INTEGRATED
MARKETING COMMUNICATION STRATEGY FOR COSMETIC RETAIL COMPANY: A STUDY OF NEW
CENTRAL PALU
Anastasia
Gabriela Liem1, Neneng Nurlaela
Arief2
School of Business and
Management, Institut Teknologi
Bandung
anastasia_liem@sbm-itb.ac.id
and neneng.nurlaela@sbm-itb.ac.id
Abstract
New Central Palu is non-food modern retail store located in Palu, Central Celebes. It sells wide range of products with
cosmetic as the main product. Currently, New Central Palu
experiences stagnant sales and lack of awareness. Therefore, this study aims to
identify the problems and propose integrated marketing communication strategy
to solve the problems. Both quantitative and qualitative methods are used in
this research. Thus, data collection is done using in-depth interview to
internal management of New Central Palu and
questionnaire distribution to the target market. In-depth interview is explored
from head of purchasing, head of marketing and sales, and general manager of
New Central Palu. Besides, online questionnaire using
google form has been distributed to 193 respondents through New Central Palu's official instagram.
Secondary data from other resources, such as books, journal, and others is also collected to support the data analysis. Internal
analysis is done using STP analysis, marketing mix, and VRIO analysis while
external analysis is implemented using PESTEL analysis, porter's five forces,
and customer analysis. Then, SWOT analysis is done before integrated marketing
communication strategy is proposed. Six marketing communication mix channel is
used, including advertising, personal selling, sales promotion, public
relation, direct marketing and digital marketing to optimize the resut. It can be concluded that New Central Palu has a
enormous business potential as modern retail cosmetic store in Palu. However, there are some marketing strategy and
recommendation that should be implemented.
Keywords: Integrated
marketing communication strategy, marketing strategy, cosmetic retail company,
beauty industry
Introduction
The Ministry of Industry (Kemenperin)
targets cosmetic industry to grow more than 9 percent in 2022, after achieving
a record of 7 percent growth in 2019. The growth is based on the expansion of
various types of cosmetics and personal care, both in domestic and international
market. According to Director General of Chemical, Pharmaceutical and Textile
Industries of the Ministry of Industry, Muhammad Khayam, there are huge
opportunities in ASEAN market, due to the same climate, socio-culture, and
purchasing power. According to Social Bella's Chief Executive Officer (CEO),
John Marco Rasjid, in Euromonitor, the cosmetics and personal care industry is
estimated to grow to US$ 6.03 billion in 2019, and targeted to grow to US$ 8.46
billion by 2022 (Kementerian Perindustrian RI 2020b).
Due to Covid-19 pandemic, many people
adapt by shifting their shopping behaviour from offline to online. This is
proven by increasing of online transaction of cosmetic products up to 80%.
Moreover, according to Director General of Small, Medium and Multifarious
Industries (IKMA) of the Ministry of Industry, Gati Wibawaningsih, social
distancing allows people to have more time at home, so they have time to take
care of their skin, body, and hair. Therefore, demand of home skincare is increasing
in exchange for salon and spa supplies (Kementerian Perindustrian RI 2020a).
Shopee and Tokopedia are two pioneers in
e-commerce industry in Indonesia. According to a survey conducted by Compas,
Shopee takes the largest portion with a percentage of 80.90% for the beauty
category compared to Tokopedia (Rukmana 2022a). In early 2021, the beauty
category dominates sales in e-commerce by 46.8% with a turnover exceeding 40
billion (Haasiani 2022). Moreover, in Shopee, sales in
the beauty category increased by 5.1% and 11.3%, respectively, in April - June
2022 compared with previous month. Facial care dominates the beauty category
with a market share of 42.9% with facial serum as the highest market share in
the subcategory (Rukmana 2022b).
Proven by research conducted in Manado,
local brands are still highly favored in the cosmetic and beauty industry in
Indonesia. It is due to its affordability, quality, and improvements over the
years (Korengkeng and Tielung 2018). Moreover, Deloitte conducted research on
average expenditure on Cosmetics and Beauty Products per purchase in 2019.
According to the survey (Figure I.1), more than 70% of the market bought low-
to middle-class cosmetics. 18% of the market bought low-end products with
prices below Rp 50.000, 30% bought lower-middle class products with prices
between Rp 50.000 - Rp 100.000, 38% of the market bought middle class products
ranges between Rp 100.000 - Rp 200.000, 12% of the market bought upper-middle
class products between Rp 200.000 - Rp 500.000, and only 3% of the market
bought high-end products with prices more than Rp 500.000 (Deloitte 2020).
