Insead Loreal Case Study

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For product categories, the trend will start from classical clothing and electronics into intimate lifestyle products such as skincare and cosmetics which have a higher requirement for safety and performance. In Yue Sai’s case, management made a right decision to move it from consumer division to luxury division. However, this might be a little ahead for Chinese consumers who hadn’t changed their perception of Chinese brands as being affordable and functional.

3. What is brand heritage? How can the conflict between a respective brand’s heritage and staying relevant for new generations of consumers be resolved?

Brand heritage is the enduring reputation that a firm accrues from its moment of inception. Yue-Sai built a long-term brand reputation as the oldest and first major cosmetics and skincare company to recognize the need to manufacture and distribute products created specifically for the needs of the Chinese consumer market. Madam Yue Sai’s insight that the “standards of beauty in China were different than those of other cultures,” enabled her to build a lasting and positive brand heritage that facilitated Yue Sai’s ascendancy in its early years, culminating in its crowning as China’s leading luxury cosmetic company by 1998.

A brand’s heritage may often prove to be detrimental to its long-term prospects if it starts to conflict with the extant perceptions and expectations of a new generation of consumers. Though Yue Sai initially derived a great deal of goodwill from Chinese consumers as the first native brand to disrupt the Western-dominated cosmetic and skincare market, this heritage has eroded its brand value among younger Chinese consumers who perceive older brands as outdated or unfashionable.

To resolve this conflict between brand heritage and maintaining relevancy among the current generation of consumers, companies such as Yue Sai must endeavor to develop new modes of evolving their respective brand heritage to connect and reach younger segments of the market. In Yue Sai’s case, a strategy that can be employed to achieve this goal is an alteration of the marketing mix. Possible solutions include 1-product) focusing on innovating and utilizing new technology and research to create products that connect with the younger consumer; 2-promotion) eschewing traditional modes of print advertising in favor of promotion through social media platforms such as Sina Weibo (China’s version of Twitter) and partnerships with popular live show hosts on Chinese video stream websites such as Youku; and 3-place) expanding e-commerce opportunities for younger consumers through channels such as WeChat (Chinese Whatsapp with commerce capabilities).

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