MASTER OF BUSINESS ADMINISTRATION

Assignment Mark Sheet

Student ID Number: Cohort: September 2009

Assignment: Marketing Management

Date Received: Marker:

Comments and suggestions for improvement:

Very interesting piece of work. Subheadings are useful in the content list. Good PEST analysis.
Adapted 5 forces diagram as required for the company. Clear understanding of the subject is
depicted. Matrixes and models are used efficiently. Not enough academic resources.

OVERALL
Question 1 Question 2 Question 3 Question 4
MARK 74%
Mark obtained

Marker's signature:

Please note: The above marks are provisional and subject to ratification by the MBA External Board.


Assignment: Business and Financial Environment 1
I certify that all the material in this paper which is not my own work has been identified and
acknowledged and that no material is included for which a degree has been previously conferred upon
me.
Please sign: Please print:

Student ID Number:
 Kingston University Business School

Marketing Management
Assignment
“Developing a marketing plan for United Europe Holding”

Prepared by:
ID Number:

Word count: 3 130 (excluding Executive Summary,

Bibliography, Appendix)

Moscow, April 2010

2
CONTENTS

Executive Summery…………………………………………………………………………….....4
1. Corporate Strategy ..…………...……………………………………………………………….5
2. External Analysis………………………………………………………………………………6
3. Internal Analysis ………………………………………………………………………………8
4. Marketing Objectives…………...…….……………………………………………………...11
5. Marketing Strategy ……... ………………………………….………..…………..…………11
6 Implementation……………………………………………………….……………………...19
7 Control and Forecasting……………………………………………………………………....20
References ...……………………………………………………………………………………..22
Appendix 1………………………………………………………………………………..……...23
Appendix 2…………………………………………………………………………………….....24
Appendix 3………………………………………………………………..……………………...25
Appendix 4…………………………………………………………………..…………………...26

3
Executive Summary
The present marketing plan was developed for United Europe Holding, Russia’s leading
distribution company operating in the market of perfumery and cosmetics, as currently the
company lacks one.

The main objectives of UEH in the short term perspective are:

 Bringing the revenue back to the results of 2008 (220 000 000 EUR)

 Cost efficient processes of sales and operation activities

The main objectives of UEH in the long term perspective are:

 Increasing the market share in 2012 in perfumery and make up segments;

 Establishing long-term partner relations with the retailers and covering new market
segments.

The overview of the economic health in the industry signifies that the market in question was
struck by the crisis, however, not as dramatically as other retail segments and that in tune with
the growth of the retail sector it continues to grow.

The benchmarks of the competitive advantage for a distributing company are:

 A diversified brand portfolio;

 Flexible pricing terms;

 ATL and BTL support of the brands.

PEST and SWOT analysis outline UEH’s current position and possible directions of the further
development, thus they open the new market segments such as pharmacies, on-line sales,
independent mono brand boutiques.

Financial objectives
 To increase EBITDA: by 19% in 2012;
 To bring back the gross profit margin to the level of 2008 in 2011, and increase it 8% in
2012;
 Marketing budget: 15% of the turnover;
 To increase the turnover in 2011 10% to 2010, and in 2012 15% to 2011;
 To reduce the turnover coefficient from 3.5 (months) to 2.5 (months)

Marketing objectives
 To occupy 17% of selective perfumery market and 20% of decorative cosmetics market.
 To keep the leading position in the market;
 To explore new market segments and attract new customers;
 To develop CRM programs both for b2b and b2c customers.

UEH’s marketing strategy is to continue operating in the current market with a deeper
penetration so as to increase the market share, which can be achieved through a complex
program based on the marketing mix.

4
 Acronyms

United Europe Holding – UEH

Ile De Beaute – IDB

Federal Service for Oversight of Consumer Protection – FSOCP

Welfare and Federal Agency on Technical Regulating and Metrology – WFATRM

1. Corporate Strategy

1.1 Overall Position

JSC «United Europe Holding» works in all segments of perfumery and cosmetics market and
offers its partners a wide range of related services: marketing, logistics, storage and warehousing
support, financing and investments, IT-services. 16 branches, covering all territory of the
Russian Federation, have a management structure identical to the central one. More than 200
sales representatives serve about 7 000 points of sale. UEH brand portfolio counts more than 60
perfumery, make up and skin care brands.

