of a product, particularly products that are used daily by a majority of the population, the firm can reach a wider audience of consumers, therefore offsetting the lower pricing with greater sales volume.  

In this case specifically, a drawback to lifestyle positioning for Yue Sai, is that the brand has been diluted over the years and has no concrete position because the various owners of the company have tried so many different strategies that it would be difficult to re-establish Yue Sai as China’s premier cosmetics brand. However, with the right marketing and distribution strategy, Yue Sai could certainly remind consumers that it was the first Chinese brand of its kind, made specifically for Chinese women, thus promoting the functional benefits and appealing to a broader market base.    

2. Are today’s Chinese consumers ready for Chinese luxury brands? How might this change over time? How does this depend on the product category?

As stated in the case “Chinese consumers increasingly desired more sophisticated, premium products.” Recently, with the rising disposable income, Chinese consumers are trading up from mass products to premium products from categories such as handbags, apparel, skincare products, to even daily products such as bath lotions. In addition, Chinese consumers shift their focus from functional benefit to emotional benefit (e.g. brand value) and added-value benefit (e.g.,sulfates-free and cones-free shampoo).  At the current stage, Chinese consumers still associate luxury brands more with well-established foreign brands which usually have historical heritage and have attained loyal customer bases generations after generations such as Chanel, Lancome, La Mer.  

However, I think over time they will be ready to accept Chinese luxury brand. First of all, Chinese brands have been building their reputation over the years. For example, the brand Shanghai Tang was established in 1997 to rejuvenate the classic Chinese fashion from the 1920s to 1930s. In 20 years, Shanghai Tang has opened outlets in major cities around the world. Secondly, as China’s economy matures, the leaders are trying to transform manufacturing from “made in China” to “smartly made in China. ” Chinese handset maker Xiaomi has set up a research and development unit in Bangalore, its first such facility outside of its home to further strengthen its innovation. Thirdly,  “The global success of firms like Haier, Huawei, and Lenovo had made Chinese consumers increasing proud of their nations.” From being irresistibly drawn to western brands, Chinese consumers will become more sophisticated in choosing brands that suit best their needs and identities.