The Multichannel Challenge at Natura in Beauty and Personal Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

The Multichannel Challenge at Natura in Beauty and Personal Case Solution

Key Questions

Question-1

What strategic distribution channel i.e. direct, multichannel or a mix of both the firm should chose to revive its market share?

As one of the major challenge faced by Natura is its declining sales after moving towards multichannel to direct selling so the major question raised could be about the choice of of distribution channel.

Question-2

What brand management techniques the firm should adopt to face the intense competition in the beauty and personal care market of Brazil?

Another challenge is the intense competition in the beauty care products industry. In this case, with the presence of number of competitors, the question regarding the brand management is also essential for consideration.

Question-3

What Marketing strategies will be helpful for the firm to cope up with the intense competition and declining market share?

Not only brand management, but effective marketing strategies are also one of the major concerns for the firm to cope up with the current situation faced by the firm.

Recommendations

In order to suggest an optimal to the firm, an evaluation of available alternatives that the firm can pursue is conducted below.

Strategic Alternatives

Alternative 1

The company should pursue both the strategies simultaneously i.e. multichannel and direct selling.

Pros

This will allow the company to expand its reach without compromising on its core capabilities and will help it in regaining the trust of its consultants while motivating them to carry out their operations, without worrying about their position and role in the company. Furthermore the company will be able to cope up with the changing dynamics of the business by being more easily asses-sable through various channels rather than relying on a single strategy.

Cons

This will increase the cost of the company by a significant margin, as the company will be carrying out both the strategies at the same time, which will demand an additional production, making it challenging for the company to equally satisfy the needs of all the channels while minimizing the cost of input. As an addition, the company holds little expertise and knowledge regarding the new emerging channels, as it previously relied mostly on direct selling networks, making the transition extremely challenging for the company.

Alternative 2

The company should invest in brand development and multichannel strategies through franchising system.

Pros

It will help in expanding the brand reach across different areas rapidly without any major investment and will motivate the partners to bring innovative ideas, mainly because of their own invested money. Furthermore it will allow the company to open multiple franchises at the same time and will provide it with a competitive advantage because of the local knowledge of the franchisees. Moreover, it will help the company in generating high financial returns for comparatively less risk.

Cons

The company will be required to invest high upfront cost in order to set up a new model. This will further demotivate the consultants by making them feel left out. In addition to this the company will have no or little control over the way franchisees operating their business, which will make it difficult to convince all the franchisees to works for the benefit of the company as a whole. Furthermore it will make it a lot harder for the company to innovate with franchising in comparison to its own outlets. (Shane, 2013)

Decision Criteria

The points that are to be evaluated before taking a decision are given as follows;

Market Presence
Growth
Increase in Sales
Risk
Total Cost

Decision Matrix

Factors	Alternative 1	Alternative 2
Market presence	7	9
Growth	7	8
Increased sales	6	8
Risk	4	7
Cost	4	6
Total	28	38

Best Alternative Solution

After evaluating the key strengths and opportunities of the company, and the alternative presented above using decision matrix; it is recommended that the company should opt for franchising model as it will help the company to increase its market presence rapidly without incurring any substantial investments. Franchising will allow the company to market its product at various platforms both locally and globally due to the wider range of networks. Additionally franchising will minimize the risk associated with the growth and will allow the company to focus on the core areas while generating high financial returns.

In order to execute the recommendation; the company will be required to carry out the following actions, in order to successfully implement the plan:

In order to implement the franchising model; the company will have to restructure its current model that is more based on direct selling.
Afterwards the company will have to state all the legal terms and necessary disclosure associated with the franchising, before taking any step further.
The upfront cost to change the model of the company from direct selling to franchising will require an initial investment of $75000.
The company will have an obligation to define all the rights that will be granted to the franchisers, and the rights that will be reserved with franchises. The ways through which the franchise can exercise control, royalty payments and the authorization of suppliers.
After carrying out the above steps, the company will have to screen out the potential franchisees, as it is essential to consider the personalities of the business owners before entering into any kind of agreement, as they are going to be representing the brand.
Once the franchisee will be selected; the company will have to carry out the required registration and authorization of franchising documents earlier to selling in the state or from the state. (DeLuca, 2011)

By doing so, the company will be able to gain a competitive edge in the market over its competitors and will be able to sustain its position in the long run by allowing itself to expand both internationally and domestically, which will further help itin the generation of high returns....................

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The Multichannel Challenge at Natura in Beauty and Personal Harvard Case Solution & Analysis