The challenging economic environment had a negative impact on the retail sector which in 2009
resulted in the decrease of the company’s turnover (- 19 per cent to 2008), an even more
dramatic marginal decline of 23 per cent, and an increased stock of goods at the end of the year
(turnover coefficient – 3.5 months in comparison with 2.5 months in 2008).

1.2 Company’s mission: to deliver a full range of distribution, logistics and retail services to its
partners.

Company’s objectives:

 Increase the turnover to strengthen its leading market position;

 Increase its profit margin in the context of the challenging economic environment;
 Develop a brand portfolio capable of setting partnership with the majority of retailers in
Russia;
 Secure partners’ relations in b2b sector;
 Raise customer loyalty in b2c sector.

1.3 Company’s strategy: to be the market leader through establishing partnership with all the
retailers and offering the most exhaustive brand portfolio.

5
Table 1 United Europe Holding Brand Portfolio

2. External Analysis

In order to outline the outer market profile PEST analysis is applied:

2.1 Political factors

The companies dealing with products containing more than 15% of denaturized alcohol are
regulated by the states by means of:

 License initiated by the Federal Law dated at 22.11.95 # 171-F3 (edited on 07.01.1999 #
18-F3) upon “State control of production and distribution of ethyl alcohol or products
containing it”;
 The Russian government’s resolution of licensing the activities of production, storing
and distribution of nonedible products containing alcohol dated at 06.12.1999
(http://www.sertis.ru/legislation/8/41)

6
Companies importing perfumery and cosmetic goods are obliged to register imported goods in
accordance with the resolution of the FSOCP and WFATRM so as to get the certificates of
quality conformity, certificates of safety and free sales.

Other factors are given in Appendix 1

2.2 Economic factors

Russia’s retail market has grown at a tremendous pace, by almost 500% over the last decade,
reaching $451 billion in 2008. While the credit crunch and global financial crisis have dampened
immediate-term growth prospects, a longer-term view of the market indicates significant growth
opportunities for retailers in the country (Retailing in Russia, 05.2009).

In 1997-1999 40 % of sales of perfumery and cosmetics were done through open-air markets and
approximately the same amount through department stores. In drugstores and supermarkets the
cosmetic goods practically were not presented, and direct sales made approximately 5 %. Over
the decade the quantity of the open markets was reduced from 40 % to 9,5 %. Absolutely new
channels of distribution of cosmetic means, such as hypermarkets, drugstores, Internet shops,
concept stores have started to appear and develop.

Ruble devaluation nurtured the negative impact of the financial crisis on the perfumery and
cosmetic segment. Being totally dependent on import, distributors and retailers had to raise
prices from 15 to 30% depending on products, which negatively affected the consumption since
consumers’ income was estimated in rubles and the overall inflation of nearly 15% made the
turnover of the key players plunge 25% in the first months of 2009.

Margin reduction is one of the key features that characterizes pricing policy led by all perfumery
market players – starting from importers to stand alone retail stores and direct channels of sales.

2.3 Social factors

Cultural and demographic factors in Russia, where women outnumber men and looking good is
considered a key competitive factor when both man- and job-hunting, have created one of the
world’s most attractive markets for cosmetics, perfume and beauty services. (Kolchik S., 2010)

Other factors are given in Appendix 1

7
2.4 Technological factors

In order to make the quality of operation processes more efficient and improve the final services
to their clients, leading distributors are supported by warehouse management systems of storage
and orders assembling. The WMS exchanges information with ERP systems through which the
information about the products is delivered to managers. Retailers increase customer loyalty
through various CRM programs which enable them to create a better customer profile and make
their final offer more effective.

