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BODY SHOP, INC.
Term Paper ID:25258
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Essay Subject:
Examines marketing of English cosmetics firm. Background, industry, expansion, strategy & goals, buyer profile, more.... More...
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10 Pages / 2250 Words
8 sources, 16 Citations,
MLA Format
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Paper Abstract:
Examines marketing of English cosmetics firm. Background, industry, expansion, strategy & goals, buyer profile, more.
Paper Introduction:
Introduction
Until recent years, American women did not consider bath supplies (such as lotions, soaps and related products) important enough for retailers to open shops devoted exclusively to these items. Department stores sold upscale makeup products, and bath items were generally sold as adjuncts to these types of products. Perfumes, bath lotions (and powders) and makeup were often placed together in department store layouts. Women (and nearly all of the customers for these types of products are women) could also purchase some items at discount stores and mass retailers, but these outlets typically did not carry an extensive line. That changed when the Body Shop, an English company, opened a store in the United States selling not only bath products, but products which focused on health and beauty and which created an entire image about the brand and
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The emphasis on naturalingredients produced with a strong concern for the environment is part ofwhat separates the Body Shop from these types of traditional health andbeauty companies. Not only does the Body Shop face competition fromits traditional rivals such as Bath and Body Works, but also from massretailers. The Roddick's own approximately 25 percent of the company and afriend and early investor, Ian McGlinn, owns another 24 percent. Fred Meyer, a mass retailer and one of the nation's largestsupermarket chains, is selling aromatherapy products in its stores and isexpected to realize a significant boost in sales. Body Shop International Company Report. Today, the industry is indeed global with American companies competingwith European companies in Asia, and similar combinations occurringthroughout the world. This became a key pointin the company's success since it would be able to control quality andcosts with an in-house production operation. "Au Naturel." Soap-Cosmetics-Chemical Specialties (Jul 1994): 36-41. This research examines the marketing of the Body Shop andexamines how an English company was successfully able to export thisproduct throughout the world. Although the company is interested in producing items which havestrong appeal to women on the basis of the product itself, they are alsobound by the company's commitment to marketing goods which areenvironmentally sound and which are not tested on animals. Distribution The Body Shop has aggressively pursued opening stores throughout theworld with a particular interest in Asia and the United States. Asia is themost profitable of the company's regions, generating 38 percent of theprofit for the company in 1998, with the United Kingdom contributing 33percent, the rest of Europe 16 percent, and Latin America and Australiaeight and five percent, respectively. In addition, havingproduction facilities within the United States also meant that the companycould respond more quickly to changes in the market and could meet shiftingdemand better since the logistics were much improved. However, the company is well-suited toprovide products from the World Wide Web; while some level of personalservice is lost through this distribution method, there are also analystswho believe that the consumer who purchases through the Web is well-educated and of the target demographic group that the Body Shop tries toserve. Often grouped in with traditional fragrances andcandles, aromatherapy is only now reaching a broad mass audience in theUnited States, and companies such as the Body Shop are seizing onaromatherapy's tie-in with natural ingredients as a natural "next step" intheir product line (Tode 8). NY: Merrill Lynch, Sep 4, 1998.Tode, Chantal. At the same time, the Body Shop has chosen to place itsproducts in its own stores so that consumers cannot easily compare itsproducts against those of other companies. The United States has a large number of consumers whoactively oppose testing cosmetics on animals, but these are also women whoare willing to purchase cosmetics and health and beauty products. As a result, this market is no longer in a growth phase, but hasinstead entered the mature phase of the life cycle where there is increasedcompetition and increased price pressure. Founded byAnita Roddick, who formulated the first products, and her husband Gordon,the company is publicly held and traded on both the London and NASDAQexchanges. Indeed, some of the products imported to the UnitedStates were manufactured by the Body Shop in the United Kingdom. Themarketing environment is also attractive, and the recent growth of theshopping mall as the preferred purchase venue also had strong influenceover the company's decision to market in the United States (Nicholas 15). The company continues to innovate and provide consumers with productsthat are not offered by other companies, at least initially (the company'sproducts are often copied by competitors who are less committed toenvironmental factors with the result that profits can be cut, as well).In 1998, for example, the Body Shop introduced its hemp line of productsemphasizing the unique properties of commercial hemp (and resulting in somelegal problems in France where the display of the hemp leaf is illegal).The Body Shop recently completed a reorganization intended to leave founderRoddick free to find new product ideas and which puts day-to-day operationsin the hands of Patrick Gournay as CEO. Body Shop (the) Company Report. As women in the so-called Baby Boomgeneration age, their health and beauty needs