SEPHORA

Assessment 3: Group Project Submission Form

Surname, Name:

Student Number:

Idrizi Ornela

12403172

Van Veelen Derk

16204946

Rooney Gerard

16204973

Vero Edoardo

16203049

Assignment Topic:

Feasibility study (Marketing Plan): Group project

Programme:

MSc International Business

Module:

Global Marketing (MKT42220)

Lecturer:

Rui Qi Wei

Date of Submission:

/12/2016

We confirm that we have actively participated in the construction of this paper report. This case report
is based upon the independent analysis of the below signed members of the group, except where clearly
and specifically referenced as otherwise.
Idrizi Ornela

_____________________________

Van Veelen Derk

_____________________________

Rooney Gerard

_____________________________

Vero Edoardo

_____________________________

Table of Contents

Overview of the firm marketing

Year of establishment:
The firm we have chosen to analyse for this project is Sephora. The company was founded in
France by Dominique Mandonnaud in 1969. Sephora provides unique,
open-sell environment and provides a broad range of product categories including skincare,
color, fragrance, body, smilecare, and haircare, in addition to Sephora's own private label
(Sephora, 2016). In 1997 Sephora was acquired by the multinational luxury goods
conglomerate, Louis Vuitton Moet Hennessy (LVMH). Ever Since since this acquisition,
Sephora has experienced astonishing growth levels. Over time Sephora has developed a broad
range beauty format containing perfume, beauty and cosmetics products. This concept led to a
new generation of stores with a sober and luxurious architecture, designed in three spaces
dedicated to perfumes, makeup and skincare respectively LVMH (2015). Based on the quality
of this concept, Sephora has gained the confidence of selective perfume and cosmetics brands. In

addition, Sephora developed its own brand range of exclusive products in 1995 and now offers
various products sold under its name.
Growth trend:
The Sephora brand is available in 31 countries and has more than 250 brands(Reference, 2016).
Sephora has proven both financial and business growth throughout the years and figure 1.0
below will demonstrate LVMH financial reports from the years 2016 and 2006. These
statements will be used to to demonstrated Sephoras renowned success. From the 2016 figures,
it is evident that Sephora has further increased its market shares around the world. LVMH states
that Sephora has yet again delivered double-digit revenue growth and that the companys
performance was remarkable. Also during this period, Sephora expansion continued with some
fifty store openings worldwide. While looking at the 2006 financial statements it is obvious that
the Sephora company has grown from 621 store in 2006 to 1661 stores in 2016. Moreover, the

revenue has also increased from 3,891million in

2006 to 5,480 in 2016.
E
Figure 1.0 Financial Reports of LVMH from 2006-2016
Market segment(s) being served:
Sephora has target market segments including women and men. There are specific sections
within the Sephora stores which show images of women of all cultures from 20-30, 30-40, 4050+ and men 20-40+. Sephora attracts a variety of customer but the main segments are women,
who value fashionable/quality skincare, beauty, and fragrance products and are open to a
medium to high price range (Tung, 2013). Furthermore, there are cosmetic products which
appeal to the teenager segment. The colour coordination of Sephoras stores are black and white,
and give the store a look that may be attractive to professionals. Moreover, the wide assortment

of brands, vendor exclusives, and private label combinations would attract any shoppers looking
for variety (Sephora, 2016).
Current Buyer Characteristics:
From analysing Sephoras customer demographics below it is evident that the typical Sephora
customer is female and between the 20-35. Moreover the psychographic segmentation of
Sephora's customers is younger urban people, who are into fashion, like to take care themselves
and to stand out. Sephoras customers come from all types of backgrounds but the main shoppers
are of Asian and Hispanic origin. Furthermore, Sephoras main customers either earn below
$20k or above $100k. This proves that Sephora provides product for customer of different
financial backgrounds.

Figure 1.2 Sephora Shopper insight retrieved from InfoScout

SWOT analysis:
A SWOT analysis aims to identify the strengths and weaknesses of a company and the op
portunities and threats are factors in the environment that may affect the company. A swot
analysis will be conducted for Sephora in order to identify the companys internal strengths and
weaknesses and, also its external opportunities and threats.
Strengths
Provide a variety of products from different brands (as well as its own private label).
Broad range of product categories including fragrance, skincare, color, body, smilecare, and hair
care.
Target several different customer income demographics.
Exceptional reputation for providing high quality goods

