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Introduction
Sephora is a beauty Products Company created in 1969 by a French beauty products enthusiast. However, in 1997, the business was acquired by Louis Vuitton Moet Hennessy (LVMH) (Moore et al., 2020). Over the years, the corporation has grown to become a leading retailer in the European beauty marketplace. Since then, the firm has expanded its operations within Europe, gaining a 15 percent market share (Moore et al., 2020). Supported by a stable financial and visionary foundation from the LVMH, Sephora intends to expand its operations into the Asian market, with its main focus being the Vietnamese market. Therefore, this paper intends to present an extensive assessment of the globalization of Sephora, particularly in the Vietnamese marketplace.
Market Assessment
The international cosmetics sector is expected to grow over the coming decades. In Vietnam mainly, the cosmetics marketplace has been increasing gradually and is currently valued at US$ 3 billion (Pham et al., 2020). As a growth opportunity in Vietnam, the economy presents a significant potential for Sephora to expand its operations. Furthermore, Vietnam has few direct competitors for the company, thus offering a chance for expansion. In Vietnam, most cosmetics sellers are minor drugstore cosmetics, whereas Sephora is a luxury makeup company. The makeup sector in Vietnam is currently worth US$ 3billion and is projected to grow expansively in the next three years (Pham et al., 2020). Therefore, the business will be successful in Vietnam since there is an available market for high-end cosmetics products.
Regarding entrance into the Vietnamese cosmetic industry, it will be easy for a foreign company, such as Sephora. The Vietnam market is considered amongst the least problematic economies to conduct trade globally. The country is ranked 68th out of 189 nations on the Easy of Conducting Trade Index (Danh, 2022). In essence, several retailers of such products are multinational corporations in the Vietnamese cosmetic industry. Moreover, it is tranquil for Sephora to undertake commerce within the country through specific approaches. These tactics can include investments techniques such as acquisitions, contract methods, and joint partnerships. The franchising technique will enable Sephora to establish its presence nationally and locally within Vietnam. On the contrary, licensing will entail subcontracting the local retailers to market and sell the Sephora products within the market (Tien et al., 2019). The approach will be equally effective in ensuring the distribution of the Sephora products. Therefore, the Vietnamese market is lucrative for foreign brands, notably Sephora, owing to its vast market share.
Trends
Considering the different consumer preferences within the Vietnamese cosmetics marketplace, tailoring the products to satisfy such needs is necessary. To begin, a group of consumers prefers organic and natural cosmetics products. Veganism in cosmetics refers to customers who refrain from commodities produced using animal-founded raw materials (Tien et al., 2019). In this case, Sephora should ensure that the products intended for these clients are made from organic raw materials, such as plants. Second, some cosmetics choices are consumed by men. It is presently acceptable for men to use cosmetics, such as lotions, serums, skin treatments, and serum (Nguyen et al., 2021). Consequently, Sephora should expand its product line to encompass the Asian male markets. Finally, there is a growing trend in retail technology, specifically in the cosmetics industry. Sephora should install technology in their retail stores to enable consumers to test makeup before actually purchasing them (Huang et al., 2019). Through this approach, buyers in-store and online see the shades that will complement their complexion. From the assessment of tailoring of products, Sephora needs to ensure its products accommodate the three groups of consumers to boost its sales and performance within the economy.
Promotional, Distribution, and Pricing Strategies
Promotional Strategies
Sephora can use the appropriate promotional strategy to establish its presence in Vietnam is point-of-sale marketing and End-cap promotion. The point-of-sale and end-cap involve retailing cosmetics products and marketing them in stores. The objective of this approach is to boost convenience and impulse (Kishore, 2020). In this case, this strategys end-cap and point-of-sale elements can be used to sell the cosmetics commodities, which are usually intended to move quickly. The company will further achieve this by ensuring such products are easily presented to the consumers. Therefore, this advertising tactic will be effective in the Vietnam market owing to the growing demand for high-end cosmetics products.
Distribution Strategies
The appropriate distribution approach to be used in the case of the Vietnam market should be an extensive supply tactic. The strategy entails contracting specific distributors within the economy to sell the cosmetics products in defined regions. Furthermore, the comprehensive distribution tactic is efficient for Sephora since it is correlated to the brand and its prestigious image (Pignata et al., 2018). Finally, the strategy is suitable in this case since its target market is well-described and combines consumers who are capable of purchasing the commodities despite being hard to reach.
Pricing Approaches
Value-centered pricing technique, also identified as consumer-centered pricing, is used to establish a products cost depending on its value to the clients. Sephora should first understand the importance of each product to the target market to utilize this pricing approach effectively. However, the value established by the products should be determined based on increased consumer happiness and efficiency. (Kishore, 2020) Therefore, by using this pricing strategy, Sephora should focus on using cost to back their products image. Moreover, employing the technique will improve commodities sales and generate merchandise bundles to minimize inventory and attract Vietnamese consumers.
HR Issues, Strategies, and Rationale
Owing to the dynamics of globalization, Sephora is expected to face various Human Resource (HR) issues. First, the companies will face challenges with foreign recruitment since it will change animatedly. For instance, if the minimum educational requirement is MBA for candidates, the same academic qualification varies in Vietnam (Bracken et al., 2019). Second, freshly hired applicants need to be taken through training concerning the firms policies and processes and their job roles. Consequently, Sephoras HR department will face challenges regarding Vietnamese workplace requirements and culture training. Finally, labor laws in Vietnam are usually vigorous and strict, specifically on foreign companies. Therefore, the companys HR managers will be required to understand the countrys labor laws to avoid future legal contentions.
The effective HR strategy that Sephora should implement upon its entry to Vietnam is the training and development approach. The strategy will encompass renewed training of employees to ensure they are well trained and conversant with the current progressions within their fields of expertise. Similarly, the tactic is effective since the companys workers will be able to enjoy their tasks and undertake them with commitment and focus (Bracken et al., 2019). Therefore, choosing this HR strategy is owed to its three fundamental phases that certify effective implementation. The stages include establishing training units, training the workers, monitoring them, and evaluating the outcomes.
Conclusion
The success of Sephora within the Vietnamese market will require the evaluation of various market factors, such as pricing, preference, and distribution. Therefore, Sephora will function in Vietnam as an owned franchise to realize increased performance. Furthermore, the company should ensure that its operations in the economy are governed from within the company. However, the stores in Vietnam should be overseen by domestic retailers since they effectively understand their culture and language. Therefore, the Vietnamese marketplace is a dynamic environment and should be assessed further to understand its preconditions.
References
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