CV. Central Maju Sejahtera, also known
as New Central Palu, is a family business in cosmetic retail industry. The
company based in Palu, Central Celebes. There are various products sold at New
Central with the main product cosmetic products, such as skincare, personal
care, and makeup products. Our target market is the people with low to medium
socioeconomic level and mostly women aged 15-30 years old.
There are several beauty stores in Palu,
but most of them only sell cosmetic products, and do not sell other items, such
as stationery, home care, and other products. There are five other popular
cosmetic stores, such as Palu Makeup, Mutiara Beauty Store, Elza Beauty Skin,
Ullzang Beauty Shop, and Days of Beauty (DOBE) Palu. Most of the stores have
implemented social media marketing strategy and are available in marketplace.
Palu Makeup and Ullzang Beauty Shop have started social media marketing
strategies through Instagram since 2018, while others started in 2020 and 2021
during the pandemic situation, including New Central Palu. This initiative has
proven successful with a sales increase in New Central Palu up to 25% from the
previous year with the main income from offline sales.
In 2022, we face new normal condition of
Covid-19 pandemic. Sales are expected to increase due to the lifting of several
social distancing and Covid-19 restriction rules. However, this condition is
also peppered with inflationary condition in July 2022 (Bank Indonesia 2022).
However, the inflation surge is not felt as hard in Asia as it is in the US, EU
or UK with inflation rate higher than 9% (KANTAR World Panel 2022). Indonesia
is currently experiencing the highest inflation rate in the last seven years,
approximately 6% year of year (Bank Indonesia 2022), and observers predict that
this condition will get worse in 2023 (BBC News Indonesia 2022).
According to the Beauty Trends in Asia
2022 report, Indonesia is currently experiencing resilient beauty trend, along
with South Korea and India. With total value growth of between 5% in Indonesia,
these market is still benefited from the post-pandemic gains despite
experiencing inflation. The impact of inflation will depend on local shoppers'
experience of rising prices, while a post-pandemic bounce will be influenced by
how constrained consumers are at peak times of concern (KANTAR World Panel
2022).
Furthermore, a high inflation rate will
have a negative impact on the socio-economic conditions of the community. One
of the effects of a high inflation rate is the decline in living standards of
people and in the end it makes everyone, especially the poor, poorer (Bank
Indonesia 2022). Moreover, some customers feel uncomfortable shopping at New
Central Palu because the place is limited, uncomfortable due to insuffiicient
number of air conditioner, and long queues at the cashier. Others also claimed
not to know the ongoing promo until the promo ended and inadequate services
provided by staff, especially beauty advisors. Therefore, New Central Palu has
experienced low growth in 2022, approximately 5% year of year.
In order to overcome the various
problems mentioned before, New Central Palu has planned to enlarge the store,
carry out store rebranding, and conduct grand re-opening event in February
2023. These initiatives are expected to grow brand awareness and sales of New
Central Palu. However, to be successful, integrated marketing communication
strategy needs to be implemented.
Methods
All
the primary and secondary data that has been collected will be analyzed using internal and external analysis methods. In
order to sustain in the business world, a company needs to analyze
the internal environment of its business. In other words, it means that the
company needs to identify the strength to build on and weaknesses to be
overcame during strategy formulation. In this study, internal analysis will be
done using STP Analysis, Marketing Mix, and VRIO Analysis.
In
order to identify and analyze the market, Segmenting,
Targeting, and Positioning (STP) Analysis will be used. This analysis will the
company to focus on the customers who have a greater interest in the company
values. The purpose of this analysis is to sort the customers into groups that
have the same needs and wants so that the company can develop products and marketing
strategies that are suitable for the particular target market which in the end
might increase the sales.
Marketing
mix refers to a collection of controllable marketing variables that impact the
company's ability to successfully market its products or services to the
consumers. The variables comprise Product, Price, Place, and Promotion or known
as the 4Ps. However, in service marketing, the variables has been adapted into
7Ps to address different nature of services, including product, price, place,
promotion, people, physical environment, and process (Todorova 2015).
VRIO
Analysis will be conducted to evaluate the resources of a company such as
financial resources, human resources, material resources, and non-material
resources (information and knowledge) to identify the competitive advantage of
the company. There are four elements of VRIO framework (Rothaermel 2021), such as Valuable, Rare, Costly to imitate, and Organized to capture
value.
Before
entering the business industry or doing business
adjustment, every company must understand the context of the external condition
of the industry it competes. Therefore, the external analysis will help the
company to leverage what opportunities that can be used to improve its business
performance while at the same time help the company to mitigate the threats
that might harm the business. In this research, external analysis will be done
using several methods, such as PESTEL Analysis, Porter's Five Forces, and
Customer Analysis.
