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
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 Agenda
• Company Background
Introduction
• Reasons of choosing The Body Shop

• External Analysis
Situation Analysis • Internal Analysis
• SWOT Analysis

Corporate and business level • Product Portfolio – BCG Matrix

strategies • Business level strategies

• Segmentation
Customer Analysis • Targeting strategy
• Positioning

• Brand related strategies Product strategies

Functional level strategies • Pricing strategies Promotional strategies
• Place strategies
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 Product & Company
Natural
waxes

Vitamins Founded in the UK in 1976

Makes and sells natural product

Essential
oils Over 2,400 stores in 61 countries
Coconut oil

100% natural

Behavior Company belief Leader in

Eco-friendly Truthful, Natural
company natural and ingredients and
ethical recycle
packaging
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 PESTEL Model
Political & Legal

• A complete table of ingredients must be shown (HKTDC, 2008)

Economic

• Per capita incomes is increasing globally (FranchiseHelp, 2014)

Socio-cultural

• Many people have interests in natural cosmetics (HKTDC, 2014)

Environmental

• More than 3 million tons of chemicals are dumped each year

• 38,000 animals died per year to test product (Urbantimes, 2012) 4
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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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 Internal Analysis
Strong Brand Equity
Meet customer’s expectation
• Ethical brands
natural ingredients
packaging came from recycled or sustainable sources
• 83% of regular customer
prefer retailers treat environment and social issues seriously

Financial Support Has a strong financial

supports

• The Body Shop

sales: EUR 835millions 1.2%
• L’Oreal S.A.
32th World’s most valuable brand
sales: EUR $30.5 Billion
(Forbes, 2014) 6 6
 Internal Analysis
Sourcing and Production

130 suppliers in 26 markets

Community Fair Trade suppliers in a further 21 countries

 devotes to support Community Fair Trade

 promises to buy more sources through Community Fair Trade

 promises to provide a fair trade condition

The Body Shop Technical Team

 ensure no ingredient has been tested on animals

 address ‘chemical of concern’

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 Internal Analysis

Product
portfolio
• 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)
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 SWOT Analysis
Strengths:
1. Strong brand image
2. Many loyal customers
Internal
3. Strong financial supports
4. Good supplier network
Opportunities:
1. Increasing worldwide
awareness of natural and
External eco-friendly products
2. Customer’s safety-conscious
is increased.
3. Beauty industry keeps
expanding
Weaknesses:
1. Little product
advertising
2. Narrow brand portfolio
of cosmetic products
Threats:
1. Stiff competition in the
cosmetic market
2. There are regulations and
requirements on labeling
ingredients increase of
cost
 Corporate Strategy
• Launch the new products on existing markets continuously
• Keep on launching new flavor Ansoff’s Model
body cream, shower gel,
skin care

 New products are the extension of the

original product for existing market
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 Product Portfolio – BCG Matrix
(Ibis World, 2012)

• Several Strong
Key players
in Industry

• L’Oreal’s key brands

• Global beauty market on lipsticks:
estimated Maybelline, Lancome
to reach 387.3 billion euro and YSL
by 2015 (Ibis World, 2012)
(Euromonitor
International, 2011)
• Body Shop is not the
best 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 materials
Distinctive feature

• New technologies
 Low costs

• Economies of scale
Produce large quantity 12
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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 Improve appearance, no harm to body and
cosmetic product environmental friendly

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 P3
Targeting Positioning
P1 P2
• Differentiated marketing  More for same strategy
 Functional strategy
• Emphasis the natural beauty &
P1: Young to middle product features
age women • Affordable price with good quality

Medium to
P2: Aging customers (Basically Heavy User
women)

P3: Young to middle age men

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 Brand related strategies

The brand
The Logo The slogan
Name
Enhance
Care about
Green color beauty
body
naturally

short and Manufacture

Environmental
simple products
friendly image
Memorable ethically
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Brand related strategies
Brand identity strategy：

• focuses on developing
The founder of The body shop
natural products
Dame Anita Roddick
human right activist.
• environmental friendly
company.

• commit in seeking and

sustaining natural materials

• one of the first to adopt anti-

animal testing,

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 Brand related strategies MANAGING BRAND STRATEGY
Proactive efforts should be devoted to managing
each brand over time

Strategies for Improving Product Performance

Product
Managing brand strategy Alter improvement
Cost
marketing
reduction
• Product improvement strategy
Product line
Add new Strategy
• Improve Ingredient formula is 100% natural ingredient Eliminate
product(s) specific
product(s)
Environmental
effects L9-29

Brand Leveraging strategy

• Line extension
• Existing Brand & Existing product category

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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
(1) The Product design

The All-Natural Lipstick

Differentiation feature :
• 100% natural Ingredient
• only one lipstick no petroleum & no Lead
• good performance in coloring

 Unique in the market

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

• 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.
Replaceable
lipstick Core

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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

Pricing Strategy
Bundle pricing
High-passive
strategy
• Not selling to the premium • To stimulus the
purchase
• Focus on product feature intention
–100% natural ingredients • e.g. cosmetic
box set 23
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Promotional strategies-Internet Marketing

“Guess the
Banner Advertisements Ingredients
”

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 Reasons for using Internet marketing

Draw a lot of attention

Fast information dissemination

Feedback could be collected

Familiar with using social media

Cost is relatively low

A paperless tool

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 Promotional strategies-Public Relations
1. Make-up
2. CSR event
demonstration

• Makeup Artists, • 0.5% of sales for each lipstick

audiences & models will  Friends of the Earth
be invited • Promote environmental
• Lucky draw sustainability
• Concern about anti-animal
• Free lipstick samples testing
• Increase brand awareness

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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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 Place strategies
Franchising Online channel
network The trend in online retail sale Reduce operation
is increasing cost
• Franchisee help Follow this trend to increase
The body shop
the sale volume
run the
business Reach customer online
everywhere

• Expand their
business to
different
country in low
cost

• Distribute the
product rapidly
(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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 Reference
• 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

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 Reference
• 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…

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Thank you!

Q&A

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