Austin Jones, Hara Satpathy Madison McClure, Shane Damico Shu Liu

Problem: Sephoras competitors are encroaching on its client base. With such a fickle market group, Sephora must find a way to secure client loyalty.

International cosmetics company

Profited significantly by riding digital trends in the marketplace

YouTube Facebook Online consumer reviews

Q: Should Sephora continue to grow its digital marketing efforts? If so, which elements should be nurtured further and which should be let go?

Target Consumers

Women aged 25 through 35 within U.S. Higher income, more likely to afford Sephoras products Influenced by trends more heavily than older females.

Consumer Behavior

Heavy online shopping

Customers also use website to do research, compare price and see reviews before purchasing. 75% of the demographic of women aged 25 to 35 reach social networking and spend more than 300 minutes per visitor.

Competitor Analysis
Brand Identity Sephora is considered as a brand that associates prestige to a beauty specialty retailer. Present in more than 23 countries with more than 1000 stores. (2010) Carries 288 brands represented by 20,000 products. Brand Experience Encourages trial and experimentation. Provides assisted self-service Customer Base Appeals women between 25-35 and older women who liked to feel young again. Competitors Multi brand specialty store like ULTA - off mall, fast follower, 400 stores, 21,000 products. Large online merchants - Amazon and Beauty.com Smaller sites Birchbox: curated box of samples for monthly fee Gilt Group: luxury products in flash sales

Company Strengths and Weaknesses (SWOT)

Strengths

Largest prestige and beauty specialty retailer with international presence.

Strong market share (30% of prestige online market)

Provides a fun, party atmosphere with unique store experience. Attracts customers who prefer quality over price. Carries private label products. Targets young customer and women who want to look 25-35 again.

Weaknesses

Present only in mall locations. Does not cater well to lower cost brand demands

Does not discount frequently like competitors.

Not organized to respond to all consumer discussion outlets. Sometimes seen as "high and mighty Lack mass-market appeal

Company Opportunities and Threats (SWOT)

Opportunity

Investment in e-commerce sites to achieve faster growth. Loyal customer partnerships reflected in millions of visitors coming to Sephoras
website each month.

Sephoras Beauty Insider customer loyalty program is huge success which installs
a sense of privilege to customer.

Strong commitment to mobile marketing trends. Explore Geo-fencing opportunities to attract customers to Sephora store locations.
Threats

ULTAs savings program Sephoras not so loyal customer base Expanding online stores like Amazon and Beauty.com Vast social media presence lends itself to quick negative feedback spread Possible over-expansion of social media without any direct control by Sephora. No clear and measurable way to calculate ROI on planned investments.

Clear increase in online interaction through Facebook

812,000 Facebook fans in September 2010 Over 4 times the 2009 total

Social media registered a 1.125% conversion rate

Figures dont account for users that follow Sephoras Facebook page but arent registered followers Also doesnt account for highly active advocates

Hugely successful program with 9 million active users, 12 million total users.

69% conversion rate Users that have purchased from Sephora within the last year. Beauty insiders make 80% of Sephoras purchases This makes each Beauty Insider worth $9.54 a year in sales Roughly 5% of sales are online for Sephora $5.35 Million in sales come from Sephora Direct 69% of customers joining Beauty Insiders purchase a Sephora product within one year Its worth noting that the conversion rate might be artificially high because sign-up is usually done at the Point of Sale.

Based on Sephoras sales numbers, $85.6 Million in US sales come from Beauty Insiders. Beauty Insiders are a largely digital program based on email.

Sephora has created a program with a great conversion rate.

Facebook Development
Pros

Widespread source of experience sharing and product feedback, encouraging user loyalty. A great outlet for engaging with Sephora customers one-on-one Superusers are difficult to recognize on Facebook

Cons

Beauty Talk
Pros

Cons

Highly educational from the view of users. Superusers are better recognized by Sephora here Most visitors on this platform are passive viewers. Inconvenient to track both Facebook and Beauty Talk postings.

Twitter
Pros

Positive influence over brand loyalty and increasing brand awareness. Almost the same function as Facebook. There is no unique contribution to Sephora.

Cons

YouTube
Pros

More in-depth product education and skill teaching. Provides higher brand recognition when compared to other medias. Best videos lead to package purchasing for recreating the final image.

Cons

High requirement for contents and ideas.

