Sephora Direct: Investing in Social Media Video and Mobile Harvard Case Solution & Analysis

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Background

Sephora is a cosmetic retail store exhibiting numerous prestige brands of cosmetics including makeup, skincare, body, color fragrance, smile care and hair care even having their own label. Sephora was started and founded by Dominique Mandonnaud in 1969 as a single perfume shop in France. Now it is recognized by variety of cosmetic brands and making itself prominent in the market, Sephora operates 1000 stores in around 23 countries and has 450 stores from 1000 only in the US. Sephora has been derived from a Greek word sephos which means pretty and in accordance to the biblical name Zippora which was the name of Moses’ beautiful wife.

Mandonnaud started from one small perfume shop and his determination to expand led him to operate 54 perfume shops throughout France and continued to expand and the consequences can be seen with bare eyes today. Sephora is operating online also as ‘Sephora Direct’ which sells the foremost beauty brands on its site. Sephora Direct started in the US in 1999 and is currently one of the largest North American stores.

Problem Statement

In order to be with this modern world and generation, companies and organizations have to adjust themselves accordingly. Not only to earn high profits and gain popularity and name but also to survive. That is the Vice President of Sephora Direct, Julie Bornstein’s plan to double her investment in social media, mobile and video in order to get more customers and cover the current pace. She needs to convince David Suilteanuher, CEO of Sephora USA regarding the budget. She needs to identify the points that will lead the company to success because of her decision.

Analysis

The portion of analysis will help Bornstein to determine whether her actions are in favor for the company or not. Few of the analysis are done below to give a precise and concrete idea of the environment suitable for Sephora Direct.

SWOT Analysis

Strength

Sephora is a well known entity amongst the cosmetic brands. Sephora Directs operates 450 stores in the US which covers half of the US cosmetic market and this can be considered as a great strength. Sephora provides well known prestige brands and has always tried bringing the best quality to its customers. Sephora uses brilliant marketing mix and is going to the acute path to success. Sephora has managed to increase their online sales and has also succeeded in selling out almost all of its brands which were available in their stores. They provide testing samples in their retail stores before the consumer purchases a product which gives them a competitive advantage.

Weakness

Without any doubts, Sephora has tried every way to achieve success. However, as mentioned before it is every important to be with this modern world and Sephora Direct has to enhance their digital marketing. The company has low creativity in their site which can lose the grip of the loyal customers. They have not captured the entire market of cosmetic and failed to penetrate in the consumers’ mind.

Opportunity

Due to the advancement, the organizations are trying to have the advanced and modern technology. Sephora has countless opportunities to get the market and bring innovation in their brand and also improve the site with qualified digital marketing. They need to make their online based activities more obvious and prominent to the world and try to avail every opportunity. They can even start hiring brand ambassadors who can become crucial assets for the company. They should enhance their Beauty Talk site as that is currently the most important source of gaining unlimited customers.

Threat

Many other competitors are presently very active which can be a severe threat for both the Brick and Mortar stores and their Click and Mortar stores. Major competitor of Sephora is ULTA which operates its stores almost equal to Sephora that is around 400 in the US. Macy’s and Nordstrom and even MAC Cosmetics are rivals of Sephora. However, there are many online stores like Amazon.com and Beauty.com which can be threats to Sephora Direct. No improvement in their creativity and innovation can also be a major threat to them.

Budget Plan

When planning the percentage of the budgeted amount which will be received, among the distribution of various digital categories, the main focus should be on the beauty Talk and various sites. She should even allocate few of the amounts to the digital marketing like different pop up ads and fly in ads………………………

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Julie Bernstein, senior vice president of Sephora Direct, seeks to double its budget for social media and other digital marketing initiatives for 2011. The number of digital efforts made over the past two years, it seems to be paying off, and there is a desire to intensify Sephora in social media, online video and mobile presence. Bernstein must justify the need for additional funding, determine how best to distribute the money between different platforms, as well as to establish effective ways to measure the return on investment (ROI) for a digital marketing expenditures. It should also take into account that the funding request is likely to occur at the expense of traditional marketing programs Sephora. Importantly, Bornstein should start thinking about a cohesive long-term strategy, which clearly defines the role played by digital platforms and how they help Sephora maintain its leadership position in the space of prestige beauty care. Constant emergence of new players such as Groupon and social store, the growing power of social media platforms such as Facebook and consumer behavior through user-generated content and rapidly evolving in the digital age, to make it even more difficult task. “Hide
by Elie Ofek, Alison Berkley Wagonfeld Source: Harvard Business School 24 pages. Publication Date: June 30, 2011. Prod. #: 511137-PDF-ENG

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