The Body Shop Marketing Plan In Hull - Assignment Example

? The Body Shop Marketing Plan In Hull Table of Contents Executive summary page 3 Background page 4 Environment analysis page 4 External Environment : page 5 Macro Environment : page 5 Micro Environment : page 7 Internal environment : page 8 SWOT Analysis : page 9 Marketing Objectives : page 10 Conclusions : page 11 References : page 12 Appendix : page 13 Executive summary The Body shop is one of the most reputed companies in the cosmetic industry. It has joined hands with L’Oreal recently to improve its global presence. However, some people believe that this alliance is just like the mixing of oil with water because of the contrasting business philosophies of these two companies. Since it is a socially committed company, Body shop gives more priority to environmental protection and human right protection. Hull is one of the most heavily populated cities in England. It has a large tradition and heritage. Moreover, Hull is one of the heavily industrialized cities in England. The per capita income of people of Hull city is more than that of other people in England. Body shop has better business potentials in Hull city, especially in the coming spring season. This report discusses the marketing strategies suitable for body shop to exploit the market potentials of Hull city in the coming spring season. Background Corporate social responsibility and sustainable development are some of the popular business terms in the modern world. These terms got popularity because of the increasing awareness of the people about the protection of environment and the consequences of injudicious exploitation of natural resources. Corporates in the past heavily exploited the natural resources and hence the environment is facing huge problems now. Modern generation believe that it is the duty of the corporate companies to give something back to the communities in which they operate and to the environmental protection. Body shop is one business group, which has shown its commitments towards environment and to the people from the beginning of its operation itself. “I just want The Body Shop to be the best, most breathlessly exciting company – and one that changes the way business is carried out. That is my vision,” said Dame Anita Roddick, human rights activist and the founder of the Body Shop (The Body Shop, n. d.). The Body Shop is the leader in cosmetic industry at present. Founded at Brighton, UK, in 1976, Body shop has expanded its wings to continents such as America, Asia and Europe. Hull is an important British market for the body shop. Hull is a city with immense heritage and people in this city give more importance to the protection of their beauty. The demand for cosmetic products is high in Hull compared to other cities in England. As in the case of many other businesses, cosmetic business depends heavily on seasonal changes. March, April and May (spring) are months with pleasant climate in Hull. During spring, people got out quite frequently and engage in so many activities including beauty care activities. With the help of suitable marketing activities, Body Shop can increase its sales in Hull city during the coming season. This paper analyses the marketing strategies required to position The Body Shop and its products during the spring in Hull. Environment analysis External and internal environments are equally important for a company like body shop to formulate effective marketing strategies. External environment has to be analysed at the macro and micro levels to get more insights into the effectiveness of the marketing strategies of Body shop. External Environment Robens (2007) pointed out that “Mergers and acquisitions are two common and prevailing means for company growth in today’s business world. They represent options that aim at a very high degree of integration, as opposed to cooperative agreements and joint ventures” (p.12). “On March 17, 2006, Body Shop announced that it had agreed to be taken over by L’Oreal in a ?652 million (US$ 1.14 billion) deal. L’Oreal offered 300 pence a share, a premium of 34.2 percent to Body Shop’s closing share price of 223.5 pence on February 21, 2006” (Teimouri, et al., 2011, p.561). Robinson (2006) pointed out that “Under the deal, Body Shop will retain its separate identity and management and would gain access to L'Oreal's research and development and marketing expertise to enhance its product offering”(p.10). L’Oreal is believed to be the biggest company in the world as far as cosmetic industry is concerned. In a heavily globalized business world, companies are using mergers and acquisition like strategies to increase their competitive power. The tie-ups with L’Oreal will definitely help Body shop to extend their wings more freely to international markets. “Numis analyst Steve Davies says that L'Oreal would pump money into funding The Body Shop's international expansion, given that there is still great potential to open stores in Russia China and other parts of Asia” (Benady, 2006, p.25). Macro Environment Macro environment of body shop can be better evaluated with the help of PEST (Political, economic, social, and technological) analysis. Political Testing of cosmetic products on animals has caused huge concerns in British political circles. Some people believe that such testing is necessary whereas others oppose it. Critics argue that the life of animals is as important as the life of human and