ANGELES, CHEN, CHOI, MANLULO, TAN MKT 101 B

GROUP NAME: DIVERSITY Ms. Pindy Mendiola

BRAND: Caronia

I. Marketing Background

In 2011, the international nail care and nail polish industry experienced an increase in

sales until the next two years and recently just slowed down. Nail polish can be considered as

a class indicator in which the purchase of these products show how much you are willing to

spend for beauty purposes whether it may be a bottle of cheap nail polish or trip to the salon

or spa for a manicure.1 The size of the market of the nail industry has been growing. As for

the past years it has been believed that women, in general, are the usual consumers of these

goods and services but because of recent hypes in pop culture, some men are also getting into

the nail polish hype. There has been this phenomenon called the “Nail Polish Effect”2 in

which nail polish sales have been incredibly fast in growth. More and more of the consumers

of nail polish have learned to do their own nails rather than spend on salons.3 The nail

industry is constantly growing as more and more brands enter the market and competition

pushes these brands to make more varieties that can topple the competition.4

Going locally, behind the lines of Caronia, the company has a sound structure when it

comes to financial, accounting, and operations. This is the reason why the brand has lived on

since its humble beginnings back in the 60’s. Although their research and development

departments sometimes clash with their financial department due to the large cost of

experimenting on the brand, the company is able to slowly come up with new products at

least once every 2-3 years. Another conflict it has is between its advertising and financial

departments. For the same reason as with the research and development department, the cost

of advertising their product is large and very risky. The financial department has no way of

ensuring that the advertisements the advertising department produces will be able to generate

enough awareness for their brand. This explains the decline of advertising Caronia

1 Groden, Claire. "Nail Polish Sales Slow After Years of Growth | TIME.com." TIME. July 23, 2013. Accessed December 14, 2014. http://style.time.com/2013/07/26/nail-polish-sales-slow-after-years-of-growth/.2 Some sort of a ‘replacement’ of the “Lipstick Effect”.3 Walker, Rob. "GCI Magazine." State of the Industry. June 1, 2012. Accessed December 14, 2014. http://www.gcimagazine.com/marketstrends/regions/world/156321685.html.4 Pastor, Pam. "Nail Polish Is the New Lipstick." Inquirer. April 27, 2012. Accessed December 14, 2014. http://lifestyle.inquirer.net/45243/nail-polish-is-the-new-lipstick.

experiences over the years. They used to invest so much in getting their brand heard, but now

that they are one of the more popular brands, they focus more on keeping the product quality

stable rather than getting more people to buy their product simply because of the fact that

they have established their presence in the market.5

There are a number of marketing intermediaries to help promote and share their nail

products. There are various resellers and physical distribution firms who carries different

brands of nail care, some of them baring familiar names such as SM, Robinsons, etc. These

resellers and physical distribution firms are what get the brand’s name recognized in the

public, once they are being sold.

The customer market that the nail care industry works with is that of the Consumer

Market. Their brand has since always prioritized the interest of their customers. Since its

birth, Caronia made it a point to become a common house hold brand in order to satisfy their

target market.

On a macro environmental level, nail care products face problems when it comes to

the economic environment. The Philippines’ economy is one of the biggest challenges that

the company could face because it affects the purchasing power of the people they target. As

of now, their current target is the Class C, both upper and lower, Milennials. This is closely

related to the Political Environment, in charge of the tax regulations of the businesses in the

Philippines.6

For the Natural Environment, the concern is the various places it can harvest its

resources for their products and the effects of its production of products. Hand in hand with

the technological environment, the production is improved by the evolving technology that

the 21st century has to offer.

