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Sephora Direct

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Evelyn Ticona

on 6 December 2014

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Transcript of Sephora Direct

Sephora Direct
Paul Hayden . Sarang Nanavati . Evelyn Ticona
What do we know about Sephora?
What do we know about Sephora?
Founded in 1969 by Dominique Mandonnaud
Retail concept: "Assisted self-service" to differentiate from current stronger market (department stores)
Teamed up with investors to combine stores with Boots PLC
Sephora: Greek word "pretty" (sephos) and Biblical name Zipporah (Moses' wife)
Acquired by LVMH in 1997 for $262 million
First U.S. store in NYC in 1998
Building the Brand - E-commerce
Building the Brand - Social Media
Solution
Turn around and look at Dr. K!
Investing in Social Media, Video, and Mobile
History
Retail concept
Sephora in the U.S.

Jeniffer Aniston's new fragrance at Sephora
Building the Brand - Brick & Mortar
How would you describe the brand
development through Brick & Mortar Retail?

Demographics
Customer Interaction
Philosophy
Design
Store Growth
Building the Brand - Brick & Mortar
Demographics
Women age 25-35 who felt they grew up with the brand
Younger and hipper customers than traditional department stores

Philosophy & Customer Interaction
Encouraged experimentation, sampling products prior to purchase
“Cast Members” would assist customers, not push product
Offered Prestige brands, both classic lines and emerging brands


Design
All had similar look and feel – Colors were Red, White & Black
Stores featuring animated window displays to attract window shoppers.
Pop & Alternative music played to create a fun, party atmosphere
Complimentary products place side by side for testing

Store Growth
By 2010 there were nearly 1,000 stores in 23 countries
Sephora had 200 locations inside J.C. Penny’s
Carried 288 brands consisting of 20,000 different products

Building the Brand - Brick & Mortar
Building the Brand - Beauty Insider
What was the impact of Beauty Insider?

What did customers receive?
How were they recognized?
What was the impact on revenue?





Can Sephora gather data to measure ROI for each channel?
Can it use engagement level and typical conversion rate from engagement to purchase.
Can it use CPM for each channel and determine its advertising costs?
How can Sephora measure Brand equity to justify a million dollar advertising budget? (current spend is 35% of the total budget)
Should Sephora invest more ?(a simple ROI calculation on sweepstakes conducted via Facebook suggest $19 in revenue for each $ spent).


Opportunities & Challenges for Sephora

Competition with ULTA

Any strength that has room for improvement? What are other internal strengths for Sephora?

Strong online presence (Facebook, YouTube, Sephora.com)
E-commerce
Beauty insider program
Trendy store experience
Real estate and global presence
Wide range of products
Competitive pricing
Mobile Initiatives

Strengths (Internal Positives)

What other external threats are out there for Sephora?

Competition
Department stores (Nordstorm, Macy’s)
Prestige beauty stores (MAC)
Brand specialty stores (ULTA)
Online stores (Amazon)
Quickly changing social media environment
Declining shop sales due to heavy online shopping


Threats (External Negatives)

How would you prioritize these opportunities? Any opportunity that stands out?

Partnership opportunities with media companies (Shopkick, Shopsocially, Foursquare, Groupon)
Expanding their reach to Non I-Phone smartphone users (e.g. Android).
New Product opportunity and exclusive rights to promote (Jennifer Aniston)
Increase cross promotion (promote mobile app presence via beauty talk and vice-versa)
Target millennials

Opportunities (External positives)

Building the Brand - E-Commerce
Sephora.com’s
Impact:

Projected to generate 15-20% of revenue in 2010
As of 2010 the site saw 310,000 visitors a day
Started online customer reviews





Building the Brand - Social Media

How did social media start for Sephora?

What made Sephora take the risk of allowing reviews on Sephora.com?

Sephora’s Facebook fan page.

What was the impact of “Sephora Claus”?

What was the driver behind Beauty Talk?

Building the Brand - Social Media
Sephora’s look at ROI of “Sephora Claus” sweepstake:


Social Media ROI = (Derived Value–Investments)/Investments

Social Media ROI = ($1,000,000 - $50,000)/$50,000

Social Media ROI = $950,000/$50,000

Social Media ROI = 19 x Investment

For every $1 spent Sephora earn $19 in revenue

Building the Brand - Social Media
How did Sephora utilize YouTube?

