Sephora Case Study

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Table of Contents

1. CORE ISSUE OF THE CASE            3

1. SEPHORA’S OVERVIEW        3

                 2.1   History        

2.2   Background

2.3   COMPETITION        

1. SEPHORA’S MARKETING MIX        4

1. MARKETING MEDIUMS        5

4.1   SEPHORA DIRECT - Sephora.com and beauty insider        

4.2   SEPHORA DIRECT – Social Media

            4.2.1    Ratings & Reviews

            4.2.2    Facebook

            4.2.3    Beauty talk

            4.2.4    Twitter        

4.3   ONLINE VIDEO – YOUTUBE

4.4   SEPHORA DIRECT – Mobile

1. CHALLENGES        7

1. STATISTICAL ANALYSIS        7

6.1   budget allocation        

6.2   Return on investment (ROI)

1. CONCLUSIONS        10

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Vice president of Sephora Direct, Julia Bornstein faces the issue of ideal investment proportion converging into a marketing mix with the additional $1 million proposed. The multiple digital avenues available with respect to new communication platforms are to be evaluated, measured and compared articulating returns on investment and leveraging its focus on the key performance indicators. To summarize the effectiveness of new investments made or to strengthen the existing ones using quantitative analysis is the core issue of the case study.

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• 2.1  HISTORY:

• Started in 1969 as a single perfume shop in France by Dominique Mandonnaud, he combined his stores with investors in 1993 and rebranded the combined set of stores as “Sephora”; The name Sephora is derived from the greek word for pretty (sephos) and the biblical name Zipporah (Moses’s beautiful wife).
• In 1997, Luxury product group Louis Vuitton Moet Hennessy purchased the company for $262 million.
• In 1998, Sephora launched its 1st shop in New York City, followed by launching its online site Sephora.com in 1999.
• Sephora entered a retail partnership with J C Penney in which it became the exclusive beauty retailer inside J C penny’s departmental stores.
• As in 2010, Sephora has nearly 1,000 stores in 23 countries, of which US and Canada have 450 stores.  

• 2.2   BACKGROUND:

• Product:

                Sephora as it’s tagline quotes ‘the beauty authority’ is the largest beauty retailer in the world offering 288 brands, representing over 20,000 products ranging from classic lines to emerging brands. Its products are considered upscale brands than the mass – market brands. Two exceptions to these upscale brands are MAC and CHANEL which have not collaborated with Sephora yet.

• Price:

                The pricing of Sephora is often identical to that of the departmental stores because U.S beauty retailers tend to price prestige products at the manufacturer suggested retail price (MSRP).

• Place:

                Sephora is located at popular locations in – mall, beauty retailer outlets in JC penny or has its own exclusive retail stores, all over US.

• Promotion:

                Promotions typically involve offering samples rather than discounting. However, Sephora offers two discount events each year to its loyalty card members, hosting of private label brands, offering surprise discounts to its VIB’s for being super users for online marketing etc.

• 2.3   COMPETITION:

• Sephora faces competition from departmental stores like Macy’s and Nordstrom, single brand prestige beauty stores (e.g.,MAC cosmetics), online merchants such as Amazon.com and Beauty.com along with online companies like Birchbox and Gilt groupe.
• However, the closest and strongest competitor to Sephora is ULTA chain. Given below is a concise comparison that can be inferred from the case.

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• Current Marketing Strategy and planning of Sephora involves Traditional marketing as well as in-bound marketing.

• Store window merchandising, 32- page print catalogs sent to a portion of Sephora’s Beauty Insiders three times a year, print advertising in magazines, a few direct mail pieces sent to Beauty Insiders, two major sales/promotions (one in April and one during the holiday season), and free gifts for Beauty Insiders.
• Animations is another important component of the marketing mix.  
• Huge investments are made for online search advertising (e.g., Google AdWords) by buying thousands of keywords for brands, products, and beauty related terms. This investment represents the single largest source for traffic to the official website.[pic 12][pic 13]
• Investing in advertisements on sites like Facebook, Beauty Insider program and emails are also a key element. [pic 14]

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• To build the social media further, the additional $1 million is to be allocated in various digital and social media initiatives to maximize its effectiveness by measuring its return on investments for an optimal marketing mix.

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• 4.1 Sephora Direct – Sephora.com and Beauty Insider

• Sephora.com:

3 million visitors go to this website making it one of the top 50 retail sites in US. The website was launched in 1999 with 100 brands and within few months included all brands sold at any of Sephora stores. The online presence of the customers is visible since past few years, and therefore Sephora targeted the young clientele who would discover and learn apart from the physical experience of going to a store. Sephora encourages online shopping by promotional offers like free shipping and free samples.