 Located in 31 countries all around the world. Between 2006 and 2016 Sephora opened 1040
stores worldwide (LVMH, 2016).
Large international market share in the global cosmetic and fragrances industry. In the United
States alone Sephora has captured more than 20% share of the cosmetic and fragrance market
(Forbes, 2013).
Weaknesses:
No television promotion, billboard advertisements, or print advertisements for Sephora. As
advertising and promotion can be a way that a company connects with their customers and also
allow customers to recognise the brand, the lack of this hinders Sephora's ability to connect with
loyal customers (Sephora Cosmetics Blog, 2014).
Opportunities
Emphasis on male related products and broaden line of men products
Design a Sephora beauty lounge area within stores. This is series of intermittent spaces
throughout the store that provide opportunities for community interaction and personal service
as well as spaces to unwind (PSFK, 2014).
Threats
Highly competitive cosmetics industry with thousands of brands
Customers are very selective when choosing beauty products and attracting them requires high
brand quality and service.
Position of the product on the product life cycle in home market:
As mentioned previously Sephora launched its own brand range in 1995 including Sephoras
own brand lipstick products. As we have chosen the lipstick range we agree that this product is
positioned as being relatively mature within the product lifecycle in the home market.
Detailed description of specific product to be marketed in your selected country:
The product we have chosen to market in China is a lip stick and will be available in a range of
colours. As Sephoras best seller range are lipsticks we felt that this product would be of high
demand in the Chinese market. The lipstick will aim to hydrate lips while providing an intense
Color. We have provided a demonstration of how the lipstick will look like. Our aim is to adapt
our product to the Chinese consumers taste and to do this we will incorporate different Chinese
art symbols inside of the lipstick while also emphasising the Sephora name of the packaging.
The lipstick may seem like a clear colour from a glance but once applied the tone will change
depending on the lipstick.

Analysis of market you have selected to market your product

Current size of the market, Profile of the prospective buyer:
Euromonitor International reports that Chinas colour cosmetic industry is worth a staggering
CNY 25.1 billion and the market has grown by 11% since 2015. By 2020 it is estimated that the

colour cosmetics industry will reach a staggering 37 billion Chinese Yuan. This is a result of the
Chinese consumers having accepted to wear colour cosmetics on a daily basis to achieve a better
personal image (Euromonitor International, 2016).
Profile of the prospective buyer:
The colours cosmetics industry in China mainly attracts customers which are born between the
1980s and 1990s while those aged between 25 and 34 are the most frequent users of colour
cosmetics. However, students younger than 24 years old (who have fixed income) are also
increasingly using cosmetics (Euromonitor International, 2016). Furthermore, the colour
cosmetics industry is also attracting male consumers, thanks to the influence internet sources.
Market
trends,
future
growth
potential:
The total amount of the sale of lipstick products in China in 2015 was CNY 5032.2 compared to
that of CNY 3317.9. In 2010. Additionally, the lipstick sector has experienced a growth of 11%
since 2010 ( Euromonitor, 2016). From these figures it is evident that the lipstick industry is
constantly growing and there is prosperous growth potential for lipstick products. The rise of
incomes in China has allowed consumers to trade up to high end products and thus leading to a
gradual rise in unit prices.
The top cosmetic brands and their growth records will be highlighted in the diagram below.

Competitive Environment
The cosmetics sector on the Chinese market has been growing really fast pace with the rapid
development of the Chinese economy the last years.
Nowadays, in the cosmetics market, consumers attitude has changed remarkably as consumers
are more independent in making decisions. Instead of being influenced by advertisement or