YouTube had a reach of 466 million users, 73 billion mins.

“How to get Smokey Eyes” had 1 million views

Combined all videos under Sephora
YouTube channel

Can cost upwards of $20,000 to develop
professionally

Question: Is it possible to build the brand
through video streaming?

Final Thoughts
Does a $1 million investment in social media make sense?

Is it enough of an investment in Social Media?

How would Sephoria reallocate it's media spending budget to give social media an extra $1 million?

SWOT Analysis
STRENGTHS
(internal positives)
Strong online presence (Facebook, YouTube, Sephora.com)
E-commerce
Beauty insider program
Trendy store experience
Real estate and global presence
Wide range of products
Competitive pricing
Mobile Initiatives

Any strength that has room for improvement?
What are other internal strengths for Sephora?

STRENGTHS
Weaknesses (Internal negatives)
Lack of resources (to develop new programs and social media efforts)
Ability to effectively measure ROI
Mobile app only available in I-phone, with sluggish features
Connecting social media to e-commerce
Internal communication challenge
Internal struggle to integrate
Partnership opportunities with media companies (Shopkick, Shopsocially, Foursquare, Groupon)
Expanding their reach to Non I-Phone smartphone users (e.g. Android).
New Product opportunity and exclusive rights to promote (Jennifer Aniston)
Increase cross promotion (promote
mobile app presence via beauty talk
and viceversa)
Target millennials
Opportunities (External positives)
Competition
Department stores (Nordstorm, Macy’s)
Prestige beauty stores (MAC)
Brand specialty stores (ULTA)
Online stores (Amazon)

Others
Quickly changing social media environment
Declining store sales due to heavy online shopping
Sephora Beauty Insiders
CRM program – set up around perks

Beauty insiders received emails once/twice a week and a special offer on birthday
Offered free samples and gave them “first looks” at new products
1 point for each $1 spent in stores/online.
Redeem points at 100, 500 for one free gift

VIB (very important beauty insiders) spent $350+ /year
2010 – 15Million customers had signed up, with 9Million active (purchase something in the last 12 months)
80% of sales came from beauty insiders

What % of Sephora's spending is used on beauty insider program?





How did Sephora.com lead
to social media?
What benefits/risks are there to moving
customers from Facebook to Beauty Talk?

What was the growth of Twitter & how can they utilize it?

Twitter:
2009: Created
2010: 100,000
Threats (External Negatives)
Competition with ULTA
Can Sephora gather data to measure ROI for each channel?
Can it use engagement level and typical conversion rate from engagement to purchase?
Can it use CPM for each channel and determine its advertising costs?
How can Sephora measure brand equity to justify a million dollar advertising budget? (current spend is 35% of the total budget)
Should Sephora invest more ?(a simple ROI calculation on sweepstakes conducted via Facebook suggest $19 in revenue for each $1 spent)
Opportunities & Challenges for Sephora
How do millennials shop?
Segment: 25-35 years old

Millennials are open to change and strongly
engaged in technology and social media sites.

More likely to respond to digital efforts through
e-commerce due to its
high interest in Internet
based activities.
High involvement advertising model
How did Sephora build its brand with Sephora.com?

What was the revenue growth?
Describe the online activity?
Building the Brand - E-Commerce
Weaknesses (Internal negatives)
Opportunities (External positives)
Threats (External Negatives)
Sephora colors
Red: High-arousal color, associated with risks. Power, energy, passion and love.

Black: Formality and mystery.

White: Optimism and hope.

Porter's five forces- analysis

Facebook Fan Page:
2008 - Created
2009: 300,000
2010: 900,000

Benefits:
Sephora.com enables users to post product ratings and reviews
Reviews improve site conversion from shoppers to buyers by providing confidence in product results.
Facebook was a forum for client feedback
Beauty talk driver: lack or archival capacity on Facebook and difficulty to address personal beauty questions (acne, wrinkles)
Users identity was revealed on Facebook
Building the Brand - Social Media
Challenges:
Blend with Facebook site
Use two sites simultaneously
Additional funding
Beauty talk was more in-depth and less well-understood experience.
Full transcript