Caronia’s key success factors are present through its resilience against the

competition it has. They are able to put minimal attention to its competitors while focusing on

itself and still be able to stand above the rest. Its establishment in the market is also another

key factor mainly because this is what helps people remember the name of the brand. The

5 Taken from the website: http://www.caronia.com.ph6 Wallop, Harry. "Gen Z, Gen Y, Baby Boomers – a Guide to the Generations." The Telegraph. July 31, 2014. Accessed December 15, 2014. http://www.telegraph.co.uk/news/features/11002767/Gen-Z-Gen-Y-baby-boomers-a-guide-to-the-generations.html

more it is recognized by the majority of the populace, the more people want or are

comfortable buying their product.7

I. Competitive Analysis

Amidst all the other brands both high-end, like O.P.I and Orly, and those more

considered as for the masses, such as The Face Shop and Etude House, Caronia holds fast to

its proud heritage and position in the market as a homegrown quality nail polish brand.

Through this we see Caronia positioning itself as a brand that is friendly, reliable, and

accessible and maybe even a Filipino household classic. Through its promotions and event

tie-ups, like with Ballet Philippines for example, it would suggest the brand’s desire to be

perceived as one that represents the diverse interests and by extension the individuality and

identity of its customers through the use of their products.

Caronia has a number of competitors present in the market. Some of the competing

brands include other familiar names such as Bobbie, OMG Nail Polish, O.P.I, Etude House,

The Face Shop, Orly, Careline, Caress, My Posh, and etc. Caronia is one of the top sharers in

the Philippine Nail Polish Market, searing the market dominance of Caronia re-brands such

as Bobbie, Careline, and Caress. Other brands such as Mwah!, Wish, and My Posh, share a

considerably less portion of the market compared to Caronia, Careline, Bobbie, and Caress

Caronia offers a wide variety of nail polish targeted to the targeted to the broad class

C. They offer two types of nail polish, namely: Regular, which comes in 26 colors, and

Frosted, which comes in 49 colors.8 Based on data regarding consumer preferences gathered

by the survey, emphasis will be given to products preferred by the market. This preference

can be measured by product attributes such as price, scent, quality (longevity), and color.

Caronia products’ price ranges at around 30-50 PHP which is very affordable for its target

market of the broad C class, D class, and E class. Their products are strategically placed in

accessible locations such as supermarket, department, retail outlets, and drugstores such as

Mercury Drug and Watson's. As of the moment, Caronia utilizes its website

(http://www.caronia.com.ph) and its Facebook page (Caronia Philippines) for its promotions.

7 "Caronia Art Of Dance Nail Polish Collection Review." The Beauty Junkee. May 5, 2014. Accessed December 14, 2014. http://thebeautyjunkee.blogspot.com/2014/05/caronia-art-of-dance-nail-polish.html.

8 Taken from the website: http://www.caronia.com.ph

Some strategies used by the companies incorporates small giveaways for its consumers

through its Facebook page. Currently, Caronia is in a partnership with Ballet Philippines.

Caronia’s competitors in the local market analyzed by the group are Orly, The Face

Shop, O.P.I., The Face Shop, Etude House, OMG Nail Polish, and Bobbie. These brands are

evaluated based on the 4 P’s of Marketing.9

A. Orly:10

Orly provides various types of nail color, pedicure, and hand cream, but they

started out with and specialize in nail-related products. Orly offers various

collections, such as Sparkle, Smoky, Baked, Galaxy FX, Secret Society, Pretty in

Pink, Mash-Up and many more. Their nail polish products are divided into 3

types, namely Creme, Shimmer, and Glitter. They also offer French manicure,

which the founder of Orly: Jeff Pink invented, nail treatments, and various types

of Smart Gel, and nutrient-providing manicures as well. Orly's unique Smart Gel

and superb-quality nail color products stand out amongst its competitors in the

international market, including the Philippines. Many customers are highly

satisfied with the company's high quality nail polish and say that Orly offers one

of the best nail polish products in available in the Philippines.

Orly's products are relatively expensive compared to those of its competitors.

Its nail color and gel products' price ranges from 350 - 550 PHP11 per bottle,

depending on where the item is bought. The company targets, mainly,

socioeconomic class A and B, who are not necessarily price-sensitive, which

allows it to concentrate on developing its quality in order to provide its customers

with high-end products.

