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Burt's Bees Case Study

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by

Shakori Fletcher

on 17 March 2014

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Transcript of Burt's Bees Case Study

Raise Prices
Greater perceived value

Could potentially generate more profit

Burt's Bees Case Study
Keep Prices the Same
o Strong Customer Loyalty from customer value-based pricing

o Quality and Effective Products

o High Market Share from gaining consumer trust

o Creates unique competitive advantage

o Potential growth in globally emerging markets
Final Recommendation
Also increase promotions, advertising, and emphasis on customer service to add to value-added pricing strategy
Lower Prices
Go after a larger segment with reduced prices

Currently holds 42.8% of market share, could increase

Would create more awareness of their overall Brand
Prices
Get involved!
What is the highest price you would pay for chapstick/lip balm?

Highest price for shampoo?

Highest price for over the counter face cream?
Christina Capetola Shakori Fletcher
Corey Glass Yale HoffBerg
Jenny Proctor
Burt's Bees Case Study
MKT 311 Case 3
Overview of Company
Discussion Question 1
Does Burt's Bees pricing strategy truly differentiate it from the competition?
Discussion Question 2
Has Burt's bees's executed value based pricing, cost based pricing or competition based pricing?
Discussion Question 3
Discuss how Burt's Bees has implemented product mix pricing strategies.
Discussion Question 4
Could Burt's Bees have been successful as a natural product marketer had it employed a low-price strategy?
Discussion Question 5
Is burt's Bees's
Pricing Strategy Sustainable?
Alternatives
Keep Prices the same * Lower Prices * Raise Prices
PROS
CONS
o Pricing points being too expensive in comparison to competitors

o Low brand awareness & little to no marketing strategy

o Too many different product lines with no target segments
Pros
CONS
Decrease in profit

Entering competitive market

Could effect the overall quality

Decrease in “value added prices”
Pros
CONS
Burt's Bees's already charges more than comparable brands

If the price premium is too high, customers will ignore the option of buying the product
Keep prices the same
Increase Customer Service Starting with MKT 311 Case 3!
Sources

"It's all about trying them because once they smell the products and feel them they want to use them." -Replogle (CEO)

Therefore, it would be beneficial for Burts Bees to give away free samples in places like CVS and Walgreens.

Nagel, Andrea. "Burt's Bees Buzzes Into New Stores." WWD: Women's Wear Daily 191.122 (2006): 12. Business Source Complete. Web. 16 Mar. 2014.
Value-based pricing

The company first assesses customer needs and value perceptions.

They then set a target price to match customer perceived value.

By setting a high price, customer’s wonder what makes the product so special, which adds value to the product.

The customer’s justify the higher prices for the products’ natural ingredients.
Uses
product-line pricing strategy
--> setting the price steps between various products in a line based on cost differences between the products, consumer evaluation, and competition

Set a higher standard with a higher price for all of their products

Using only natural resources priced high, creates higher valued products
Price
- the amount of money charged for a product or service, or the sum of all
values of the customers exchange for the benefits of having or using the product of service.

Price premiums of 80% higher then competitors

2.99 per a tube of chapstick

99 Cents for competitors

Competitors include: Toms, Natures Sunshine, Chapstick and EOS

Value added Pricing- attaching value, which justifies a higher price
Key Concepts:

Humble Beginnings

Value Versus Price

Eco-Brands in Hard Times

Pressing on with Price Premiums

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Higher Variable Cost

Lower Profits

Change in Consumer Impressions
Full transcript