PESTEL
analysis is an external environment framework that analyzes
a significant range of external factors, such as Political, Economic,
Sociocultural, Technological, Ecological, and Legal that could affect the
business of a company. This model provides a relatively straightforward way to
scan, monitor, and evaluate the important external factors and trends that
might affect the company (Rothaermel 2021).
Porter's Five Forces of competitive position
analysis is a simple framework for mapping and assessing the competitive
strength and position of a business organization. This is useful both in understanding
the strength of an organization's current competitive position and the strength
of a position that an organization may look to move into. There are five
competitive forcces, consist of threat of new
entries, bargaining power of buyers, bargaining power of suppliers, threat of
substitutes, and rivalry among competitors (Porter 2008).
Customer
analysis is defined as the process of analyzing
customers and their habits. Through understanding the consumer, a company can
begin to offer products and services to fulfill their
needs. The purpose of undertaking customer analysis is to examine the customer
profile, their behaviour in using and purchasing products or services, and
their preferences about beauty store. By understanding what motivates them to
make a purchase, brands can build their business and provide solutions to those
needs (Cuellar-Healey and Gomez 2013).
After
internal and external analysis, Strength, Weakness, Opportunity, and Threat
(SWOT) analysis will be done before strategy formulation. SWOT analysis is
useful to collect all the information from the environment analysis and segment
them into internal problems (strength and weakness) as well as external
problems (opportunities and threats) (Ferrell and Hartline 2015). This analysis will help the author to generate suitable integrated
marketing communication strategy formulation for New Central Palu.
Result and Discussion
In this research, the data that has been collected from
in-depth interview and questionnaire would be analyzed using internal and
external analysis. Internal analysis discusses about internal management and
strategy of the company, while external analysis examines factors outside the
company that may affect the business. Detail internal and external analysis
will be used in formulating integrated marketing communication strategy.
In
this study, internal environmental analysis consists of Segmenting, Targeting,
and Positioning (STP) Analysis, Marketing Mix (4Ps) Analysis, and VRIO
Analysis. These analyses would help in determining the suitable integrated marketing
communications strategy for New Central Palu.
STP Analysis
Segmenting,
Targeting, and Positioning (STP) were determined mostly from in-depth interview
with internal management of New Central Palu. Apart
from that, some data was also adjusted to the results of questionnaires from
the target market of New Central Palu.
A.
Segmenting
The
demands, resources, locations, buying attitudes, and purchasing behaviors of
customers vary in any business industry. By segmenting their markets,
businesses can more effectively and efficiently target smaller segments with
goods and services that match their specific needs. There are four major
variables in consumer markets segmentation: geographic, demographic,
psychographic, and behavioral (Armstrong and Kotler 2021). New Central Palu's market
is mostly from Central Celebes, especially Palu city.
Most of them are women aged 17-40 years old with low to middle income status
with student or employee as their occupation. They are creeatice,
extraverted, friendly, and care about health and appearance. Moreover, they
tend to use skincare products in daily basis and some of them are beauty
enthusiast.
B.
Targeting
Smart
targeting aids companies in being more efficient and effective by concentrating
on the segments that they can satisfy best and most profitably. Targeting has
advantages for consumers as well—companies serve specific groups of consumers
with offers carefully crafted to meet their needs (Armstrong and Kotler 2021). New Central Palu's target
market is women aged 17-40 years old who live in Central
Celebes island. They are university student, entrepreneur, housewife,
and employee with low to middle income level. Moreover, they are beauty and
social media enthusiast who are extraverted, active, friendly, and creative.
They seek for original and BPOM-certified products with affordable price.
C.
Positioning
Positioning of a company must serve the needs and tastes
of clearly defined target markets (Armstrong and Kotler 2021). The positioning of New Central Palu
is "Most Complete and Trustworthy Cosmetic Store with Affordable
Price." It means that New Central Palu wants to
be known as a cosmetic store that offers complete range of original products
with affordable price.
Marketing Mix
The marketing mix is the combination of tactical marketing
techniques used by the company to elicit the desired response from the target
market. Everything the firm can do to engage customers and provide value
to them is included in the marketing mix (Armstrong
and Kotler 2021). Table 1
provides detail about marketing mix analysis of New Central Palu.