Orly products are available in Marionnaud, First Aid Greenbelt, PCX (Ermita,

Rockwell, ATC), Watsons (Greenbelt 5, Ayala Cebu), Beauty by SM (Makati,

Megamall), Landmark-Trinoma, Caswell-Massey, Jesi Mendez (New World,

Ermita, Park Square I, Tutuban), Chocolate (Trinoma), Nail Tropics (Serendra,

Eastwood). It is also available on online market such as Lazada. Many of the nail

9 Data from these brands are collected from the product’s website and social media sites as well as various interviews of consumers and store checks of different outlets where they sell these products.10 Taken from Orly’s website: http://www.orlybeauty.com/11

care salons also use Orly in order to satisfy its customers who expect a service that

is worth the pricy payment.

As of now, Orly has established a very positive reputation amongst the target

market and solid market share as well. It advertises and promotes its products

passively through its Instagram, Pinterest, Twitter, and Facebook page, and

occasionally physical advertisements in several malls or billboards since its

patrons are loyal to the company. It also advertises its products in women's

magazines occasionally.

B. The Face Shop:

The Face Shop offers all-around body care products such as body wash, scrub,

facial wash, soap, toner, lotion, nail polish, and many more. It is an international

brand based on Korea which recently has penetrated into the Philippine market.

The quality of its nail polish products are above average but inferior compared to

high-end products like Orly. Since it is a company that specializes and

concentrates on all-around body care, it offers a variety of products according to

each nail type, which is a unique feature that attracts customers. It also offers wide

variety of colors and collections such as Lovely Me:ex Oh My Neon Nails, Face It

Colored Paper Nails, Face It Planet Art Nails, Trendy Nails, and many more.

The nail polish products of The Face Shop is often, or always on sale. Through

this, it is able to offer the general colors at very cheap price, as low as 50 PHP per

bottle. The usual price ranges from 50 - 200 PHP per bottle. Based on its price

range, The Face Shop targets, mainly, B and C socioeconomic class.

The Face Shop has its branches in Alabang Town Center, Ayala Center Cebu,

Eastwood, Festival Supermall, Fort Bonifacio Global City, Glorietta, Robinsons

Place Manila, Rockwell, Robinsons Galleria, Shangri-La Plaza, SM Cebu, SM

Taytay, SM Sucat, SM Southmall, SM Fairview, SM Megamall, SM The Block

Level 2, SM Bacolod, SM Pampanga, SM Mall of Asia, Shoppersville Arcade,

The Podium, Trinoma

The Face Shop rarely advertises its products on magazines or billboards.

Instead, it displays banners and posters in malls near its shop, which catches the

eyes of the by-passers. Following the trend, it promotes the brand by hiring

several well-known Korean celebrities as models since Korean wave is hitting the

Philippines.

C. O.P.I12

O.P.I is a company that only concentrates on nail polish products. It offers

various colors such as classics, soft shades, and brights, and many collections such

as Gwen Stefani Holiday, Nordic, Brazil, Peanuts, Ford Mustang, Coca-Cola, and

many more. As of now, the official website of the company offers 283 different

shades of colors. According to a customer survey, the products of O.P.I. are very

high-end like those of Orly. Both Orly and O.P.I differentiate their products from

other competitors through investing in development of products that do not stain

the nails even if the nail coloring stays on for a long time and ones that do not chip

easily after drying up.

Other opinions were that O.P.I products have bigger brush compared to other

brands', which makes it easier to apply the nail color, they do not dry up in bottle

easily after opening the products, and O.P.I offers a very wide variety of choices

in color.

The products of O.P.I are very high-end, thus, they are quite pricy. The price

ranges from 300 - 700 PHP per bottle, which is definitely more expensive than

most of its competitors. Based on the price range of O.P.I nail polish products, the

firm caters mainly socioeconomic class A and B.

O.P.I products are available in Rustan's Department Stores.

O.P.I mainly advertises its products through magazines. It also has Facebook

page, Twitter, Instagram, Youtube channel, Pinterest, Google+, and Tumblr

following the online SNS promotion trend. It has unique feature on its official

website where a virtual simulator allows customers to see what each color of nail

polish product looks like in different length of nail and different color tones.

