Strategic Marketing Management
Strategic Marketing Management
Strategic Marketing Management
Course: DMS/GROUP A
Date: 30/05/2010
Contents:-
1. Company Background.................................................................................................5
2. Situation analysis..........................................................................................................5
3. External analysis...........................................................................................................6
a) Political factors
b) Economical factors
c) Social factors
d) Technological factors
e) Environmental factors
f) Legal factors
e) Competitors
5. Market Segmentation...................................................................................................19
a) Consumer market
b) Products
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c) Competitors
d) Brands
6. Internal Analysis........................................................................................................21
a) Physical Resources
b) Financial Resources
c) Human Resources
d) Intangibles
a) Market
b) Materials
c) Men
d) Money
e) Machines
7. S.W.O.T Analysis.......................................................................................................24
8. Marketing Plan............................................................................................................26
8.1) Objectives
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8.2) Strategies
a) Product
b) Price
c) Place
d) Promotion
e) People
f) Process
g) Physical Evidence
9. Budget Breakdown...............................................................................................30
10. Appendix...............................................................................................................32
11. References.............................................................................................................43
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1. Company Background
1.1 Mission Statement
To dedicate the business to the pursuit of social and environmental change.
Creatively balance the financial and human needs of the stakeholders:
employees, customers, franchisees, suppliers and shareholders.
Ensure that the business is ecologically sustainable, meeting the needs of the
present without compromising the future.
Meaningfully contribute to the local, national and the international
communities by adopting code of conduct which ensures care, honesty,
fairness and respect.
Campaign for the protection of the environment, to defend human rights and
against animal testing within the cosmetic industry. (Value Report, 2009
-2010)
Organizational Structure
The Body Shop has a hierarchical structure. They have departmental heads spread all
over the world. The Body Shop encourages open-door policy and two-way
communication within the company. They have a strong belief in the company values
which creates a bound between the employees. (Our People, 2009-2010)
Since June 2006, The Body Shop is wholly owned by L’Oreal therefore it is no longer
a listed company. (About Us, 2009-2010)
The macro environment includes major forces, the environmental factors that have
an impact on the organisation on a varying scale (Jonhson, Scholes, & Whittington,
2008). The main element of macro environmental is the PESTEL framework which
identifies the major drivers of change. The macro environments affecting the core
business of the organization are identified below:
a) Political Factors
b) Economical Factors
Increase in VAT UK’s new chancellor George This will increase the
Osborne announced on 21st price of daily
May 2010, the hike on tax to commodities which
20% by next April. (Clark, would lead to restrict
2010) customers to buy
cosmetics.
High unit labour cost High labour cost in UK has Company strategies
left a gap in productivity as cannot be pursued to
compared to the counter parts the fullest extent.
like America and Japan.
(Mail Online, 2010)
purchasing power.
Conclusion: Due to the recession profits of the company can be affected, as the
demand for the product will reduce and due to changes in the exchange rates which
could affect product manufacturing.
c) Social Factors
(Environmental Investigation
Industry, 2003)
d) Technological Factors
Roll on true match Cosmetic company has More options for the
developed a roll on technique customers.
to spread the foundation
evenly on the face. (L'Oreal,
2010)
e) Environmental Factors
Conclusion: Companies that are not socially and environmentally conscious will be
affected in its performance and reputation.
f) Legal Factors
International Trade Companies import all its The company has made
Policy. products from overseas any strategic plans to look for
changes will have an effect alternative sources of supply.
on cost.
Conclusion: Companies has to abide by the rules and regulations set by government.
These are the internal factors of the company that has direct impact on the
organisations strategy. They include customers, employees, suppliers, shareholders,
media and competitors.
There are three factors to be looked upon while carrying out the analysis, credible
alternative future, improving the organisational learning and evaluating and
developing strategies for each situation. (Jonhson, Scholes, & Whittington, 2008)
Conclusion: Looking at the factors above the possibility of a new entrant entering in
this industry is fairing weak.
Conclusion: As there are no substitute for each brand of cosmetic product the threat
of substitutes is weak.
Conclusion: Supplier power is relatively low in this case as buyers have a wider
range of options.
e) Competitive Rivalry
expenditure.
