Launch of a New Luxury Range

ESSEC Business School

Activating a Beauty Brand
Professor Pascal Pollet

Akshit Agarwal
Charlotte Bouges
Sesley Xiaoyu Chen
Mia Flaugnatti
Barbara Puig

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 Table of contents

I. Range assortment

II. Competition

III. Competitive chart and recommended retail prices

IV. Price list in € and £

V. Invoicing prices to the uk

VI. Retail strategy

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 I. Range assortment

For this new range, we’ve chosen seven products for each step of a skincare routine :
- Step 1 : a cleanser to wash the face and remove the makeup ;
- Step 2 : a toner to prime the skin ;
- Step 3 : an anti-ageing serum to moisturize the skin and reduce fine lines ;
- Step 4 : an eye cream to moisturize the eye area and reduce the appearance of fine lines ;
- Step 5 : a day cream to moisturize the face all day long ;
- Step 6 : a night cream to moisturize the skin intensely during the night ;
- Step 7 : a face mask to treat the skin on the long term and reduce wrinkles.

Our product line targets mature skin and aims at reducing wrinkles and fine lines while providing
deep hydration. With those seven products, we wanted to create a full beauty skincare routine with
complementary products. These products work together and are the essentials of a good skincare
routine

II. Competition

As Clarins wants to become the number one prestige skincare brand and launch a very exclusive and
luxurious product line, they need to expand their ranges step by step to stay coherent for their
customers. Right now, their most luxurious product lines are Nutri-Lumière and Multi-Intensive.

On this chart, if we take the example of day creams and night creams, we can see that the prices are
between 202€ and 240€ for 100 mL. If Clarins was to launch a range with a price of 500€ for 100 mL
for their day cream, it would not correspond to the image that customers have of the brand.

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In order to understand Clarins competitors’ ranges better, we analysed what type of product lines they
were proposing.

We listed all traditional Clarins competitors and compared their product lines. Here is the list of the
competitors we selected :

- Estée Lauder
- Lancôme
- Dior
- Chanel
- Yves Saint Laurent
- Clinique
- Givenchy

For each brand, we have looked at their different product lines and organized them in the following
chart :

We chose to look at the price range for moisturizers and serums as they are usually the most
important products of a product line and it gives an idea of the overall positioning of the range.

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From this chart, we noticed that Clarins lacked a more prestigious product line such as Dior Prestige,
Orchidée Impériale for Guerlain, Absolue for Lancôme, or Re-Nutriv for Estée Lauder.
Yet, all of these brands have product lines similar to Clarins’ (Hydra Life Capture Youth for Dior,
Hydra Zen for Lancôme, Revitalizing Supreme + for Estée Lauder…).
This is why we have decided to align our product line with the ranges mentioned above (Dior
Prestige, Re-Nutriv, etc…). Some of these product lines are more expensive than others (Orchidée
Impériale, Dior andPrestige…) and some are more relevant for Clarins, as Re-Nutriv. Indeed, even if
it is more expensive than what Clarins is already offering, the price range is still coherent. Depending
on the type of product, this price range would be around 1,3 to 2 times more expensive than existing
Clarins prices, which seems coherent to us.

III. Competitive chart and recommended retail prices

As explained in the previous part, we have decided to align our range with Estée Lauder and their
Re-Nutriv range. This is Estée Lauder's most luxurious range. We justify our prices by being 10 to
15% lower than Estée Lauder's Re-Nutriv range.

For each product, we have created a competitive chart to visualize the recommended retail prices and
make them coherent.

Cleanser :

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Toner :

Anti-ageing serum :

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Eye cream :

Day cream :

7
Night cream :

Face mask :

For each category of product, we gathered already existing Clarins products (in red), and products
from competitors. This chart also illustrates the absence of really high-end products from Clarins.
Our new product line appears in blue. As mentioned above, the prices are mostly aligned with
Re-Nutriv and Abeille Royale. We’ve converted them in pounds by using a divisor of 1.17, which is
the current exchange rate. We’ve then rounded up the price to make them coherent and respect the
pricing rules.
Cleanser = 40€ (100 mL) => 35£
Eye Cream = 100€ (15 mL) => 85£
Toner = 75€ (200 mL) => 64£
Serum = 250€ (30 mL) => 213£
Day Cream = 154€ (50 mL) => 132£
Night Cream = 154€ (50 mL) => 132£
Face mask = 120€ (50 mL) => 102£

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 IV. Price list in € and £

Here is our price list with all our products and POS materials.
The list consists of the name of the product, the type of the product, the recommended retail price per
100mL. Then we find the product capacity and the price for the capacity and finally the wholesaler
price.
We have put the SOPs on the price list free of charge. The list is to show our resellers all the products
and derivatives available.
As far as samples are concerned, we intend to offer them a quantity of sample according to the
purchase amount of the products sold.