Table 1 Marketing Mix Analysis of New Central Palu
|
Marketing Mix |
|
|
Product |
Main
Product: Cosmetics Skincare, makeup,
personal care, baby care, accessories, tools, and salon supplies Additional
Products Health appliances,
party supplies, home care, and stationery |
|
Price |
Regular (ranging
from IDR 5.000 up to IDR 300.000) Wholesale (mostly
10% discount from regular price) Reseller (10-17% discont from regular price) |
|
Place |
· Offline Store · Online through Whatsapp, Instagram, and Shopee |
|
Promotion |
Digital
Marketing: Social Media, Marketplace Advertising:
Point of Purchase (POP) display at store Personal Selling:
Beauty advisor, in-store staff Public Relation:
Hampers for certain events for reseller, giveaway, free gift for Shopee order Sales Promotion:
Discount, Bundling promotion, Buy 1 Get 1 Direct Marketing:
Direct sales in offline store and marketplace |
VRIO Analysis
In order to analyze using VRIO framework, a firm's
resources, capabilities, and competency must be assessed. There are several
resources of New Central Palu that are essential for
the businness, such as wide and complete product
range, service quality, pricing strategy, online channel, instagrammablle
and comfortable offline storee, experienced human
resources, supply chain management, economies of scale, digital platform, and
knowledge about cosmetic industry.
According to Table 2, New Central Palu
has sustainable competitive advantage from most of its resources and
capabilities. However, there are some resources and capabilities that still at
competitive parity and temporary competitive advantage. Therefore, New Central Palu requires to do more efforts to improve some of its
resources and capabilities to become sustainable competitive advantage.
Table 2 VRIO Analysis of New Central Palu
|
Resources / Capability |
Valuable |
Rare |
Costly to Imitate |
Organized to Capture Value |
Impact |
|
Wide and Complete Product Range |
YES |
YES |
YES |
YES |
Sustainable
Competitive Advantage |
|
Service Quality |
YES |
NO |
|
|
Competitive
Parity |
|
Pricing Strategy |
YES |
YES |
NO |
|
Temporary
Competitive Advantage |
|
Online Channel |
YES |
NO |
|
|
Competitive
Parity |
|
Instagrammable
and Comfortable Offline Store |
YES |
YES |
YES |
YES |
Sustainable
Competitive Advantage |
|
Experienced Human Resources |
YES |
NO |
|
|
Competitive Parity |
|
Supply Chain Management |
YES |
YES |
YES |
YES |
Sustainable Competitive
Advantage |
|
Economies of Scale |
YES |
YES |
YES |
YES |
Sustainable
Competitive Advantage |
|
Digital Platform |
YES |
YES |
YES |
YES |
Sustainable
Competitive Advantage |
|
Knowledge about Cosmetic Industry |
YES |
YES |
YES |
YES |
Sustainable
Competitive Advantage |
PESTEL Analysis
PESTEL
is a framework that categorizes and analyzes an important set of external
forces (Political, Economic, Social, Technological, Environmental, and Legal)
that might impinge upon a firm (Rothaermel 2021).
A.
Political Factor
According
to Law Number 7 of 2021 concerning Harmonization of Tax Regulations, The
Indonesian Government raised the value added tax to 11% from the previous 10% starting
April 1, 2022. This policy could increase state revenues, so that it is
expected to be one of the paths to the welfare and prosperity of the Indonesian
people (Mubarok
2022). However, along with it, the price
of goods also increased. Therefore, it might affect the company because it
could reduce the ability of customer to purchase the products.
In
addition, Palu City Government has stipulated the Palu City Minimum Wage (UMK) for 2023, amounting to Rp
3,073,895, about 7% increase from previous year. This is due to rapid economic
growth in Palu, especially after the 2018 disaster
and the Covid-19 pandemic (Bustan 2022). Thus, the company's operational costs will increase
rapidly with an estimated number of employees of nearly 80 people by 2023.
B.
Economic Factor
The
Central Statistics Agency (BPS) for Central Celebes Province recorded that
economic growth of Central Celebes in quarter III-2022 compared to quarter
III-2021 experienced a growth of 19.13 percent. The high economic growth is
supported by the existence of large-scale industrial sectors such as the mining
and quarrying sector in Morowali, North Morowali and Banggai Regencies.
However, despite the high economic growth, this has not fully impacted on
improving people's welfare (Wiranata
2022). This condition may positively
affect company sales and revenues.
C.
Social Factor
Currently,
beauty is a social standard in Indonesia. Females in Indonesia along with their
male counterparts, who they outnumbered, place more emphasis on self-care and
overall attractiveness than ever before. Women in modern and urban cities, like
Jakarta, are being taught to feel that beauty is a need since employers value
appearance and attractiveness highly (Hadiwidjaja
2022).