promotional campaigns like a few years ago, they collect information through different channels
and consider various factors before choosing the products that they most prefer.
According to China Food and Drug Administration (CFDA) statistics, the number of enterprises
qualified to produce cosmetics in China as at the end of November 2015 was 4,542. By
analyzing the cosmetics market, it can be seen that domestic brands are concentrated in the mid
and low-end segments, while foreign enterprises and joint ventures focuses on the high-end
segment like Sephora.
Currently, the greatest competition is seen among foreign brands such as L'Oral, Shiseido,
Mary Kay, Este Lauder and Olay. On the other hand, the low-end market is divided by many
domestic SMEs. (Chinas cosmetic market, 2016) These companies can be seen as the direct and
indirect competitors for Sephora.
Porters 5 Forces
Porter's Five Forces model, identifies and analyzes five competitive forces that shape every
industry, and helps determine an industry's weaknesses and strengths. (Investopedia)
Understanding the competitive forces, and their underlying causes, reveals the roots of an
industrys current profitability while providing a framework for anticipating and influencing
competition (and profitability) over time. (Harvard, 2008)
Threat of entry: Medium
For domestic companies in China is not very hard to enter the cosmetic industry and in fact every year
many of those companies decide to enter the market as the investments required are quite low, inputs are
available domestically and theres a huge customer demand. Moreover, the word of mouth is important in
China (Harvard Business Review, 2010) and even though some customers seem to be loyal to a brand, it
is possible that they will try other ones, based on the fact that those products are new and positively
reviewed. However, for international companies is not easy to enter the market because it requires high
capital investments, a well functioning distribution network and a good brand image.
Threats from supplier: Low
Sephoras suppliers do not have a high bargaining power. Sephora has relationship with many different
brands and it also has its own private label in order to feature its beauty products. Sephoras main
suppliers are pharmaceutical and chemical companies so the switching cost would be low for Sephora.
Threats from buyer: Medium
Customers usually have strong bargaining power because competition in the cosmetic industry is very
high and the switching cost is low. However, among the international brands it is a bit different. These
brands are positioned as high-end, luxury and exclusive and Chinese women like to show off that they
can afford those expensive products. (The Economist, 2014) As a result, the high level of demand for the
well known foreign cosmetics brands leaves customers very little bargaining power within the luxury
cosmetics market segment.
Threat of substitutes: Low
There is a lack of substitutes to beauty products. Consumers could produce some kinds of homemade
products at home such as lotions. However, Chinese women normally care about their appearance (The
Huffpost, 2013) and they realize that applying obscure synthetic cosmetic products may cause skin
problems over time, and they tend to prefer natural formulations.

Competitive rivalry: High

The cosmetics market in China is highly saturated and has a great variety of brands and products supply.
More than 3,000 companies are strongly competing in the huge Chinese market (U.S. Commercial
Service Hong Kong, 2015). Some of them come from the Western countries as Sephora: P&G, the
LOral Group, Estee Lauder Companies, Avon, and Unilever. Others, like AmorePacific and the
powerful Shiseido Co., are from South Korea and Japan, respectively. Foreign brands account for nearly
60% of the total sales of cosmetics in China, with sales value making up nearly 90% (U.S. Commercial
Service Hong Kong, 2015). In addition, the rapid development of domestic cosmetics companies boosted
the growth of domestic brands (such as Chinfie, Chcedo, CMM, Houdy, Caisy, and Longrich) at a rate of
about 10-15% in 2014 increasing the intensity of the cosmetics rivalry (Chinas cosmetic market, 2016).

Economic Environment
Economically speaking China is an ideal country for Sephora to expand into, there are many reasons for
this not limited to its slowing but steadily continuing growth in GDP year after year at approximately
6.5% a year. Furthermore we have found that the GDP per capita income has been growing steadily since
the early 1960s from a record low of 130.14 USD in 1962 to a record high of 6416.18 USD in 2015.This
chart below seems to suggest that the Chinese GDP per capita will continue to grow steadily over the
course of at least the next few years.

So as of April 16th 2016 China has received its latest credit rating of 80/100 from Trading Economics,
however it is important to note that the same credit rating agency predicted the outlook for China as being
negative despite the high score they were given. With that in mind we must recognise that China is going
to have to take a hit on any borrowing costs, though it may not be significant. These changes have come
since China has opened its bond market wider to foreign investors. S&P have stated that China have
taken longer than expected to move to domestic led economic growth and that risk to the government's
creditworthiness is gradually growing. There are those however such as Rosita Lee, director of HangSeng Investment based in Hong Kong who are unphased and state that this was expected with the
decreased growth in the economy, furthermore, Fitch ratings, whose latest review only came out in
November,stated China's outlook as stable.
For more than a decade China has been experiencing a growth in the middle class and there is no sign of
that growth stopping until at least 2022. More than 75% of Chinas urban consumers will earn 60,000 to
229,000 RMB a year(McKinsey & Company, 2016). These figures will continue to become more

significant if the Chinese government continues to reduce its interference with its exchange rate. Barton
proposes that this kind of growth in income levels, should it happen as expected, would lead to a
doubling in household income which would mean more disposable income.

