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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