SPD4456 Strategic Marketing Final Group Project Lecturer: Dr. May Lau Group 2 Class: A02B Choi Winki 13627878S Kwok Chi Fu 13630489S Tong Wing Ni 13625443S Wong Wai Kin 13610687S Yip Yun Cheong 13609260S Zhang Kan 13609928S 1
Jul 16, 2015
SPD4456 Strategic Marketing
Final Group Project
Lecturer: Dr. May Lau
Group 2 Class: A02B
Choi Winki 13627878S
Kwok Chi Fu 13630489S
Tong Wing Ni 13625443S
Wong Wai Kin 13610687S
Yip Yun Cheong 13609260S
Zhang Kan 13609928S1
Agenda
• Company Background
• Reasons of choosing The Body ShopIntroduction
• External Analysis• Internal Analysis• SWOT Analysis
Situation Analysis
• Product Portfolio – BCG Matrix
• Business level strategies
Corporate and business level strategies
• Segmentation
• Targeting strategy
• Positioning
Customer Analysis
• Brand related strategies Product strategies
• Pricing strategies Promotional strategies
• Place strategies Functional level strategies
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Product & Company
100% natural
Natural waxes
Vitamins
Essential oils
Coconut oil
Founded in the UK in 1976
Makes and sells natural product
Over 2,400 stores in 61 countries
Eco-friendly company
Behavior
Truthful, natural and ethical
Company belief
Natural ingredients and recycle packaging
Leader in
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PESTEL Model
• A complete table of ingredients must be shown (HKTDC, 2008)
Political & Legal
• Per capita incomes is increasing globally (FranchiseHelp, 2014)
Economic
• Many people have interests in natural cosmetics (HKTDC, 2014)
Socio-cultural
• More than 3 million tons of chemicals are dumped each year
• 38,000 animals died per year to test product (Urbantimes, 2012)
Environmental
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The Five Forces Model
Low bargaining power of supplier
Standardized raw materials
Bulk purchase
Easily shift between different suppliers
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• Ethical brandsnatural ingredientspackaging came from recycled or sustainable sources
• 83% of regular customerprefer retailers treat environment and social issues seriously
Strong Brand Equity
• The Body Shopsales: EUR 835millions 1.2%
• L’Oreal S.A.32th World’s most valuable brandsales: EUR $30.5 Billion
Financial Support
Internal Analysis
Meet customer’s expectation
Has a strong financial supports
(Forbes, 2014) 6 6
Sourcing and Production
Internal Analysis
130 suppliers in 26 markets
Community Fair Trade suppliers in a further 21 countries
The Body Shop Technical Team
ensure no ingredient has been tested on animals address ‘chemical of concern’
devotes to support Community Fair Trade
promises to buy more sources through Community Fair Trade
promises to provide a fair trade condition
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Internal Analysis
• Over 1,200 products
• Skincare
• hair care
• cosmetic products
• The Body Shop’s proportion in product categories
• skincare and hair care products occupied over half of the proportion
• cosmetic products only have 16.6% (The Body Shop, 2013)
Product portfolio
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SWOT Analysis
Strengths:1. Strong brand image2. Many loyal customers3. Strong financial supports4. Good supplier network
Weaknesses:1. Little product
advertising 2. Narrow brand portfolio
of cosmetic products
Opportunities:1. Increasing worldwide
awareness of natural and eco-friendly products
2. Customer’s safety-conscious is increased.
3. Beauty industry keeps expanding
Threats:1. Stiff competition in the
cosmetic market2. There are regulations and
requirements on labeling ingredients increase of cost
Internal
External
Corporate Strategy
• Launch the new products on existing markets continuously
• Keep on launching new flavorbody cream, shower gel,skin care
New products are the extension of the original product for existing market
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Ansoff’s Model
Product Portfolio – BCG Matrix
• Global beauty market estimated to reach 387.3 billion euro by 2015 (EuromonitorInternational, 2011)
(Ibis World, 2012)
• Several Strong Key players in Industry
• L’Oreal’s key brandson lipsticks:
Maybelline, Lancomeand YSL(Ibis World, 2012)
• Body Shop is not thebest lipstick seller of
L’Oreal
• Shower Gel is FMCG
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Hybrid Strategy
• Beauty market in worldwide
• Hybrid Strategies
(Cost leadership + Differentiation strategy)
• By innovation Natural materialsDistinctive feature
• New technologies
Low costs
• Economies of scale Produce large quantity
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Segmentation
(1) Demographic & Psychographic segmentation By Gender & age
women & men have young to middle age 16-40 and aging segments (Age ≥40) (HKTDC, 2011)
(2)Usage Behavior light, medium to Heavy user
(3) Analysis of product market:
Product Level Needs of customers
Generic Beauty product Beauty Enhancement
Product Type Cosmetic product Use for make-up
Product Variant All-Natural
cosmetic product
Improve appearance, no harm to body and
environmental friendly
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Targeting
• Differentiated marketing
P1: Young to middleage women
P2: Aging customers (Basically women)
P3: Young to middle age men
P1 P2
P3
More for same strategy Functional strategy• Emphasis the natural beauty &
product features• Affordable price with good quality
Positioning
Medium to Heavy User
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Brand related strategies
The Logo
Green color
Environmental friendly image
The brand Name
Care about body
short and simple
Memorable
The slogan
Enhance beauty
naturally
Manufacture products ethically
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Brand related strategies
Brand identity strategy:
• focuses on developing natural products
• environmental friendly company.