change, as well. In addition to a shiftin the age of the target consumer, the Body Shop has also shifted itsincome group, as well. Perfumes, bath lotions (and powders)and makeup were often placed together in department store layouts. The shift is due not only to a desire to attract more customers,but also to permit customers who are already loyal to the Body Shop tocontinue to feel welcome there. Challenges facing the company are alsoconsidered. The availability ofproducts at such outlets may well serve to confuse consumers who areunfamiliar with the various aspects of aromatherapy and could cut into thecompany's profits over the long-term (Clark 57). Such designs did not appeal to American consumers who were moreattracted to open, airier designs. Buyer Profile Traditionally, the Body Shop focused on targeting women between theages of 16 and 35 to its shops, primarily because it was felt that thesewomen would be more sympathetic to the company's social causes and moreinterested in natural cosmetics which were outside the realm of traditionalofferings. The Body Shop's competition recognizedthis and took full advantage of the lapse. The Body Shop has actively avoided selling its products throughchannels other than its stores in the United States; putting its productsinto department stores or mass retailers would pose severe competition toits own stores and might well cause consumers to receive mixed messagesabout the products' positioning. "Defining Aromatherapy is a Marketing Priority." WWD (Apr 18, 1997): 8.Wheeler, Claudia D. The Body Shop has sinceredesigned most of its stores, but may have lost considerable market shareby not recognizing the differences between United Kingdom and United Statesconsumers. During 1998, 39 percent of the company's sales camefrom the United Kingdom and 26 percent from the United States. Another 15percent came from Asia, 14 percent from Europe (other than the UnitedKingdom), and six percent from Latin America and Australia. No production wasperformed within the United States during these early years, and thecompany relied on other manufacturers to meet its own quality standardsboth from a product and an environmental standpoint (Edelson 5). "New Age Finds a New Face." Marketing (May 21, 1998): 15.Patel, M., et al. Innovation remains one of thecompany's primary goals and will remain Roddick's responsibility; Gournayis charged with finding ways to make the company more profitable in itsexport locations such as the United States (Nicholas 15). Theemphasis within the company is producing items which not only enhance awoman's natural beauty, but to emphasize products which are made usingnatural ingredients and which recognize that most women do not have thesame beauty as women found in traditional beauty advertisements. The company's strong presence inAsia meant that it was particularly vulnerable to that region's economicdownturn in 1998, and the company's financial performance sufferedsignificantly during that period (Patel 3). In this way, the BodyShop hopes to build an attractive growth path for consumers to becomeaccustomed to the Body Shop environment and products early in theirconsuming years so that they continue to turn to the Body Shop as theirneeds shift in coming years. The companyparticipates in a wide range of community-based programs in order both toprovide a higher profile for itself when it enters a market as well asbecause the principals are strong believers in particular social causes.As a result, the products sold by the Body Shop carry this same image andconsumers who frequent the Body Shop often do so because of the socialconscience associated with the company (Edelson 5). Those whoare already accustomed to shopping at the Body Shop will be attracted toproducts which lack additional color and fragrance, or who become morediscerning in their use of cosmetics as they age. That changed whenthe Body Shop, an English company, opened a store in the United Statesselling not only bath products, but products which focused on health andbeauty and which created an entire image about the brand and the consumerwhich continues to this day. The company is an international organization with operationsthroughout the world. Thecompany does not use ravishingly beautiful supermodels in its advertising(which is nearly nonexistent); instead, it focuses its marketing onpromoting natural products and natural processes to the affluent Americanwoman. In addition, the sameenvironmental awareness which gave the Body Shop its impressive salesduring its early years has caught on within the international community,and increasing numbers of consumers are now interested in purchasingproducts which have strong environmental images. While it is unclear whetheraromatherapy will gain the same credibility in the United States that ithas in Europe, companies such as the Body Shop are already making inroadsselling these products (Tode 8). Women(and nearly all of the customers for these types of products are women)could also purchase some items at discount stores and mass retailers, butthese outlets typically did not carry an extensive line. Aromatherapy itemswere introduced in 1993, some five years after the company began retailingoperations in the United States (Edelson 5). The United States is an attractive market option for manycompanies because of the relatively affluent consuming public and therelatively easy entry strategies which can be used to gain access to themarket. Production and Financial Plan The Body Shop began operations in the United States in 1998 and openedits American headquarters in New Jersey. Works CitedBurdett, E, et al. For the Body Shop, the United States was also attractive because alarge number of consumers have expressed an interest in being consideredecologically aware. Global technological advances in transportation andcommunications have made it easier for consumers to learn about productsand to demand those products in their home markets. This is not to say that the Body Shop is abandoning the youngercustomer. However, the company is not alone in its