The body shop international Plc is very well known as The Body Shop. At present there are 2400 stores operating across the world in 61 countries. The company is a part of L’Oreal corporate group and was found in 1976. The head-quarter of The Body Shop is located at Littlehampton, West Sussex, United Kingdom. It offers a wide range of product for hair, body, and face. They claim that the products provided by them are inspired by nature. The Body Shop Australia offers variety of products inspired by goodness of nature. They are currently offering products throughout the world. In Australia the target market includes Men’s and Women (Zadek, Evans & Pruzan, 2013). People in between the age of 20-35 ages are there targeted consumers. There focus is cover almost every part of the world in coming years. They are also offering products to the consumers from the urban cosmopolitan cities. They are offering wide range of natural products to the customers. The Body Shop is providing a wide range of organic products that include natural ingredients like herbs, flowers and fruits. The company claim that there products doesn’t include any chemical and are pesticide free. The products are very well acknowledged among the public due to its high degree of safety products (Kent & Stone, 2007).
The PESTLE Analysis helps in understanding the market strategies of The Body Shop Australia. It makes an effective relationship in between the different Macro-Environmental Factors.
The multinational companies require political stability in the country they are working. The political threat is even relevant when the company is concerned with the fair trade practice. Political unrest and terrorism in the country can cause restlessness for the company. Trade regulation however affects the trade relation of the c company.
The exchange rate of a country however affects the supplier around the world. Many countries who supply ingredients require money in the local currency. The exchange rate has a great influence on the revenue of the company.
Lifestyle do affects the sale of the product and hence it is essential to increase the awareness related to a product. Social factors do affect the total amount of revenue associated with the product. Fair trade practices and sustainability do affect the consumer related choice for a product.
Technology has a direct impact on the product. An increase in the availability of internet is directly influencing the growth related to a company. It facilitates effective communication which is important for managing the revenues inside a company. Technology has a long lasting impact o the image of the brand. Effective utilization of technology is important for a company to grow.
An increase in the matter related to the legal procedure are however necessary to keep a check over the health and safety. One of the legal concern related to the matter is refilling the bottles and jar for cosmetic purpose.
The environmental protection law was passed due to growing concern related to the flora and fauna. The products developed by the body shop are not tested on animals and are nature friendly. Moreover the growing concern related to the nature is affecting the concern of the individual related to the product. Environment is given more importance at the Body shop in order to meet the requirements.
The threat of new entrant is high in case of cosmetic company is very high. The threat is increasing day by day putting a huge pressure on the company. With an increase in the competition the revenue margin will gradually decrease.
The bargaining power of the supplier is not that strong. Most of the supplier for the body shop is from the third country. Moreover they have limited partners in the industry. That is the reason they cannot create monopoly in the market. The supplier has a low switching cost as they belong to a poor community. So they have to find another beneficent buyer in order to cooperate with them. Hence it is clear that the bargaining power of the supplier is not strong (Smith, 2007).
The majority of buyers at the body shop belong to the young generation who are more inclined towards being chargeable as compared to the old generation. It is difficult to attract buyers due to difference in the price issue. Moreover the buyers can switch on to the other product very easily. There are many other competitors in the market who are consistently creating competition for the company. So, it is concluded that the bargaining power of the buyers is strong (Van de Ven, 2008).
The threat from the substitute is there due to relative price, technology and cost of switching. According to the current situation the company has a fear that the consumers can switch to other cosmetic products without focusing on the environmental issue and natural ingredient. Previously the threat of substitute were very high but due to current change in the trends consumers are paying more attention on buying products that are naturally being made. Hence the threat of substitution is very low (Mattila & Wirtz, 2008).
In the cosmetic industry there is a high growth which is causing high rate of profits. Many companies in the market copied the strategy of The Body Shop in order to sustain in the market. This industry is a mature industry so the total market share will not increase rapidly. Moreover the rate of competition will increase in coming years creating an intense pressure on the company. Hence it is clear that the threat of competitive rivalry is very high.
The body shop is the company is consistently focusing on promoting the usage of natural products in developing the range of cosmetics. The cosmetic industry is considered to be one of the mature industries and include the old as well as new players. They are consistently developing products that have helped in gaining a considerable market share. There are not only the local brands but the international brands that are being used by the localities in Australia. Every company is trying to focus on developing products that are made through the natural ingredients. Under such a competitive atmosphere it is creating a huge pressure on the company in order to attain objectives (Zentes, Morschett & Schramm-Klein, 2007).
The company is looking for different opportunities in order to stand against the various competitors. They are focusing on developing the capacity so that they can attain a considerable market share. In recent time the body shop has gained a significant position in the market. The consumers are ready to spend more money on the cosmetic products hence securing an effective place in the market. The various competitor of the Body Shop Australia are the bath and body works, garden Botanika, H2O. All these companies are trying to copy the similar concept of the Body Shop. Consumer these days are aware about using the products that are developed using natural ingredients. Bath and body work has gained a market share due to development of the natural products (Varley & Rafiq, 2014).
Cosmetic industry sees fluctuations in the profit which is affecting the all over margin of the company. In the same manner it is necessary for a company to invest in development of the consumer centric products as it will help them in securing a sustainable market place. This industry is a mature industry so the total market share will not increase rapidly. Moreover the rate of competition will increase in coming years creating an intense pressure on the company (Vigaray, 2010).
