estee lauder in china
Thanks for my partner.
As a company spokesperson explained in the case, more of estee lauder’s growth is expected to come from expansion and awareness-building in tier-2 and tier-3 cities as tier-1 cities begin to mature. So we should learn current situation about the tier 2 and 3 cities first, to see what the opportunities here are. My partner has mentioned the specific classification of china’s cities, now I still quote this classification.
1. Firstly, as the case mentioned, three quarters of china’s urban population live outside tier1 and 2 cities. According to the latest statistics published by the National Statistics Bureau, almost 80% urban population lives in outside tier 1 and 2 cities. Such large population is a huge potential market for the cosmetic company to develop, and tier one and two cities began to mature.
2. However, there is no denying that the tier 3, 4 and 5 cities have a lower economy situation comparing to the tier1 and 2 cities. As u can see in this graph, Beijing and Hangzhou have the amount of almost 40000 yuan in urban disposable income per capita, while Guiyang only has the amount of 23000 yuan, much lower than the tier1 and 2 cities.
3. Thirdly, the cosmetics industry is sustainably growing, But the main source of growth has shifted to tier-three and tier-four cities, while growth rate significantly decreased in tier-one and tier-two cities. Kantar Worldpanel’ s latest report showed that the cosmetics market in the first quarter of this year in the county-level city and county growth remains rapid growth over 20%, much higher than tier-one and tier-two cities.
These three current situation clearly and directly shows that tier-3,4 and 5 cities with larger population and higher cosmetics growth rate are huge potential market, but people there often with lower income may has lower consumption level than customers in tier1 and 2 cities. Therefore, it is supposed to reposition its targeting customers for estee lauder entrying this
As a company spokesperson explained in the case, more of estee lauder’s growth is expected to come from expansion and awareness-building in tier-2 and tier-3 cities as tier-1 cities begin to mature. So we should learn current situation about the tier 2 and 3 cities first, to see what the opportunities here are. My partner has mentioned the specific classification of china’s cities, now I still quote this classification.
1. Firstly, as the case mentioned, three quarters of china’s urban population live outside tier1 and 2 cities. According to the latest statistics published by the National Statistics Bureau, almost 80% urban population lives in outside tier 1 and 2 cities. Such large population is a huge potential market for the cosmetic company to develop, and tier one and two cities began to mature.
2. However, there is no denying that the tier 3, 4 and 5 cities have a lower economy situation comparing to the tier1 and 2 cities. As u can see in this graph, Beijing and Hangzhou have the amount of almost 40000 yuan in urban disposable income per capita, while Guiyang only has the amount of 23000 yuan, much lower than the tier1 and 2 cities.
3. Thirdly, the cosmetics industry is sustainably growing, But the main source of growth has shifted to tier-three and tier-four cities, while growth rate significantly decreased in tier-one and tier-two cities. Kantar Worldpanel’ s latest report showed that the cosmetics market in the first quarter of this year in the county-level city and county growth remains rapid growth over 20%, much higher than tier-one and tier-two cities.
These three current situation clearly and directly shows that tier-3,4 and 5 cities with larger population and higher cosmetics growth rate are huge potential market, but people there often with lower income may has lower consumption level than customers in tier1 and 2 cities. Therefore, it is supposed to reposition its targeting customers for estee lauder entrying this