CONSUMER BEHAVIOR

BODY SHOP BRAND: REPOSITIONING TO TARGET THE ‘MASSTIGE’

SEGMENT AND IMPACT OF ITS ACQUISITION BY L’OREAL

SUBMITTED TO: SUBMITTED BY:

GROUP-9
PROF. RAY TITUS SANDIPAN BASU
TULIKA
GARIMA SINGH
TARUN PAL
SOUVIK BANERJEE
SUGANDHA HURIA
SHILPA JINDAL
VINEET BAGRI

SECTION: ‘C’ (MARKETING)

DATE OF SUBMISSION: 17TH FEBRAURY, 2010.

MARKET ANALYSIS

SWOT ANALYSIS :
STRENGTHS:

Brand Loyalty – Body Shop is greatly dependent on its brand reputation

which is a critical factor in sales. Due to its unique products, it has come
out to be seen as one of the most environmentally friendly retailers.

L’Oreal’s support – By being a subsidiary of L’Oreal, Body Shop

appears to have an increase in sales. Furthermore, L’Oreal’s experience
in advertisement and marketing can boost overall sales.

Niche marketing – Body Shop targets a niche market. By stating that it is

not testing its products on animals and by appearing to have an ecological
profile, it has appealed to customers with ethical issues. Being the only
shop in the shopping centre that sells ecological products, has given it
advantage in the local market.

Charity support - Body Shop provides financial aid in charities by giving

small amount of money to it.
The Body Shop was maintained as a standalone entity with continuity in
management.

A commitment to employees, franchisees and suppliers to uphold The

Body Shop’s values.

Distribution network continuing to offer only The Body Shop branded

products

WEAKNESSES:

The Body Shop continued to grow in size but market value was declining
which led Roddick to step down as CEO in 1998.
 OPPORTUNITIES:

Equally it offers plenty of opportunities for further expansion of The

Body Shop, with the business now being able to tap into the huge
marketing as well as research and development resources that L'Oreal has
with it.

Also, The Body Shop will have more global experience after its
acquisition by L’Oreal.

THREATS:

The takeover could put a number of natural and organic personal care
companies in a stronger position to compete against The Body Shop.

It believes that some consumers will switch to other natural and organic
personal care products for ethical reasons.

STP ANALYSIS
GEOGRAPHIC SEGMENTATION:

 Region: USA, UK, Belgium

DEMOGRAPHIC SEGMENTATION:
 Age: 15+yrs.
 Sex: Female
 Marital Status: single, married, divorced, widows etc.
 Income: Low, middle and high income group.
 Occupation: Professional, Blue collar and white collar.

PSYCHOLOGICAL SEGMENTATION:
 Need Motivation: Ego need, Self-actualization.
  Perception: Low-risk, and moderate-risk.
 Attitude: positive attitude towards ethical products.

PSYHOGRAPHIC SEGMENTATION:
 VALS segmentation: Innovators, Thinkers, Strivers,

SOCIOCULTURAL SEGMENTATION:
 Culture: American.
 Social Class: Lower, Middle class. Not high class because for them ethical
standard is not very important.

USE-RELATED SEGMENTATION:
 Usage rate: Heavy and medium users.
 Awareness Status: very high.
 Brand Loyal: Customers of body shop was extremely brand loyal.

USE-SITUATION SEGMENTATION:
 Location: Party, daily routine, marriages, Home, Office.
BENEFIT SEGMENTATION:
 Value-for-money, pure herbal product, social acceptance.

TARGETING
Target customers could be:
 Niche market where people are looking for company using ethical practices.
 House-wife.
 College students.
 Professionals.
 Old-aged Person.
 Person looking for value for money.
 POSITIONING

Body Shop has positioned itself as a company using:

 Natural Products.
 Ethical treatment to animals.
 Respect for employee right.

RE-POSITIONING
FMCG sector was witnessing tremendous growth but body shop profit was
declining after the critics started crawling around about body shop using unethical
practices such as using ingredients already tested on animals. So they decided to go
for repositioning. Body shop was trying to tap the niche market consisting of
persons willing to buy product or services from the organization following ethical
practices.
To differentiate itself from other retail outlets like Tesco plc in UK and Wal-
Mart in US and try to adapt a blue ocean strategy it repositioned itself as a
Masstige(low price product that are marketed under a prestigious brand name).
This re-positioning was done by:
 Introducing innovative product: provide benefit comparable to premium
brands at affordable prices. Eg: hair car range, Skin focuses etc.
 Creating a new brand identity. Direct selling”Body shop at home” and an e-
commerce site.
 Coming out with a new store design.
 Developing multiple channels.

MARKETING STRATEGIES
PRODUCT
TBS from time to time launched new products in the market .A special flurry of
products were launched in 1999 during the restructuring phase and 2005 during the
repositioning phase of the business .Their product portfolio was diversified from
hair care to special skin care to manicure etc. All their products but had a distinct
attribute that all ingredients used were natural and not animal tested, which was a
predominant flavor to their brand DNA .Their product was targeted especially to
the segment of people who seek benefit at affordable prices .

PRICING
The TBS products were fairly low priced as they achieved cost reduction by
avoiding high indulgence in advertising .They priced their products for a new
product segment “masstige”, wherein they tried to get themselves identified as a
luxury cosmetic brand .The main aim of the pricing strategy was to make the
customers identify it as an affordable but luxurious brand, using just enough
pricing strategy which only helped them increase their customer base.