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V. Invoicing prices to the UK

1. Cleanser
A RRP icl. VAT £35,00
B VAT 3,89 12,50%
C=A-B RRP excl. VAT 31,11
D Retailers Margin % 12,44 40%
Wholesale Price exl.
E=C-D VAT 18,67
Coefficient 1,88
F Sales Discounts % E 2,80 15%
G Net Sales=E-F 15,87
H=A/G Coefficient 2,21
I=D+F Retailers Margin % C 15,24 49%

2. Eye Cream
A RRP icl. VAT £566,67
B VAT 62,96 12,50%
C=A-B RRP excl. VAT 503,71
D Retailers Margin % 201,48 40%
Wholesale Price exl.
E=C-D VAT 302,22
Coefficient 1,88
F Sales Discounts % E 45,33 15%
G Net Sales=E-F 256,89
H=A/G Coefficient 2,21
I=D+F Retailers Margin % C 246,82 49%

3. Toner
A RRP icl. VAT £32,00
B VAT 3,56 12,50%
C=A-B RRP excl. VAT 28,44
D Retailers Margin % 11,38 40%
Wholesale Price exl.
E=C-D VAT 17,07
Coefficient 1,88
F Sales Discounts % E 2,56 15%
G Net Sales=E-F 14,51
H=A/G Coefficient 2,21
I=D+F Retailers Margin % C 13,94 49%

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4. Anti-Aging Serum
A RRP icl. VAT £710,00
B VAT 78,89 12,50%
C=A-B RRP excl. VAT 631,11
D Retailers Margin % 252,44 40%
Wholesale Price exl.
E=C-D VAT 378,67
Coefficient 1,88
F Sales Discounts % E 56,80 15%
G Net Sales=E-F 321,87
H=A/G Coefficient 2,21
I=D+F Retailers Margin % C 309,24 49%

5. Day Cream
A RRP icl. VAT £264,00
B VAT 29,33 12,50%
C=A-B RRP excl. VAT 234,67
D Retailers Margin % 93,87 40%
Wholesale Price exl.
E=C-D VAT 140,80
Coefficient 1,88
F Sales Discounts % E 21,12 15%
G Net Sales=E-F 119,68
H=A/G Coefficient 2,21
I=D+F Retailers Margin % C 114,99 49%

6. Night Cream
A RRP icl. VAT £264,00
B VAT 29,33 12,50%
C=A-B RRP excl. VAT 234,67
D Retailers Margin % 93,87 40%
Wholesale Price exl.
E=C-D VAT 140,80
Coefficient 1,88
F Sales Discounts % E 21,12 15%
G Net Sales=E-F 119,68
H=A/G Coefficient 2,21
I=D+F Retailers Margin % C 114,99 49%

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 7. Mask
A RRP icl. VAT £204,00
B VAT 22,67 12,50%
C=A-B RRP excl. VAT 181,33
D Retailers Margin % 72,53 40%
Wholesale Price exl.
E=C-D VAT 108,80
Coefficient 1,88
F Sales Discounts % E 16,32 15%
G Net Sales=E-F 92,48
H=A/G Coefficient 2,21
I=D+F Retailers Margin % C 88,85 49%

Checking Gross Margin -

Per 100ml
Net
Wholesale
after sales
W/S discount,
RRP incl excl A&P &
Coefficient Product VAT VAT commission COG %COG Coefficient
1,88 Cleanser £35,00 18,62 8,38 2,09 25% 16,71
Eye Cream £566,67 301,42 135,64 33,91 25% 16,71
total
discount Toner £32,00 17,02 7,66 1,91 25% 16,71
45% Anti-Aging Serum £710,00 377,66 169,95 42,49 25% 16,71
of W/S excl
VAT Day Cream £264,00 140,43 63,19 15,80 25% 16,71
Night Cream £264,00 140,43 63,19 15,80 25% 16,71
Mask £204,00 108,51 48,83 12,21 25% 16,71

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 VI. Retail strategy

United Kingdom
The UK markets serve as an important milestone for a brand to build credibility and expand to other
countries later for selling its products. Clarins already has a well established brand name and a
subsidiary in the UK but to ensure the success of its new luxury range of products it has to
strategically build a retail strategy to penetrate into the competitive UK markets. We propose that
following the retail structure pyramid, it starts by targeting the A+ and A level retailers and moves to
B level → C level across cities in the UK. We want to build a retail network that will have a mix of
different types of retailers, e.g Multibrand retailers, Department stores, Perfumery chains, Drugstores
etc. and also have pure e-commerce players to sell online.