Conclusion: The competitive rivalry within the cosmetic industry is strong as there is
no great product differentiation in terms of cost, quality, performance and variety.
Thus the exit barrier is very high.
Taking into consideration the above analysis the cosmetic industry can be rated at ** out
of five industry. It is a great market for The Body Shop to operate in as the changing
trends and shifting attitude of the customer to move on to natural and environmental
friendly products is growing in the industry.
5) Market Segmentation
a) Customer Market
The Body Shop creates a product differentiation market, its customer’s are
usually single females from the age group of mid twenty’s or early forties
professionals with good qualification and a focus on environmental issues. It
also targets men but is not as expanded.
So they have to increase the promotion of male products.
b) Products
The Body Shop has environmentally friendly products that are made up natural
ingredients. The Body Shop deals with the following products:
c) Competitor Analysis
Being a cosmetic company The Body Shop has a range of competitors, but by
analysing the Perceptual Map the competition between product with high quality and
low price is relatively high. In this case companies reinforce in their customers with
brand ethics and values.
Low Quality
Source: (Lamb, Hair, & C, 2008)
d) Brand
The Body Shop from the beginning focused on environmentally friendly products,
which created a brand image about the product among the customer who really care
about the environment. The Body Shop also gives the customers an exceptional
experience in store with their personal care products. (The Body Shop, 2009 - 2010)
The Body Shop did not use animals for testing their products and they believed in
fair trading which helps the people to earn their daily income which will enable them
to create a better future.
6) Internal Analysis
a) Physical Resources
Resources are sourced from the Body Shop community trade programme
which includes olive, soya, cocoa, sugar and sesame from parts of Brazil to
Samoa, Daabon in Colombia.
Community Trade now works with over 30 suppliers in more than 20
countries.
2500 stores in 60 countries around the world.
b) Financial Resources
Since June 2006, The Body Shop is wholly owned by L’Oreal therefore it is no
longer a listed company. (The Body Shop (2009 – 2010)
c) Human Resources
The Body Shop employs over 10,000 people across the world.
d) Intangibles
The Body Shop is an original, natural and ethical beauty brand.
Core Capabilities:
The Body Shop supplies its customers with natural products which are
environmentally safe. This creates a competitive advantage over the other
cosmetic companies in the market.
These types of products are not easily developed, as a result of which The
Body Shop has created a niche within the cosmetic industry.
The Body Shop differentiate their competitors by their method of sales and promotion,5
M’s can be used to analyse its competences and capabilities.
a) Market
The Body Shop is the leader in environmental friendly products but now companies
like Herbal, Lush have come on board to compete with the similar type of product,
But the Body Shop has maintained their image for a long time which won’t affect the
sales.
b) Materials
Over the past few years The Body Shop has invested setting up new stores across the
country with unique design. They have also introduced merchandises that contribute
towards children.
c) Men
Please refer to Human Resources 6.1 – c
d) Money
Please refer to Financial Resources 6.1 – b
e) Machines
Please refer to Physical Resources 6.1 – a
Threats Implication
Although The Body Shop was acquired by the cosmetic giant L’Oreal in 2006, their ethics
remain the same and they operate separately as a separate unit within the L’Oreal group.
This will not have an impact on The Body Shop’s brand image. (Russel, 2007)
They can further develop some product for people from the age group of 50-65, as there is
a demand anti-ageing product in the market. Introduction of cosmetic product for men also
has to be introduced in a wide range.
8. Marketing Plan:
See Appendix 3
Market Share
Target sales – 5.5%
Current Sales- 3.5% Sales gap - 2%
Forecast – 1.5%
1yr Time
According to analysis The Body Shop had 3.5% market share in 2009 (The Star
Online, 2009).
Increase in the market share by 2% by expanding the male cosmetic market by
2011 will be 5.5%.
If nothing is done to increase the market share it will go down to 1.5% i.e. there
will be a gap of 2% in the sales.
Source: Ansoff
1. Existing products in the existing market - The Body Shop use of different
promotion techniques (selling different types of products as a package)
2. New product in the existing market- Introducing a new range of cosmetics for
babies by August 2012.
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3. Existing product in the new market- Increasing sales of cosmetics for men by
promoting the product.
4. New product in a new market - The Body Shop does not have any interest in
developing such a strategy due to the objectives set.