Cultural Environment
Acknowledging the cultural environment is particularly important for a company entering a market which
is so distinctively different to their own. While Sephora has successfully expanded into other nations in
the past, this does not necessarily mean that they will have the same success with expansion in the future.
Despite becoming more globalised the effect of cultural distance on Sephoras level of success will not
diminish.
However, simply being a foreign brand is a benefit to Sephora as Chinese consumers often consider
foreign brands as having both more value and a higher level of trustworthiness.
This is due to two factors; firstly, Chinese consumers have had problems with local brands before in
terms of product quality. The most famous case of this being in the market for baby formula when
Chinese companies sold a formula which was merely an imitation of baby formula and contained
dangerous ingredients which costed Chinese children their lives in certain cases. This case and cases like
it have developed in the Chinese market a lack of trust across many industries.
Secondly, Chinese consumers hold a high regard for foreign brands, so much so that they are willing to
pay more than most other countries for the same products. This can be seen in the diagram below.

The reason for this is quite simply the status symbol of owning high end products of foreign design in
China which is significant(Attractchina.com, 2016).

Legal Environment
The country is known to have a planned economy, exemplified by their Five Year Plans and the different
periodical objectives, set out by the government. The high rate of governmental interfering lies in a linear
relationship with the communistic regime of the country. The Chinese Communist Party (CCP) is the
single leading party in China and it rules since 1949, which is known to be the start of a period called the
Socialist Economy. China is known by its governmental protection of its own market via legislation and
trade barriers. Competing for example, with Chinese State Owned Enterprises (SOEs) can be called
unfair competition due to the incredible amount of governmental financial support.
China is highly regulated by its government. This also applies to the Chinese Contracting Law. The
functions of the Chinese Principles of Contract Law are Guidance for Legislation, Guidance for Law
Interpretation and Guidance for Contract Interpretation. The conclusion of a contract in China is based on
the Offer and Acceptance Process, which is based on two conditions: (1) the intentions of the parties to
be legally bound (2) the existence of a sufficient agreement between the parties.
Since China is a communistic country, it has a high rate of governmental influence on every aspect of its
economy. To regulate trade export and import, the Chinese government has implemented the China
International Economic and Trade Arbitration Committee (CIETAC) commission in 1956. To stimulate
trade export and import, the Chinese government has implemented the China Council for Promotion of
International Trade (CCPIT) in 1952.
The legal construction in The People's Republic of China is different than the legal forms that are
recognized in Europe or the United States. As mentioned earlier, the PRC is a communistic country,
which means that there are high amounts of State Owned Enterprises (SOEs) and local governmental
revenues are stimulated by financial revenues from Township and Village Enterprises (TVEs). There are
also many different types of legal persons. The following chapter will elaborate on the legal forms.

Entry Strategy
There are many different types of legal persons that are recognized by Chinese Legislation. This part,
however, will solely focus on the business types that foreign investors establish when they enter the
Chinese market.
A wholly foreign owned enterprise (WFOE) is a limited liability company wholly owned by the foreign
investor. A WFOE requires registered capital and its liability is limited to its equity, it can generate
income, pays tax in China and its profit can be repatriated back to the investor's home country. Any
limited liability enterprise in China, which is 100%, owned by a foreign company, individual(s) or
companies can be called a WFOE.
Joint Venture (JV)
A joint venture is a limited liability company formed between a Chinese individual or company investor
and a foreign investor. The parties agree to create an entity by both contributing equity, and they then
share in the revenues, expenses, and control of the enterprise. Foreign investors have used JVs to enter
the restricted industries in China, such as: Education, Entertainment, Mining and Hospitals.
Hong Kong Company
A Hong Kong company is often used as a Special Purpose vehicle (SPV) to invest in the mainland of
China. Hong Kong is one of the easiest and quickest locations to start a business. Although a HK

company is not a legal entity in Chinas mainland, many foreign investors, especially investors from
Europe and North America choose to form a Hong Kong company as an SPV to invest in China. Due to
the local expertise of the Chinese market and the tax free revenues, Hong Kong is a very attractive place
to start a business.

Our Foreign Market Entry Strategy:

Our options are clearly laid out above but one key factor that we must be aware of is that they are not
mutually exclusive meaning that instead of just choosing one, a combination of two can be formed in a
manner that would be most beneficial to the business. The two strategies we chose to use are that of the
joint venture and the Hong Kong company. The purpose of this is to allow us to enter and adapt to the
chinese market with limited liability.
Once we are established in Hong Kong we can much more easily enter the mainland chinese market,
especially with the assistance of our new found partner in the joint venture which would be an investor
with real experience in and cultural knowledge of the mainland chinese marketplace, this kind of
knowledge could be the difference between success and failure. Furthermore when starting operations,
being based out of Hong Kong in particular as they have reduced tax restrictions on foreign companies.
Lastly, the reason for choosing Hong Kong in particular as a starting point is the advantages it provides in
terms of its geographical location, political connections and lesser restrictions than the mainland and the
infrastructure which has allowed it to become a central hub in southeast asia. This would be beneficial
should Sephora desire future expansion into other countries in the region.