3. Internal Analysis

3.1 Competitor Analysis

In 2009, the largest importers of perfumery and cosmetics were the three companies - Hermitage
& Star Beaute (division of Luxe-Holding), IFD (division of Kurs), and United Europe Group.
According to the market research (Russian Retail Industry Forecast to 2013, 2009 ) these companies
controlled nearly half of the sales of luxury products. Luxe-Holding together with the German
company Douglas-Holding owned a chain of stores – Douglas Rivoli, the retail chain L’Etoile is
owned by Kurs and Alcor, whereas United Europe Group has a retail division called Ile De
Beaute.

However, the financial crisis opened new opportunities for mergers and acquisitions, thus in
January 2010 United Europe Group merged with Hermitage & Star Beaute and became the most
powerful player in the distribution segment of perfumery and cosmetics market.

In order to evaluate the competitive environment of the industry in question, Porter’s 5 forces
model has been applied:

8
Table 2 Porter’s Five Forces

Competitive Threat of
Supplier Power Buyer Power Rivalry Substitution Threat of New Entry

Not extremely high Extremely Rather high, a Low, but possible ifEntry barriers are quite
as the conditions are high, as final lot of brands in there's a mass trend low, however, it is rather
mainly dictated by decisions are the market to use natural challenging to become a
the wholesalers, made by retailers are products instead of distributor of a well
Absence of retailers; interested in; skin care (e.g. known brand
monopoly; Number of market is facial masks made
Significant number federal retail growing, of fruits, etc)
chains is number of
limited competitors is
increasing.

The brief analysis given above implies that buyers’ power predetermines the game of all other
market players as retailer dictate their rules to wholesalers which they have to follow in order to
have a market share.

3.2 Future Trends

Distributors need to take into account the following market factors so as to stay successful
players in the market:
 According to research agencies, the segment of drugstores is filled only on 3-6 % (about
1000 shops), while a potential market capacity of 15-20 thousand shops. (Russian
Perfumery & Cosmetic Market. Ten years in perspective, 2009)

 On-line shopping has started to be more popular especially during the crisis..

 Value rather than cheapness counts when consumers have to choose between brands
when making purchasing decisions. (Kasriel D., 2009)

 Federal chains will eventually leave no space for regional stand alone stores which won’t
be able to compete with the discount offers and value added drivers provided by powerful
retail chains;

9
  Exclusive offers will start to play an even more significant role in terms of the
competitive environment. Thus the retailers will demand offers designed exclusively for
their chains.

3.3 SWOT Analysis

In order to develop a more effective marketing plan SWOT analysis is carried out.

Strengths Weaknesses
 Developed system of logistics, IT, and  Red tape prevails, slow in decision
distribution services; making;
 Huge variety of brands;  It is difficult to create an exclusive offer
 Good reputation and attractiveness for to a client due to the high coverage of
foreign suppliers; the retail segment;
 15 years of expertise, sophisticated  Only 25% of brands are the basis for
management team; UEH’s turnover;
 Close relations with IDB.  UEH is negatively perceived by other
retailers due to the close relations with
IDB;
 Vulnerable to customs regulations and
political and legal pressure.

Opportunities Threats
 UEH is in a good financial state, thus it  Skilled and experienced managers
can merge and acquire other companies might be poached by competitors;
and brands, thus increasing its market  Currency rate fluctuations might result
share. in a lower margin;
 To raise brand awareness UEH can  Customs regulations and new licenses
launch mono brand boutiques for the issued by the authorities might increase
so-called 3-D brands (comprising make the cost of goods.
up, fragrance, and skin care lines);
 Purchase new, pharmacy oriented
brands so as to be able to approach the
pharmacy;
 Open its own on-line stores to sell its
brands without retail pressure so as to

10
 increase its profit margin.

The implemented SWOT analysis signifies that the company’s market coverage is rather strong
due to the well developed distribution chain, besides its positions are secured by the support of
the second largest retailer in the country, however, it has to be cautious in terms of the relations
with the government and try to be proactive with the respect to customs regulations. It has to
secure the relations with the suppliers so as not to lose the brands most important to the turnover
increase, but it also has to follow the new trends that arise in the market and create the basis for
its further development.

