Sephora Case History, Issue And Objective, Competitors

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Sephora Case Study
CASE HISTORY
Sephora was founded by Dominique Mandonnaud in 1969, France. It was first established as simple perfume shop and by 1979 it had expanded to several store chain. Originally, the company was set as a self-service store that offered a wide range of products. As Sephora continued to grow, it was rebranded in an attempt to expand its market niche. After the rebranding, the founder established several branches across France something that increased its market share to 8% in the country. In 1997, Sephora was purchased by LNMH, luxurious product chain at a cost of $262 million. After the purchase, the company included a wide range of products and services to its portfolio. Under the management of LNMH, Sephora entered the international market by opening its first oversees store in New York City, United States in 1998. Like any firm entering the global market for the first time, Sephora experienced various challenges especially in the supply chain due to stiff competition from strong established companies such as Clinique and Estee Lauder. This led Sephora to initiate partnership relations with unknown brands. It was through these relationships that innovation and creativity for their brands was born to introduce new supply channels as well as line of products and services. Sephora had to address various issues in their line of division especially the supplies from their direct suppliers. The bottom line, Sephora offers more than 190 brands ranging from typical classics to new and exotic brands; in this regard it provides more than 21,000 products.
All of Sephora’s direct marketing and digital initiatives Sephora Beauty Insider and Sephora.com are managed by Sephora Direct Group. Currently, its budget is estimated to be $22 million where and estimated amount of $8 million is allocated to online marketing. Much of the budget is allocated to online-search marketing. The social media, mobile and video is awarded $1 million representing less than four percent of the total marketing budget. Bornstein wants the social media, video and mobile marketing budget to be increased by an addition of $1 million to make a total of $2 million.
Sephora spends huge funds on online-search advertising by purchasing keywords related to its products. Search marketing represents the largest component of the company’s marketing budget and contributes much to its traffic through its website. Another key element in Sephora’s marketing mix is email marketing especially for the Beauty Insider program. In the modern business world, social is a crucial element for any company to invest in due to its popularity in attracting more clients and is becoming the easiest and cheapest way to shop especially in the younger generation. According to Sephora’s financial reports, its mobile shopping has been increasing and that is why Bornstein wants the social media marketing budget to be doubled to create more value to its customers. It is believed that the more value a company creates, the more profits it gets.
CASE ISSUE AND OBJECTIVE
The core issue of this case is to justify why the $1 million additional budget for social media campaign is necessary by evaluating the involved...