Marketing Mix
Product Strategy

Product mix for Sephoras own brand lipsticks in China

Product Mix

Strategy

Main Reason

Product concept

Adaptation

To adapt to country norms

and tradition

Colour

Adaptation

To adapt to country norms

and tradition

Packaging

Adaptation

To adapt to country norms

and make it easy to read

Label

Standardization

Brand recognition and

profitability reasons

Brand Name

Standardization

Brand recognition and

profitability reasons
When launching lipsticks in the Chinese market, Sephora will adapt the product adaptation
strategy and allow the product to be modified to the preferences and demand of the Chinese
consumer. This may be achieved by inserting various Chinese culture symbols and patterns
within the lipsticks i.e the lotus flower, the Taiji figure etc. The lipsticks will initially look like a
clear substance but once applied to the lips, the colours will change into the specific shade and
will be available in a variety of red/pink tones. The reason for this choice of colours is Chinese
women prefer wearing red lipstick, a tradition goes back hundreds of years to the apprentice
Geisha makeup which features a thick white base and red lips. The packaging of the lipstick will
also be adapted to feature Chinese writing. Packaging has a significant impact on the sales and is
essential that the design attractive as well as unique. Essentially, attractive packages may lure
customers to enter a store and have them try the products. The figure below demonstrates the
standard Sephora lipstick and also our recommended version of the lipstick. Furthermore, a
leaflet containing a detailed description of the product and its unique features will be inserted in
the package. Incorporating a leaflet within the package enables Sephora to connect with
customers by bringing the brand's story to life, while also presenting the product.
Sephora will incorporate a more standardisation approach in relation to the brand name and label
when entering the Chinese market. The main reason for this is because the company is a
worldwide renowned cosmetics brand and does not need to change these aspects of the product
mix.

Sephoras own brand lipstick and Sephoras recommended lipstick for the Chinese market

Product positioning involves placing your product in the mind of the consumer in a positive
manner. Sephora has a distinctive brand image and strictly use only the colors black, white and
red throughout their stores and website designs. Customers automatically think of their black
and white striped visuals when they think Sephora. These colors deliver a clean brand image that
goes along well with their high end luxury cosmetics.

Place
In order to design the channel of distribution, several factors are taken into account. These consists of
four determinants: functions, levels, width (this stands for the number of intermediaries) and channel
systems. In terms of functions, Sephora will lose some control of the product that they will market
through intermediaries. The intermediary will carry the inventory and takes care of the physical
distribution, as well as the after-sales service. However, when selecting an intermediary, Sephora should
make decisions on which functions they want to delegate in order not to lose control. The second
determinant is the amount of levels that will be used. Sephora is going to sell in China, making use of a
retailer will be recommended, since Chinese retailers have knowledge over their market. In order not to
lose control over the functions and to keep control over the strong brand identity of Sephora a short
channel of distribution is recommended. Next to that vertically integrating a wholesaler together with a
Chinese company will be beneficial to control the amount of information from the Chinese market. In
addition, the short channel distribution makes the need for information from the Chinese market high.
The third determinant is the number of intermediaries that will be used. The product that will be sold in
China is a convenience product, which is mature on the product life cycle. The product can also be
considered as a low-price product and the customers that buy these products prefer certain brands. As
shown in figure 1 and 2, the product can be used for intensive distribution.
The last determinant is the choice of the channel integration system. As analysed within the marketing
mix, a multi-channel marketing system will be recommended. The product will be sold via an online shop
and physical shops in China. This increases market coverage and the online shop will lower channel
costs. However, selling via an online shop can cause difficulties with keeping control over the factors. In
addition, these two channels can end up competing with each other.