PLACE:
Distribution
 Multi-channel strategy
a) Body Shop at home

b) E-commerce Site (www.thebodyshop.com)

 Franchised outlets- In 1978, first foreign franchisee opened in Brussels,

Belgium.
 Company owned stores

PROMOTION:
 In the 1970s, TBS grew at the rate of 50% annually and also got a lot of
media attention.
 In 1986, TBS formed an alliance with Greenpeace, to promote its “Save the
Whales” campaign and in 1990; TBS formed an alliance with Friends of the
earth (FOE).
 During the initial years, TBS promoted their products through offbeat
brochures.
 Roddick’s view about business as a model for social change and her rhetoric
against standard corporate practices attracted a lot of media attention.
 Roddick became very popular with the press and got a lot of free publicity.
Customers were told about the stories behind the products and how Roddick
discovered them.
 TBS campaigned for ban on practice of testing of cosmetic products and
ingredients on animals, which highlighted TBS’s brand was built around
five core values: opposition to animal testing, community trade, self-
esteem, human rights and protection of the planet.
 TBS used languages and images on its products which showed respect for
women, i.e. Self-esteem which helped in promoting the products.
 In addition to providing product information, a number of leaflets and
posters(recycled paper) provided information about social causes that
encouraged customers to get involved in. Also, customers were greeted with
employees wearing T-shirts bearing a social message.
 During masstige positioning, sales promotion initiatives such as sampling
and free gifts with purchases were used for new products.
 Multichannel strategy was used. In 1994, company set up direct selling
network like ’The Body Shop at Home ’ and in 2004, use e-commerce
site(www.thebodyshop.com).
 Affiliation- A program was launched in 2001 in US, where the hosts
required provided invitees with a chance to try out TBS products

For repositioning, TBS revived its marketing mix. They brought in new
innovative product range like ‘Hair Care’ and ‘Invent Your Scent’.
Promotions focused on Visual Merchandising, Direct Marketing, etc.
They used tag line-“Made with Passion”.

CONSUMER DECISION MAKING

Here we see that consumers were satisfied with the products even though
there was so much criticism about the company. The consumer behavior
 clearly showed the trend that they cared much about the brand rather than
the organization. The products they bought still contained the natural
ingredients which attracted the consumers.
.
Impact of CSR on stakeholders

To consumers CSR may mean high quality products at a good price, and to some
extent ethical or philanthropic behaviour. Research supporting the use of CSR
programs argues that consumer evaluation standards go beyond product
performance to include ethical standards.

Investing in CSR can bring about a number of commercial benefits. These include:
enhanced corporate reputation and image; improvements in employee
commitment, retention and motivation; improved productivity; strengthened
shareholder confidence and finally competitive advantage through differentiation

CSR has also been shown to indirectly impact consumer behaviour through its
links to corporate image, which has been found to impact on perceived quality,
customer satisfaction and customer loyalty.

Most of the companies are involved in CSR but the real strength lies in capitalising
on that. To understand the strategy behind this, we take help of Porter’s Strategic
CSR model.

Porter’s Strategic CSR Model

Michael Porter and Mark Kramer (2006) proposed that (CSR) should be linked to
core business objectives that are leveraged for increased economic and social
values. These can be used to maximize the market value of the firm. How exactly
can corporations undertake CSR activities that also have a direct positive economic
impact?

Porter and Kramer’s view is that organizations should focus on a fewer number of
carefully targeted CSR programs which are tightly linked to core business
objectives (a strategic CSR approach). These authors reason that by linking the
CSR approach with strategy these programs will provide a greater impact on both
the organization and society. Strategic CSR is designed to produce profits and
social benefits rather than profits or social benefits.

Framework for strategic CSR implementation for TBS

A number of reasons why TBS engaged in CSR practices can be identified.

These included
(a) to bolster the organization public image,
(b) to meet needs or pressures from key external stakeholders,
(c) to be in alignment with industry or community expectations,
(d) to protect itself from legal threats, and
(e) to achieve a marketing advantage or other direct economic impacts.

In a generic manner, there are four situations in which an organization would

undertake a strategic CSR approach:

 When the organization seeks to resolve business problem that can’t be

solved within traditional business boundaries. Therefore it must address the
underlying societal issue which is the primary source of that problem.

 When an organization creates an opportunity based on a societal issue or

trend.

 When an organization seeks to protect itself from a threat posed by a societal

issue.

 When an organization seeks to have a greater business and societal impact

from its existing CSR program.

TBS had the last 3 situations which could be used. Societal trend consisted
of other companies using animal testing. Then societal issues leading to its
criticism were there about the use of petrochemicals and being hypocritical.
So CSR could protect from these threats. Also it was found that 84% of the
customers shopped with TBS because they ‘shared values’. So their existing
CSR programs had a greater impact on their business.
The following five-step process explains how a company can implement a strategic
CSR approach to address these four circumstances. These steps include the
following:

 Scoping the organization’s environment for ways the firm can translate
societal issues which impact it into some type of a corporate advantage.

 Development of an expanded menu of CSR program options to create

corporate opportunities associated with these societal issues.

 Careful analysis of strategic CSR program options based on consideration of

economic and, societal impacts as well as other relevant organizational
variables.

 Implementation of the selected strategic CSR program option which often

involves coordination with other organizations and sectors.

 Measuring both the economic and social outcomes and reporting results
within the organization and to key stakeholders.

TBS employed 4 out of these 5 steps excluding the 3 rd one. It operated with other
organizations like NCADV. Time and again it came up with more CSR activities
which extended its menu. It also went on to reposition itself for targeting the
masstige segment. Then in 2006 it was acquired by L’oreal.
The strategic CSR approach requires openness to new ways of assessing
organizational issues, considering nontraditional alternatives, a careful assessment
of the benefits and costs of the alternatives, implementation through new
relationships with external organizations, and measurement for reporting of the
impacts. As we see TBS was able to employ these attributes and capitalize quite
well on that.