Sephora's Evolution: From Perfume Shop to Global Beauty Hub

Founded by France Dominique Mandonnaud in 1969 as a simple perfume shop. By 1979 the company was already expanded to “several stores” Originally, Sephora was planned to be self-service store that offers a variety of products. Its founder Mandonnaud rebranded his combined set of stores in order to expand is market. Mandonnaud extended its branches all over France by acquiring 8% of total French retail perfume market and was purchased by LVMH, luxury product group, for $262 million in 1997. Sephora expanded its operations and services beyond the perfume industry and expanding its core of products to cosmetics.

Under LNMH’s ownership and opened its first U. S store in New York City in 1998 However, this presented a challenge for the company as they had a difficult time to supply the products from other prestigious brands; such as Estee Lauder and Clinique. The Company banked on rather unknown brands to fill its shelves therefore, these relationships grew strong and eventually this fact led to the innovation and creativity of these brands to introduce new lines of products.

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Sephora confronted many issues on their cosmetic line division, especially with the direct line of supply from other stores.

Bottom line, Sephora offers more than 200 brands that go from the typical classics to new and exotic brands; altogether, Sephora counts with more than 20,000 products. Among those products we could find top of line and sophisticated brands as well as not so well know products. Sephora formed an strategic alliance with JC Penny. Sephora. com was projected to generate 15-20% of Sephora USA sales in 2010.

Sephora. com ranked top 50 retail sites in U. S SWOT analysis Strengths Globally distributed with more than 1000 shops worldwide Strong parent company; LVMH More than 20,000 products to offer.

Strong online sales self-service approach to cosmetics Strong emphasis on construct loyalty brand by tracking down the customers shopping habits. Weaknesses Modest operational budget. Low brand recognition Lack of TV promotions and print ads. Higher price than drugstores and supermarkets Opportunities Enhance their customer loyalty program in order to build a “relationship” with the product consumers. Sign contracts with famous celebrities to endorse their products. Introduction to enter into emerging economies such as Brazil and India. Threats Economic downturn.

Other companies in the same industry. Amazon and other online companies that sale cosmetic, with their aggressive approach could certainly become a threat. Identification of Problem Personnel and financial constraints needed to be addressed. Imagination and inventiveness was greatly needed. Budget limitation, presented a real challenge when it comes to budget allocation to different initiatives. Outcomes assessment of social media campaigns as well as mobile applications constituted a real test to overcome. Sephora Direct Julie Bornstein took Sephora on another journey.

She transforms the marketing view to a much modern and up to date campaigns. New Budget request was introduced in order to launch a major campaign that will include social media, web site enhancement as well as the implementation of “customer relationship” campaigns. Campaign success should be assessed thorough out Facebook “likes” and twitter followers as well as I phone application downloads. Sephora. com and Beauty Insider Sephora. com was implement on 1999 with very imp clear short and long term goals. Up to 25% of sales should be generated by Sephora. com by 2010. By 2007 Sephora developed its Beauty Insider campaign.

Incentives such as 1 point for every dollar, redeem points programs are among those strategies in order to create that “relationship” with its customers Social Media Although this initiative had a rocky start, eventually become a success, Bornstein visionary initiative and her persistence, this initiate obtained 1 million product reviews posted on their web site. (Ofek, 2012). Facebook Sephora join Facebook by 2008 in less than a year their account had close to 300,000 fans in Facebook. Last statistics show the Sephora page with more than 900,000 Twitter By 2010, Sephora had approx. 100,000 users.

Primarily used for current promos, contests, events, etc. Customers used it to tweet about newly found products. You Tube Used by Sephora to upload “How to Videos” on make-up applications; however this sharing video site could be utilized on a much more aggressive way. Cell phone applications The rapid pace of technology forced mayor companies such as Sephora to create applications for smart phones like IPhone, Droid, Blackberry, etc. Alternatives Budget Re-distribution As stated previously the fast pace of technology constitute a real challenge not only to Sephora but to every single company.

Therefore, I would like to present the following suggestions: Cellphone applications should really receive a great attention and consequently, more financial Resources. Pros Instant reaching out to their customer base Cons Increase cost of application development fees. Facebook, according to younger generations has become “not cool” and obviously not as attractive for younger women, therefore Sephora should look into other popular social media networks in order target new customers that eventually become loyal customers. Instagram, Pheed, thumb, Medium, etc.

should be receiving at least 5% of the developmental budget for emerging social sites. Pros Targeting potential new buyers, young men and women that are eager to take on the world. Cons This target population might take some time in order to become actual customers. Beauty Insider should remain at 20% as this constitutes the strongest campaign for Sephora when it comes to help “Sephora loyal customers”. Pros Continuous catering of “loyal customers” Cons Become obsolete if new strategies are not develop. Retailing – print catalogs, store animations.

Should receive 30% percent of their developmental budget as these tools have become obsolete for the most part. (Personal opinion) Pros Reduction of cost in traditional advertise. Cons Potential loose of mature but loyal customers. Recommendation Finally, my recommendation will be to start a comprehensive Research of outcomes in the different categories of initiates developed under Julie Bornstein leadership. Based on those findings re-restructure the entire budget and re-think some of our means to reach out to new and existing customers.

We live in a fast speed life and therefore our customers are as busy as they could help. Therefore Sephora must constantly evaluate and re-design their marketing strategies in order to provide the upmost friendly user options to inform serve and sell our products and services to their consumers. Therefore I would choose the Cellphone application development to receive a greater part of the advertisement developmental budget and at the same time re-balance other line of the budgets in order to adjust the budgets accordingly to the outcomes evaluation done thorough the above suggested research.