Figure 1: Channel width

Figure 2: Channel width

Promotional Strategy:
When discussing promotional strategies, it is important for a business to understand and recognise the
changes which have been implemented in recent years such as in 2015 when new regulation was brought
in which had an impact on advertising through things like celebrity endorsements as well as having a
variety of other impacts. Most of these changes however should not impact Sephoras advertising to a
large degree but they should be kept in mind when developing adds due to the simultaneous increase in
fines for breaking the rules of this new legislation.(Doland, 2016)
Despite these changes, Sephora still need to be covering three primary means through which they should
attempt promotion. Firstly, as we will state, they should be attempting a joint venture and with that in
mind we believe that the partnering company from China should be allowed a significant amount of
creative control as they will be more attuned with the local culture, its characteristics and what consumers
will be more likely to respond to. Secondly they should attempt to use the most appropriate media
available in order to reach their consumers, this kind of media should be related to other enterprises like
those involved in the fashion industry.One such example of how this could work would be the local social
media app WeChat which is very popular in China(Emarketer.com, 2016).This app would allow Sephora
to communicate directly with intended target market and would grow more beneficial as Sephoras
popularity grows.Finally and perhaps most importantly is where they should enter the market, often times
companies entering China fail to account for local cultural differences, the local partnership would help
address this issue but it could be further addressed by choosing to enter Hong Kong before mainland

China. This is because of their prior connections to the west, it would be easier to first adapt to this
market, allowing for gradual integration into the overall chinese market. Some of the advantages of the
use of Hong Kong have already been mentioned but there are many more which can be (Techinasia.com,
2016).

Pricing strategy
In order to set the price for Sephora in the Chinese market, the pricing of the same product across entered
countries is taken into consideration. A great challenge for Sephora is how to coordinate their prices
across the countries in which they sell their products. As mentioned before Sephora is an upper class
brand within the makeup industry and therefore wants to achieve a similar positioning in the Chinese
market. This will be done by adopting standardized pricing. However, the pricing will be adapted to the
market conditions of China. This will be done by taking the 3C method into consideration. The 3C
method consists of costs, competitors price, which consists of the prices of substitutes and the asking
price of the competitor's product.. The last C is the customers perception of the price and the price the
customer is able to pay.
Sephora uses a global pricing strategy, which means that the prices are the same in every country they
enter, taken into account the inflation in that given country.
Firstly, in order to determine to what extent prices should be standardized by Sephora, the headquarters
are setting a fixed world price for the lipstick Sephora is selling. This price is set between $10 and $24.
The fixed price is set after fluctuations of foreign exchange rates are measured. Since this product is sold
in large quantities this strategy is less risky. Another benefit of this strategy is that the product can be
introduced rapidly and Sephora will be able to form a consistent image across international markets.
Which will be beneficial for Sephora in the long run to establish a global brand.
As mentioned earlier this report would like to take the 3C method into consideration as well. First of all,
the fist C will be addressed to cost, which is set between $10 and $24 as mentioned before. This cost
includes fixed and variable costs already since this is the selling price of Sephoras product on internet.
After the cost, the competitors prices will be discussed in a table, which consists of the lower price
products of that market, the middle class and the upper price products.
Low-class <100 Yuan

Middle-class 100-200 Yuan

Upper-class 200> Yuan

Carslan
Maybellinel
Qdsuh
NYX

Bourjois
LOreal
Maybelline

Sephora
Dior
Chanel
YSL
Benefit
Estee Lauder

At last the customers expectation of this product will be discussed. The Chinese consumer of this
product will be a high-end buyer, since the product of Sephora within this price range is considered
expensive. Therefore, there is an expectation that the customer is willing to pay more for the product than
the average consumer, because the prices vary from medium to high.

Conclusion:

In conclusion we have determined that the optimal move for Sephora at this moment in time is to expand
into China as we believe it offers a unique blend of circumstances which seem to be complementary to
where Sephora stands currently as a multinational company.
There is the continued and expected growth of both the Chinese economy as well as the market for
cosmetics. This growth is being experienced in other countries around the globe but China is unique in its
consumers views of international products and foreign brands which hold the majority market share.
Whats more is the significant factor of protectionism in the country which is and will continue to lead to
a rise in the market share of domestic brands. This is bittersweet as it means Sephora must act quickly,
which can hold risks, but simultaneously, once they are a part of the market, they are less likely to be
challenged by future market entrants.
Finally, we have the suitability of the market itself in terms of cultural and social responses. We have
developed what we understand to be an effective marketing strategy which will also be helped along by
guidance from our local partner in this joint venture. Furthermore, there is the prospect of using local
retailers in our product distribution and placement which should work well with the joint venture aspect
of Sephora allowing for more harmonious distribution across the country.

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Legal Part + Entry Strategy

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https://www.theseus.fi/bitstream/handle/10024/107666/Ji_Hanbing.pdf?sequence=1

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