4. Marketing Objectives for 2011, 2012

4.1 Financial objectives
 To increase EBITDA: by 19% in 2012;
 To bring back the gross profit margin to the level of 2008 in 2011, and increase it 8% in
2012;
 Marketing budget: 15% of the turnover;
 To increase the turnover in 2011 10% to 2010, and in 2012 15% to 2011;
 To reduce the turnover coefficient from 3.5 (months) to 2.5 (months)

4.2 Marketing objectives

 To occupy 17% of selective perfumery market and 20% of decorative cosmetics market.
 To keep the leading position in the market;
 To explore new market segments and attract new customers;
 To develop CRM programs both for b2b and b2c customers.

5. Marketing Strategy
5.1 Segmentation
The market seems to be nearly ideal for the segmentation as it is divided by clusters of the
clients with similar needs.
 Departments stores, mainly located in the largest cities targeted at the people with an
income significantly higher than the average. Need – high quality, exclusive brands.
 National and regional chains; Need – fast delivery, post payment terms, variety of
brands from mass market to luxury ones.

11
  Independent stores both in regions and Moscow. Need - famous brands, attractive
price offers.
 On-line stores. Need - fast delivery, variety of brands;
 Pharmacies. Need - skin care brands with the pharmaceutical background;
 Open markets. Need – cheap mass market brands;
 Direct sales. Need – training for the staff, variety of SKUs

Pie chart 1 Shares by Channels. Perfumery and Cosmetics in 2009.

Shares of Channels in Perfumery and Cosmetics Market

Pharmacies Others
6% 4% National Chains
Fairs and markets
30%
15%

Direct sales
21% Department Stores
24%

Source: Russian Cosmetics Market Forecast

UEH has adopted a differentiated marketing strategy targeting a number of the segments so as to
differentiate products and marketing mixes for each: department stores, national and regional
chains, independent store, on-line stores.

The information about UEH’s key customers is given in Appendix 3 (2)

Geographically the shares of UEH distribution fall into following segments:

12
Pie Chart 2 Geographical segments of UEH distribution

Moscow
Khabarovsk Vladivostok VIP
N. Novgorod 5% 5%
Joint Interprises
6% Moscow
12% Saint-Petersburg
Bryansk
VIP Yaroslavl
8%
Serg. Posad 3% Saratov
3%
Rostov
Voljsk Joint Interprises
6% Voljsk
30%
Rostov Saint- Serg. Posad
6% Petersburg
Bryansk
Saratov 9%
N. Novgorod
2% Yaroslavl
5% Khabarovsk
Vladivostok

5.2 Competitive advantage

Today UEH offers the retail market more than 50 brands which can be differentiated by price
and quality positioning: mass market, semi-selective and luxury, as well as by three distinct
product categories: fragrances, make up, and skin care. So far it is the only wholesaler in the
market with such a exhaustive portfolio comprising well-known brands. For a retailer it is much
easier to deal with one large distributor as UEH and represent a number of its famous brands
rather than have contracts with different wholesalers. Thus UEH’s competitive advantage is an
exclusive right to distribute more than fifty brands of high awareness in Russia.

Table 3 Perception map of UEH brand portfolio targeted at various segments

13
 Niche brands

Agent Provocateur
Prada
Gucci, D&G
Trussardi
Carolina Herrera
Versace Nina Ricci
Moschino
Low Price High price

Salvador Dali Paco Rabanne

Antonio Banderas
Morgan Max Factor
Rimmel Bourjois
Divage

Mass market brands

5.3 Marketing Strategy

According to Ansoff product-market matrix (Ansoff, 1988) UEH’s strategy is to continue

operating in the current market with a deeper penetration so as to increase the market share.

14
Table 4 UEH Strategy Pyramid

UEH Strategy Pyramid

Strategy
Leading market
position

Tactics
-Thought-out brand portfolio;
-Constant improving of client
relations;
-Targeting new segments

Programs
- B2B CRM programs;
-B2C CRM programs;
-In store BTL activities;
-ATL support;
-Merchandising;
-Trainings for sales teams;
-On-line shop;
-Branded stand alone stores

15
5.4 Specific Marketing Programs
UEH is an intermediary between the final customer and the retailer that is why the market mix
which will be applied to develop specific marketing programs contains 7Ps.

