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Sephora Direct Case Study Notes

by: Mischa Rapt

Sephora Direct Case Study Notes FMIB3

Mischa Rapt
Hult International Business School
GPA 3.5
International Marketing
Nick Imparato

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About this Document

Case study notes for Sephora Direct
International Marketing
Nick Imparato
Study Guide
50 ?




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This 4 page Study Guide was uploaded by Mischa Rapt on Tuesday September 22, 2015. The Study Guide belongs to FMIB3 at Hult International Business School taught by Nick Imparato in Fall 2014. Since its upload, it has received 1087 views. For similar materials see International Marketing in International Business at Hult International Business School.

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Date Created: 09/22/15
Sephora Direct Value Proposition creating sensory experiences for clients innovative and edgy in the way products are sold vibrant stores that encouraged trial and experimentation all about store experience both online and of ine Target Market 25 35 year old women many of whom grew up with company Aspirational element teenage girls looked up to this cohort and older women wanted to look 2535 again Price identical to that of department stores PlacezEurope and US Promotion Beauty Insider VIB free giftssamples redeemable points Productcosmeticfragrance hair and skin care products Over 20000 products 288 brands ranging from classic lines to emerging brands represented prestige brands perceived more upscale than mass market brands e g Revlon Maybelline Competitor ULTA go head to head among 25 to 24 yr olds 29 shop at ULTA and 30 at Sephora Known as fast follower of Sephora however did not have a distinct mobile offering in 2010 0 Sephoracome commerce site web presence as part of their strategy 80 sales came from Beauty Insiders 1520 of Sephora USA sales Beauty Insider program 15 million customers 9 million as active low cost email platform 0 Social Media Facebook behavior shifted to 16 of all online time with social media created promotion promotion code and sweepstakes Sephora Claus Program in uenced over 1 million of sales prizes donated by brands Sephora carried 50000 direct costs to run promotion as well as staff time from various depts 900000 fans valued each at 360 holiday promotion expected to spread virally while also in uencing sales Beauty Talk not as popular or wellknownunderstood most viewers are only passive viewers that benefit from input of superusers 200 superusers expected to contribute often posting on daily basis Twitter 100000 followersused mainly as communication channel 0 Ratings and reviews over 1 million product reviews posted 0 Online videoYoutube nearly 100 videos that generated over 3 million views uncovered hundreds of user generated content videos want to reinforce positioning as an expert advisor but professional videos can cost over 20000 have to decide on what they want to accomplish with video do they want to create how to or focus on brand buildingare we using videos to broaden Sephora communityhow do we integrate own videos with ugc segments CEO would like to see them own vid category for personal care products cant be too scrappy to fit with brand image 0 Sephora DirectMobile 25 shoppers with smartphones used ratings and reviews for purchasing decisions 90 of clients using iphone or itouch product that accessed Sephora through their mobile 3rd party prices for high end apps ranged from 100000 to 200000 makes shopping easier prjected to generate several million dollars of sales each apps adapted for ipadandroids etc will cost 100000 to 200000 upfront plus another 20000 to 30000 of annual maintenance 1 Assuming she receives the additional funding how should Bornstein allocate her budget across the various digital categories in uenced over 1mill of sales Budget Category additional 1 DescriptionPrograms 2011 Budget Allocation mill Video Production Professional videos to reinforce Over 20000 Sephora as expert advisor VideoYouTube Advertising Video Contest 900000 fanseach 360 3240000 Sephora Claus Program 50000 direct costs Social Partnerships Trials were done but unsure would amount to anything celeb endorsementzJennifer Aniston however not known to embrace digital platforms cross promotional opportunities that can drive traf c to site and stores eg Groupon requires 3050 discounting apps to make shopping easier and expected to generate several million dollars of sales 100000 to 200000 each600000 for 3 apps requires 20000 to 3000090000 annual maintenance690000 Store Kiosks If Bornstein receives additional funding she should focus most of her efforts in the mobile sector as Sephora s marketing image is all about store experience both of ine and online The mobile platform offers a variety of opportunities for integration and convenience for shoppers It also creates a direct database for those who purchase through their mobiles and it makes customers trackeable It will also provide a