Target market identification for Schwarzkopf

The main purpose of this report is to make a situation analysis and target market identification for Schwarzkopf. The report comprises a situation analysis, including Current Product, Current Pricing, Current Distribution, and Current Promotion for Schwarzkopf. After that, market segmentation is used to find its potential market or target market, which is created by identifying and analyzing its Geographic Segmentation, Demographic Segmentation, Psychographic Segmentation, and Behavioral Segmentation. According to these analysis and market segmentation, it will provide a range of advice and assistance for Schwarzkopf to expand its present market and potential market and bring great advantages to the development of Schwarzkopf.

2.0 Introduction

Schwarzkopf, founded in 1898, more than a century, is a professional hair products and is one of the world’s three major brands involving in cosmetics, hairdressing and it has spread its sales to more than 80 countries around the world and now it is recognized and respected by a large number of international professional hair stylist. To the consumers, the world famous brand-Schwarzkopf show good impression of high-end, elegant, professional, reliable and quality and Schwarzkopf is the most welcomed among the 25-35 year-old woman. At present, Schwarzkopf is a leader in the field in addition to not only commitment to product development, but also provide personalized service, emphasizing the links with designers and customers.

Great changes have happened in people’s daily life along with the fast development of technology as well as economy that residents have paid increasing attention to the quality of life and they long for improving their lives, as a result, they would like to pay for the daily uses in reasonable prices with good quality. Schwarzkopf may be the very product for consumers that could help them to show their status and quality of life. Therefore, in this report, it will make a situation analysis and target market identification for Schwarzkopf. In the first part, it will get a situation analysis including current product, current price, current distribution and current promotion. In the second part, segmentation theory is to illustrated following by the definition and the explanation of the segmentation as well as the benefits to Schwarzkopf using segmentation. After that, target market identification about geographic, demographic, psychographic and behavioral. Following that, target market collage will be demonstrated. Finally, conclusion will be drawn out.

3.0 Situation Analysis/Current Marketing Mix

3.1 Current Product

Schwarzkopf is an international brand that if the consumers purchase the product, they will feel proud of their selection since Schwarzkopf is really an expert in shampoo and consumers benefit a lot from the product and their hair will improve obviously. In addition, since you use the product, the effect will last for several days that it helps the busy people to save much time as well as they could show their status among its counterparts. Schwarzkopf has beautiful packaging and labeling such as the gorgeous color and fashion style that it could catch women’s eyes in few seconds, which may help them to stay for seconds for the products. Its key features are extremely convenient to use with high-end, elegant, professional, reliable and quality product in various colors. As long as purchasing its products, the consumers could receive personalized service according to their habits and behavior. If there is any problem, consumers could contact with the world-top experts directly. However, it may consumers are female that it is also its strength as female consumers, unlike male consumers, are willing to travel around so long as they have free time. Most of them would like to pay a few minutes to the fashion and economic products. If they are the honest or repeated consumers, they tend to look for such products as Schwarzkopf offer not only the good product, but also professional after sale service as well. Therefore, they may not purchase other products in steady, especially for the white- collar as it is that obvious in white-collar workers and they always have a psychological tendency to seek stability (Philip, Hammond, Lomax 2005,12; Kim and Sugai 2008, 483) . According to consumers’ preference, many new kinds of product are carried out with reasonable prices. Although Schwarzkopf is a world-famous brand, it has gained a large number of competitors and potential competitors as well, such as Wella, L’Oreal, which are also the world-famous companies majoring shampoo and other counterparts products. However, to Schwarzkopf, it has its special strength. For instance, Schwarzkopf’s main products are shampoos and they are more expert in shampoo because its competitors focus not only on shampoo, as well as other makeup. Moreover, consumers has a special way to contact with the international professional hair stylists if the purchase Schwarzkopf, which could cater consumers’ psychology.

