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Understanding Market Segments and Targets: Building the Right Relationships with the Right CustomerClass Assignment (Individual)

E X E C U T I V E S U M M A R Y

The report starts with a brief introduction about The Body Shop, the chosen company. Moving on, the report provides an insightful analysis with evaluation and elaboration for the target marketing strategy that the company has adopted. The strategy includes three crucial inter-linked steps including market segmentation, market targeting and market positioning through

ADVANCE DIPLOMA IN BUSINESS MANGAMENT

Marketing Management

Dang Quynh Mai

ABMD2 0945A

Index no.

Understanding Market Segments and Targets: Building the Right Relationships with the Right Customer

which the company effectively arranges marketing mixes including the 4 ‘Ps’ and 4 “Cs” in order to attain good consumer response and maximize the company’s competitive advantage in the market. The statistics on the company values and financial figures as well as the positioning map can be found in the appendices.

CONTENTS

Introduction....................................................................................................................................................4

Part A: Target Marketing...............................................................................................................................5

1. Market Segmentation.........................................................................................................................5

Marketing Management Assignment Page 2


2. Market Targeting...............................................................................................................................7

3. Market Positioning.............................................................................................................................7

Part B: Marketing Mix...................................................................................................................................9

1. The Four ‘Ps’......................................................................................................................................9

2. The Four ‘Cs’...................................................................................................................................10

Conclusion...................................................................................................................................................12

References....................................................................................................................................................13

Appendices...................................................................................................................................................14

Appendix 1 – Company Values...............................................................................................................14

Appendix 2 – some Company’s Figures in 2007.....................................................................................15

Appendix 3 – Perpetual Positioning Map of THe Body Shop.................................................................17



INTRODUCTION

The Body Shop International plc, known as The Body Shop (TBS), is an international

manufacturer and retailer for innovative ethically-sourced naturally-inspired beauty and cosmetic

products. Founded in the UK in 1976 by the late Dame Anita Roddick, the business focuses not

only in beautifying its customers but also bettering the environment. Over the years, TBS has

constantly pursued positive environmental practices such as “Protect Our Planet” campaign and

“Against Animal Testing” policy. It can be clearly seen from substantially-sourced ingredients

used to the highly environmental-friendly packaging of the products.

Being a human right activist and an entrepreneur, Anita Roddick pioneered the simple

idea that she could use business to make right kind of difference to the world and succeeded by

making TBS the world first cosmetics and toiletries company to introduce fair trade into the

beauty industry in 1987. So by the end of 2008, 65% of the company's products contain

community traded ingredients and it spent over $12 million on community traded ingredients in

2006.

The company has its own charitable organization, The Body Shop Foundation, whose

focus is providing financial assistance to organizations working to achieve progress in the areas

of human and civil rights, environmental and animal protection.

TBS now has over 2,400 stores in 61 countries, with a range of over 1,200 products1,

making it the second largest cosmetic franchise in the world. TBS has become a part of L’Oreal

Group since March 20062. It employed more than 10,000 people. In the end of the year 2006,

retail sales were more than 700 million pounds, increased 6.5% compared to year 2005.3

1 (the body shop website)2 (the independent uk)3(the body shop homepage)



PART A: TARGET MARKETING

1. MARKET SEGMENTATION

Market segmentation is the process of dividing a market into distinct groups with

distinct needs, characteristics or behaviors who might require separate products or marketing

mixes4. There are four major types of segmentations namely geographic, demographic,

psychographic and behavioral variables. TBS has used the combination of all different

segmentation variables mentioned above. This allows it to maximize its capability to satisfy

specific customer’s needs through its wide range of products.

1.1 Geographic segmentation

Geographic segmentation is a simple form of market segmentation. Certain countries,

regions, etc. are assumed to have common characteristics which influence buying attitudes. For

examples, due to the fact that Asian, European and African customers have different skin tones,

TBS introduced different shades of face powder in different regions. The powder shade that is

used in Asia would be more suitable for the ivory skin of the Asian while the shade in Africa

would be more suitable for the ebony skin of the African. TBS outlets in America would offer a

wider range of shades due to multi ethnical population compared to that of TBS outlets in

Indonesia. Another example is TBS websites designed in different languages for local users. This

ensures that the websites are user – friendly and customers are always fully informed about the

brand’s current events, campaigns and the release of new products no matter where they are.