Moreover,
due to the abundance of items that claim to offer and deliver same or even
better prices, customers lack of brand loyalty. Customers may find it difficult
to make judgments due to the overabundance of skincare products on the market,
thus they frequently try new brands or products (Hadiwidjaja
2022). Therefore, this serves as a
challenge for cosmetic store to keep updated with cosmetic trends. As soon as a
product and/or brand goes viral, the store has to get the product ready
immediately.
D.
Technological Factor
Association
of Indonesian Cosmetic Companies has held Indonesia Cosmetics Ingredients (ICI)
in 2022 to introduce and promote raw materials, packaging, products, laboratory
equipment, and the latest cosmetic machinery. Moreover, the latest trends and
technologies needed in the process of making cosmetics for the industry in
Indonesia and ASEAN countries are also explained (Aprilyani
2022). It is proven that technology needed
in production process of cosmetics product is always evolving.
In
addition, technological developments also facilitate the company's operations.
The company uses information system technology in daily basis to run the
company, from inputting the products to selling it. Moreover, fingerprint
attendance machine is used to record the attendance and punctuality of
employees. The company also uses marketplace application to expand the business
channel for selling products. Social media, such as Instagram and Whatsapp, also has proven to be useful for marketing
purposes.
E.
Environmental Factor
The
rapid growth of the cosmetics industry has had a negative impact on the
environment because it has increased the amount of packaging waste for beauty
or skincare products and the formation of excessive consumption or
over-consumptive habits. The accumulation of beauty product waste also occurs
at home. This is due to excessive consumption habits such as easily buying and
changing beauty products just because they follow trends or discounts. As a
result, it causes accumulation of goods at home and has the potential for
environmental problems (Maret
2022).
An independent
survey conducted by Lyfe With
Less—a minimalist lifestyle community in Indonesia—in 2022 found that 53
percent of respondents admitted that they always throw empty bottles or empties
into the trash without sorting them out so they mix with household waste. As a
result, the waste is just thrown into landfills without going through the
proper disposal process, which ends up waiting for the waste to decompose for
decades (Maret
2022). Therefore, cosmetic stores should
collaborate with beauty brands to encourage consumers to clean and return the
waste empty bottles or other empty beauty products for recycling.
F.
Legal Factor
Cosmetic products are considered as controlled goods by
Indonesian customs, which presents a significant obstacle for
beauty store companies and brands that want to sell their cosmetic products in
Indonesia. The Indonesia National Agency of Drug and Food Control (BPOM) must
receive an application from them or their registration in order to be sold or
distributed in Indonesia. The registration procedure and the information
required to finish the paperwork from both the manufacturer and the supplier of
the raw materials are time-consuming (Hadiwidjaja 2022).
Last but not least, as the majority of people in
Indonesia are Muslims, buyers must confirm whether or not their preferred
product is "Halal." It follows that the product must adhere to
Islamic law, be free of pork or other non-halal animals, and otherwise be
compliant with Islamic law. Consequently, any cosmetic items sold in Indonesia
must secure halal certification from Majelis Ulama
Indonesia (MUI) (Hadiwidjaja 2022).
Therefore, the challenge for beauty store companies is to
make sure that the products sold are BPOM certified. Moreover, there are still
many cosmetic products sold without halal certification from MUI. Thus, the
company needs to ensure to beauty brands whether the product is halal or not
whenever asked by customers.
Porter’s Five Forces
A. Threat of New Entrants
The threat of new entrants in New Central Palu is Medium. The cost
to open cosmetic store is not high. Moreover, distributors and beauty brands
are very welcome with new cosmetic stores. Howeever,
the are some economies of scale because cosmetic store often gets more discount
or promotional support if the amount of order increases. Other than that,
experience of beauty industry is highly needed as viral products and/or brand
keep changing.
B.
Bargaining Power of Buyers
The bargaining power of buyers of New Central Palu is High. Due to
the ease of other cosmetic store to make ready the beauty products, customers
could easily switch to another cosmetic store who sells same products.
Moreover, the target customer is highly price sensitive, so sometimes slightly
different price would be noticed by them and they would choose the cheapest
cosmetic store.
C. Bargaining Power of Suppliers
The bargaining power of suppliers of New Central Palu is Medium. There are
large number of suppliers in beauty industry, including local distributor and
official beauty brand's reseller system. Almost all beauty brands' product are similar, so it is easy to substitute and/or change to
other beauty brands. However, if the brand and/or product's viral in social
media, the bargaining power of suppliers increases as the demand of the
products increases. On the other hand, new beauty brands that are not
well-known are sometimes less desirable because there are very few enthusiasts.
