Sephora Harika

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Table of Contents

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Table of Contents

Core Issue

Company Background

Marketing Plan

Performance Analysis

Market Competition and Expansion

Sephora Direct:  Investing in Social Media, Video and Mobile

In recent years, Beauty care segment of wellness industry is currently been ramping up its chain all over the globe. A clutch of brands has caught the imagination of consumers and Sephora seems to be one amongst them. Consumers are becoming more aspirational , which has led to the evolution of grooming for both male and female segment in order to enhance their appearance.

Core Issue:

Julie Bornstein, Vice President of Sephora faces the issue of ideal investment proportion of additional $1 million proposed. Collectively Sephora needs to create a new marketing budget in social media. The multiple digital avenues available are to be evaluated, measured and compared articulating the ROI and focus on key performance indicators. To summarize the effectiveness of new investments made or to strengthen the existing ones using quantitative analysis is the key issue of this case.

History:

• Started in 1969 as a single perfume shop in France by Dominique Mandonnaud.
• Rebranded as Sephora in 1993 operating 54 stores throughout France, representing 8% of the total French retail perfume market.
• Sephora was bought by Louis Vuitton Moet Hennessy(LVMH) in 1997.
• In 1998, Sephora launched its first shop in New York City, later launching its online site Sephora.com in 1999.
• Sephora entered into a retail partnership with JC Penney where in it became an exclusive beauty retailer in JC Penney’s departmental stores.
• By 2010, Sephora h nearly 1000 stores in 23 countries out of which 450 stores were located in the U.S and Canada.

Market Competition:

ULTA is pinpointed as Sephora’s main competitor , as it operated nearly 400 retail stores in the U.S. Most of ULTA’s stores were in off-mall locations and included a full-service salon. Sephora also competed with several large online merchants such as Amazon.com and Beauty.com. Sephora.com was the largest online prestige beauty website, capturing roughly 30% of the U.S. online market.

Later in 2010, after the arrival of Rothstein, Sephora strategized a marketing plan which included store window merchandising, catalogs, print advertising in magazines, mails, vacation sales and promotions, freebies for beauty insiders, animated marketing mix.

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Sephora allowed women to try on their products before they could actually purchase them. Unlike other department stores where one person worked for a particular brand, Sephora employees worked for Sephora and could guide the customer in the right direction no matter who the designer was. This so-called self-service concept helped Sephora become more popular as a customer- friendly store.  In addition, Sephora spent millions on online search advertising. Email marketing, social media,  mobile and video represented 35% of the total marketing budget.

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Client and Loyalty:

Sephora.com launched in 1999 with 100 brands expanded to include all of the brands sold at any of the Sephora stores. This e-commerce site projected to generate 15-20% of Sephora USA sales in 2010.It emerged as one of the top 50 retail sites in the U.S. It encouraged site visitors to purchase online by offering free shipping for orders over $50 and three free samples with every order. David Suliteanu , President and CEO of Sephora USA saw the importance of internet as a forum where customers could discover and learn.

ULTA and Sephora both utilize CRM; however Sephora’s loyalty program surpasses that of ULTA. Most of these programs were set up around discounts. Customers spending over $350 were considered Very Important Beauty Insider(VIB) who enjoyed extra perks. Sephora offered free samples to their beauty insiders which attracted millions of customers. It also offered one point for each $1 spent in stores or online. Beauty Insiders typically received  special  offers on their birthday, and also invited to special events at stores. By 2010, 15 million customers had signed up for the programs with 9 million considered active . Approximately 80% of Sephora’s sales came from Beauty Insiders.