1.2 Demographic Segmentation

Demographic segmentation involves dividing the population into discrete segments either

by age (e.g. for clothes retailing), or by sex (e.g. for the sale of cosmetics), or by family size (e.g.

4 (Philip Kotler, Eight Edition)



for selling different sizes of breakfast cereals), or by income group (e.g. in selling own-brand and

manufacturers' brands in a supermarket), or by occupation (e.g. in selling life insurance to

teachers or stunt drivers). As a cosmetic brand, TBS undoubtedly choose gender segmentation.

The brand has two product lines for men and women. Each line consist a wide variety of

products ranging from skin care, body care to hair care. TBS believes that there is no barrier

between sexes when it comes to self pampering. Of course the product lines have certain

different features to suit different needs of women and men. For example, women product line

has cosmetics while the men line does not have. However, the men line has many products for

shaving. Also the packaging of the men line is different from that of the women line. While the

men line uses more masculine colors for its bottles such as black and navy blue, the women line

enjoys more feminine vibrant-color packaging with pink, gold, green or pearl white.

1.3 Psychographic Segmentation

Psychographic segmentation is concerned with identifying personality traits and

distinguishing characteristics in groups of the population. For examples, for skin care products,

TBS segments its customers based on their skin types from dry skin to oily skin. TBS also has

the specialized products for the customers that have specific needs for their skins such as lack of

natural radiance, whitening or anti-ageing.

1.4 Behavioral Segmentation

Behavioral segmentation looks at consumer behavior patterns such as occasions, benefits

sought, user status, usage rate or loyalty status. For example, for cosmetics, TBS using occasion

segmentation. During winter, consumers tends to uses dark nuances more such black, dark blue,

brown, mocha in contrast to summertime when bright colors such as pink, orange, green are

more popular. This helps TBS decide the colour shades for its seasonal limited edition make-up

collection. Another example is usage rate. TBS introduces weekly promotion on certain products

for light users but for medium and heavy users, TBS applies “Love your Body” membership

programme allowing customers to enjoy all year around 10% discounts. Moreover, they are

rewarded with product rebates and treatments at the company’s spa sanctuary. This undoubtedly

boosts customer’s loyalty and motivates frequent buyers to buy even more.



2. MARKET TARGETING

Market targeting is the process of evaluating each market segment’s attractiveness and

selecting one or more of the market segments to enter5. This involves evaluating market

segments and selecting market segments.

2.1 Evaluating market segments

This is very important because it makes promotion, pricing and distribution of your products

and/or services easier and more cost-effective. For example, based on market research, it is

shown that consumers in UK, USA, Australia and Japan are more attracted towards online

shopping, hence, TBS added the online – shopping section into the websites in these countries to

boost the product sales.

2.2 Selecting market segments

TBS adopts differentiated marketing which is a market – coverage strategy in which a firm

decides to target several market segments and design separate offers for each. It offers hundreds

of variables aimed at defined segments. For example, while the anti-ageing skin care range Wise

Woman TM is highly appealed to age 50+ women, the Men Maca Root range is for the gentlemen.

3. MARKET POSITIONING

Market positioning is the process of influencing consumer perception of a brand or

product relative to the perception of competing brands or products.6 (Refer to Annex A for the

5 (Philip Kotler, Eight Edition)6 (business dictionary.com)



perceptual positioning map of The Body Shop brand). The positioning task involves three steps

as follow:

3.1 Identifying possible competitive advantages

Based on product differentiation, TBS is well-known among its customers for its simple

packaging and sweet smelling naturally-inspired product. For image differentiation, TBS has

been recognized as one of the most ethical company in the cosmetics industry through its various

campaigns regarding civil and human rights, animal and environmental protection. The concept

of the brand highly appeals to environmentally and socially conscious customers who want to

look good as well as feel good.

3.2 Choosing the right competitive advantage

TBS has chosen to become an affordable environmental-friendly and ethical brand as its

competitive advantage. It proved to be a brilliant approach when TBS customers enjoy high –

quality premium naturally-sourced ingredients for their products. Customers can visibly see the

company’s concept. For example, it uses 100% PCR bottles and recycled carrier bags. Moreover,

in 2008 stop-domestic-violence campaign, the company contributed certain dollars for each

lipstick sold. All these campaigns not only allowed TBS to raise social awareness but also

provide TBS with more media coverage. The approach proves to be highly profitable, yielding

more than 500 million pounds profit each year.