3.2 Current Pricing

With the internalization, the competition in shampoo market is becoming much more fiercely than ever before. There are hundreds of companies involving in shampoo with various types of shampoos. As a result, in order to gain a bright future market, Schwarzkopf should have a sharp eye on the market situation. At present, the shampoo market scale is becoming larger and larger than before, involving in market different sizes in various places. To the consumers, they have improved their reliance on the brand, which gradually increase consumer brand awareness, brand recognition and brand concentration. The majority of market share will be concentrated in the hands of a few brands. If the new brand there is no perfect quality and propaganda, it will be difficult to gain a firm foothold in the pattern, medium and low competitive market. To the market demand, consumer purchases increased steadily and the product’s basic demand in the city is saturated, but potential individual needs and rural basic needs are large (Argent 2000, 63). The consumers are beginning gradually pursuit of product quality and grade. To Schwarzkopf, it has natural benefits than its most competitors. For example, Schwarzkopf is a world brand that most of consumers have gained much information about the brand and the company could spend low cost on the advertisement and medium, which in return could reduce the prices of its products and which are most of the consumers would like to see. What’s more, the Schwarzkopf has a reasonable price in shampoo. Taking Schwarzkopf Country Colors for example, its price is just £ 3.99 – £ 5.83, which is much cheaper than other products from its competitor. Therefore, if there is a small change in the price of the products, the consumers demand may not change a lot, at least in short term. In addition, most of Schwarzkopf products are cheaper than its competitor. According to the basic principles of economics, there is a special curve, as supply is positively related price of goods, but demand is inversely related with prices, between consumers purchase decision for this product and prices (Devereux and Yetman 2002, 97). As a result, if mild changes in the prices, the consumer decision on the Schwarzkopf products may not change because of price elasticity of demand.

3.3 Current Distribution

Schwarzkopf is one of the three major manufacturers, Wella, L’Oreal and Schwarzkopf, producing professional hair products and now it has controlled companies or commission agents in more than 80 countries with larger than 200,000 Sharon working together. As a result, you can purchase the product much more easily in the major cities. What is more, with the fast development of internet, on-line shopping is becoming increasingly popular than ever before (Yang and Lai 2006. 297), so consumers could buy Schwarzkopf products without any difficulty. You also could observe the advertisements about Schwarzkopf products on web on TV, and so on, which also offer an easy way for the consumers to get the products. Taking Beijing, the capital of the People’s Republic of China, for instance, all the shops selling Schwarzkopf products are chain stores distributing almost in every district, if the consumers find any problems about the product, they can change their products in their nearest stores bringing available invoice. As a matter of fact, the things like that almost never happen. The consumers also could buy Schwarzkopf products in big supermarket such as Carrefour, and so on, which bring great convenience to the consumers. As an international company, the majority of the products are produced by Schwarzkopf itself and most of the stores import the products from Schwarzkopf directly. Only just a few types of the products are produced by its controlled companies or commission agents, but all the technologies are supplied by Schwarzkopf headquarters, which may ensure the very quality of its products. Therefore, all the consumers should not worry about the quality and the service. If they buy the product, nothing will be wrong.

As Schwarzkopf products are female oriented that all almost its consumers or potential and target consumers are women aged from 25 to 35 year old, from which the company benefits a lot. To those consumers, nearly everyone in that age may pay much more attention on their appearances than any other group of consumers and they have the money to buy the products to satisfy their psychology and show their status (

Kurata and Nam 2010, 138). Therefore, these characteristics of the product can influence its distribution. The stores should open in these places, in which are more female consumers, like near the shopping plaza, and other busy streets with more young ladies.

3.4 Current Promotion

Promotion is designed to provide short-term consumer or dealer’s incentives, which could mobilize people’s enthusiasm, interest to buy the products in a short period as well as that customers could understand the product as soon as possible(Raju 1995,5)

. To a new product, generally, consumers have a resistance to the new product. The cost of the initial use of new products is double than the old ones, consumers do not want to take risks to try new products (DelVecchio, Henard and Freling 2006, 205). Since if the consumers are not satisfied with the new product, but also spend the same price to buy the old product, which is equal to the price spent two before they get a satisfactory product, so many consumers buy new products in the feeling of that high cost. However, the promotion will allow consumers to reduce this risk awareness and reduce the cost of initial consumption, trying to accept the new product.

Recently, the promotion messages can be observed on the internet. One of the information about Schwarzkopf is its new product, which is Schwarzkopf Silhouette product. Another promotion is about Schwarzkopf OSIS Upload 200ml hair Product. Among the two types of products, one is new and the other one is old. However, they almost have the same goal to improve its sales. To the new products, promotion could help the consumers to reduce this risk awareness and reduce the cost of initial consumption, trying their best to accept the new product and make known for many other potential consumers or target consumers. To the old product, after the consumers trying the product, if they are satisfied with the product, they may devote their will to re-use the product. But this spending will be at the beginning is not strong, not reliable. But promotion can help them achieve this intention. In addition, in the process of promotion, the sale often will increase. But to different types of consumers, the promotion messages may be various. To the young ladies, the messages should focus on beauty and fashion as well as good outlook which could catch the potential consumers’ eyes in just a few seconds. But to the middle-aged consumers, promotion products must focus on practical applicability with reasonable prices. In addition, appropriate places in the process of promotion should take into consideration as they can attract the consumers as soon as possible.