digital experience that integrates mobile social and in store experience Concentrate on Iphone App development and it would be worth investing in other apps adapted to other digital devices such as ipad and androids There is also a predicted moving popularity to android and they should not only limit their apps to Iphone users in order to generate more sales in the future and provide more exibility and adaptability increasing the range of users as well The mobile sector is predicted to generate several million dollars of sales and the cost to projected revenue allows for large profit margins Facebook development gaining popularityproduct reviews and ratings active participation from users constant interaction through social media could gain trust from customersgreat way to reinforce brand reliability 900000 fans are valued at 360 each meaning a possible over 3 million in revenue compared to 50000 in direct costs to run promotions Also allows for high profit margins Holiday promotions such as the Sephora Claus also known to in uence over 1million dollars of sales Their efforts should definitely also be focused mainly on promotions and analytics through facebook and development of mobile apps as the expected generation of sales seem to be much more promising and feasible by their rapid growth and the costs are minimal when compared to what they are generating in terms of the amount of followers and users they are attracting With the amount of sales generated from mobile and facebook they have enough to cover the costs for high quality video production for youtube videos and youtube advertising Given that the additional funding requested must be shifted from Sephora s marketing spending where would you propose to cut Why They could cut their budget based on certain features of their mobile app to reduce maintenance costs as some of it such as the interactive games did not encourage spending 2 What do you make of Sephora s digital and social media efforts as of the fall of 2010 0 Sephoracomecommerce site web presence as part of their strategy 80 sales came from Beauty Insiders grew quickly into a sizeable business and projected to generate 1520 of Sephora USA sales in 2010 15 million customers signed up for Beauty Insider program due to its perks and promotions 0 Social Media atings and review over 1 million product reviews postedpositive and reliable providing confidence in product s results increasing traffic from online search resultskeeping clients for longer durations on site reducing returns lowering call center visits and encouraging repeat visits Facebook had nearly 900000 fans by Sept 2010facebook fan valued at 360 Beauty Talk q amp a forum showed promise but needed to find a balance between letting clients share their own answers vs expert opinion on Sephora that could be perceived as biased not as well understood or recognized needed to find a way to promote forum and adapt with facebook site allowed for recognition Twitter approximately 100000 followers used as a communication channel such as for Sephora Claus sweepstakes 0 Online videoYoutube hundreds of user generated content videos found added high quality professionally produced videos about hot trends 0 Sephora DirectMobile mobile shopping projected to reach 24 billion WAP launch in Aug 2010 saw an increase in mobile purchases within days introduction of iphone app was promising with 100000 downloads projected 300000 downloads by end of year and several million dollars of sales through mobile devices Was it wise in your opinion to create Beauty Talk as a separate social platform to Facebook It was not wise because of extra maintenance cost to hire employees to run the website and site maintenance and it does not encourage purchasing considering you would have to simultaneously use both websites at the same time and they cannot be amalgamated into one It becomes a hassle and does not make the shopping or browsing eXperience any easier or enjoyable It is just a forum to discuss beauty tips and it can be confusing for some to have this separate forum as there is already a lot of discussion and interaction happening on Facebook Only passive viewers benefited from the input of superusers and ratings and reviews already could do a similar job by reinforcing consumers confidence in products Suggestion to create a live chat for beauty talk on Sephora site 3 What metrics do you propose Sephora Direct use to measure the success of its digital efforts going forward 0 Number of followers 0 Interactions 0 Analyzing Traffic 0 Engagement level Number of facebook comments twitter followers and beauty talk posts No of Facebook likes as a way to indicate client engagement Mobile usage data and noted where consumers tend to spend their time when using Sephora s Iphone app 0 Advocates actively participate in interactive threads and post comments frequently 0 Followers 0 Searchersmonitor and listen to social media streams for items of interest scan online sources for relevant information


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