The A+ and A level stores will bring in the maximum amount of sales revenue for Clarins and help
solidify the luxury image that the brand strives for for this range. The well known iconic retail stores
like Harrods at Knightsbridge, Selfridges, Liberty, Jarrolds & Harvey Nicolas etc , Whose prestige
already attracts the target customers for this range of Clarins products.

Name of Retailer Number of Doors

Harrods 1

Selfridges 4

Liberty London 1

Jarrolds 1

Harvey Nicolas 7

We also sell with retailers mentioned below in the table. For retailers like Boots, Superdrug, Holland
& Barrett, we would essentially only want to be present in the largest stores located at the best or
strategic locations in the cities. Retailers like The perfume shop, Top Shop , Sandersons will be
targeted eventually after we monitor the sales performance of the other retailers.

We obviously want to leverage the brand.com channel and the e-commerce of these various retailers
but Not missing out on pure -online retail players, In the UK we target some top players like
CultBeauty.com, LookFantastic.com, FeelUnique.com, allure.com, Allbeauty.com & Escentual.com

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 Name of Retailer Number of Doors

John Lewis 51

Fenwick 9

House of Fraser 44

Boots 2500

Debenhams 2500

Holland & Barrett 715

SuperDrug 830

Space NK 72

Sandersons 3

Top Shop 150

Pearl Pharmacy 18

The Perfume Shop 255

Location - Different Cities in UK

In terms of locations in the UK, we analysed
metrics like population but more importantly the
Annual average spend per person on beauty
across cities in the UK. Leeds, London,
Coventry topped the list. The Infographic below
will show the top down approach we want to
follow for the Clarins luxury range. We start
witht the top spending cities and roll down
eventually to the smaller ones as we expand
with time.This would help us target the location
where customers have an appetite for expensive
skincare products or in other words where the
average basket size is higher.

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 France
Clarins needs no introduction in the french markets but it cannot be ignored that it still faces intense
competition from other brands.We here as well would ideally want to have a mix of Departmental
stores, Drug Stores, Beauty retailers, Perfumery chains etc for ensuring a wider reach. For the new
luxury range of products for Clarins, the retail strategy like the UK will firstly and imperative have the
high end retailers like Le Bon Marche, BHV, Printemps and Galeries Lafayette. They are iconic and
have high sales revenue attarting the target customers we need to get the products off the shelf like hot
cakes ! Their strategic locations and loyal customer base is another pro for these retailers. These
would serve as the A+ retailers in the pyramid for the france market.

Name of Retailer Number of Doors

Le Bon Marché Paris 1

The Bazar de l’Hôtel de 1

Ville (BHV) - Paris

Printemps 19

Galeries Lafayette 62

Clarins is already present in the top 3 multi brand beauty retailers in France namely Nocibe, Marionnaud
and Sephora and therefore it would be relatively a smooth process to also add the new range of products
through these channels.

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These retailers have a high number of doors and are located in every major city in france. For retailers like
Beauty Success, Passion Beauté & Une Heure pour soi we want to penetrate only through the bigger
outlets and flagship stores (if any). This will help the new luxury range to uphold the image of being
exclusive.

Locations - Different Cities in France

The French territory works slightly differently than the UK as statistics show that Beauty product sales are
primarily concentrated in the Ile de France region with Paris. Followed by the south of france/ French
riviera. For the launch, we want to first target the bigger cities in France (by population) like Paris,
Marseille, Lyon, Nice, Toulouse, Nantes, Montpellier, Strasbourg, Bordeaux & Lille and then
eventually go to the smaller cities such as Aix en Provence, Rennes, Rouen etc. The smaller cities with a
lot of tourist movement like Deauville, La Baule, Dinard, St tropez, Cannes, Grasse, etc. and many more
are an expectation as they would serve as a good point of sales as well.

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