hence animals should not be used for any experimental purposes. On the other hand, supporters of animal testing are of the view that human life is the most important thing in this world and the life of animals are less important. Anyway, Body shop has deliberately stayed away from this politics and hence their reputation has been improved a lot. Economic The Body Shop enjoyed a 4.2% increase in like-for-like sales growth in 2011 following a “militant” approach to innovation.” The retailer achieved growth in Europe, North America and experienced “strong growth” in the Middle East, most notably in Saudi Arabia and Egypt. It performed well in Asia, particularly in India and Hong Kong (Lawson, 2012). (See appendix 1 & 2 for more details of body shop’s performances in recent times). These statistics clearly suggests that the growth prospects of Body shop are phenomenal. Moreover the acquisition of the Body Shop by L'Oreal helped the company to perform well not only in domestic market but also in international markets. Social “Defending human rights is another core value of the Body Shop as it felt that it is the responsibility of every individual to actively support those whose human rights are denied”(Teimouri, et al., 2011, p.566). Social commitment is as important as environmental commitments. Fortunately, The Body Shop has good reputation in social commitments also. It should be noted that the body shop is not much interested in opening shops in China even though China is the most heavily populated country and the rapidly emerging economy in the world. This is because of China’s disrespect towards human right issues. On the other hand, Body Shop has more than 85 stores in India. It should be noted that India is a democratic country whereas China is a communist country. Moreover, India respects human right issues whereas China does not have much respect towards this issue. In short, Body shop is not ready to give its core values for gaining benefits. Thus, the reputation of the company as a socially committed has improved a lot in the past and it can be utilized for the marketing purposes in Hull city during the coming spring season. Technological The Body Shop is enhancing its militant approach to innovation, with launches including Brush with Fashion, a make-up collection created for young consumers; Earth lovers, a range of eco-designed, 100%-biodegradable shower gels; as well as White Musk Libertine.” The brand now has 16 online stores internationally and is continuing to grow at an accelerated rate in e-commerce (Lawson, 2012). Innovation is the key for business success. Body shop knows this principle very well. If Apple Inc. is the major innovators in consumer electronics industry, Body Shop is the major innovators in cosmetic industry. The beauty trends among young people are changing day by day. It is impossible for a company in cosmetic industry to stick will old products always. One of the major strengths of body shop is their ability to read the market trends well and to introduce suitable products. Micro Environment Market, customers, customer behaviour, competitors, etc constitute the microenvironment of an organization. Market The alliance with L’Oreal helped the Body shop to expand its market to continents such as America, Asia and Europe. At present, body shop is concentrating more on emerging markets such as India etc. They have more than 85 outlets in India alone. However, European markets are still important markets for The Body Shop. Customers Body shop has a diverse customer base. Irrespective the region in which it operates, all people like body shop products. Shankleman (2012) labeled The Body Shop as one of the world's leading ethical retailers (Shankleman, 2012). Even though there are plenty of companies in the cosmetic industries, none of them can claim the reputation of the Body Shop in terms of ethical business practices. Body shop has huge growth potentials in most parts of the world since beauty consciousness is growing everywhere in the world. Earlier, women were more interested in the protection of beauty than men were. However, modern men are giving more importance to their appearances. Metro-sexuality is a new term evolved in recent times because of the increasing consciousness of men in their appearances. Body shop can definitely exploit this situation. It is better to produce more cosmetic products for men to exploit the favourable market trends. Customer behaviour As in the case of other industries, cosmetic industry is facing huge competition. Globalization has made lot of changes in cosmetic industry. The emergence of new players from overseas countries is definitely a threat for Body shop. Moreover, the concepts of fashion and beauty are changing day by day. The products, which succeeded in the past, may not succeed at present and in future. The changing beauty trends are causing big threats to the ambitions of Body shop like cosmetic companies. Even though Body shop has good image as a socially responsible company, its associate company L’Oreal does not has such reputation. The association with L’Oreal is thus becoming a threat to the image of body shop. Competitors Bath & Body Works and Olay & Nivea are the major competitors of Body shop in Europe. They have wider customer base in Europe. However, the collaboration with L’Oreal helped body shop to overcome the strong competition from these competitors. The combined strength of L’Oreal and body shop