Sephora Direct: Investing in Social Media, Video, and Mobile Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Sephora Direct: Investing in Social Media, Video, and Mobile Case Solution

Introduction

The U.S. beauty market was saturated with many players, who had small market share with unique selling proposition (USP) offerings. The total size of U.S. beauty market was $58.9 billion in 2009, and the main competitors of Sephora were Nordstrom and Macy’s. Moreover, with the passage of time, many players emerged with their unique business models such Birch Box, and Gilt Group, inorder to capture the market share in the industry. Amazon.com and Beauty.com were also strong players in this market because of their broad reach across the U.S. and globally. Sephora captured around 30% of the market share in the U.S. with having 20,000 products of 288 different brands.

In 2010, Sephora marked its existence in 23 different countries with 1000 operated stores. It started its business with a shop only back in 1969. Moreover,Sephora was started by Dominique Mandonnaud in France as a perfume shop. In French, Sephora captured 8% of the market share with the presence of 54 stores. When the company was expanding in theU.S, as a result famous manufacturers of beauty products were reluctant to supply their products to Sephora. They were of the opinion that their products were made for superstores and malls, then the customers would not purchase the products from small shops like Sephora. After such comments, team Sephora filled its shelves with small brands. With the passage of time, the customers’ reach towards Sephora increased because of its product briefing and service quality. The company invested in its salesmen so that they can understand the needs of the customers very well.

Sephora represented itself as modern and innovation oriented. The fun environment was provided by the company inside the stores to keep the customers and employees engaged. As the trend of online shopping was increasing therefore, Sephora.com was created to tap that emerging market. This online presence was estimated to have double digit growth with high margin due to less overhead cost. Different promotional activities were organized to promote Sephora and to understand the customers’ feedback.

Problem Statement

The main problem associated with Sephora was regarding its budget allocation of the coming year. As social media was considered to be the best tool for understanding the customers’ need and digital presence was considered to be the larger platform for selling products in distant areas where there is no any physical store,now it was time to analyze the different platform of communications regarding their objectives.

Case analysis

Understanding the situation

Sephora was founded by Dominique Mandonnaud in France with a small perfume shop. This company expanded its presence in the U.S. in 1979,and today it has around 450 stores and 30% of the U.S. market share. The business of Sephora was unique in nature; they offered fun shopping environment to customers so that they could enjoy shopping. They had products from traditional brands to emerging brands in order to serve diversified target market. They primary target market comprised of women who wanted to look beautiful than average.

Sephora’s management promoted its brand through various channels and among those the effective one was social media as the engagement of customers was high on social media. Moreover,Sephora used to ask questions from its customers and the feedback was considered seriously by the management, because for them it was like a treatment which could lead to the company’s success.However, it was somehow unreliable source because of less confidentiality. Moreover, any one could comment on the posts of Sephora whether they used the products of the brand or not.

Sephora faced intense competition from other players who can portray greater threat for its brands. Like Ulta.com, Amazon.com and beauty.com. Moreover, many new players were coming in this business because of very fewer regulations and less capital requirement. Its further situation analysis is presented in the form of Porter’s five forces model.......................

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