Therefore, its bargaining power is low.
D. Threats of Substitute Products or Services
The threat of substitutes products or services of New
Central Palu is Low. The
substitutes of cosmetic products would be beauty clinic, salon, and spa.
However, the cost for treatment would be very high. The other substitutes are
natural ingredients, such as honey, olive oil, and others, but the quality
would not be the same as formulated cosmetic products. Therefore, the threat of
substituted products or services is low.
E.
Rivalry Among Existing Competitors
The rivalvy among existing
competitors is Medium. There are
large number of competitors, but only few large competitors. Moreover, New
Central Palu has well-maintained supply chain
management, so it is easier to collaborate with beauty brands. In addition,
economies of scale also play an important role because companies will get
better prices if they buy more products. However, customer loyalty is medium due
to high price sensitivity. Last, the cost of leaving market is quite high
because there is a stock of goods to be sold until it runs out.
Customer Analysis
According
to questionnaire result, New Central Palu's target
market are women aged betweeen 17-25 years old with
majority occupation as student. In addition, almost all of the respondent live in Palu city with monthly
income less than Rp 1.500.000. They prefer to purchase cosmetic products once
every month with average expense of Rp 150.000 to Rp 500.000 through both
online and offline channnel. Beauty influencer and/or
beauty enthusiast is the most common cosmetic information source. In addition,
skincare is the most high demand product above all
cosmetic products as most respondents use skincare and body care in daily
basis. On the other hand, most respondents use make up during events only.
Moreover, most of New Central Palu's target market is
price sensitive and care about product availability.
SWOT Analysis
SWOT analysis is made based on internal and external
analysis that was stated before. Table 3 provides details on the SWOT Analysis
of New Central Palu.
Table 3 SWOT Analysis
|
Strength |
Weakness |
|
· New
Central Palu has wide range of products ·
Availability level and buffer stock in New
Central Palu is quite high ·
New Central Palu
has a creative design team for social media ·
Management and control system in New Central Palu is good ·
New Central Palu
has maintain great supply chain system ·
Offline store of New Central Palu will soon become instagrammable
and convenient |
·
Product knowledge of New Central Palu's in-store staff is still lacking ·
New Central Palu
still cannot maintain service quality of beauty advisor from beauty brands ·
New Central Palu never
promote in offline advertising, such as billboard ·
There are still high
turnover of in-store staff, so the service quality is not well-maintained |
|
Opportunity |
Threat |
|
· According
to Central Statistics Agency (BPS) for Central Celebes Province, economic
growth of Central Celebes in quarteer III-2022
compared to quarter III-2021 experienced a growth of 19.13 percent. · Currently,
beauty has become social standard in Indonesia, so people especially female,
pay attention more on self-care and overall attractiveness than ever before ·
Cosmetic industry has experienced growth even
in pandemic condition when other industries are weakening ·
According to Central Bureau of Statistics in
Indonesia, the number of cosmetic companies increased by 20.6%, from 816 companies
to 913 companies in 2021 to July 2022. |
· E-commerce
has become a place for price wars between cosmetic stores, so that with a
decrease in retail prices, the company's profits will also decrease · There are a lot of cosmetic brands who are
still non-BPOM registered. So, sometimes New Central cannot provide viral
products and/or beauty brand because of it. · Many
cosmetic stores have just opened in Palu because
the cosmetic industry is a potential market, so the market rivalry is quite
intense · Official
marketplace and/or website of beauty brands usually make huge promotions
which has led customers to purchase there because of their price
sensitiveness |
Integrated Marketing
Communication Strategy
In
order to propose suitable Intergrated Marketing
Communication Strategy, New Central Palu should do
few steps, such as identifying target audiences, setting communications
objective, designing communications, selecting communication channels, and
deciding on media mix.
A.
Identifying Target Audiences
According to the target market, the target audience of
New Central Palu is female aged 17-25 years old.
Their occupation is high school student, university student, and employee. In
addition, the income level of the target audience is low to medium.
B.
Setting Communications
Based on the analysis, communication objectives of New
Central Palu is to build
brand awareness and customer purchase intention. New Central Palu needs to focus on skincare as the main product focus
because it is an in demand product. Moreover, it is
also intended to build bond with customer to increase customer retention and
loyalty.
C.
