Case study: Sephora Direct: Investing in Social Media, Video and mobile. Bus615
Case Set Up: History and Growth
* Founded by France Dominique Mandonnaud in 1969 as a simple perfume shop. * By 1979 the company was already expanded to “several stores” * Originally, Sephora was planned to be self-service store that offers a variety of products. * Its founder Mandonnaud rebranded his combined set of stores in order to expand is market. * Mandonnaud extended its branches all over France by acquiring 8% of total French retail perfume market and was purchased by LVMH, luxury product group, for $262 million in 1997. * Sephora expanded its operations and services beyond the perfume industry and expanding its core of products to cosmetics. * Under LNMH’s ownership and opened its first U.S store in New York City in 1998 However, this presented a challenge for the company as they had a difficult time to supply the products from other prestigious brands; such as Estee Lauder and Clinique. * The Company banked on rather unknown brands to fill its shelves therefore, these relationships grew strong and eventually this fact led to the innovation and creativity of these brands to introduce new lines of products. * Sephora confronted many issues on their cosmetic line division, especially with the direct line of supply from other stores. * Bottom line, Sephora offers more than 200 brands that go from the typical classics to new and exotic brands; altogether, Sephora counts with more than 20,000 products. Among those products we could find top of line and sophisticated brands as well as not so well know products. * Sephora formed an strategic alliance with JC Penny.
* Sephora.com was projected to generate 15-20% of Sephora USA sales in 2010. * Sephora.com ranked top 50 retail sites in U.S
* Globally distributed with more than 1000 shops worldwide * Strong parent company; LVMH
* More than 20,000 products to offer.
* Strong online sales
* self-service approach to cosmetics
* Strong emphasis on construct loyalty brand by tracking down the customers shopping habits.
* Modest operational budget.
* Low brand recognition
* Lack of TV promotions and print ads.
* Higher price than drugstores and supermarkets
* Enhance their customer loyalty program in order to build a “relationship” with the product consumers. * Sign contracts with famous celebrities to endorse their products. * Introduction to enter into emerging economies such as Brazil and India.
* Economic downturn.
* Other companies in the same industry.
* Amazon and other online companies that sale cosmetic, with their aggressive approach could certainly become a threat.
Identification of Problem
* Personnel and financial constraints needed to be addressed. * Imagination and inventiveness was greatly needed.
* Budget limitation, presented a real challenge when it comes to budget allocation to different initiatives. * Outcomes assessment of social media campaigns as well as mobile applications constituted a real test to overcome.
Julie Bornstein took Sephora on another journey. She transforms the marketing view to a much modern and up to date campaigns.
* New Budget request was introduced in order to launch a major campaign that will include social media, web site enhancement as well as the implementation of “customer relationship” campaigns. * Campaign success should be assessed thorough out Facebook “likes” and twitter followers as well as I phone application downloads.
Sephora.com and Beauty Insider
* Sephora.com was implement on 1999 with very imp clear short and long term goals. * Up to 25% of sales should be generated by Sephora.com by 2010. * By 2007 Sephora developed its Beauty Insider campaign.
* Incentives such as 1...
References: Ofek, E. (2012). Sephora Direct: Investing in Social Media, Video, and Mobile. Harvard Business School.
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