9) Institutional Plans
(See Appendix 2)
Media Promotions
Advertise in the fashion magazines.
Local tabloid newspapers.
Underground train stations, Buses, Ferry’s.
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In store promotion for both men and women cosmetics not just women.
Advertising on the television.
a) People
I.T – To enhance the shopping experience online, and encourages new
user by online promotional offers.
Sales Department – To increase sales and make the customers aware of
the different range of products to the customer.
Operations Department – To monitor all the stock moving from each
store.
R&D – To develop a new range of baby cosmetic products.
Marketing Department – To set targets by implementing marketing
plan, to keep a track of promotions and monitor if the strategies are
followed correctly.
b) Process
o Appropriate software for the billing process.
o Return policy – Exchange/return the product if not according to the
taste.
o To keep a track of time taken to deliver product purchased online.
c) Physical Evidence
Monitor time taken to deliver an online product.
Stock checks should tally with the inventory stock.
Good ambience has to be developed in stores to attract potential
customers.
Sample of each product should be available for the customer to try.
9) Budget Breakdown
£ Million
Overall cost is £3.78 Million
Promotion
Product
People
Physical
Evidence
Process
Place
Quarterly meetings will be held with the head of marketing department regarding new
implementations of marketing plan to remain stable or gain profit.
Gantt chart will be followed to draw conclusions about the cost involved in
implementation and how much time would it take to complete it.
Reports of implementation plan will be given to all the board members to show the
status of each implementation.
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New trends and technology required for the new product development will be
discussed after every 3-6 months.
Appendices
Appendix 1:
Internal Analysis/Value Chain Analysis (Porter, 1998)
Primary Activities
Inbound Logistics: this deal with the receiving, storing and distributing inputs of
product. The Body Shop receives its raw materials from 30 suppliers worldwide
which are normally shipped to UK. If these resources are stopped or discontinued
from the foreign countries then the company needs to think about some alternatives.
Operations: The Body shop products are against animal testing, the packaging used
for the products can be fully recycled. Everything in the store is environment friendly,
even the bags used to pack during direct sales.
Outbound Logistics: The distribution is done to all the retail Body Shop stores in the
UK where they are further categorised into different types.
Marketing & Sales: The Body Shop is a socially active organisation which supports
communities, different charities that support children and women. The brand image as
a supplier of environmental products makes people aware of the company.
Service: The Body Shop has created a niche market that sells natural beauty products.
Support Activities
Procurement: The Body Shop supports community trade from where the raw materials
are sourced.
Technological Development: The Body Shop has invested a lot in R&D in the past to
make their product as natural as possible. E-commerce has also contributed in the
direct sale of the product.
Firm Infrastructure: The Body Shop has over 2500 store over 60 market segments, as
they have been acquired by L’Oreal all the financials are done under them; quality
control is monitored closely for quality.
Appendix 2:
Implementation Plan
Appendix 3:
Market Segmentation
Target marketing
Marketing Positioning
Marketing Planning
Appendix 4
Benefit Segmentation of the Body Lotion Market
Indepen Low cost Workin Heavy user Olive flavour Self – Value -
dent g men automony oriented
segment
Worrier Skin care Mothers Soft skin Butiri Baby Highly Conservativ
and kids Sensitive es
Appendix 5
Core Competency Model.
Source:
(RIMS, 2010)
Appendix 7
Ansoff matrix
- SOCIAL SERVICES
- According to Ansoff matrix analysis, The Body Shop has newly entered in different
sectors in market penetration,
- And as they are leader in the cosmetic industry and are looking forward to enhance the
male cosmetic market.
- They are also looking to get diversified in sectors like financial services, products, retail
business, social services, ethical welfare.
Product life cycle shows that growth of a company is staring from a fix position, In the
beginning company don’t make any profit when they launch their product in the market, there
are chances of loss or make profit, The Body Shop has already has a good reputation in the
market if they launch any new product they don’t need to do behave like new entrance
because people trust this brand and they will buy their product.
Appendix 8
Resource Plan:
Activities JAN FEB MAR APR MAY JUNE JUL AUG Resources
Y
Enrolment Manager
Structure Executive
Approval Management
Product HR
Advertisement Marketing
Distribution HR
Sales Marketing
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