4.0 Segmentation Theory

4.1 Defining and explaining segmentation

Market segmentation is a useful tool and often applied in the market analysis. Based on consumer demand and habituation, the entire market and the potential consumers are divided into various types in common. The objective is based on the heterogeneity of consumer demand. The principle of market segmentation is to seek the potential consumers with the same demand. The goal of market segmentation is aggregating consumers together in different markets but for the same demand. Since the concept brought out, it plays an increasingly important role in promoting for the development of the whole enterprise (Bock. and M 2002, 217).

4.2 Benefits from market segmentation

It is beneficial for enterprise to select the target market and make the favorable marketing strategies. Market segmentation has brought many advantages to the enterprise. The market segmentation, the sub-markets become more specific and easier to understand the needs of consumers. According to their own business ideas, principles, production technology and marketing power, the enterprise could determine its target market (Jan-Benedict, Steenkamp and Hofstede 2002, 187) . With market segmentation, the information is easy to understand and feedback. Once the changes happen in consumer demand, enterprise can quickly change the marketing strategy, developing appropriate measures to adapt to changes in market demand, improving the resilience and competitiveness.

It is conducive to concentrate manpower, material resources into the target market. Any enterprises have limited resources, manpower, resources, and funds. By segmentation, enterprises could choose a suitable target market, and can concentrate on human resource, financial resources, material and other resources to fight for the advantage of the local market, and then occupy their target market (Afonso, et al, 2008,560).

It is beneficial to explore market opportunities and develop new markets. Through market segmentation, companies can understand the potential purchase power, the satisfaction level and level of competition, which is useful to explore market opportunities, make timely production and shift to marketing decisions for the enterprise. According to its technical conditions of production to develop new products, to carry out the necessary product technical reserves, to master product replacement initiative, to open up new markets to better meet the needs of the market.

5.0 Target Market Identification

5.1 Geographic Segmentation

Here the geographic location in this report is Perth, Theo, Australia. Perth is the capital of Western Australia and it is also the fourth largest city in Australia. It is located southwest corner of the Swan River in Australia (also translated as the Swan River). As the Australian continent is located in the West Bank Mediterranean climate regions, mild climate and unique scenery along the Swan River, make Perth to be a very popular tourist destination. The Perth has an extensive living space and a high level of quality of life. Very year, in the selection of the world’s best cities to live in, Perth can get the good prize, which reflects that both the living environment the quality of life and social welfare of the city are quite good. Perth is part of a friendly city and it won the first place as the world’s most friendly city in 2003, winning a worldwide appreciation and recognition.

5.2 Demographic Segmentation

The total estimated population of Perth is about 1,659,000, the fourth most populous city in Australia. Because there are many famous universities in Perth, such as the University of Western Australia and Murdoch University and so on, in which are many young potential consumers for Schwarzkopf, since the young ladies could make up themselves beautifully to show their charming. The gender rate almost equal according some references. In addition, as the students graduate from the university, many more new students will come and the number is pretty significance to Perth, which also may the potential consumers or target consumers. As most of the people in Perth get high education, they have developed a habit of buying brand products that Schwarzkopf could be the very one to show their beauty and psychology. What’s more, there are a large number of visitors come from all over the world that they can afford the very products. Perth is a developed city with an extensive living space and a high level of quality of life that most of the people in the Perth have a favorable income that they have the wealthy to afford the products. With the significant population growth after the world second war, employment growth happened not only in manufacturing but in retail and wholesale trade, business services, health, education, community and personal services and in public administration. And a large number of the residents come from other countries that they would like to buy the products as well.

5.3 Psychographic Segmentation

To the consumers or potential consumers, they have the ability to afford the product. To these consumers, most of them are middle or high income levels that they have the awareness of using the world brand like Schwarzkopf as well they can afford the product. To these consumers, they have special lifestyle VALS type, they pursuit happiness, freedom, confidence as well as social status. Therefore, what they use in their daily life could reflect the social status and psychology. Maybe Schwarzkopf could help them to realize their lifestyle VALS type. People in Perth have their special personalities. Almost the consumers in Perth wish to get personal service from the product that the Schwarzkopf can do this. Schwarzkopf offers a useful way for the consumers to contact with the world famous hair stylist. The consumers in Perth interested in products with good quality in proper prices and they also wish the enterprise could hear the consumers’ opinions according their demand. Schwarzkopf could do so that it will get a large market in Perth.