Product
The product in the distribution business has a dual character – it is a part of a service for b2b
clients and a final product for b2c customers.

Product levels (based on Levitt, 1974)

Core product
Making customer
more beautiful
Product features:
Packaging, quality, texture,
Merchandising & style, brand
Service features:
Time of delivery;
Discount from SRP;
Regular product or novelty;
ATL & BTL support;
Expiry dates

B2C

B 2 B + B 2C

B2B

Marketing task 1 – To conduct a survey so as to choose the new para-pharmaceutical brands to

widen the portfolio and cover new segments.
Product life cycle in the beauty industry is rather short (several years).
Marketing task 2 – To ensure launches of novelties not less than 4 times per year for each brand.

Physical Evidence
16
Both for retailers and final customers physical evidence of the distributed products is a rather
significant factor, the way the products are designed, merchandised and displayed raise the brand
awareness and increase sales.

Price
SRP for each brand is determined by brand positioning, thus luxury brands have a larger margin
but lower volume and vice versa with mass market brands. The wholesale price is determined by
the category of a client.

Category Discount from SRP (%)

VIP –National Chains 55%
A – Department stores, regional chains 45%
B – Independent stores 30%

Marketing task 3 – To develop special price offers for promo kits, seasonal discounts, special
activities initiated by clients.

Place
Distribution is managed through 16 branches located in the key regions of Russia, final products
are presented in 7000 points of sales. Brand positioning determines which market segments can
represent a brand.
Marketing task 4 – to develop a channel of internet sales, which will result in the marginal
growth, as it will avoid the retail aspect.
Marketing task 5 – to open stand alone brand boutiques for those brands which have fragrance,
skin care, and make up ranges, e.g. Korres Store.
Marketing task 6 – to establish partnership with pharmacies.

People
Sales and marketing departments are the most important teams to ensure UEH strategic
development and market penetration. Raising the competences of the personnel through
trainings, seminars, team building activities will improve UEH’s efficiency.
Marketing task 7 – to work out trainings for product knowledge and incentive programs for
sales teams.

Processes

17
Effective and fast services are extremely important for b2b market, that’s why UEH has to invest
a lot in its IT, logistics, storing, order processing processes so as to stay the market leader and a
strategic partner to its clients.
Marketing task 8 – to create a full package of services for the clients.

Promotion
Promotional activities listed below impact positively the revenue and market as well as create an
image of UEH as a good, professional partner delivering value added services to its clients.

CRM programs
 Introduction of special CRM programs for b2b clients – e.g. special incentives for buyers,
store managers, sales personnel – so as to increase the clients’ loyalty both to UEH and to
specific brands, which will result in the turnover increase.
 Introduction of CRM programs for b2c customers of the key clients – creation of
customer databases, direct contacts with customers through emails or text messages,
special offers, loyalty cards, invitations to instore activities, contests, birthday greetings,
etc.

Instore BTL activities

 Brand days;
 Sampling, spraying,
 Beauty schools and treatments;
 GWPs;
 Customer events;
 Promo decorations of the new launches;
 Merchandising guidelines for each brands and merchandising team support;
 Training and event for the clients’ personnel

ATL activities
 Brand ads in glossy magazines and in trade press;
 Outdoor advertisement;
 Internet media advertisement;

18
Complex marketing task 9 – to create annual marketing calendars for each brands and work out
activities mentioned above for each brand and new launch, make the marketing calendars
customized – exclusive activities for VIP clients.

6. Implementation
6.1 Gantt chart is applied to illustrate the implementation plan in Appendix 4.
6.2 Resource allocation is given in Appendix 3 . Key resources to implement marketing
activities are: brand management department, sales department, training department.

6.3 Marketing budget

15% of UEH’s turnover
The key groups of marketing costs are: ATL activities raising brand awareness, BTL activities to
promote sales, and the new retail project.

