The micro- and macroenvironment
In marketing, microenvironment refers to elements related to a company’s immediate operational sphere; these factors directly affect the process of decision-making and performance, while the macro environment is composed of uncontrollable external elements that also influence the way a company performs and makes decisions. Within the context of an international fragrance company that has chosen to enter the Middle Eastern market, the microenvironment is associated with years of experience in the perfume market, the number of departments, and the success of the brand in its home market, as well as the company’s overall marketing strategy.
The macro-environment, on the other hand, is much more complex since the company cannot assume full control of all factors, which is often frustrating. It includes the external environment: the number of potential customers, social media trends, and economic indicators for Middle Eastern countries, as well as overall trends and customer preferences in choosing a perfume. The actions of the key competitors of a brand can also be regarded as belonging to the macro-marketing environment since the particular accomplishments of a rival perfume company in the Middle Eastern market may pose a threat to a company only beginning its marketing attempts in the same region. Moreover, if a famous brand should collaborate with a celebrity to create a perfume, such a move can also bring significant losses to a competitor.
The international fragrance company positioning as “the world’s local fragrances”
Brand positioning is especially important for fragrance companies because preferences in perfumes can vary from one region to another. Therefore, international fragrance companies need to take into account the fact that Middle Eastern customers choose spicy oud fragrances over fresh and floral scents. However, a large part of becoming popular is related to updated digital communication efforts (as seen from Elizabeth Arden’s example) that allow brands to reach potential clients and get a better understanding of their needs.
Companies like Revlon, Coty, Dior, L’Oreal, and many others have invested funds and efforts into researching the preferences of customers and offering the largest variety of products from which to choose. For example, Coty has an extensive range of products in the company’s portfolio that caters to every consumer of the brand, which means that any customer—whether from the UAE or France—will find something he or she likes. Such an approach to positioning is particularly beneficial for a brand since it does not take too much effort to connect with clients around the world—the only investment needed is a coherent customer communications strategy that will apply to clients around the world.
The Middle East market for an international fragrance company
Reasons for an international fragrance company choosing the Middle Eastern market are numerous. Among the key reasons are high economic indicators for the Gulf countries, which means that the purchasing power of customers is relatively high. High economic indicators are of the highest importance for brands that enter a new market because companies must be sure that investment and marketing efforts will be rewarded with high revenues. The second reason is the overall increase in the popularity of spicy Arabian scents. Because brands are already producing these types of fragrances to cater to the demands of the European and American markets, entering the Middle East with such perfumes is a smart move since the region is accustomed to traditional heavy scents that last for days.
The third reason for choosing the Middle Eastern market is the reported growth of sales in the region. For example, in 2011, Revlon reported an overall increase in sales by 4.5%, corresponding to higher sales of fragrances in Europe, Africa, and the Middle East. The fourth reason for a perfume company to enter the Middle Eastern market is the overall receptiveness of the region to fragrances. Even niche brands such as Hennessy managed to attract a high-end audience with unique scents (for example, Arabian Nights). Because the region is considered wealthy, the price of Arabian Nights ($400 an ounce) did not scare customers away; on the contrary, the elegant packaging along with high-quality ingredients brought Hennessy a significant profit (Matherly, Nandialath, and Richards).
Market segments that the fragrance industry targets
Fragrance companies are currently in a position that requires them to be proficient at targeting new market segments due to the fierce competition between brands. The introduction of a new market segment can be seen from the example of Elizabeth Arden, which collaborated with singer Taylor Swift to target her multi-million online following. The production of a new fragrance called Someday allowed EA to reach a new audience: Swift’s fans, who were ready to buy a perfume with their idol’s name on the bottle. By employing digital marketing, Elizabeth Arden managed to create tremendous hype regarding the product.
Another market segment targeted by fragrance companies relates to the production of expensive niche perfumes designed to fit in the high-end position of the market (as seen from the example of Hennessy’s Arabian Nights). Because the mainstream market for perfumes has expanded to the extent that there is nothing new and original being created, customers may try to look into new niche brands that tend to be more expensive but offer a unique selection of fragrances that are different from the mainstream. Thus, large international perfume brands are trying to invent new fragrances (Armani Prive, Tom Ford, Chanel Exclusives, etc.) that will be of higher quality, and more expensive, to cater to the needs of consumers who prefer buying unusual scents. Such an approach will be particularly beneficial in the context of the Middle Eastern market where purchasing ability is quite high, and customers will be interested in buying high-end niche fragrances that differ from those in the mainstream market.
The basic categories of target marketing strategies
Target marketing relates to the process of brands choosing between whether they are going to emphasize one or multiple segments or pursue the mass market. The case study about entering the Middle Eastern market includes several target marketing categories since the approaches of competitors were not the same. Differentiated marketing has been one of the most common approaches because brands needed to cater to the needs of the general audience while introducing another segment to gain profitability (for example, Elizabeth Arden and Taylor Swift’s perfume).
Concentrated targeting, on the other hand, has been employed by niche brands like Hennessy that have catered to the needs of the niche audience that value high-quality ingredients and unique scents. Such an approach was chosen because the company does not produce a wide range of fragrances and has a limited scope of resources when it comes to offering customers mass-market scents. Thus, Hennessy used concentrated marketing to bring wealthy customers high-quality products at a high price instead of mediocre quality products at a lower price.
Work Cited
Matherly, Laura, Anup Nandialath, and Claire Richards. Case Study: Arabic Perfumes and the Global Fragrance Market. Thunderbird School of Global Management, 2013.