Mobile App
Pros

Cons

Provides helpful decision aids such as the scan feature, additional product information and reviews, and purchase history. Improves customer satisfaction and reduces cognitive dissonance.
Cost of creating and maintaining apps is high.

Social Partnership
Pros

Cons

Partners, like Groupon, may expand Sephoras appeal to additional market segments (such as deal hunters). Inappropriate collaboration may cheapen Sephoras brand image.

Sephoras targeted segment

Young, trendy clients (aged 25-34) who are very active online and on mobile.

Beauty Insider digital campaign

Beauty Insiders account for 80% of sales

Facebook/Sephora Direct
Verifies Sephora client bases is very tech savvy, social-media- friendly nature. Beauty Talk appears to have provided too many overlapping characteristics that Facebook and Sephora Direct offer

Mobile
90% of mobile ordering comes through iPhones (for now)

Objectives

Sephora needs to keep Beauty Insiders happy and engaged. Increasing the budget for social media and mobile will allow Sephora to deepen the online relationship they have with their customers.

Continue courting customers on Facebook.

Continue investment in Sephora Direct to strengthen the firms ability to measure consumer engagement.

Greater need to generate mobile applications and websites

Create apps for other operating systems Need to be able to capitalize on popularity of the new smartphone competitors, Android Windows, and Samsung Galaxy.

Increased investment will allow Sephora to highlight the most visited of their mobile and digital sites along with their mobile apps.

Need to focus on revenue drivers in those categories and evaluate underperforming sites and apps to determine their cost-effectiveness.

Train and involve in-store employees to use mobile devices to scan beauty products inventory, availability and accept payments from customs. This extra layer of service would position Sephora as a e-friendly retailer.

Focus on mobile apps to boost in store sales.

It would inspire Sephora customers to use retail facility as showrooms.

Prioritize on localization to enhance mobile commerce to capture the customers who are - tech savvy, educated and early adaptors.

Invest resources in new content for social media, focus on conversion to sales using measures like Reach, Engagement and Effectiveness. Sephora should find a way to effectively measure the Return On Investment in digital initiatives that includes: Online search advertising, social media exposure, online video and mobile apps. Measuring which social media platform drives the most business to Sephora Direct, and resulting conversion rates Focus on customer purchase behaviors through effective CRM program and business analytics that capture key demographic and consumers digital footprints.

Social Media should be a driver for brand engagement rather than conversions. Social media should be heavily used for - brand engagement, lead generation, conversations, online reputation management (ORM).

Watch Social Media listing platforms to determine which outlets have the best ROI.
Eliminate social media outlets that underperform. These links can help Sephora track the number of hits, unique visitors and conversions.

Create Twitter promotions that provide links to exclusive deals.

Utilize Beauty Insider and VIB for sustaining long term relationships with recurring customers. Customers loyalty should be paid much more attention. Create a more decisive definition of a loyal customer, and monitor criteria.

Hold special event for its VIB and VIB Rouge.

Utilize Geofencing in Sephora direct app. Send users promotions when in close proximity to Sephora location.

Create highly integrated experience using all of Sephoras digital marketing avenues. Design homepage with links directing users to Sephora online, Beauty Talk, and Facebook. Will allow Sephora to track the number of individual clicks on each link. Can provide valuable information on who is using what link. Will allow Sephora to consolidate online presence and strengthen experience.
Develop Apps for smartphones other than Apple iPhone. Droid, Samsung Galaxy and Windows phones are eroding Apples market share. Begin experimenting with small stores not located in shopping malls. Allows Sephora to capture less metropolitan markets. Use Geofencing to promote new stores.

 Sephora needs to blend each of its online platforms together, creating a hub-site that directs consumer traffic to each customers respective needs.

Utilizing Geofencing technology for mobile Twitter, Facebook, and app promotions should increase impulsive purchases on local levels.
The firm must establish criteria for measuring conversion rates for each of its online platforms, and eliminate under-performing outlets.

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Lecture Notes Ofek, Elie, and Alison Berkley Wagonfeld. "Sephora Direct: Investing in Social Media, Video, and Mobile." Harvard Business School Case 511137, June 2011. (Revised June 2012.) Linda Boland Abraham, Marie Pauline Mrn, Andrea Vollman. How Women are Shaping the Internet, June 2010. Marissa Miley, Ann Mack. The New Female Consumer. AdvertisingAge Whitepaper, November 2009.

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