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Strength · The major strength of the company is its brand name. · There major ingredient includes the natural products that are adding a significant value to the product. · The brand name L’Oreal adds to the brand equity increasing the level of consumer retention. · Maximum number of product doesn’t contain any chemical. · The mission statement of the company is one of the major strength of the company. · There products have revolutionaries the entire cosmetic market. · The major target audience is the niche market. · The organization has an eco-friendly position in the market (Assenmacher, 2011). |
Weakness · Some people lack trust in the brand. · The supply chain management of the brand is not up to the mark. · Brand loyalty is still an issue |
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Opportunity · The largest opportunity is to launch specially for men. · More opportunity to launch a range of baby products · To increase the number of stores in order enhances the market presence. · They should introduce different variant of the existing product. · They have an opportunity to establish in a Chinese market which will eventually increase the opportunities. |
Threat · The fall in the price of the currency is one of the major threats for the company. · High level of competition in the market causing a threat to the company. · There are unstable suppliers in the market who are causing serious threat to the brand (Bárta, Pátík & Postler, 2009). |
The brand holds a strategic position in the market and specially fusing all its resources on the young generation. The company is following a consumer centric approach which is currently focusing on developing products that are based on natural ingredients. They have created loyal customers due to their marketing strategies (Jobber & Ellis-Chadwick, 2012). The company is being focusing specifically on the young generation. They timely introduce new products that are more consumer and eco friendly. There marketing and promotional strategy is slowly creating a huge place in the market. The logo of the brand is to attract attention of people across the world. They are also providing with the loyalty cards and rewards point that has helped in developing a special position in the mind of the buyer (Fernie & Sparks, 2014).
There are wide ranges of products that are provided by the company that depend upon the distinguished market rate. The main product of the body shop is the body care, skin care and hair care etc. the brand is providing goods that are based on the natural ingredients. The company has outsourced most of its manufacturing units that are producing products that are based on the beauty. The company ensures that the products used by them are best on the basis of quality control measure (Malhotra, 2008). It is essential to understand the relationship in between the best quality and the price. In order to compete in the market they need to plan out an efficient marketing plan. The body shop is currently applying the low medium price policy that has helps in gaining a significant market place. . They are offering wide range of natural products to the customers. The Body Shop is providing a wide range of organic products that include natural ingredients like herbs, flowers and fruits. The company claim that there products doesn’t include any chemical and are pesticide free (Kotler, Keller, Manceau & Hémonnet-Goujot, 2015).
The products they are delivering are made defining on every stratum of the society. This includes the natural cosmetic products for women of every age group.
There are ample of market opportunity for the product in the recent time. The overall market is growing at a fast pace that has already created opportunities for the old players. The body shop is one of the most effective strategists in the market that has distinguished market strategies that has helped them to grow efficiently. They are currently offering products throughout the world. In Australia the target market includes Men’s and Women (Grewal, Levy & Kumar, 2009). People in between the age of 20-35 ages are there targeted consumers. The products they are supplying are considered to be one of the best qualities in the whole world (Alexander & Doherty, 2009).
The market is currently witnessing growing opportunity where they are planning to shift their interest in producing those goods that are user friendly. By this way company will witness a consistent growth in all over the world. The current strategy of the body shop is to expand in the international market by focusing on the local needs. They are focusing on the promotional strategies that are being used by them in order to attain a significant market place (Hutt & Speh, 2012).
Recommendation & Conclusion
It is recommended that the brand should increase its visibility in the Australian market by placing the product as there priority. Moreover there is a need to diversify the product range in order to attain attention of consumers of different section of the society. The body shop is a world renowned name that has gained a significant market place though its competitive strategies. There marketing strategies are considered to be very aggressive creating a long term opportunities for the company. The company is a part of L’Oreal corporate group and the head-quarter is located in 1976. It offers a wide range of product for hair, body, face and home… the report include the PESTLE analysis to understand the macro environmental factors and the porter 5 forces in order to understand the various threats that are attached with the company. SWOT analysis help in understanding the strength and weakness of the company. It helps in understanding the market position of the brand. This is however helping in understanding the brand equity in the mind of the people. The body shop Australia is a world renowned brand that is consistently developing with a pace. In this way the brand has already gained a considerable market place but in coming year the brand has to evolve according to the market requirements.
References
Alexander, N., & Doherty, A. M. (2009). International retailing. Oxford University Press.
Assenmacher, K. (2011). The Bodyshop-An Analysis of the Company´ s Actions towards Sustainability.
Bárta, V., Pátík, L., & Postler, M. (2009). Retail marketing. Management Press.
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Jobber, D., & Ellis-Chadwick, F. (2012). Principles and practice of marketing (No. 7th). McGraw-Hill Higher Education.
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Mattila, A. S., & Wirtz, J. (2008). The role of store environmental stimulation and social factors on impulse purchasing. Journal of Services Marketing, 22(7), 562-567.
Purkayastha, D., & Fernando, R. (2007). The body shop: Social responsibility or sustained greenwashing. Case studies in sustainability management and strategy. Sheffield: Greenleaf, 226-251.
Simply Strategic Planning.(2015). IMAGE. Available at: https://www.simply-strategic-planning.com/porters-five-forces.html (Accessed on: 21 March 2017)
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Zadek, S., Evans, R., & Pruzan, P. (2013). Building corporate accountability: Emerging practice in social and ethical accounting and auditing. Routledge.
Zentes, J., Morschett, D., & Schramm-Klein, H. (2007). Strategic retail management. Betriebswirtschaftlicher Verlag Dr. Th. Gabler GWV Fachverlage GmbH, Wiesbaden (GWV).
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