• commit in seeking and sustaining natural materials
• one of the first to adopt anti-animal testing,
The founder of The body shopDame Anita Roddickhuman right activist.
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Brand related strategies
Managing brand strategy
• Product improvement
• Improve Ingredient formula is 100% natural ingredient
Brand Leveraging strategy
• Line extension
• Existing Brand & Existing product category
MANAGING BRAND STRATEGY
Proactive efforts should be devoted to managing each brand over time
Strategies for Improving Product Performance
Product line Strategy Add new
product(s)
Cost
reduction
Product
improvement Alter
marketing
strategy
Eliminate
specific
product(s) Environmental
effects L9-29
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Product strategies
Product level The customer value hierarchy
Core benefit : enhance beauty
Basic product: fundamental elements, lipstick
Expected product: Lipstick with moisturizing & coloring function
Augmented product: 100% natural ingredients & environmental-friendly packaging
potential products: lipstick with medical function.
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Product strategies
Product classification: • Shopping Products :customers are willing to invest time and effort to buy. (Ashok,
2007).
• customer will compare brand, price, quality, design, color etc. before buying lipstick
• The All-Natural Lipstick belongs to Shopping Products
New product life Cycle• extension of existing products
• improve formula & packaging
• stimulate sales volume & reactive the PLC
• Cycle-Recycle pattern.
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Product strategies
The All-Natural LipstickDifferentiation feature : • 100% natural Ingredient • only one lipstick no petroleum & no Lead• good performance in coloring
Unique in the market
(1) The Product design
According to FDA’s studies in 2012: much more leads was found in the lipstick , up to 7.19 parts per million (Servens, 2013).
Leads and petrochemicals are harmful to human health
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Product strategies(1) The Product design
Unique features:
• Did not contain any chemical
• more safe & will not harm for human health.
• differentiate with competitors
attract customers who want to avoid digesting chemicals, petroleum or heavy metals.
Major Challenge for product design
• Moisture function:Natural waxes, vitamins, essential oils & coconut oil.
• Coloring function:derived from fruit /vegetable extracts/flower & herbs
e.g. Raspberry to derived the red color
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Product strategies(2) The Packaging design of the new product
Replaceable lipstick Core
• More environmental friendly packaging design
• Full recyclable materials
• Refill the new lipstick core to the old lipstick holder.
• Cradle-to-cradle practice: encourage customers to bring the old lipstick holders for recycle and receive 5% discount.
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Pricing strategies• Position: More for less(short term)
• Price objective: Relatively low price
• Around $100 in short period
• If the demand of lipstick is high
• Charge $140 in long term
• Not selling to the premium
• Focus on product feature –100% natural ingredients
• To stimulus the purchase intention
• e.g. cosmetic box set
High-passive strategy
Bundle pricing
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Pricing Strategy
Promotional strategies-Internet Marketing
“Guess the Ingredients
” Banner Advertisements
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Reasons for using Internet marketing
Draw a lot of attention
Feedback could be collected
Cost is relatively low
Fast information dissemination
Familiar with using social media
A paperless tool
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Promotional strategies-Public Relations
• Makeup Artists, audiences & models will be invited
• Lucky draw
• Free lipstick samples
1. Make-up demonstration
• 0.5% of sales for each lipstick Friends of the Earth
• Promote environmental sustainability
• Concern about anti-animal testing
• Increase brand awareness
2. CSR event
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Reasons for using public relations
Draw attention from target customers
Attract media coverage
Show the effect after using All-Natural lipsticks
Communicate message “BEAUTY WITH HEART”
Convince people to purchase
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Place strategies
Retail Shops & Online stores
The Body Shop operate over 2,600 retail stores across 65 countries
Greater control of distribution
Lower the distribution cost
Directly communicate with customer
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• Franchisee help The body shop run the business
• Expand their business to different country in low cost
• Distribute the product rapidly
Franchising network
Online channel
The trend in online retail sale
is increasing
Follow this trend to increase
the sale volume
Reach customer online everywhere
Reduce operation
cost
Place strategies
(Forrester Research, 2010)
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Conclusion
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Reference• Apple Daily 蘋果日報,. (2014). 【環保救兵】石油化妝品深入肌膚底層. Retrieved 9 October 2014,
from http://hk.apple.nextmedia.com/news/art/20130503/18248119
• Ashok, J. (2007). Principles of Marketing Management (1st ed.). Vk Global Publications Pvt.
