CNDSN October 10th news (Changjiang Securities) Estee Lauder is a high-end cosmetics market leader. This report is a series of cosmetics third, we choose a large cosmetics group Estee Lauder as a case to explore the depth of the core elements, the full text focus from three aspects of brand expansion, channel layout and emerging market development. We believe that the Estee Lauder occupy the national high-end cosmetics market 50%, occupy the global high-end cosmetics market 25% share of the key is to its own brand and acquisition / supplemented by agents of roots in the high-end market segments, to strengthen the management and control channels to achieve highly contract of service marketing and brand development, adaptation of the products and services to lead the emerging consumer market.

Brand expansion: cultivating high-end market and increase market share

Estee Lauder to lead the world's high-end cosmetics market, the core is to focus on creating its own brand to occupy the main market, the acquisition of high-end brands to complement other segments of the market segments. Estee Lauder in the past 70 years of development history, the company focused its own brand research and development and investment in the main marketing resources, continue to maintain the initial creation of the 6 own brand market competitiveness, to today's company's own brand sales accounted for more than half; in other segments of the field, Estee Lauder through acquisitions and agents to enter the field of functional and channel more refined products fit more personalized needs. On the whole, the company's own, acquisition and agents of a total of more than 30 brands, covering a wide range of skin care, makeup, perfume, hair care four areas.

Channel layout: strictly control the mainstream channels to strengthen the brand image

Estee Lauder channel distribution characteristics: first, to department stores and professional chain for the mainstream channels, more than 50% of the sales from department stores, Macy, nordstorm, Sephora sales accounted for 25% ratio; second, the company currently online sales accounted for 6% ratio, high-end cosmetics online market to a retailer's website, the line layout to department stores and franchise stores online platform based. We believe that channel control and the selection of online and offline depth cooperation mode, the Surety Company marketing and service quality of the high quality, to express the concept of the consumer brand. On this basis, China's online business selection and lynx cooperation, the global channel to increase the self independent brand stores, the company is the company in recent years, new channel layout, aims to achieve the integration of marketing, service and brand.

Valuation analysis: new growth and profitability is the valuation premium

Lauder since 1995, the stock rose more than 10 times, 1995-1999 years as well as the two phase of the stock market has been significantly outperform the market, especially in the second stage, the company PE 9 times since the lowest level to 25 times, the relative industry valuation premium over 15%. 2009-2014 years, the company's revenue and net profit growth of 8% and 13%, net profit margin of about 4 percentage points to 10%, in which the company through the layout of the Asia Pacific and other emerging markets, and the relative market pricing power to highlight the implementation of differentiated pricing strategy, the global high-end cosmetics market share and product profitability, resulting in a higher valuation premium. 3

(original title: search for the core elements of Estee Lauder's continued growth)

Editor: small Shen

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