Sephora Direct: Investing In Social Media, Video And Mobile Harvard Case Solution & Analysis

BACKGROUND

Sephora is known to the world as a “visionary beauty retail concept”. It was started as a single perfume shop in France by Dominique Mandonnaud in 1969. Sephora was designed so that the customers could try multiple brands in an assisted self-service environment. The company is currently owned by Louis Vuitton Moet Hennessey (LVMH), one of the leading luxury goods group. Sephora’s target market segment is the people who are brand conscious and prefer best quality products and services. Its segmentation is set on the people who prefer to seek prestigious cosmetics products.

The objective of the company is to deliver best quality products and services to its customers and always differentiate itself from its competitors. The women prefer the self-service environment of the Sephora rather than the self-oriented service of other beauty brands. The company is using different unique methods to sell the products to its customers. Moreover, before making a purchase at the counter, the company conducts survey from the customers about the new product.

PROBLEM STATEMENT

According to the case, Julie Bornstein, the senior vice president of the Sephora Direct wants to double the budget for social media, video and mobile in 2011. Sephora’s team must identify success in her previous initiatives and set the goal to achieve future success in the digital media. In this regard, Bornstein needs to define the optimal marketing mix and key performance indicator. Furthermore, Bornstein will have to justify her decision, explain distribution of funding and justify the return on investment. Allocation of budget and return on investment (ROI) are two major concerns of Julie Bornstein in which she will have to focus and justify accordingly.

However, the vice president will have to define the role of digital media for the success of the company and how to measure their marketing activities success. In order to gain competitive advantage and sustain its marketing leadership in the long run, Bornstein must identify the role of digital marketing. These issues are critical; therefore, they require justification from Julie in order to double the budget of the company. Due to emergence of new digital platforms, Ultra stores, and multiple brand specialty stores and consumer changing behavior are the major challenges for Julie. Besides that, threats from new entrants are also one of the major challenges which Bornstein needs to focus.

ALLOCATION OF BUDGET ON VARIOUS DIGITAL CATEGORIES

Sephora digital marketing is responsible for all its direct digital marketing and direct digital initiatives, such as Sephora.com and Sephora beauty Insider. Social media has become one of the important parts for Sephora to invest because it is becoming an increasingly way to shop and gain customers advantage, especially youth customers. Moreover, Sephora’s web presence become an important part of its strategy because young customers are going online making purchases and the company should develop strategy to reach its clients social websites or through apps.

According to the 2010 marketing plan data, the modest amount of money is estimated of $1 million, representing fewer than 5% of the total marketing budget. Moreover, high level breakdown of Sephora media spending includes 20% in beauty insider such as emails and events, 35% in online such as search, affiliates, and social media, and 45% in retail such as print catalogues and store animation. One of the major challenges faced by traditional retail spending is the growth of digital media. People are adopting and shifting to digital media rapidly, therefore, it is the reason for cutting catalog and print media.

Julie Bornstein needs to focus that the company’s media spending in retail is more than other options, which needs to be addressed because each day people prefer to use Smartphone, tablets, computers to read newspapers, magazines or information about beauty products online. Furthermore, the ages of the clients vary from 22-36, also they prefer digital media than the print media. However, Sephora does not needs to eliminate the print and mailing catalogue because its catalogue represents the Sephora’s experts, trend-cutting and one of the strength of the brand. However, Julie must develop a strategy to cut the number of spending on retail and utilize the other options.

ALLOCATING BUDGET

  1. YouTube 25%
  2. Mobile 20%
  3. Facebook 15%
  4. Twitter 10%
  5. Video Contest 8%
  6. Beauty talk 7%
  7. Print Catalogue 5%
  8. Emails 3%
  9. Gifts 3%
  10. Events 2%
  11. Web searching 2%..........................

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