Design The Communication
Customer
behaviour research has proven that cosmetic product
that is in high demand is skincare. Moreover, target audiences prefer to be
updated with new products, especially the viral products. It is also important
to share promotional information as most of the target audience is
price-sensitive. Questionnaire result also shows that the target audience think
that product recommendation and review is essential content to be shared in New
Central Palu's instagram.
As a conclusion, New Central Palu should provide
several contents, such as new products, on-going promotions, and product
recommendation and review with skincare as the main product focus.
To
convey the promotional and product sharing message, an informative approach
will be chosen because the target market is young women who prefer a direct and
to the point approach. In addition, informative technique will provide a more
thorough and detail product review and recommendation. On the other hand,
transformative communication approach may be implemented as supplementary to
increase customer retention and loyalty as it may help connecting customers to
New Central Palu's identity and value.
In
New Central Palu, the author has became face of New Central Palu
as some of Instagram story content is shared by the author. Therefore, daily
content on Instagram, especially those that are featured, should be shared by
authors to increase trust and bond with the audience. In addition, some events
may require collaboration with local influencers and beauty enthusiasts, such
as Lucky Tembang, Maria Grace and Sizka
Angela to increase brand awareness.
According
to questionnaire result, Maria Grace, Lucky Tembang,
and Sizka Angela are chosen as the suitable local
influencer to share New Central Palu's promotional
information as they are attractive to the target audience. Moreover, Maria
Grace is make up artist and
beauty enthusiast, so she understands cosmetic products and may convince her
followers to purchase it in New Central Palu.
Moreover, Lucky Tembang is the most well-known
Instagram influencer in Palu as he shares comedy
content in daily basis. Sizka Angela is beautician
who has learned about semipermanent make up in Korea and owns a beauty clinic
in Palu. Therefore, her Instagram followers suit with
New Central Palu's target market.
D.
Selecting Communication Channels
New
Central Palu need to maximize the use of both
personal and nonpersonal communication channels. Influencer endorsement, direct
marketing through reseller whatsapp broadcast message,
and personal online selling through Instagram and Whatsapp
should be used as online personal communication. In addition, direct selling by
beauty advisor, sales promotion girl, and in-store staff and word of mouth will
be used in offline channel. On the other hand, nonpersonal communication will
use instagram ads, organic social media content, and
e-commerce program in online channel whereas nonpersonal offline channel
communication should involve billboard, radio broadcast ads, beauty events, public
relations by sending hampers at certain events, and sales promotion, such as
discount and bundling package.
E.
Deciding on Media Mix
In developing marketing
communication strategy, company must consider several factors, such as product
market type, buyer's readiness stage, and product lifecycle stage. New Central Palu's type of product market is consumer markets because
the target market purchase products for their own needs. Moreover, New Central Palu is currently at evaluation of alternatives and
purchase decision stage in tems of consumer readiness
stage. In product lifecycle stage, New Central Palu
is in growth stage. There are six major communication channels, such as
advertising, sales promotion, public relation, personal selling, direct
marketing, and digital marketing.
Advertising
One of the best way
to raise brand awareness is using advertisement. Advertising makes it possible
to reach a large audience, so it could also be used for market expansion.
Moreover, there are online and offline channels for advertisement. Online
advertising such as social media ads or marketplace ads is more economical than
offline advertisement media. In addition, the features also make it possible to
target specific audiences based on the company needs. Regarding the content, it
could also be customized and creatively made to attract customers. Offline advertising includes TV and radio
ads, magazine or newspaper ads, flyer, point of purchase (POP) display, and
billboard. Currently, New Central Palu has placed
point of purchase (POP) display. It is recommended to try using radio ads and
billboard to reach larger audiences, so it is expected to give bigger impact.
Sales Promotion
New Central Palu has implemented several sales promotion, such as
product discount, bundling, and Buy 1 Get 1 promotion. Moreover, giveaway and
free gift lottery with minimum purchase has also been done several times. In
marketplace, New Central Palu has done monthy campaign during pay day sale at 25th monthly and
twin date sale. It is suggested that New Central Palu
focuses more on other marketplace campaigns, such as flash sale, live sale, and
others. New Central Palu may collaborate with
cosmetic brand to do live sale to boost the sales. This
efforts may increase customer engagement, sales, and revenue in
marketplace.
Public Relation
Public relation may be
beneficial if the campaign is well-planned and integrated with other marketing
communication mix strategy. New Central Palu may use
"Beauty starts here" campaign for Grand Re-opening events to let the
audience know that sanctuary of beauty has just opened in Palu.
In order to quickly increase brand awareness, PR package for local influencers
should be prepared as well. Is must be attractive and
memorable so that influencer and their followers could be attracted and would
remember it for a long time.