made them the number one brand not only in Europe but also in many other parts of the world as well. The cosmetic products from body shop are believed to be highly expensive. It should be noted that competitors are introducing many cheaper products in the markets even though the quality of such products cannot be guaranteed. Current people are facing lot of financial problems because of the ongoing recession and hence they may opt for cheaper cosmetic products. Internal environment Brand Image, Competitive advantages, Product/Service, Price, Place, Promotion are some of the internal environmental variables of an organization. Body shop brand is a highly reputed brand everywhere in the world not only because of the quality of its products but also of its huge commitments towards the environment. As mentioned earlier, it is a socially committed company, which gives more importance to values such as human rights. In short, body shop has a good brand value which can be utilized to improve its competitive power. According to Councillor Martin Mancey, Hull City Council Portfolio Holder for Environmental Sustainability and Chair of the Green City Group; “we want to set the city on course to becoming a leading low carbon city and recognised as a leading green city in the UK and Europe"(Hull city council press releases, 2012). The statements of Mancey clearly indicate the commitment of Hull city authorities towards the environment. The Body Shop can definitely utilise this situation well to their advantages. The alliance with L’Oreal by Body shop came as a big surprise to many people since these two companies have entirely different business philosophies. Body shop believes in making money in an ethical manner whereas L’Oreal believes in making money at any cost. This alliance once again proved that in business, there are no permanent enemies. Even though many people raised questions about the success of this business alliance, so far these two companies succeeded in maintaining their alliance in a fruitful manner. Both the companies are maintaining their identity even though the alliance is there. L'Oreal says it will ensure that the Body Shop keeps its independence and will maintain its existing management team so as not to undermine its ethical considerations” (Benady, 2006, p.24). It will be suicidal for the body shop to change its business philosophies over a night. They know this fact very well and are eager to maintain their image despite the alliance with L’Oreal. In a heavily competitive business world, the alliance with L’Oreal will help Body shop to increase its global presence SWOT Analysis Strengths 1. Innovative approach 2. Brand loyalty 3. Huge brand name Weaknesses 1. Price 2. Less number of service staff Opportunities 1. Increased awareness of beauty among men or metrosexaulity 2. Increasing awareness of corporate social responsibility, eco-friendly products and environmental protection. Threats 1. Globalization 2. Competition 3. Bad reputation of L’Oreal Marketing Objectives Today there is an ever-widening selection of causes and claims made by the beauty industry that continue to capture people's imagination. There is now heightened interest in eco-friendly and fair trade beauty products. One in five (20%) British women want their beauty products to have packaging that is recyclable (The Rise of Ethical Beauty Products in Europe, 2012). As mentioned earlier, modern teenagers are giving more prominence to eco-friendly cosmetic products. So, body shop should never deviate from their core business principles which helped them to survive in this industry for such a long period. Hull city is a place famous for traditions, customs and beliefs. It is one of the oldest as well as the most civilized cities in England. People in Hull city are well educated and their living standards are comparatively better than people in other parts of England. All these factors are encouraging for body shop to set high objectives of sales in the coming spring season in Hull. “Hull has a population density of 3,694 persons per square kilometre giving it one of the highest population densities outside of London. Hull has a median age of 35.1 and a modal quinary age group of 20 – 24” (Hull city council-population). Teenagers in the age group of 15-19 and 20-24 are the prominent customers of body shop. (See appendix 3 for more details) Moreover, the number of males in Hull city is more than the number of females. These statistics clearly suggest that the business potential for beauty products in Hull city is huge. “The Body Shop offers a line of hundreds of skin and beauty products, including lotions, moisturizers, soaps, hand washes, bath oils, toners, cleansers, exfoliators, masks, eye treatments and more” (The Body Shop Skin Care Review, 2010). These products are necessary even for laymen, irrespective of seasonal changes. Body shop should make certain products exclusively for the spring season. Every product travels through four stages in its life cycle; introduction, growth, maturity and decline. Body shop products are in the maturity stage now. After the maturation of a product, it may travel through the decline stage. In other words, body shop product popularity may decline in near future itself unless the company replaces the existing products with new products. Majority of the available body shop products are quite familiar to the people of Hull. A breakthrough product is necessary for the body