A PESTEL Analysis of Lakme involves examining the external factors that could affect the company’s operations and performance. The acronym PESTLE stands for Political, Economic, Sociocultural, Technological, Legal, and Environmental factors..
Introduction
Lakme is a cosmetic brand of Hindustan Unilever and is doing really good. It is associated with fashion icons in India. Prime Minister Jawahir Lal Nehru observed that Indian women are spending fortunes on beautifying themselves but due to absence of any local brand all of this money is going in foreign brands’ pockets, therefore he personally requested Tata Oil Mills to establish a local cosmetic brand.
Later on it was bought by Unilever along with other ventures of Tata Oil Mills. Every year Lakme hosts Fashion Week twice a year which is the most popular and awaited fashion event. Its summer resort is run in February and Winter festive in August. Leading fashion icons and celebrities participate in this event.
Political Factors
Designers have used Lakme Fashion Week platform for various political protests many times. When violent events were taking place in India due to Hindu Muslim conflicts and many lives were taken for this reason than designers protested against lack of action from government. They made their models walk on the ramp with their face and mouth covered with blood. Then when the designers were subjected to censorship by the government they again protested it through their designs and attire in Lakme Fashion Week.
When Gujarat was under attack one of the designer went as far as depicting Chief Minister Modi as Hitler on the same platform. This Fashion Week is also a showcase for all Indian textile talent and art; many industrialists attend the show to know about latest trends and investment ideas and market their brands. (Deven, 2013)
Economic Factors
Indian cosmetic market was around 250 billion Indian Rupees in 2011 and was expected to grow annually by 17% due to increase in purchasing power parity and decrease in inflation, higher literacy rate and increasing awareness for fashion, all has accounted for this rapid growth in this market. Therefore whoever is thinking to jump on the train better do it now or forever hold their peace? Lakme is the market leader with around 18% market share and expectations to grow as the market grows.
Marketers have developed a segment of men in this category too by showing them over and over that their skin needs as much care and protection as women. Also Indian Muslims is a large untapped market with great potential to grow; their main concern is that the products that they use are carmine and alcohol free, which are prohibited in Islam. (King, 2013)
Social Factors
Just as designers were using Lakme Fashion Week as a platform to raise their voices on political issues they do the same for some social issues too. Manish Malhotra, India’s star designer, known for his wedding collections, promoted gender equality and raised his voice against any kind of domestic violence based on gender discrimination. Another young designer posted whole show on Instagram to include every follower, according to her whole of India cannot be invited to a fashion show but they surely can join the Inst show.
This has created the image of a brand which is liberal and social, modern and classy. This platform has also participated in social events and causes like raising money through Fashion week for flood victims and terrorist attack victims.
Technological Factors
Lakme is the category leader and this category demands high volume of R&D. every day new colors get I trend and old colors become out of fashion, companies have to keep up and even stay ahead of trends. In skincare customers demand high research driven products which are a better solution to their needs and problems, in order to maintain its leadership position Lakme has introduced its Radiance range. T
he technology infuses with the skin cells and protects the skin from any ham like tanning, discoloration, pimples, acne etc. Similarly in haircare segment it has developed advanced technology through which customers will get beautiful vibrant colors without damaging health of hair. Lakme understands the amount of research which is required by it being the industry leader.
Environmental Factors
As the awareness and need for cosmetics are increasing, the skin problems reported to doctors are also on the rise. No matter how lustrous this category is there are certain side effects attached to the daily and excessive use of cosmetics, like discoloration of lips and eyelids, uneven skin tone etc. women using lipsticks would be in taking minerals above their required range. In India use of Mercury in cosmetics is prohibited except for eye care products but when tested, fairness creams were found to have a dangerously high level of Mercury in them; Lakme Perfection Radiance was among them.
Lakme spokesperson later clarified that they do not use Mercury in any cosmetic products, however presence of Mercury might be because of its natural occurrence and air and traces can be absorbed by the products when exposed to air. (Chandra Bhushan, 2014)
Law/Legal Factors
Lakme is a public limited company therefore it has to follow rules regarding disclosure of true financial statements depicting the correct picture of the company to shareholders and also informing them about any major investment decisions that the company might undertake. It has to follow laws regarding mineral content and other ingredient level in their products. It is in a sensitive business, their products get in direct skin contact with customers, any fault on their part can lead to suits and defamation, loss of customers and revenue, and therefore they have to be highly careful in whatever new products they are launching.
They own intellectual and copyrights to many new technologies that they have developed over the years for which they have to pay royalties etc. in order to present themselves as ethical they also have to be socially responsible and portray themselves as a company who respects laws.
Bibliography
- Chandra Bhushan, K. P. (2014, January 31). Beauty and the beast. Retrieved December 28, 2015, from Down to Earth: http://www.downtoearth.org.in/coverage/beauty-and-the-beast-43255
- Deven, M. V. (2013). On the Runway: Lakme’s Protest Song. Sadie Magazine.
- King, M. (2013, January 24). Indian cosmetics market led by Lakmé. Retrieved December 28, 2015, from Companies and Markets.com: http://www.companiesandmarkets.com/News/Consumer-Goods/Indian-cosmetics-market-led-by-Lakm%C3%A9/NI6435