market entry strategy of cosmetics producer SkinCeuticals on the Chinese market. SkinCeuticals is presented in the Company Presentation section. The SWOT Analysis section analyzes numerous strengths, weaknesses, threats, and opportunities associated with the company's situation. The China Analysis section presents some of the most important factors that influence the business environment in this country. There is also a section on Costs, Benefits, and Risks. The strategy of SkinCeuticals is presented in the Market Entry Strategy. The Recommendations section reveals the advantages of SkinCeuticals on the Chinese market.
SkinCeuticals is a cosmetics company established in 1997. The company focuses on producing cosmetics combined with pharmaceutical effects. These products are based on using the original tropical vitamin C formula in order to address the different problems of the skin. The company's product strategy reflects its principles. These principles are represented by developing products intended to prevent damage to the skin determined by environmental factors, protect the skin, and correct that damage produced by these factors.
The company's success relies on its interest and investments in research and development. Therefore, SkinCeuticals has developed a network of professionals in different fields, in order to combine their knowledge and expertise. Their work helps develop innovative products. The company's range of products includes numerous items that address the problems of oily skin, normal and combination skin, dry skin, sensitive skin, problematic skin, and others.
The company relies on the following strengths in order to reach its objectives: innovative products, increased level of investments, and a wide range of products. The most important strength of the company is represented by innovation. The fact that the company is able to develop products based on principles that are not addressed by its competitors, helps the company differentiate its products.
The increased level of investments is another important strong point that the company focuses on in order to ensure the success of its strategy. The financial power of SkinCeuticals allows the company to invest in the research and development of different products, and to identify the product characteristics that customers need. Another important strength of the company is represented by the wide range of products developed by SkinCeuticals. This is because the company understands that customers have different needs and preferences that must be addressed by these products.
The most important weaknesses of the company are represented by the rather high prices of the SkinCeuticals products, the flexibility of the distribution strategy, and reduced advertising of its products. In the case of certain categories of customers, the SkinCeuticals products are considered expensive. This does not allow the company to significantly increase its number of customers. In addition to this, it does not help address other customer segments.
The reduced flexibility of the company's distribution strategy is another weakness of the company. It is important that SkinCeuticals develops an efficient supply chain strategy. This helps the company reduce its costs. In addition to this, it can determine the company to increase its market share. Another important issue that can be considered a weakness of SkinCeuticals is represented by its advertising. The company's success relies on addressing different communication channels that must be adapted to the different customer segments.
The most important opportunities that the company must take into consideration are represented by the numerous developing markets, technological developments, and the research and development process. The developing markets in Asia and Europe present great potential that the company can use in order to expand its business. These regions can be used in order to build production facilities because of the large supply of skilled workforce that can work for lower salaries. These regions can also be considered important markets, with important customer segments that the company can address.
The technological developments can be adapted and used by the company in order to reach objectives like improving the production process, reducing the costs of production, and developing innovative products. The research and development process is an important opportunity that can help the company create competitive advantage. It is important to invest in these opportunities.
The threats that SkinCeuticals should focus on refer to the increased competition in the cosmetics industry, the increased costs of production, and the reduced customer segments addressed by the company. Regarding competition, there are numerous cosmetic producers that are focusing on addressing international markets. Some of these companies have more expensive products, while others are cheaper. There are many differences between these companies. However, the customer segments addressed by SkinCeuticals are also addressed by some of these companies.
The increased costs of production can be considered a threat because they lead to higher prices of the company's products. This can significantly affect its profits. The fact that the company's products are expensive, SkinCeuticals cannot address the largest customer segments that are represented by individuals with low to medium incomes.
China is one of the most important economies. The development of the country has determined numerous companies to build production facilities in China because of its cheaper workforce. In addition to this, the country's economic development has increased the incomes of Chinese customers, increasing their potential for these companies. The Chinese government intends to continue the country's economic development by sustaining job growth, reducing corruption, and improving the environmental situation.
China has a stable political environment. However, this does not mean that companies are not affected by politics in China. It is a well-known fact that the Chinese government influences the activity of companies in this country (CIA, 2012). The government establishes strict regulations that make it difficult for certain companies to do business in this country, it influences some of the prices and creates the impression that there is a reduced level of freedom in the case of these companies (EconomyWatch, 2010).
However, the company must analyze the social and cultural factors that affect the Chinese market. It is recommended to analyze the cultural dimensions that characterize China. These cultural dimensions are represented by power distance, individualism and collectivism, masculinity and femininity, uncertainty avoidance, and short-term and long-term orientation (Value-Based Management, 2011). The competition on the cosmetics market in China must also be studied. The potential of this market has been identified by most players in the industry. Other cosmetics producers have addressed the Chinese market in order to expand their business. Therefore, SkinCeuticals must develop a similar strategy.
Costs, Benefits, and Risks
Regarding the costs of addressing the Chinese market, the company must invest in market research, in developing certain products adapted to the needs and preferences of Chinese customers. In addition to this, the company must invest in developing an efficient distribution network. It is important that the company studies the Chinese market and the purchasing behavior of customers in this company. The costs of this activity can be reduced by addressing the services of Chinese companies. The most important benefit of addressing the Chinese market is represented by expanding the business of SkinCeuticals, increasing the number of customers, and increasing its profits. The Chinese market can help SkniCeuticals increase its market share. However, the company must take into consideration the fact that there are certain risks in addressing the Chinese market. These risks are represented by the influence of the Chinese government on companies doing business in this country, and by the cultural differences between the company and customers in China.
Market Entry Strategy
The Chinese market is also addressed by some of SkinCeuticals' competitors. Therefore, it is not recommended to develop a strategy based on objectives like becoming a leader on this market. Such a strategy can become expensive. The objectives that SkinCeuticals must reach through this strategy are represented by improving awareness of Chinese customers on its products, developing a large customers base, and increasing its profits.