Analysis of the French Perfume Market
The French perfume industry is one of the most difficult places to penetrate, establish a presence, and expect to get a share of the market from the point of view of new entrants like the Rasasi Perfume brand. French perfume makers had been mastering the art of making perfumes since the 17th century (Groom 2012). For example, French perfumers mastered the technique called enfleurage, the science and art of extracting essential oils from fragrant flower petals (Groom 2012).
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As a result, high quality perfume products became synonymous with the French name. French perfume brands are some of the most expensive commodities in the world, and yet consumers continue to buy these products.
In order for the Rasasi company to succeed in a highly competitive environment, corporate leaders must develop a niche market and they need to know market trend trends and current developments within France’s perfume market. A US government agency tasked to help American businessmen penetrate the French market provided key insights regarding the said industry. Rasasi Perfume must take advantage of these insights and information. For example, the study conducted by the agency reported that despite the high cost of France’s perfume products, this particular market segment continues to expand (International Trade Administration 2016).
In addition, there are at least five critical attributes of the French perfume market that require the attention of Rasasi’s investors and corporate board. First, there is high demand for innovative products, because consumers are demanding and they like new or trendy products (International Trade Administration 2016). Second, perfume products are being distributed through specialized chains, and then, through department stores and pharmacies. Third, new entrants must register the brand on the European Portal, or more popularly known as the Cosmetic Products Notification Portal (International Trade Administration, 2016). Fourth, there is an opportunity when it comes to the ethnic perfume market. Finally, there is significant opportunity in men’s perfume products.
Applying the CAGE Framework
The CAGE framework is an acronym for an assessment tool when it comes to global business matters. The acronym stands for the cultural, administrative, geographic and economic distance framework that corporate leaders must appreciate and understand in order to establish the Rasasi brand in France (Kapil 2016). At first glance, there is considerable distance between the UAE and France. Thus, the attempt to establish a business in French soil is fraught with risk.
For example, in the cultural aspect alone, one can see significant differences. This is manifested in the different cultural traditions as well as the laws of the land. There were no historical ties with France. For example, the UAE was never a colony of France. The only positive thing from the point of view of the Rasasi company is the fact that the cultural aspect does not affect the way French consumers view perfumes. For example, the Rasasi company creates perfumes based on international standards.
There are also considerable challenges when it comes to the administrative aspect, because of the language and cultural barriers. It has to be made clear that the French market is not only a difficult market to penetrate simply because of established brands, but also as the result of tough laws that governs the industry. Thus, it is important to hire consultants or a top level manager who is familiar with the inner-workings of the French bureaucracy.
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The company must embrace the idea of investing heavily on packaging the product in accordance to the cultural and aesthetic requirements of the French consumers. Furthermore, there is also a need to spend more in terms of enticing highly qualified personnel currently working as insiders within the French perfume industry to come and join Rasasi’s foray into the French market. In addition, additional expenditures are needed when it comes to training workers and staff needed to promote the products in a culturally sensitive way.
The geographic aspect of Rasasi’s foray into the international market is both a challenge an opportunity for the company. Due to the geographic distance, the initial strategy is to export the product from the UAE to France. However, due to the state-of-the-art manufacturing facility in Dubai, it is possible to market these products with a significantly lower price point compared to established brands like Dior or Chanel.
There are also perceived hurdles when it comes to the economic aspect of the CAGE analysis framework. For example, both countries have different currencies. In addition, France, and the UAE do not belong in the same business associations or international federations. Consider for instance the fact that France is a member of the European Union. Thus, the common currency within the EU is an economic advantage for all the member nations when they transact with each other. However, the Rasasi company cannot leverage the same benefits.
At least two major issues require greater scrutiny, and these are related to the combined impact of the geographic distance and the economic forces that are continually shaping the industry. First, there is a need to investigate the level of economic protectionism created within France in particular and within the European Union in general when it comes to products coming from outside the European continent.
A stringent level of protectionism or the establishment of significant levels of barriers to trade does not bode well for the new entrant. Without a clear solution in hand, the company faces the possibility of spending a great deal of resources on tariffs and other related fees. It is imperative to figure out a legal way to go around the problem or find a way to lessen the financial burden of the company.
The successful entry into the France’s perfume market requires a two-fold strategy. First, the Rasasi brand must develop a business and marketing approach based on the insights gleaned from studying the target market’s perfume industry and the insights acquired from applying the CAGE assessment tool. Second, the company must look into case studies or similar business ventures that succeeded in establishing a presence in the said industry.
Based on the requirements needed and the perceived challenges identified earlier, one of the best courses of action is to study and emulate the practices utilized by Shiseido a Japanese company that was able to penetrate the French perfume market against significant odds. It has to be pointed out that in the present time, Shiseido is the fourth largest cosmetics company in the world (Verbeke 2013). However, when Shiseido’s corporate leaders decided to enter the France’s perfume market, the company was an insignificant player when it came to the manufacturing and marketing of perfumes. Nevertheless, Shiseido was able to overcome all the challenges and the hurdles blocking its path by initiating a clever strategy that calls for a business partnership with a local pharmaceutical company (Leelapanyalert 2015, p.76).
It is imperative for the Rasasi group to use the same business tactic. There are several reasons why this is a wise move for the company. First, Rasasi benefits from understanding how the French perfume industry works from the inside. In other words, the consultants or researchers are not going to supply the company with second hand information.
Rasasi is going to have access to critical information with regards to French manufacturing processes as well as government regulations on how to go about this type of business. Second, Rasasi creates an ally that helps the company navigate French bureaucracy, especially when it comes to the registration portal mentioned earlier. Third, Rasasi need not start from scratch, because the business partner helps the company secure the needed permits and handle the requirements of establishing a business in France. Fourth, the said business partner helps the company mitigate financial risks.
For example, this strategy can help Rasasi deal with tariffs and related issues. Finally, the company can use the established presence of the business partner when it comes to its distribution requirements. As mentioned earlier, the third most important distribution network for perfume products is through the pharmacies.
Based on the insights gleaned from the CAGE framework and the overview of the French perfume market, the Rasasi group must focus on innovative products marketed to men. Furthermore, the company must invest in the research and development of perfume products aimed towards the growing ethnic market. For example, it is prudent to develop products marketed to Middle Eastern immigrants, as well as immigrants from India and Pakistan.
It is also a good idea to expand the distribution facet of the business so that after a year of operation, the company has a significant presence in the supermarkets and related types of business establishments. Therefore, one of the most critical business decisions that the corporate leaders are going to make is to choose the right business partner for this particular venture.
Kapil, 2016, The CAGE framework – globalization matters. Web.
Leelapanyalert, K, Tanpradit, N, Khiewvan, C & Sakhonchaicharoen, P 2015, ‘Shiseido group: the turning points, challenges and future opportunities’, Academy of Asian Business Review, vol. 1, no. 2, pp. 69-78.
Groom, N 2012, The perfume handbook, Springer, New York, NY. International Trade Administration, 2016, France-cosmetics. Web.
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Verbeke, A 2013, Business strategy, 2nd edn, Cambridge University Press, New York, NY.