Marketing and Retailing of the Body Shop - Case Study Example

Topic: Marketing and retailing of The Body Shop Introduction The Body Shop is an international retailer of toiletries and cosmetics. It came into existence on 26 March 1976 in Brighton, United Kingdom – founded by Dame Anita Roddick with the Mission of social and environmental change – “To dedicate our business to the pursuit of social and environmental change.” As the name suggests -- The Body Care – it offered homemade skin care and body lotions prepared from natural herbs like jojoba oil and rhassoul mud, having elaborative names – Tea Tree Oil Facial Wash and Mango Dry Mist. The company has achieved commendable heights in business expansion on the global canvas, growing at the rate of 50% annually. Its stock appeared on London’s Unlisted Securities Market in April 1984, opening at 95 pence. The Body Shop was fully listed on London Stock Exchange in January 1986 and at that time, the company’s stock was selling at 820 pence. The market value of the company had reached at £350 million ($591 million) by 1991. The journey was not smooth; ups and downs came when Littlehampton manufacturing plants were sold. In the year 2000, manufacturing was outsourced. Even then, the Body Shop commanded the same market value in the year 2004 (£334 million as of September 2004). The Body Shop is catering to 77 million customers through 1980 stores expanded in 50 markets according to 2004 figures. Marketing and retailing As it is common knowledge that The Body Shop International plc is a major international branded retailer of personal care products for the complete body, it ranks on 27th number, as the most reputed brand internationally. It has pursued from the very beginning the marketing strategies to reach the level of performance, it has attained. It recognized the opportunity, about 30 years ago, to manufacture body care products from natural ingredients. At that time, high street retailers were selling similar products without any information on raw materials and their benefits. The Body Care provided all the detail of the ingredients and their properties with the added facility of refilling the product in the used bottles with a 15 percent discount. The product pricing was reasonable in the sense that it was priced in between the common and exclusive brands. While keeping away from traditional marketing, the company advertised with offbeat brochures, exotic ingredients, not offering the products in sales to enhance the brand image along with being extremely reachable to press. The company’s founder – Roddick – made social and environmental concerns a major cause to fight against, as the marketing basis of the body shop. The company gained long-term competitive advantage over its competitors by practising community trade programs, running campaigns against domestic violence in Canada and creating social awareness against experimenting the products on animals. It took great concern in reducing waste by practising ‘recycling’ of bottles and containers, used for packaging its products. Knowing well that its target audience are young women, it has strived to increase its customer base by reaching to adult segment of its customers without compromising on values and by not playing with customers’ fears, treading on realistic grounds that personality and health are above perfection and typical beauty. To be dedicated to its customers, the company has introduced a Copy Approval System (CAS) to check that its promises match with its commitments; priciples and practices are identical, correct and relevant to its corporate image. Being a global retailer of a speedily expanding market of about GBP 85 billion and having customer focused approach, the body shop has been providing an appealing store environment based on ethical business practices. It has been offering new products with the changing needs in newly designed stores, where shopping is a pleasant experience. Product packaging has also become attractive. Products have got variety with new arrivals like Hair Care range, using Community Trade ingredients conceived by hair specialists; Invent Your Scent, facilitating customers to mix them with their personal fragrances; Skin Focus, a new skin care range; Almond Hand and Nail Care, and new ingredients like Olive in Bath and Body section. The company plans to introduce a new Make-up Merchandising system. New stores are being developed on the concept of ‘recycled’ store refurbishment, providing the shops latest look and ease of space. The body shop has endeavored to provide value for money to its existing and new customers – the strategy with an objective, called ‘masstige’, providing new products prepared with natural herbs, outsourced by community trade program for its intelligent customers. The company believes in developing a rapport with its customer – basically working women and runs campaigns to impress the adult, independent, self-conscious women. The company’s stores are always within easy reach of its customer, whether it is a store, The Body Shop at Home, or an e-commerce option. To serve its customer in the best possible way, it is conducting global customer surveys. New changes in