Day, Alison Claire
(2006)
"How does Estee Lauder GWP impact the long-term health of the brand?".
[Dissertation (University of Nottingham only)]
(Unpublished)
Abstract
In recent years, sales promotions have grown in importance, becoming one of the most popular tools in the marketers kit (Jones 1990) and there is evidence that the trend in promotional activity is upwards. Additionally, due to increasing high street competition, retailers are compensating with extra promotions, more discounts and larger price reductions (British Retail Consortium, 2006). Whilst it is generally recognised that promotions do increase sales in the short-term (Blattberg & Neslin 1995), researchers and practitioners have questioned the other effects that promotions may have in the long-term for the companies that use them.
In 2005, the premium cosmetics market was estimated to be a $20 billion US dollar worldwide industry (Datamonitor, 2006). In certain geographic markets, particularly the US and UK, promotional activity (Gift With Purchase (GWP)) plays an important role in competition. This promotional activity creates significant sales volume for some premium cosmetics brands, and as sales volume determines market share - a key short-term performance indicator on which management are measured, this promotional activity is heavily relied upon in the short-term to deliver results.
This research investigates the promotion of premium cosmetics through free gift promotions, and the impact that these have on the long-term health of brands. The research focuses on a behavioural perspective, specifically looking at how GWP influences consumers opinions and attitudes in such a way that their future behaviour towards the brand would be affected (for example likelihood of re-purchase). The research focuses specifically on the Estee Lauder brand within the UK market.
There is extensive existing research into promotions generally. This existing research focuses heavily on mass-market low-involvement goods, predominantly grocery products in supermarket environments, where the promotional vehicle consists of money off coupons or vouchers, or straight price reductions. Little research exists into free gift promotions or promotion of high-involvement goods.
This research takes a qualitative interpretivist approach, using in-depth interviews. As there is little existing research into consumer attitudes towards free gift promotions in high-involvement goods, there is little upon which to base quantitative analysis. By interviewing Estee Lauder customers in a qualitative way, the aim is to elicit the customers perceptions rather than searching for external causes to explain their behaviour.
In order to ensure that the purpose and findings of this research are communicated in a methodical fashion, this dissertation is structured as follows:
Section 1: Introduction. This section sets out the background to the research area, and introduces the research question in more detail.
Section 2: Literature review. This section analyses the existing literature relevant to the research question.
Section 3: Research methodology. This gives some background to the general theory of research, and focuses on the research method selected in-depth interviews. The justification for the choice of methodology for this research is addressed, and details of how the research was carried out explained.
Section 4: Findings and discussion. This section highlights the results arising from conducting the in-depth interviews, and then discusses the implications in terms of addressing the research question. The findings are also discussed in terms of the existing literature.
Section 5: Conclusions, reflections and limitations. This section summarises the outcomes of the research, highlights managerial implications arising, and areas for future research. Finally, some potential limitations of this research that should be considered in interpreting the results are highlighted.
To summarise, this research investigates how Estee Lauder GWP promotions impact the long-term health of the brand from a behavioural perspective, using in-depth interviews of Estee Lauder customers as the research method. The dissertation is broken down into five sections to aid clarity and presentation of the research and its findings.
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