Dissertation on Marketing Innovation in Cosmetics- Body Shop
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The Body Shop is a single-brand
global producer and retailer of natural and ethically produced cosmetics and
toiletries products. Founded in the UK in 1976 by Gordon and Anita Roddick, The
Body Shop has 2,133 stores in 54 countries, 62% of which are franchises. Ranked
36th in the global cosmetics and toiletries market in 2005, The Body Shop’s
core market is the UK, which contributed 17% of the company’s sales in 2005,
followed by the US (16%).
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With a range of over 1,200
products, The Body Shop is present in a wide number of cosmetics and toiletries
sectors, including bath and shower products, skin care, colour cosmetics, men’s
grooming products and hair care. All the products are based on natural
ingredients that have not been tested on animals and are ethically sourced from
a variety of communities around the world.
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Building its values around five
core issues, Against Animal Testing, Support Community Trade, Activate Self
Esteem, Defend Human Rights, Protect our Planet, the company took a very active
stance in supporting the developing world, especially through its Community
Trade Programme. Through this programme, the company buys natural ingredients
and cosmetic accessories from disadvantaged communities in 23 countries around
the world. Today, more than half the products in the company’s portfolio either
contain a Community Trade ingredient or, in the case of accessories, are made
by a Community Trade supplier.
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The Body Shop also manages its
own charity, The Body Shop Foundation, which works to give financial support to
pioneering frontline organisations that are working in the areas of human and
civil rights as well as environmental and animal protection.
Strategic Objectives and Challenges
Continued focus on core values
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The Body Shop’s ethical,
socially aware and environmentally-sustainable stance continues to drive its
strategic marketing initiatives. In 2005, The Group actively promoted its
values by strengthening its in-store customer communications with a particular
focus on its Community Trade programme. In addition, the company also
significantly reinforced its engagement in areas such as violence against
children, chemicals in products, fair trade, ethical trade, sustainable
ingredients and Against Animal Testing.
Growing focus on product marketing
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One of the main objectives of
The Body Shop’s £100 million investment programme, announced in 2004, is to
increase focus on product marketing. While its campaigning stance strengthens
the brand in the eyes of environmentally- and ethically-conscious consumers, in
order to improve its position in the global market, it is vital that it
promotes itself more strongly as a global producer of quality cosmetics and
toiletries products in order to reach a wider customer base. In line with this
growth strategy the company is actively trying to strengthen its position as a masstige
brand by offering product support by highly trained staff, comprehensive ranges
of naturally-inspired cosmetics and toiletries, improved shop designs and
competitive pricing.
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Product innovation also plays
an important part in this positioning initiative, including innovation across
various product ranges and sectors to encourage multiple purchases and higher
transaction values. The company is also increasingly adapting products to meet
local needs in the 54 countries in which it operates. For example, during 2005,
the company launched a Moisture White range in Asia-Pacific, to meet the local
demand from women to have skin with a pale, even tone and luminosity. Proving
successful in the region, The Body Shop is now planning to extend the range to
other markets around the world.
Loyalty card moves into new markets and retail channels
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The company has also reported
continued growth for sales of its Love Your Body loyalty card, with over two
million sold across 16 countries by the end of fiscal 2006. For a £5 membership
fee, customers get a range of discounts and preferential offers which escalate
in proportion to the number and value of purchases. This pushes up the average
transaction values, and the company is now beginning to increasingly promote its
use across its e-commerce channels. The card is due to be extended into a
further 13 markets in fiscal 2007.
Developing and expanding a multi-channel organisation
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Another important objective in
The Body Shop’s growth strategy is to offer customers increased choice and
convenience through the development of a multi-channel retail model. In
addition to The Body Shop stores, the organisation also includes The Body Shop
At Home direct selling programme and Internet sales. An effective way of
reaching consumers living far away from a Body Shop store, the former has been
recording good growth in the US, the UK and Australia, the three markets where
it is currently present, with plans to expand into Germany during 2006. The
e-commerce site in the US has also performed above expectations since its
launch in 2004, more than doubling sales in the country. As a result of this
success, The Body Shop is currently developing an e-commerce site in the UK,
which should be launched in time for the Christmas 2006 trading period.
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Geographical expansion was one
of the main objectives for The Body Shop in 2005 with new stores opening in
Russia and Jordan during the year. This
expansion programme has been continued in 2006 with new stores in India,
Pakistan and Poland. At the same time, existing stores are being redesigned to
provide customers with an improved shopping experience, including new make-up
merchandising fixtures.
Improving internal operations across the organisation
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Fiscal 2005 saw a new emphasis
placed on The Body Shop’s internal operations including improvements to the
company’s IT infrastructure. By this programme, the company is aiming to gain
maximum efficiencies by coordinating back-office systems across its three sales
channels. The most important part of this programme is the global
implementation of SAP (Enterprise Resource Planning system): SAP is currently
successfully operating in the US, where it has already resulted in improved
productivity for the company.
Operational and Distribution Strategies
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The Body Shop conducts its
business through three main channels; store sales, mail order and The Body Shop
at Home. The Body Shop at Home is the company’s direct selling arm, which sees
Body Shop products demonstrated and sold in the home environment by a number of
trained consultants. This has proved a particularly important channel for the
company, with sales increasing by 14% to £53.4 million in the 2006 financial
year, and will continue to be supported as part of the company’s future growth
strategy. The division was largely responsible for the 3% growth in the UK and
Republic of Ireland in 2005-2006. The company’s on-line sales channel,
www.thebodyshop.com, has also had an important effect on sales in the US, and
is being rolled out in the UK during 2006.
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Currently representing 54% of
total retail sales, franchising continuous to play in important part in the
growth and development of the company. Some regions are more heavily franchised
than others – Asia-Pacific, for example, has only 68 out of 605 company-owned
stores in operation, whereas there are 373 out of 444 in North America.
However, due to reasons such as retirement, The Body Shop acquired a number of
franchise businesses in 2004-2005, including the head franchise businesses in
Hong Kong and Canada as well as companies operating The Body Shop in the
Netherlands, Belgium and Luxembourg. The acquisitions have performed ahead of
expectations since the takeovers, and the company is expecting further benefits
as it is focusing on developing the brand in these markets. However, this does
not mean that the company is reversing its franchise policy – the strategy
remains strong for developing markets, and in 2005-2006 the company opened two
new franchised markets, Russia and Jordan.
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The Body Shop trades with over
30 supplier groups from around 23 countries. Core to its strategy is the
Community Trade programme, which aims to create a sustainable trading
environment with disadvantaged groups all over the world. In this way, the
company hopes to allow communities to build livelihoods, including health and
educational benefits. As a result, The Body Shop attempts to source its
ingredients and accessories from economically- and socially-disadvantaged
communities, where possible.
Ownership Events
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In the beginning of 2006, The
Body Shop agreed to be taken over by L’Oréal in a deal worth £652 million. L’Oréal is planning to operate the British
company as a stand-alone business within the L’Oréal Group, led by the current
management team and with Anita Roddick remaining in her present role as
consultant. The decision prompted some controversy amongst loyal consumer
groups, which accused The Body Shop of selling out its values. However, many
other groups have encouraged members to continue to support The Body Shop in the
hope that the company’s values will spread to L’Oréal’s entire organisation.
Also read Body Shop Fragrances Market available at Mahasagar Publications