Table 5 UEH Marketing budget

UEH Forecast Forecast
Year 2 011 2 012
WHOLESALE (mln EUR) 220 000 253 000
COST OF GOODS (mln EUR) 95 652 105 417
Advertisement in mass media 11 000 12 650
Outdoor advertisment 6 600 7 590
Internet marketing 660 759
Free gadgets for the clients 990 1 139
Products free of charge 1 980 2 277
POS materials and printed
materials 1 650 1 898
Trade furniture 3 300 3 795
Launches of new products, promos 2 970 3 416
Trainings 660 759
Presentations and events 990 1 139
Retail store opening and support 2 200 2 530
Total Advertisement Budget 33 000 37 950

6.4 Contingency

19
Table 6 Contingency Planning
Contingency
*Economic risks connected
with high inflation, customers
inability to pay, demand
fluctuation, competitors’
prices decreasing
*Increase of ExWork prices
* Operational risk
* Financial risk
Effect Measures
Income decrease Continuous work with clients,
services perfection, flexible
price policy, costs reduction
Costs increase Signing long-term contracts
with fixed prices
Income decrease Accurate scheduling of work,
continuous staff retraining
Income decrease Working out investment
strategy as part of Holding

7. Control and Forecasting

7. 1 Assumptions Made:
 To increase the turnover in 2011 10% to 2010, and in 2012 15% to 2011;
 To occupy 17% of selective perfumery market and 20% of decorative cosmetics market;

7.2 Critical Success Factors

Critical Success Factors Key performance Indicators

To increase number of clients

Contracts with pharmacies

To increase turnover
In 2011 10% to 2010, in 2012 15% to 2011

Marketing costs not higher than 15% of the

Cost control turnover

To reduce stock on hand Turnover coefficient 2.5 (months)

Gross profit margin increase 8% increase in 2012
Efficiency of CRM programs in terms of
Customer loyalty increase
repeated purchases

After the implementation of marketing plan Implementation and Strategic control should be
conducted.
 Changes of sales
 Marketing cost analysis
 Price competitive ability

20
  Marketing audit

7.3 Financial Forecasts

Table 7 Costs and Revenue

COSTS 2011 2012

Sales (mln EUR) 220000 253000
Cost of goods (mln -95652 -105417
EUR)
Administrative -72000 -86000
expenses (mln EUR)
Marketing expenses -33000 -37950
(mln EUR)
EBITDA 19348 23633

In case of successful realization of marketing actions the sales increase in 19% in 2012.
Method’s drawbacks:
It is impossible to define precisely which of the marketing strategies may lead to success.
It is impossible to take into consideration the previous experience, competitors’ experience and
management intuition to distribute the marketing budget.

REFERENCES

 Wendy Lomax, Ruth Rettie, David Stokes (2005), Marketing, Kingston University.
21
  Russian Retail Trade Law Limiting Expansion Signed by Medvedev, put 30.12.2009,
retrieved at 06.02.2010 http://www.businessweek.com/news/2009-12-30/russian-retail-
trade-law-limiting-expansion-signed-by-medvedev.html
 Retailing in Russia, 2009, Verdict Research, retrieved from http://www.reports-
research.com/market-surveys/retailing-russia-2009-p-61114.html
 Kolchik S., Beauty is in the eye of the consumer, put 10.03.2010
http://rbth.ru/articles/2010/03/10/9310beauty.html, retrieved 17.04.10
 Russian Cosmetics Market Forecast (2008-2012)retrieved at 20/02/2010
http://www.thefreelibrary.com/Research+and+Markets:
+Russian+Cosmetics+Market+Forecast+(2008-2012):...-a0213035005
 Russian Perfumery & Cosmetic Market. Ten years in perspective. Retrieved 17.04.2010
http://www.lagencedeluxe.ru/eng/index/
 Kasriel D., Top Ten Consumer Trends, put 11.02.2009,
http://www.euromonitor.com/TOP_10_CONSUMER_TRENDS_FOR_2009, retrieved
17.04.2010

Appendix 1

Pest Analysis

22
Political Factors

A new Russian retail trade law (Russian Retail Trade Law Limiting Expansion Signed by
Medvedev, 12.2009) went into effect on February 1st 2010.  The law has three essential features:

 limiting the operation of chains to no more than 25 percent of total sales within particular
geographic regions, i.e. prohibition on internal expansion or merger;
 restrictions on the ability of suppliers and retailers to enter into slotting arrangements and
other payments for shelf space;

 price controls on some subset of “socially-important” goods.