3.3 Selecting an overall positioning strategy

Usually TBS adopts the “More for More” and “More for the Same” strategies. TBS

constantly update its products with better quality using technologies. For example, in 2008, it

introduced the use of sustainable – sourced palm oil across its soaps. This reduced the use of

chemicals in TBS soap and yet customer enjoyed the same price when purchasing. In 2007, it

introduced mineral make – up collection allowing users to have better coverage. However, the

customers had to pay slightly higher price compared to normal make – up.



PART B: MARKETING MIX

Marketing mix is the combination of marketing elements that are basic and tactical of a marketing plan.

1. THE FOUR ‘PS’

The “4 Ps” approach follows the marketing philosophy of putting product first.

1.1 Product

TBS offers a remarkable variety of cosmetics and toiletries ranging from skin care, hair

care, body care, make up to well being focusing mainly on therapies and body treatments. It also

offers products for men and women. Most of these products originate from natural ingredients

such as moisturizer from shea butter or lipstick from marula oil.

1.2 Price

Most of TBS products have average prices compared to other naturally – inspired

products, ranging from S$ 10 to S$ 50. Part of the profit is used for the funding of its various

social campaigns and Community Trade programme. Hence, normally TBS customers do not

mind pay extra few dollars for good causes.

1.3 Place

TBS outlets are located at crowded shopping mall together with other outlets from the

parental L’Oreal Group such as Keihl’s, L’Occitane. Therefore, TBS constantly faced stiff

competitions from these brands because they also use natural ingredients for their products.

1.4 Promotion

TBS offer different kinds of promotion for customers on weekly basis for light

customers. For more frequent customer, they can enjoy Love Your Body loyalty programme



which proved to be a success when it accounted for 35% sales revenue for TBS branch in

southern Africa in 2008.7

2. THE FOUR ‘CS’

The “4 Cs” approach to marketing is described below and follows the “You”

marketing philosophy of putting the customer - “you” - first.

2.1 Customer Solution

All TBS products can be seen as solutions to different problems of customers in terms of

appearance or well being. The skin care ranges allow all customers with different skin types to

treat their skin problems such as acne breakouts, uneven pigment and skin tones, etc. Customers

who to work under constant pressure can relax their bodies with TBS product line for massaging,

therapy treatments. The TBS gift sets with elegant and compact packaging allow customers to

save time when buying presents for their beloved ones at a very affordable price.

2.2 Customer Cost

When introducing new palm oil ingredient across its soaps, TBS keeps the price

unchanged hence allows customers to enjoy better quality product at the same price. TBS,

therefore, has maximized customer values not its gain despite the extra capital needed for

research and development of the new products.

2.3 Convenience

Apart from the conventional outlets, TBS also has a direct-selling channel called The

Body Shop At Home, where consultants sell products at parties in people’s homes operating in

the UK, the USA, Australia and Germany. Customers can also use our e-commerce websites for

online shopping. The TBS website also indicates the price and description of products, hence

allows customers browse through what they need online. This helps customer save time and

troubles during their shopping experiences.

7 (Poolton)



2.4 Communications

Customers can easily have one-to-one consulting session regarding their skin care needs

because of the well trained dermatological consultants in the TBS outlets.



CONCLUSION

Understanding the target marketing and marketing mix is part of the marketing process. It

is the foundation to build the right relationships with the right customers. It is because in this

rocket-paced globalizing world, a successful manager is not just maximizing the company profit

but sustaining the company in the long run despite the economic cycle. With more than 30 years

of history and still expanding, The Body Shop has proved that its marketing strategy has

succeeded.

(Word count: 1990)



REFERENCES

(n.d.). Retrieved from The Independent uk website: http://www.independent.co.uk/news/business/news/loreal-buys-body-shop-for-pound652m-470244.html

business dictionary.com. (n.d.). Retrieved from http://www.businessdictionary.com/definition/market-positioning.html

Philip Kotler, G. A. (Eight Edition). Marketing: An introduction. Pearson education.