• Body Shop Fails to Return 1 billion to 06 Shareholders. (2011, December 12). Retrieved November 20, 2014, from http://www.bloomberg.com/news/2011-12-12/body-shop-fails-to-return-1-billion-to-06-shareholders-retail.html
• Cosmeticsinfo.org,. (2014). How Cosmetics and Personal Care Products Are Regulated in Other Countries. Retrieved 26 October 2014, from http://cosmeticsinfo.org/Regulation-other-countries
• Franchisehelp.com,. (2014). Beauty Industry Analysis 2014 - Cost & Trends. Retrieved 8 October 2014, from https://www.franchisehelp.com/industry-reports/beauty-industry-report/
• Gotaas, M. (2012). Major Companies. In IBISWorld Industry Report OD4961: Lipstick Manufacturing in US (1st ed., Vol. 1, p. 23). United States: Ibis World Marketing Research.
• Info.gov.hk,. (2014). 政府諮詢化妝品行業對產品須登記及附有標籤的意見. Retrieved 9 October 2014, from http://www.info.gov.hk/gia/general/200411/19/1119291.htm
• Info.hktdc.com,. (2014). Regulations on the Administration of Food and Cosmetics Labelling(hktdc.com).Retrieved 9 October 2014, from http://info.hktdc.com/alert/cba-e0811g.htm
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• L'Oreal Global Financial Result. (2014, October 2). Retrieved November 20, 2014, from http://www.loreal-finance.com/_docs/fichiers_contenu/0000000786/LOREAL_Results_2013_GB_10_02_2014.pdf
• Lipbalmpalooza. (2013, November 1). Retrieved November 14, 2014, from http://www.naturalkath.com/2013/11/lipbalmpalooza.html
• Lipstick & Lead: Questions & Answers. (2007, December 1). Retrieved November 20, 2014, from http://www.fda.gov/Cosmetics/ProductsIngredients/Products/ucm137224.htm
• Mbaskool.com, (2014). The Body Shop SWOT Analysis. Retrieved 20 Nov. 2014, from: http://www.mbaskool.com/…/lifestyle…/9339-the-body-shop.html
• Servens, M. (2013, May 6). Which 20 Lipsticks Contain the Most Lead? Retrieved November 6, 2014, from http://www.motherjones.com/environment/2013/05/study-lead-metals-lipstick-top-20
• Simmons, J. (2013, January 1). What’s in lipstick? Retrieved November 8, 2014, from http://greenopedia.com/article/what-is-in-lipstick
• The Body Shop - Skin Care Review. (n.d.). Retrieved November 23, 2014, from http://www.fitnesshealth101.com/review/skin-beauty/the-body-shop
Reference
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• Thebodyshop.com.hk,. (2014). About The Body Shop. Retrieved 16 October 2014, from http://www.thebodyshop.com.hk/en/about_us.aspx
• The Body Shop Values Report, (2011). Retrieved 20 Nov. 2014, from:http://www.thebodyshop.com/conte…/…/global-values_report.pdf
• The Dangers of Lipstick. (2014, June 1). Retrieved November 14, 2014, from http://dherbs.com/news/4504/4669/The-Dangers-of-Lipstick/d,ai.html#.VHMUm1eUch5
• Urban Times,. (2012). Why Makeup Should be Greener. Retrieved 9 October 2014, from https://urbantimes.co/2012/07/why-makeup-should-be-greener/
• Ukexecutive-search.nigelwright.com,. (2014). The Body Shop becomes “Beauty With Heart”. Retrieved 24 October 2014, from http://ukexecutive-search.nigelwright.com/Assets/Documents/FeaturedinterviewBiancaVerburg.pdf?1347878483
• Ukessays.com,. (2014). A Study On Body Shop Marketing Essay. Retrieved 19 October 2014, from http://www.ukessays.com/essays/marketing/a-study-on-body-shop-marketing-essay.php
• 123helpme, (2014). Swot Analysis Of Body Shop :: Strategic Management. Retrieved 6 Nov. 2014, from: http://www.123helpme.com/swot-analysis-of-body-shop-view.as…
Reference
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Q&A
Thank you!
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