Sa Sa Cosmetics – Analyzing Competition

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SA SA COSMETICS – Analyzing Competition
Sa Sa Cosmetics is a very successful Hong Kong based discount cosmetics retailers. The case describes how Sa Sa became successful, culminating in its IPO in 1997. Since then, however, its fortunes have declined somewhat. The case discusses recent initiatives that were undertaken to sustain growth momentum. Sa Sa also undertook some marketing research studies. The research findings appear to confirm that Sa Sa may have some major problems. As 2001 comes to a close, Sa Sa contemplates what else can be done to improve profitability and keep on growing.

1. What were the reasons for Sa Sa’s early success?
SA SA was creating value for its customers by providing them with quality products at a fair price. Sa Sa was first of its kind to pioneer the concept of discount store for the cosmetics (create and control). It .did is fast in the initial stages of the business (compete) by making the stores bigger and better from 40 sqft in 1978 to 750 sqft in 1985 to 10 stores in mid 1990s. Sa Sa was able to provide value to its customer by keeping the purchase prices low by using “parallel importation” and passed saving to the customers. One of the other important factor was Sa Sa listened to its customer demand (which products to stock). Sa Sa allowed the customer to touch and feel the cosmetics products that drove the demand.

We also see Sa Sa’s strategy to deter the new entrants by holding onto old location. They controlled the inventory depending on the sales rate and the shelf life of the products.

Sa Sa uniquely combined the combined the cosmetics product knowledge to advice the customer and provided the products at lower cost in comfortable environment, thus creating value for the customer for the first time that no one has done before. This is Resource Based View, outcome of which gave Sa Sa a competitive advantage.

Sa Sa developed the
Core competency: Rare: Sa Sa’s core compentancy was rare until it disclosed it...
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