leadership and outsourcing of manufacturing process has enabled the corporate leadership to focus on improving marketing as well as logistics and products. Another feather in the cap of the body shop has been introduction of SAP technology, which has facilitated stock forecasting, enabling the company to react smoothly to changes in demand for its products. SWOT ANALYSIS Strengths:  Launching of new products  Strong ethics based on value (CAS)  Acquisitions  Sound marketing and logistics  New refurbished stores  Customer oriented  Well known brand worldwide  Quality processes (SAP) Weaknesses  Negative impact of exchange rate due to weak US dollar  Negative comparable store sales in Canada, Germany and most of Southern  Europe Opportunities:  Launching of e-commerce site in USA  Introduction of new products  New design concepts  Trial of new Make-up Merchandising system  Increased advertising to capitalize on concern over fitness and health Threats:  Image loss after take over by LOréal  Boycott of the body shop by Naturewatch, animal welfare group According to Peter Saunders, the Chief Executive Officer of The Body Shop International plc, operating from its head office in London at New City Court, 20 St. Thomas Street, the interim results of the 2004 sales for 26 weeks, till 28 August 2004, the retail sale has increased by 4%; comparable store sales is down by 1% but the results of The Body Shop at Home have been very encouraging, showing increase in sales by 51% to £21.5 million. The Body Shop at Home’s top markets – UK, USA and Australia have performed well. Profit before tax has showed negative impact due to exchange rate ups and downs. Earning per share has been equal to previous year (2003) at 3.3 pence with interim dividend paced at 1.9 pence because of lower effective tax rate. Being a global retailer, The Body Shop has stores in America, Europe, Middle East and Africa; Asia Pacific, and UK & Ireland. If we analyze the comparable store sales in different markets, we find that USA has shown positive growth (+2%), Australia (+5%), South East Asia (+8%) and the Middle East (+14%). The sales in the UK showed an improvement in 2nd quarter to –3% from 1st quarter of –7%. Overall, in the first half, the UK comapable store sales were –5%. It is encouraging to know that the months of September and October have given positive reports of the UK comparable store sales. Canada, Germany and a big part of Southern Europe has not performed well in comparable store sales in the first half. The Body Shop has made two big acquisitions in the first half of the year by acquiring Hong Kong and Canadian head franchise businesses. The Body Shop investment program in stores and information systems amounting to £100 million is going well. The first new stores opened with new store design in Covent Garden and Thurrock and introduction of ‘recycled’ shop refurbishment and the new Make-up merchandising system are running satisfactorily. The Body Shop has entered into e-commerce – another business channel in USA. The body shop advertisements provide strength to the brand image. For example, advertisement in appendix 1 is full of appealing text in colorful format – “Made with Passion” and the text below fully picturizes the values attached with the body shop products – ‘Individuality, Community Spirit and Trading Fairly’ are not only highly product promotional but relate with the ethical concerns of the corporate management. Phrases like ‘A Love of Life’ show the concern of the product manufacturer for its customers’ healthy life. The second picture “Let’s Party” in the Autumn/Winter shows young ladies partying at “The Body Shop at Home”. It requires no promotional words – the smile and joy on their faces is enough to speak volumes on the benefits and popularity of the body shop products. The picture in third appendix shows a store – Tunbridge Wells’ inside view, which shows how spacious the body shop stores are. The advertisement in the fourth appendix shows remarkably well the difference before and after using the ‘Skin Focus’in an e-commerce website display. It carries a lot of information about the other products of the body shop as well. There is no doubt that all the advertisements fulfill the objectives of the body shop. The new management of the body shop has carried forward the great work done by Roddick in all the departments of the body shop International plc. Works cited list http://en.wikipedia.org/wiki/The_Body_Shop http://www-935.ibm.com/services/us/index.wss/casestudy/imc/a1008979?cntxt=a1000063#refkeychallenges http://www.thebodyshop.com/bodyshop/global/content.jsp?page=/news/2006-08/aloeproducts http://www.thebodyshopinternational.com/NR/rdonlyres/008B062F-EAF2-477A-A254-35CC5948EE75/0/Policyonexternalmarketingandclaimslayout.pdf http://72.14.253.104/search?q=cache:8Jax040GZDoJ:www.sap.com/platform/esa/pdf/CS_The%2520Body%2520Shop.pdf+distribution+retail+management+methodologies+the+body+shop&hl=en&gl=in&ct=clnk&cd=1 http://www.thebodyshopinternational.com/NR/rdonlyres/ECE4A2E3-E9F9-4055-8D11-B83F93460B85/0/Customer_ISA_2004.pdf http://www.thebodyshopinternational.com/search?query=marketing Appendix 1. Appendix 2. Appendix 3. Appendix 4. Read More