5.4 Behavioral Segmentation

If the consumers get recognition of certain type of product, most of them could insist on those products because they believe in brand and its quality as well as service that Schwarzkopf offers. They also seek the personalized service and products. But if they Schwarzkopf product, many world-top hair stylist may offer the professional service and hair style. It is that obvious in consumers that if they have reached recognition of the product, they always have a psychological tendency to seek stability that they will continue use these products for a long, which also is a large potential market. In addition, most of the consumers or potential consumers purchasing the products are always in middle status with good income. As a result, since they use the Schwarzkopf products, it could help them to show their status.

6.0 Target Market Collage

7.0 Completion of Discussion

The pictures 1-4 describe the Geographic Segmentation of the Schwarzkopf product in Perth. As can be seen in the first picture, Perth is located near a famous river, named Swan River in the southwest corner of Australia. So people there could get beautiful views in or outside Perth and now it has attracted a large amount of visitors coming for in or out of Perth, as you can see in the picture 2 that people are busy with taking photos and catch the beautiful sight. Perth is a developed city that people in Perth are living a high level of quality of life. Many beautiful sightseeing can be observed outside of the window, describing in picture 3. In addition, Perth is a pretty friendly city with high income to the employment, seeing in picture 4. In all, all the good geographic position ensure Perth to be a large potential market for Schwarzkopf.

Demographic Segmentation is illustrated in picture 5-8. Perth is the capital of west Australia that it is estimated that Perth has a population of nearly 1,700,000, the fourth populous city in Australia, observing in picture 5. With more people living in Perth, more potential consumers will appear. There are many famous universities in Perth like University of Western Australia and Murdoch University, so the young ladies may the target or potential consumers, at least in near future, for Schwarzkopf, as the young ladies getting high education have the consciousness and financial ability to make themselves beautifully to show their charming and beauty. Perth is a tourist destination with charming sightings, seeing in picture 7, that numerous travelers pay a visit to Perth and they like go shopping while traveling, so special types of Schwarzkopf products should be developed to meet these consumers. There also is a big market behind them. Perth is a well-developed city that employment in every industry, such as retail and wholesale trade, business services, health, education, community, and so on, has a favorable income, which ensures them to afford the products. More importantly, all the employments have developed the awareness of enjoy their life with brand products.

Psychographic Segmentation is demonstrated in picture 9-12. To the young ladies, especially those who were born after 1980s, they have special lifestyle VALS type and opinion. They seek for freedom, seeing in picture 9. They have their special definition of freedom. They often recognize the brand products and then look for other types of counterparts. After the getting the products, they are always seeking for personal service. As a result, Schwarzkopf could meet their demand that Schwarzkopf offers a useful way for the consumers to contact with the world famous hair stylist. As can see in picture 10, Schwarzkopf offer personal service that almost every consumers wish to see this. Among its competitors, Schwarzkopf may be their first choice. If these consumers realize its quality, it is hard to change their mind to buy other products. As predicted by the government, the number of residents will increase in near future that a larger potential market will appear and the potential income will increase in middle aged people as well.

Behavioral Segmentation is illustrated in picture 13-16. To the consumers, especially to the white-collar, if the have got recognition of certain kind of product, they should not shift their eyes on the products in same function as they strongly believe in the brand as well as quality. They also seek the personalized service after they get the products. Schwarzkopf can do this for them to meet their demand both in behavior and in psychology. As you can see in picture 14, Schwarzkopf has many world-top hair stylist may offer the professional service and hair style. If the consumers accept the Schwarzkopf product, they always tend to seek stability for a long time, which may bring more benefits to the enterprise. Interestingly, from the income level for each household, more than 70 household could afford the Schwarzkopf product, seeing in picture 16.

8.0 Conclusion

In conclusion, Schwarzkopf is a world-top brand majoring shampoo. The aim of this report is to make a situation analysis and target market identification for Schwarzkopf.

Through current analysis of Schwarzkopf product, mainly Current Product, Current Pricing, Current Distribution, Current Promotion, Schwarzkopf has its own advantages among its competitors. Market segmentation is a pretty useful tool for analyzing the market environment and expanding the potential market. It also helps to identify and understand the reason of consumers demand. Geographic Segmentation, Demographic Segmentation, Psychographic Segmentation, Behavioral Segmentation are described in the report. It has provided a range of advice and assistance for Schwarzkopf to expand its present market and potential market, which may bring great advantages to the development of Schwarzkopf.