D. Etude House13

12 Taken from O.P.I’s website: http://pro.opi.com/13 Taken from Etude House’s website: http://www.etudehouse.ph/

Etude House is an international body care product firm that is based on Korea.

It offers a variety of colors and collections of nail polish products, such as Dear

My Party Nails, Look At My Nails, Juicycocktail Graduation Nails, Dear My

Deep Color Nails, and many more. It also offers many other varieties of products,

such as facial wash, make up, facial masks and packs, perfume, and more. It is

very competitive in its nail polish market, especially among its major target

market: teens. The distinctive generally teen-friendly colored nail polish products

capture the attention of many customers. Etude House also offers innovative nail

products such as nail stickers, stamps, and dotters, which is perfect for unique

taste of fashion-loving teens.

The price of Etude House nail polish products ranges from 78 - 198 PHP.

Given its competitors in the local market, Etude House's pricing strategies allows

its consumers to spend more for the physical good, and receive more in terms of

quality, creativity and durability of the product. The company mainly targets

socioeconomic class B and C.

Etude House has its own storefront with its stores located in many SM Malls

all around the nation, Robinsons, Landmark, Greenbelt 4, Glorietta 3, and many

more.

Etude House promotes its products mainly on online advertisements and

magazines. They often hire Korean celebrity endorsers in order to follow the trend

of Korean wave in the Philippines. Their stores are also catchy to the eyes of the

potential customers. Their stores located in various malls are white and pink,

which stands out among other stores. The company also has Facebook page,

Instagram, Twitter, and Youtube channel in order to promote its products and new

releases online.

E. OMG Nail Polish:14

OMG Nail Polish is a local company which offers 118-wide variety of colors.

OMG's nail polish products primarily focus on unique, trendsetting colors in the

nail polish industry. With its products, the company aims to provide women with

quality products for an inexpensive price. OMG's quirky, striking colors and

14 Taken from OMG Nail Polish’s website: http://omgnailpolish.com/

competitive price especially catches the attention of individualistic women with

quirky tastes in fashion.

The price of OMG nail polish products are 20 - 35 PHP per bottle, depending

on the size of the bottle, which allows the company to cater socioeconomic class

D and E. This inexpensive price also allows them to cater people who want to buy

uniquely colored nail polish that they are going to use very occasionally.

OMG products are mostly available in department stores and budget stores all

around the nation, which is very easily accessible.

OMG Nail Polish promotes its products through its Facbook page, Instagram,

and Twitter. Their main promotion is their distribution in various stores. The

physical shelf placement of products in stores allows potential customers to access

the products.

F. Bobbie:15

Bobbie Nail Polish offers a wide variety of colors as well, but not as many as

its competitors, such as OMG Nail Polish or Caronia. Although, the company

offers unique color selections such as Rain Metallica, Mwah!, and Rain.

The price of a usual Bobbie nail polish product ranges at around 20 - 50 PHP.

This inexpensive price range allows the company to cater socioeconomic class D

and E. This inexpensive price also allows them to cater people who want to buy

uniquely colored nail polish that they are going to use very occasionally.

Bobbie products are mostly available in department stores and budget stores

all around the nation, which is very easily accessible.

Shelf placement in actual physical stores is Bobbie's major advertisement

technique. Not a lot of information on products is available online. Very few

physical print advertisements are distributed with not-so-popular magazines as

well.

II. Company Background

A. Company Profile

15 Taken from Bobbie’s website: http://www.bobbienailcare.com/

Caronia is a local nail polish brand that was founded by Don Vicente Ang and his

wife Belen in 1968. The brand offered locally produced nail polish that would be available in

a wide variety of colors. It easily became popular as it offered quality nail polish and

provided the female market "an alternative to limitedly available imported nail care brands."

When it first started, it easily gained market dominance with the help of a successful

marketing campaign. Throughout the years, they utilized marketing strategies such as TV and

radio commercials, jingles, and celebrity endorsers to better capture its market.16 In addition,

they also opened a wider line of nail care products in order to better provide accessible and

affordable nail care to its market. In 2005, they repositioned their products to "a younger,

more dynamic female market." In response to changes in fashion and lifestyle trends over the

years, they continuously updated their product line taking into account the existing market

needs and wants of the time.17

Caronia currently remains proud of being the locally most trusted brand of nail polish.