shop to catch the attention of the people of Hull city. For example, Apple Inc succeeded in conquering the mobile phone industry with the help of its touchscreen phones. Body shop needs similar products to grab the attention of Hull city people. For example, hair loss is a big problem among males. If body shop can innovate a product suitable to prevent hair loss, it may excel not only in Hull, but also in other parts of the world as well. “Hull City Council provides a wide range of care services and support to local people. We provide services for children and families, and we monitor and promote fostering and adoption for children in care” (Hull City Council: Health and social care, 2012). Body shop can join hands with Hull city council to help the poor people in this city. Body shop has a huge reputation as an ethical or socially committed company. Such reputations can be converted into marketing strategies if used well. It is often said that investing in a stable or matured market is better than investing in a fluctuating market. Hull market is a stable one. Even though recent recession caused major problems elsewhere in England, the people of Hull faced little problems. In other words, Hull offers greater stability in its economy, which is good for entrepreneurs like body shop. Conclusion Hull is an ancient city in England, which has higher living standards. People in Hull city are well educated and financially sound. Hull is one of the most heavily populated cities in England. The people of Hull city give more importance to socially responsible companies and hence the business potentials of body shop in this city are immense. Body shop should try to introduce some innovative products to catch the attention of the public. Since Hull city population consists more males, body shop should introduce more male oriented beauty products in this city in the coming spring season. References 1. Benady, D, 2006. Like oil and water? Marketing Week. [Online] Available at: http://www.marketingweek.co.uk/like-oil-and-water/2002432.article[Accessed 13 November 2012]. 2. Beauty Retailing - UK - January 2012, The Body Shop. 2012. Mintel. 3. Hull city council press releases. 2012. [Online] Available at: http://www.hullcc.gov.uk/portal/page?_pageid=221,674011&_dad=portal&_schema=PORTAL&p_id=3760&p_mode=result&p_theme=5&p_theme_name=Environment [Accessed on 13 November 2012] 4. Hull city council-population. 2012. http://www.hullcc.gov.uk/portal/page?_pageid=221,147225&_dad=portal&_schema=PORTAL#[Accessed on 13 November 2012] 5. Hull City Council: Health and social care. 2012. http://www.hullcc.gov.uk/portal/page?_pageid=221,52208&_dad=portal&_schema=PORTAL [Accessed on 13 November 2012] 6. Lawson, A. 2012. The Body Shop records 'solid' growth. [Online] Available at: http://www.retail-week.com/city-and-finance/the-body-shop-records-solid-growth/5033604.article[Accessed on 13 November 2012] 7. Robinson, S. 2006. L'Oreal takes over Body Shop assets. ICIS Chemical Business. 3/27/2006, Vol. 1 Issue 12, p10-10 8. Robens, C., 2007. Consumer perceptions on the incorporation of established brands- The acquisition of Body Shop by L’Oreal. [Online] Available at: http://hig.diva-portal.org/smash/get/diva2:119755/FULLTEXT01[Accessed 13 November 2012]. 9. Shankleman, J., 2012. The Body Shop gets a green makeover ahead of Rio+20. [Online] Available at: http://www.businessgreen.com/bg/analysis/2181878/body-shop-green-makeover-ahead-rio [Accessed 13 November 2012]. 10. Teimouri M.E., Jamehshooran, B.G., and Heydari, A.R, 2011. Relationship between CSR and SCA. Interdisciplinary Journal of Contemporary Research in Business 3(2). 11. The Body Shop, n.d. About the Body Shop. [Online] Available at: http://www.thebodyshop.in/about-us-2/about-the-body-shop [Accessed 13 November 2012]. 12. The Rise of Ethical Beauty Products in Europe, 2012. [Online] Available at: http://www.skininc.com/spabusiness/global/18726729.html?page=2 [Accessed 13 November 2012]. 13. The Body Shop Skin Care Review. 2010. [Online] Available at: http://www.fitnesshealth101.com/review/skin-beauty/the-body-shop [Accessed 13 November 2012]. Appendix 1 FIGURE 101: The Body Shop UK: Estimated sales as share of UK cosmetics and toiletries specialists’ sales, 2006-10 (Beauty Retailing - UK - January 2012 The Body Shop, 2012, p.1) Appendix 2 The Body Shop: Financial performance, 2006-10 (€m) Latest year end: December 2010 2006 2007 2008 2009 2009 (a) 2010 Consolidated sales (excl. VAT) 733.4 (b) 786.9 756.0 726.3 726.3 754.9 Retail sales (excl. VAT) (c) na 1,249.0 (e) 1,217.7 1,230.0 1,328.7 1,294.4 Of which: Western Europe na na 518.0 518.1 535.2 508.8 North America na na 202.5 176.8 192.8 177.8 Rest of the World na na 497.1 535.1 600.6 607.7 Like-for-like retail sales growth (%) na +3.3 -2.3 -0.6 -0.6 -4.0 Operating profit 58.0 (d) 63.8 36.2 54.0 54.0 65.0 Operating margin (%) na 8.1 4.7 7.4 7.4 8.6 (a) Restated figures not comparable with earlier years (b) Pro-forma 12 months (c) Total sales to consumers through all channels including franchisees (d) Profit for second half when consolidated into L’Oreal accounts but almost all Body Shop’s profit made in this half SOURCE: L’Oreal Company Accounts and Annual Report/Mintel (Beauty Retailing - UK - January 2012 The Body Shop, 2012, p.4) Appendix 3 The Body Shop shoppers in last 12 months, by gender, age and socio-economic group, November 2011 (Beauty Retailing - UK - January 2012 The Body Shop, 2012, p.7) Read More