Personal Selling
Personal selling is
highly needed in New Central Palu as 90% of the sales
comes from offline store. Therefore, beauty advisor, sales promotion girl, and
in-store staff play important role in attracting people to buy products in New
Central Palu. Therefore, they should know the details
about the products that they are responsible for. The ingredients, how to use
the products, and product recommendation based on the skin condition and
expected result of the customers are the information that the sales team should
know in order to attract customer and trigger their purchase intention.
Direct Marketing
Key advantage of direct
marketing is its ability to elicit a particular response or action from a
targeted audience. Direct marketing advertises a good or service directly to the
customer rather than concentrating on educating these prospects. New Central Palu should start doing direct marketing approach via email
marketing or text message in order to inform customers about on-going
promotions.
Digital Marketing
At the moment, people can not be separated from the use of mobile phones,
especially social media. Therefore, digital marketing is essential in any kind
of business, especially cosmetic industry. Moreover, quantitative research has
proven that Instagram ads is the most attractive adversiting
for the respondents. Besides raising brand awareness, digital marketing may
help New Central Palu to engage with the target
audiences, trigger purchase intention, and get feedbacks about the service
quality.
There are several
digital marketing strategy that can be implemented in
New Central Palu, such as:
1.
Social
Media Organic Content
New products, product recommendation, product review, on-going promotion,
makeup hacks and tutorial, and education are important contents to be shared in
New Central Palu's instagram.
In order to catch audience's attention, the contents need to be attractive and
memorable. If not, customers would skip the content without even seeing or
reading the materials. Moreover, company's value and brand message should also
be delivered to the target market via social media.
2.
Social
Media Advertisement
Social media advertisement is the most economical advertisement. It is
cheaper than other media, right on target, and easily conducted. It can also be
evaluated after the advertisement is finished. In addition, creative content
using video should be made to give powerful and attractive message in the ads.
3.
Influencer
Endorsement and Collaboration
Influencer may give huge impact on the brand awareness. As New Central Palu targets Central Celebes market, local influencer based
in Palu should be chosen, rather than national
influencer. Furthermore, the New Central Palu team
must conduct research on influencers to select influencers that are suitable
for the audience according to New Central's target market.
Conclusion
New Central Palu is a non-food modern retail store located in Palu, Central Celebes. It sells variety od
products with main products are cosmetics, so the company is committed to
provide BPOM certified original products and continuously update with the latest
trend in cosmetic industry, especially viral products. New Central Palu is well-known of its trustworthiness, promotions, and
affordable prices since it applies three price categories as its pricing
strategy.
Currently, New Central Palu experiences stagnant sales and revenue even if the
goods' price goes up. This happens due to high inflation rate, limited and
uncomfortable offline store, and long queues at the cashier during peak season.
Moreover, some customers also complain about inadequate promo information at
store and lack of service quality from in-store staff and beauty advisor.
Internal analysis of
the company shows that New Central Palu has
sustainable competitive advantage from most of its resources and capabilities.
Therefore, the company has potential growth in cosmetic industry, especially in
Palu. However, New Central Palu's
marketing strategy has not been adequately planned due to a slightly inaccurate
target market and an inadequate marketing team.
On external
environmental analysis, it is analyzed that cosmetic
industry is currently a promising business industry as beauty has become a
social standard in Indonesia. In addition, New Central Palu
has quite large market share in Palu due to its
supply chain management system, so the company could win the competition in the
business. However, there are many competitors and new enthrants
in the industry, so the rivalry among competitors is quite intense. This is
also exacerbated by the high price sensitivity of the target customer. Therefore,
New Central Palu has to maintain its positioning and
plan suitable integrated marketing communication strategy.
New Central Palu's real target market is female aged 17-25 years old
who live in Central Celebes Island, especially in Palu.
They are high school student, university student, and employee with low to
middle income level. Their personality is extraveerted,
active, friendly, and creative. In addition, the target market enjoys beauty
and surfing in social media. In choosing cosmetic store to purchase their
needs, they seek for original products with affordable price, BPOM-certified,
and availability of viral products. Moreover, comfortable and instagrammable store will be a plus.
Integrated marketing
communication strategy that will be applied in New Central Palu
is to build brand awareness and increase customer purchase intention. Both
personal and nonpersonal communication channel with offline and online approach
will be used in the strategy. Moreover, six marketing communication mix
strategies including advertising, sales promotion, public relation, personal
selling, direct marketing, and digital marketing will be applied in the
strategy to optimize the result.
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