With 75 colors, Caronia still continues to try to expand it range of colors to suit the different

needs of its market. The brand also offers different nail care products as well as set colors for

different manicure demands.

Caronia also partners with events such a Ballet Philippines and other functions to

promote their brand and maintain visibility.

Over the years of its operation, Caronia has become a common household brand.

Caronia's strength in its customer lies in the fact that it had market dominance way back

when it started, aside from the fact that their nail polish was at par with imported brands

during the time. Using this to their advantage, Caronia was able to effectively market their

product over the years according to how its target buyers saw fit.

In terms of product variety, Caronia started out with its main products of nail polish.

With a running life spanning from the 1960's to present, the company has evolved from a

brand with humble beginnings offering nail polish that was comparable to leading U.S.

brands' product line, but over the years, they were able to offer new products like French

manicure products, nail care products, and hand/foot care products.

16 Valenzuela, Ana. "THROWBACK THURSDAY | Can We Ever Get the Old Caronia Song out of Our Heads?" Lifestyle InterAksyoncom. Accessed December 15, 2014. http://www.interaksyon.com/lifestyle/throwback-thursday-can-we-ever-get-the-old-caronia-song-out-of-our-heads.17 Taken from the website: http://www.caronia.com.ph/

Caronia's relatively narrow; or rather specialized product variety allows them to focus

on specific area of human health care: nails, feet, and hands, which allow them to invest more

on each product line in terms of research, advertisement, and others.

With its constant research and development, Caronia was able to introduce a variety

of new collections and colors of nail polish: its mail product line, over the years of its

operation.

Although, Caronia still lacks the exposure they need in order to diversify their market.

Recently, Caronia saw the need to branch out to today's social media sites. Aside from their

already existing website, Caronia has links to Facebook, various blogger sites, and different

photography sites, such as Instagram in order to gain the presence in media.

In terms of physical advertisements, one of Caronia's strengths is their constant push

to expose their products. By becoming visible to the public, in particular, their target market,

they are able to effectively disseminate the news about their products, either new or old.

As for Caronia's weakness in its advertisements, the company's advertisement for

each product line is too broad or too general. If each of their product line had a specific ad

that targeted a distinct group of people, they are better off, considering the fact that they are

one of the leading local brands in the nail polish industry here in the Philippines. For the

company to jump out of the general target market (The Philippine broad C class), it would

mean having to target more specific people within their already targeted market.

Also, to achieve exposure to the target market, Caronia has recently partnered up with

Ballet Philippines, during the dance company's 45th concert, in launching its new collection:

The Art of Dance, Caronia's first Toulene and Formaldehyde free (TFF) collections. Through

this project, the company was successful in advertising its new collection and the company

itself to its target market.

As a local brand, Caronia has established a solid market share in the Philippine

market. Its reasonable price quality attracts a lot of customers, but its competitors, such as

Orly and The Face Shop, have established a big market share as well.

Orly is an international brand that offers superb quality which attracts customers

despite its high price; while Caronia offers relatively lower-quality nail polish products with

much lower price. As a result, many nail care shops with relatively high price use Orly's

products in order to maximize the value that the customers are paying for. The Face Shop, on

the other hand, is a Korean brand which offers a wide variety of all-around body care

products offer nail polish at relatively higher price that of compared to Caronia, but lower

than that of Orly. The company was able to succeed in marketing its products through taking

advantage of the K-POP wave that had swept the country. This shows that Caronia still lacks

quality in its products compared to many of its competitors.