pursuit of aromatherapy asthe next market niche. "Pore & Skin-y." Brandweek (Apr 1, 1996): 1, 14.Nicholas, Ruth. "Fred Meyer is Nosing into Aromatherapy Accessories." Supermarket News (Oct 13, 1997): 57-58.Edelson, Sharon. Industry Background The Body Shop competes in the health and beauty market, but does so asan independent retailer, which makes industry comparisons more difficult toconduct. Store layout and design was copiedfrom the United Kingdom, with an emphasis on dark woods and an overall darkstore. One of the newest areas ofopportunity is that of aromatherapy. Thecompany opened 118 stores during 1996 and early 1997, and was expected toopen a similar number during 1997 and early 1998. That situation changed in 1993 when the company moved its headquartersto Raleigh, North Carolina. The company has encountered some difficulties during its years inthe United States, but is taking steps to ensure that it returns to itsprevious levels of success. The concept was successful enough to invitestrong competition, and today, the Body Shop is far from the only companyin this market. The Body Shop now targets American women withincomes in excess of $3 , annually, a figure which is more easilyattained by older women than younger customers (Mehegan 14). Aromatherapy is generally agreed tobe the use of natural plant oils in order to receive emotional, physical oraesthetic benefit. Although the Body Shoppioneered this approach, its success has not gone unnoticed by others andnow major participants in the retail market, including Bath and Body Works,a division of the Limited, Incorporated (which also owns Victoria's Secret)are using the same strategies which made the Body Shop successful andimproving on those techniques to their own benefit (Wheeler 36). The Product The Body Shop sells health and beauty products, including aromatherapyproducts, through its own boutiques located in shopping malls and districtsthroughout the world. During its first years in the United States, however, thecompany made some critical errors which may have resulted in less thanoptimum results for the organization. As of March 1997, thecompany had 256 stores in the United Kingdom, 287 in the United States, 233in Asia, 514 in the rest of Europe, 13 in Latin America, and 71 inAustralia and New Zealand (Burdett 2). Product removal is being done judiciously, but the company isfocusing on adding products which have appeal to older consumers ratherthan removing products which targeted younger ones. "Body Shop Faces up to Rivals." WWD (Apr 9, 1993): 5.Mehegan, Sean. Conclusion In 1988, when the Body Shop opened its first store in the UnitedStates, the company was exporting not just a line of health and beautyproducts, but a way of manufacturing and distributing those products. Company Background Founded in 1976, the Body Shop is based in the United Kingdom andsells health and beauty items through its own retail stores. In the United States, theFederal Drug Administration (FDA) has not tested herbal extracts forefficacy, so manufacturers cannot make specific benefit claims. Country Considerations When the Body Shop seeks to enter a new market, it carefully considersthe particular factors which might make that market a good fit for itsproducts. Market Strengths and Opportunities The Body Shop has proved successful at both initiating and effectivelyjoining trends in the health and beauty sector. Included in the product offerings are creams andlotions, cosmetics (including makeup), soaps, bath oils and powders, skinproducts, hair care preparation and some fragrances. The company's products compete with traditional cosmeticsmanufacturers such as Revlon and Maybelline. Departmentstores sold upscale makeup products, and bath items were generally sold asadjuncts to these types of products. Strategy and Goals The Body Shop has long emphasized growth through market penetration,and by offering consumers benefits which go beyond the particular featuresof a product. In England, individuals areadmitted to the International Federation of Aromatherapists only afterseveral hundred hours of training. In recent years, however, the Body Shop has rethought this strategyand is focusing on a slightly older consumer, women between the ages of 25and 5 . Product names such as Banana Foot Creme were examples of howthe company targeted the younger consumer (Mehegan 1). Introduction Until recent years, American women did not consider bath supplies(such as lotions, soaps and related products) important enough forretailers to open shops devoted exclusively to these items. The Body Shop has a greater advantage in Europe than in the UnitedStates when it comes to aromatherapy because aromatherapy is alreadyrecognized in Europe as a specific process. Thecompany has also maintained a high profile in community and social causes,including Amnesty International, and has a strong public opposition totesting cosmetic products on animals (Wheeler 36). In France,however, essential oils are prescribed by doctors for specific ailments andare often covered under medical health plans. London: ABN Amro Hoare Govett, May 9, 1997.Clark, Chapin. This shift in production philosophy within the United States alsobrought the company's American operations more in line with its Europeanand United Kingdom operations where the company had long been manufacturingits own products. During its first years ofoperation, the company imported products from other manufacturers and soldthese with the Body Shop logo in Body Shop stores. Companies are now activelycompeting for retail space in traditional malls as well as in outlet malls,and as the market itself takes on a greater international presence, thereare increased pressure from economic downturns in regions such as Asia(Wheeler 38). In addition to providing the company with morespace, the move also enabled the company to begin manufacturing its ownproducts for its own label in the United States. Despite its strong sales, theAmerican market generated a loss during this time (Patel 2).
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