Poolton, C. (n.d.). New Clicks Holding annual report 2008. Retrieved from http://www.newclicks.co.za/IRDownloads/AnnualReport2008/operational_review/tbs.asp

the body shop homepage. (n.d.). Retrieved from http://valuesreport.thebodyshop.net/index.asp?lvl1=1&lvl2=3&lvl3=0&lvl4=0

the body shop website. (n.d.). Retrieved from http://www.thebodyshop.com.sg/en/our_company.aspx

the independent uk. (n.d.). Retrieved from http://www.independent.co.uk/news/business/news/loreal-buys-body-shop-for-pound652m-470244.html



APPENDICES

APPENDIX 1 – COMPANY VALUES

“If business comes with no moral sympathy or honourable code of behaviours, then God help us all.” Dame Anita Roddick. Human Rights Activist. Founder of The Body Shop. We believe there is only one way to beautiful, nature’s way. We’ve believed this for years and still do. We constantly seek out wonderful natural ingredients from all four corners of the globe, and we bring you products bursting with effectiveness to enhance your natural beauty. Whilst we’re doing this we always strive to protect this beautiful planet and the people who depend on it. We don’t do it this way because it’s fashionable. We do it because, to us, it’s the only way. The soul of beautyTo us, beauty is a feeling, a natural way of being, where character, self-esteem and humour are freely expressed and celebrated. That’s the soul of beauty. It’s not just about looking beautiful. It’s about exuding a vibrant attitude to life.

Our incredible planetOur commitment to seeking and sustaining natural materials and ingredients, and using all our planet’s resources wisely, guides our approach to business. We set challenging environmental targets, which we detail in our bi-annual Values Reports. We were one of the first to make a stand against animal testing in the cosmetics industry, and through The Body Shop Foundation, we continue to fund organisations campaigning to end the needless suffering of animals.

The community of peoplePeople are at the heart and soul of our business. We strive to treat all people in a fair and open fashion, to respect and value their integrity. We’ve never been afraid to champion the vulnerable and the disadvantaged, and we continue to campaign for social justice and human rights. We take enormous pride in our Community Trade programme, not just because we were the first to bring fair trade to our industry, but because of the real difference it makes to the lives of the farmers, producers and their communities.



APPENDIX 2 – SOME COMPANY’S FIGURES IN 2007

Number of stores

The number of stores increased by 89 in the second half of 2006. At 31 December, the total number of

stores stood at 2,265 of which 886 are owned by The Body Shop International.

At 31 Dec.

2005

At 31 Dec.

2006

Store openings

in 2006

Company-owned

stores

794 886 92

Franchisees 1,325 1,379 54

Total number of

stores

2,119 2,265 146

The number of stores at the end of 2006 showing company owned and franchisee owned by region:

Region Total number

of stores

Company-

owned stores

Franchisees

Americas 464 400 64

Asia Pacific 662 72 590

EMEA 827 153 674

UK and RoI 312 261 51

Total 2,265 886 1,379



Sales

Consolidated since 1 July, The Body Shop recorded a second half-year of solid growth, with an increase

in sales at the end of the year. Net consolidated sales grew by +9.7%. Retail sales increased by +6.5%

(+2.7% with a comparable store base)

€ millions 2nd half-

year 2005

2nd half-

year 2006

Like-for-

like growth

Retail sales8 659.8 703.0 +6.5%

Retail sales with a

comparable store based9

+2.7%

Consolidated sales 396.4 435.0 +9.7%

Retail sales by geographic zone

2nd half-

year

2005

2nd half

year

2006

% of 2006

retail sales

like for

like

growth

€ millions

Western

Europe

301.3 318.9 45.4% +5.8%

North

America

149.9 152.1 21.6% +1.5%

Rest of the

World

208.6 232.0 33.0% +11.2%

Total 659.8 703.0 100.0% +6.5%

These figures reflect particularly good results in Europe and Asia, with very strong performances

in the United Kingdom, Norway and Japan. Growth was strengthened by the success of launches such as

the Aloe Vera Skin Care range and the Neroli Jasmin fragrance, and by gift sets, which sold very well at

the end of the year.

8 Retail sales: Total sales to consumers through all channels.

9 Retail sales with a comparable store base: total sales to consumers by stores that operated continuously from 1 July to 31 December 2005, and

over the same period in 2006



APPENDIX 3 – PERPETUAL POSITIONING MAP OF THE BODY SHOP


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