Social Factors

According to Corinne Jacques, Vice-President for Rive Gauche, Russia’s third largest retail
chain, the country’s beauty industry is one of the most recession-resistant.

“Russian women are addicted to cosmetics,” she said. “They can save on food and other
necessities, but they’d still manage to buy themselves mascara and lipstick.” Ms. Jacques
observed that Western European women are not as focused on their looks and the impression
they make as Russian women are.

One recent consumer trend here, perhaps brought on by the recession, has been women
switching to a slightly less expensive brand still within the premium span, such as Clinique,
whose market share has increased lately, or quality mass-market products, such as L’Oreal.

(Kolchik S., Beauty is in the eye of the consumer)

Appendix 2

23
Key Customers

There are four national retail chains which are vital for the company’s turnover:

 Alcor & Co. Holding owns and operates a chain of stores that retail perfumes and
cosmetics under the brand name L'Etoile, which has over 600 doors all over Russia and is
the largest player in the market. The portfolio of the chain includes more than 150 mass
market, semi-selective and luxury brands.
 Premium perfumery and cosmetics chain of stores ILE DE BEAUTE belongs to United
Europe and is considered to be the second largest retailer in the industry. Currently ILE
DE BEAUTE chain comprises more than 100 stores all over Russia. Nearly 150 luxury
brands and more than 30 mass market brands are represented in the chains.

 Rive Gauche is the strongest regional chain comprising 107 stores concentrated mainly in
the northern and southern regions of Russia. In 2009 it entered Moscow opening three
stores ready to compete with the key players such as Ile De Beaute and L’Etoile, offering
more mass market brands and special offers to the customers.

 Luxury chain Douglas Rivoli has opened 27 stores in Moscow and regions and
specializes in sales of luxury and selective brands. The chain opens its doors in the best
and most prestigious areas and shopping malls.

Apart from national chains there are players who are considered to be more luxury with a limited
presence in Moscow such as Bosco Group having Articoli chain (including GUM) comprising
three department stores and Mercury Group holding four department stores (including TSUM),
besides there’s a Finn chain Stockmann that currently has perfumery areas in its five stores in
Moscow. Regional chains and stand alone stores are also important for the company especially
for the distribution of make up mass market brands.

Appendix 3
Resource Allocation

24
 Action Resources
Task 1  

To conduct a survey to choose the new

para-pharmaceutical brands Analytical department

To sign a contract with the new supplier Brand management department

Brand launch Brand management and advertisement department

Task 2  

To ensure launches of novelties 4 times per

year for each brand. Trade marketing and brand management teams
Task 3  

To develop special price offers for promo

kits, seasonal discounts, special activities
initiated by clients. Trade marketing team
Task 4  
To develop on-line store
IT, Brand management and sales departments
Task 5  
To develop the concept of a Korres
boutique
Brand management department
Korres Boutique opening
Brand management department
Task 6  
To establish partnership with pharmacies

Sales department
Task 7  
Product knowledge trainings for staff

Training department
Task 8  
Design of a full pack services
Brand management and sales department
Task 9
 
Implementation of customized marketing
calendars
Brand management and trademarketing teams

25
Appendix 4 Schedule of Key Tasks

Action 2011 (trimesters) 2012

  I II III IV I II III IV
Task 1                                                
To conduct a survey to choose the new para-pharmaceutical                                                
brands
To sign a contract with the new supplier                                                
Brand launch                                                
Task 2                                                
To ensure launches of novelties 4 times per year for each                                                
brand.
Task 3                                                
To develop special price offers for promo kits, seasonal                                                
discounts, special activities initiated by clients.
Task 4                                                
To develop on-line store                                                
Task 5                                                
To develop the concept of a Korres boutique                                                
Korres Boutique opening                                                
Task 6                                                
To establish partnership with pharmacies                                                
Task 7                                                
Product knowledge trainings for staff                                                
Task 8                                                
Design of a full pack services                                                
Task 9                                                
Implementation of customized marketing calendars                                                

26