Sephora Direct Harvard Case Solution & Analysis

Sephora Direct Case Study Solution

Weaknesses

There are no stores in the non-metropolitan areas where as its competitor (ULTA) have outlet in a non-metropolitan area also the online store app is for iPhone only. There is no such app for android users’ despite of the fact that there are more sales of android in the U.S than iPhone in the year 2010.

Opportunities

There are number of opportunities for the brand. First one to be the introduction of new fragrance by Jennifer Anniston, exclusive rights of which can be given to the Sephora which would be a great opportunity to avail to increase the brand popularity. In addition to this, because of the introduction of online shopping apps, many companies now wants to be a partner in e-commerce business with Sephora.

Threats

Sephora faces threats from online merchants (i.e. Amazon.com and Beauty.com) as these online merchants have been in the e-commerce business for a long time now and due to this the Sephora’s online market share is just 30% as most of the online market share is of other renowned merchants.

Key Performance Indicators

Certain key performance indicators that could be used to measure the success of social media and digital marketing of Sephora Direct are as follows:

• The number of profile visits by the audience
• The number of shares on Sephora product posts
• The number of time Sephora engage with its audience
• The number of likes by the audience
• The number of direct sales made through the website or app.
• Review of the sales to determine the market share.

The above KPI’s can be used to assess and monitoring the activities of social media and digital marketing and whether it is giving benefits to the Sephora or not.(José Ramón Saura, 2017)

Alternatives

From the above situational analysis following are the different alternative which can be taken into consideration:

Alternative-1

The first alternative could be that Sephora stick to the current budget for social media and digital marketing as even in the current budget Sephora enjoys a 30% online market share and have a huge customer base. Along with a huge following on social media (i.e. Facebook and Twitter). Further the customers of Sephora are loyal to the brand and give their preference to the brand while shopping beauty products. Moreover their social programs to engage with its customer base also contributing in the increase the sales of Sephora products. Therefore, not increasing the budget will not impact much on the brand name, customer base of Sephora.

Pros:

• Renowned brand
• Loyal customer base
• Huge fan following
• Social programs for customers

Cons:

• Same market share (30%)
• Rising competition in the market
• Less advertisement

Alternative-2

The second alternative could be Sephora increases its budget and focus specifically on creating an online app for android users and also improves the already existing iPhone app as per the demands of the customers. This will benefit the brand in increasing its sales and the customers’ satisfaction as well. Introduction of an android app will also increase its online market share. In addition to this, the app will be accessible to all the class of customers thus the target market of the Sephora brand will also increase.

Pros:

• Increase in customer satisfaction.
• Increase in sales.
• Increase in market share.

Cons:

• Huge manufacturing cost of Android app.
• Increase in staff to manage digital marketing.
• Increase repairing cost of iPhone app.

Alternative-3

The third alternative could be that Sephora can collaborate with the celebrities and beauty icons. This will increase the brand image of the Sephora and will attract more customers to use its products. Further, this strategy will give Sephora an edge over its competitors and will be a renowned brand as the products of this brand will be used by the public figures.

Pros:

• Competitive advantage
• Brand popularity
• Increase in customers

Cons:

• Huge cost
• Increase competition in the market
• Different perceptions of customers related to different public figures.

Recommendation

From the above analysis, it is recommended that Sephora should increase its budget (i.e. Alternative-2) as it is the best way to maintain its position in the competitive market. The Alternative-2 will increase the customer base and benefit the Sephora to engage more often with its customers, keeping its title of largest beauty retailer in the market. Additional funding to the social media and Digital marketing will also increase the sales of Sephora as people are now looking forward to online shopping. This will also benefit the brand to keep its unique identity among other beauty retailers.

Appendices

Appendix-1 ALLOCATION OF BUDGET

Appendix-2 SWOT ANALYSIS

Appendix-3 KPI’s TO MEASURE SOCIAL MEDIA SUCCESS

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