Posted: May 18th, 2015
The Sephora Case Assignment
Choosing the right advertising media is an imperative step that any organization wishing to remain competitive and retain its customers as well as attract new ones must take cautiously. As in the case of Sephora, it is observable that the company has employed almost all strategies of advertising, especially those that are related to digital media. Keeping an online presence and reaching out to new and existing customers is important to a business, and tit is in this respect that Bornstein must strive to make the right choice that would steer the beauty company to its greatest heights in terms of market ownership. After analyzing the strategies that the company has employed in keeping in touch with its clients, it is plausible to suggest a change of style and approach to funding across the digital categories of marketing that have been made rife. Bornstein must judiciously allocate the funds to the best digital categories appropriately, considering the option that will generate more customers, and help the company to reach out to other customers in areas where it does not own a store.
From the case provided, Bornstein should allocate more funding to Facebook and Beauty talks, while cutting on reviews, twitter, and mobile apps. Facebook, for instance, holds better prospects as compared to twitter, due to the plethora of users it has attracted since its inception, and into the company. It is admirable that the number of fans for Sephora’s page increased tremendously three-fold from 300, 000 to 900, 000. Research has also shown that using Facebook to reach out to customers is a more effective strategy than other online social platforms such as twitter. The platform would allow customers to interactively share their views about the products offered by the company, and it would be easy to collect data regarding their needs and concerns. This would effectively replace the need for online reviews, in which the company had spent a fortune to integrate. Additionally, Beauty talks would be able to provide an interactive and high-profile platform for show-casing the company’s beauty products, just as noted by Bornstein, who agrees that the beauty talks are quite irreplaceable. In fact, this can function as a double strategy, in which the clips from such talks can be tagged or posted in both Facebook and YouTube, to reach out to other clients.
Sephora’s digital and social media efforts as of the fall of 2010 can be said to have been effective, though slightly exaggerated, as concerns the number of channels and options commissioned. The company’s decision to introduce Beauty Talk, Facebook, Twitter, YouTube videos, Mobile Apps, and online reviews can be argued to have been timely, as it needed to create strong market penetration strategy, and inform clients of its presence and offers. As earlier postulated, the number of options used, however, were a bit exaggerated, as some of them had conflict and recurring roles. For instance, creating online reviews while at the same time supporting Facebook and twitter accounts, was double strategy that ought to have been integrated into one. Perhaps, it is this duplication of roles that must have been responsible for the stretch and strain on the company’s marketing budget. Overall, the company did a good job in pursuing this fierce advertising strategy, as it played a crucial role in creating awareness of its brands, and developing the necessary psyche for needed for online transactions.
Creating Beauty Talk as a separate social platform to Facebook was a brilliant and strategic idea as the two platforms serve different purposes as regards customer information and attraction. Due to the nature of the target consumers of the company, using Facebook a lone would have only ensured it reached a small section of them, perhaps the young generation who are yearning to become like the 25-35 year-olds. One prime disadvantage that was noted by scores of executives including Bornstein was lack of archival capacity in the platform. It was only not effective in creating a category of consumers, as was later achieved in the Beauty Talk sessions. As such, the Beauty Talk was effective in enhancing the brand image of Sephora, as well as creating an interactive and archival platform where consumers would be able to ask as many questions as they wanted, and receive answers.
In 2015, with the advancement in technology and change of marketing paradigms, Sephora would need to adjust its advertising strategies to fit the current version of customers in the market. It would actually be advisable to enhance its online presence, as the world has witnessed a surge in the number of internet users, and a tendency towards online purchases. As such, it would be product to reintroduce such options as mobile apps, since the ownership and use of smartphones have increased, especially among the age group that forms the primary target of Sephora. Additionally, the company might need to reduce its budget on Beauty Talks and target more on Facebook and YouTube videos, as these two segments are more popular currently. However, it should still conduct some talks, in order to maintain its niche in the market.
The U.S. beauty and care products industry is defined by stiff competition currently, more than it was in 2010. There are numerous stores and manufacturers that have dominated the market, which promise to offer exquisite products to their customers. As such, the task of keeping loyal and consistent customers is an uphill task that requires constant marketing and strategic approaches to advertising. Department stores such as Macy’s and Nordstrom as well as single brand prestige beauty stores including MAC Cosmetics still offer Sephora considerable competition, but not as much as ULTA’s stores, which has excessively expanded its wings into various locations within and outside the states. Additionally, due to its decision to adopt online transactions, the company faces a daunting competition from large online stores such as Amazon, eBay, Beauty.com. Currently, there are several competitors such as L Brands Inc. in Beauty and Personal Care, Estée Lauder Cos Inc., L’Oréal USA Inc, John Paul Mitchell Systems Inc., and Procter & Gamble Co. among others. Many other online businesses have emerged, which pose significant level of competition to Sephora. The company should be worried about all these competitors, but pay closer attention to ULTA, Procter & Gamble Co., L’Oréal USA Inc., eBay, and Amazon.
Gauging the performance of a campaign strategy is imperative in accessing its effectiveness towards meeting set market goals and objectives. As for Sephora, there are various metrics that are available for measuring the performance of its digital advertising strategies. For instance, using ‘vanity’ metrics, such as the number of Facebook likes or the number of views on YouTube can be a starting point, but they do not reflect the effectiveness of the digital tool, unless those views or likes can be analytically monetized. The most important metrics that would show real value of a digital option used fall under three basic categories, that is, traffic generation, conversion, and revenue. Traffic generation metrics, which are the primary form of performance metrics for digital campaigns, include overall site/platform traffic, traffic sources, mobile traffic, click through rate (CTR), and cost per click (CPC). In order to begin to realize the economic value of the above metrics, Sephora needs to employ conversion metrics such as conversion rate (CVR), cost per lead (CPL), bounce rate, average page views per visit, average cost per page view, average time on site, and rate of return visitors. Ultimately, it would be imperative to know what revenue can be generated by the above observed metrics, such as measurement of return on investment (ROI), and cost to acquire a customer (CAC), which relates the amount that has been invested into the marketing and advertising strategies to the number of paying customers generated.
The main aim of digital campaigns, just like other modes of advertising, is to attract new customers, and at the same time maintain the existing ones. Building a positive and lasting brand image is a process that involves a continuum of activities, most of which relate to marketing strategies. As for Sephora, Bornstein has acknowledged that they need to consider adopting more strategic approaches to their marketing campaign. In line with this need, the company should work on the premise of three strategic goals:
This objective targets the online platforms that the company has put in place to further its marketing campaigns. As abovementioned, simply having a give number of viewers or visits does not directly relate to Return on Investment, which is the reason why the company finds it difficult to calculate its ROI. This, its future marketing strategies must target to convert those visits or viewers into buyers.
It is important to consider the amount spent on advertisement, and ensure that such cost is adequately surpassed by the amount of revenue generated from customers. The company needs to consider the average increase in the purchase from clients, as well as engagement metrics.
The last strategic goal of the revamped digital campaign of Sephora should be to bring back the lost customers, as well as those that have not made repeat purchases. This would ensure that both new and existing clients are retained, thereby boosting its market share and overall sales.
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