B. Brand Consumer Profile

Caronia is a brand that targets the broad female mass of the class C. On a survey

conducted by the group on a sample of 58 respondents, 72% of them are familiar with the

brand and 47% of them have used or are using the brand. These respondents age ranged from

16 years up to 23 years. Most respondents find the purchase or usage of the product to be

based on personal grooming, self-expression, and fashion purposes thus the usage of the nail

products would be occasionally rather than on a more often note of a weekly basis.18

C. Present Marketing Strategy

Based on Advertisement and Promotion, Caronia promotes and advertises its products

mainly on the internet through its Instagram, Twitter, and Facebook page. Based on this,

Caronia is targeting the youth, such as teens and people in their early 20's who access the

internet and social networking sites almost daily. The company is also launching several

promotion events on its Facebook events in order to catch the attention of the Facebook users,

and following the trend, uploading tweets asking people to tweet with hash tag (#Caronia) in

order to advertise its products through the followers and users of both products and Twitter.

This type of marketing is very low in cost, and has been proved to be effective in targeting

the young aged groups.

Caronia also released 'Match and Play', a game on the internet in order to attract

potential customers. The company uploads photos of top 20 scorers of the game every month

on its Twitter account.19 As a company that targets the teens through SNS, a company-related

games can be a good way to advertise its products and the brand itself.

The company also recently launched Caronia Jingle Contest in 2013 to advertise the

brand itself. Many companies in the Philippines have been using similar type of promotion

18 Survey live general results and analytics: https://erika14.typeform.com/report/dnaKsa/LElr19 Taken from Caronia’s Facebook and Twitter accounts

method. The contest was open for all amateur bands, and Caronia offered 70,000 PHP to

amatuer bands as a prize. This was to promote its products to a wider segment of market,

aside from its promotions via internet.

Caronia also has a booth in Cosmetologie Fair 2014, a cosmetic product fair held in

World Trade Center. This was to expose the products to new potential customers, and also

distributors of cosmetic-related products.20

On matters of price, Caronia products' price ranges around 30 – 50 PHP, which is

very inexpensive and affordable. Based on the pricing of the products, Caronia is targeting

the socioeconomic class D and E, who are very price-sensitive. The low pricing makes

Caronia's products affordable for the people who cannot spare a lot of money on beauty

related products due to insufficient income.

Low pricing also allows Caronia to target teens and women of in their early 20's. The

pricing makes it perfect for the customers to purchase Caronia's nail polish for very

occasional use. For example, if a teenaged girl wants a nail polish that matches the color of

her prom dress, but she does not want to buy expensive products since she is not going to use

it after her graduation prom, Caronia is a perfect choice for her.21

In terms of product placement, Caronia products are very accessible. They can be

purchased in many budget stores and convenient stores. This allows the company to target a

very wide market. In convenient stores, Caronia products are usually on display near the

counter, which makes it very visible for the customers of the convenient store, even the ones

who initially do not enter the store with intention of buying any nail polish products. In this

way, the company aims for its potential customers to impulse-buy the products.

Overall, Caronia mainly targets age groups of teens and early 20's, and socioeconomic

class D and E.

As can be observed, Caronia employs three common competitive strategies to achieve

competitive advantage in the market. These are cost leadership, differentiation, and focus

strategy.22

20 Ibid21 Consumers’ opinion thread: http://www.femalenetwork.com/girltalk/index.php?topic=226214.2022 "Competitive Strategies." Competitive Strategies. Accessed December 14, 2014. http://toolkit.smallbiz.nsw.gov.au/part/3/12/60

As a necessity for producing and selling inexpensive nail polish to the majority of the

industry market, they implement low cost leadership to be able to meet market demand and to

meet target sales. With cost leadership, they are able to mass produce their products at low

production costs. This strategy is crucial for them since they sell their products at low prices

and there is a large demand for those products.23

Apart from cost leadership, Caronia also implements a differentiation strategy. This

was successfully employed as they are widely known for being the first to locally produce

nail polish at the time when availability of nail care products was limited. What sets them

apart from their competitors is that their products are locally produced, have wide variety (in

colors), have comparable quality with US brands', and are still affordable.24

Lastly, it is evident that Caronia also employs focus strategy when they started

marketing their products to a younger market back in 2005. Over the years, they focused

more on the needs and wants of young women, so they launched more nail polish in colors

that are based on the lifestyle and fashion trends of young women.25

23 Ibid24 Ibid25 Ibid