Sephora – Case Analysis
Oscar Acosta Vidales
Table of Contents
Objective and Overview 3
Sephora Online & Offline Experience 3
Sephora Stores 3
Sephora.com and Beauty Insider 3
Sephora SWOT Analysis 4
2010 Marketing Plan & Social Media Opportunities 4
Target Market 5
Marketing Strategy 6
Distribution Channels 6
Creating Video content 6
Cutting offline activities 7
Sephora Recommended Strategy 7
Value Proposition 7
Gillette in 2013 7
OBJECTIVE AND OVERVIEW
The purpose of this paper is to evaluate all the relevant factors that Julien Bornstein, senior VP of Sephora Direct, had to take in order to succeed on their 2011 goals. Content creation and distribution would be the most profitable Marketing Strategy for Sephora. Future seemed prosperous for Sephora and considering the unceasing growth of Social Media, Sephora had the opportunity to improve sales through new channels.
Considering the uninterrupted growth of online sales and interactions, most of the Marketing budget for 2011 should be allocated in Social Media, focusing mainly in YouTube videos and Facebook / Instagram images.
Sephora was started in France by Dominique Mandonnaud in 1969 as a perfume shop. It expanded to the several stores in 1979 and by 1993 teamed up with investors to combine his stores with a perfume chain. In 1997 after continuous expansion throughout France, Sephora was acquired by LVMH for $262 million.
After its acquisition Sephora expanded to the U.S. by adapting to the new market and competitors. Relying on less well-known brands and their relationship with small cosmetic manufacturers.
By 2010 they had nearly 450 stores in the U.S. and almost 1000 worldwide along with their partnership with JC Penney and the dominance of 30% of the online market through their website.
SEPHORA ONLINE & OFFLINE EXPERIENCE
In 1999 Sephora.com was launched with 100 brands, and within a few months the website sales performance was between 15-20% of the total U.S. sales.
The inclusion of the online experience represented an important challenge for Sephora, in order to maintain a consolidated marketing image window designs and site homepage should be linked to each other.
Unified “look and feel” black & white stripes with some red accents as the dominant color. Walls, displays and employees were
Fun & party atmosphere, pop and alternative music.
Free try on experience in store.
SEPHORA.COM AND BEAUTY INSIDER
Around 3 million unique visitors a month.
Top 50 retail sites in the U.S.
SEPHORA SWOT ANALYSIS
2010 MARKETING PLAN & SOCIAL MEDIA OPPORTUNITIES
Marketing mix considered: store window merchandising, catalogs and free gifts for Beauty Insiders, two major promotions, print advertising and
Through 2010 Sephora spent just $1 million, just a 5% of the total Marketing Budget on Social Media, taking into account the ROI on video creation and distribution, digital marketing will eventually take over the offline marketing budget and strategy, as results are higher and more measurable.
Taking into account all of the mandatory investments, completely investing in the new technology opportunities and assigning Digital Marketing budget as shown in Table 1 the forecast value on the investment could reach nearly $11 million in revenues.
Sephora’s customer base is segmented in 3 main groups:
Women under 25 who aspire to look older, women between 25 – 35, and women over 35 who aspire to look younger. The behavior behind these segments facilitates the creation of more focused and directed content.
In order to achieve this growth, Sephora should target their efforts, resources and time mainly in Video and Images Content Creation and then invest in the different distribution channels. Sephora’s Facebook fan base has constantly grown for two straight years, creating a more engaging relationship between customers and the company. Just as with Facebook, YouTube became a major way of interaction
Sephora can increase ROI from Social Media by:
Increase its current client base’s wallet share
Increase the size of the current market
CREATING VIDEO CONTENT
The most attractive ROI from social media comes from video creation as it enables the most interactions with clients and has the biggest returns. Distribution of this content should be promoted in various social media, prioritizing Facebook and YouTube where most of the actual clients look for the products, reviews and advice from other users. By adding direct links to the website in both Facebook and YouTube, people can directly purchase the products they’ve been interacting with.
Since all the video content is available for the 812k fanbase, disregarding of their age and category interests, the videos should compel to the purchase of a big variety of products. UGC videos will help address the specific questions each user has for their situation.
CUTTING OFFLINE ACTIVITIES
In order to increase the online activities of their client base, Sephora may reduce or stop some of their offline communication, such as the physical catalog transforming it to a digital document to share through social media. Stop sending printed out mail and brochures.
SEPHORA RECOMMENDED STRATEGY
Sephora should adopt a strategy that let them take a bigger piece of their client base’s wallet. From their most loyal customers to their newest. It can achieve this by enabling bundling sales and bundling coupons redeemable from social media to the website and physical stores. The marketing spending should be focused and directed to women between . Sephora should increase its product offering with cross-branding products and campaigns and trying to get some luxury brands to their stores in order to increase the value of each of their customers by raising their wallet share.
Sephora can take advantage of the similarities of their client segments and communicate the same message through all their channels both online and offline. Their VIB expect its advertising strategy to cater for a worldwide use. Its advertising strategy should be
Directed towards the segments it is trying to focus on its customers, cost and convenience .
In Indonesia, Gillette can have the following value propositions:
? For Student Steve who wants a quality but cost efficient shaving option, Gillette Goal II is a shaving solution providing ease of use, smooth shave without hurting your pocket.
? For Professional Peter who wants a high quality and, Gillette GII is a premium shaving solution which gives you the best groomed look with the smoothest and fastest experience.
In 2013, we can expect that the market in Indonesia is extremely stable and thus Gillette need not focus on first time shavers. Now Gillette need to focus on providing an unmatched shaving experience. It should use its budget on advertising. It can use the television and social media. Gillette can use celebrities to endorse its brands. The financial analysis will be different as we will be having more trends to analyse and then base our decisi