Your SlideShare is downloading. ×
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

STRATEGIC MARKETING PLAN AND AUDIT - BURTS BEES

16,547

Published on

Published in: Lifestyle, Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
16,547
On Slideshare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
356
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. MG511 StrategicMarketingCase Study:Burt’s Bees;‘Leaving The Hive’Lecturer: Ms.xDate:14/12/2010Group:Seánpaul WalshKenneth KiernanMaeve McQuillan
  • 2. Contents:1.0 Case Overview 22.0 Analyses 2 2.1 External Analysis 2 2.1.1 Strategic Mapping 2 2.1.2 Competitor Analysis 3 2.1.3 Category Audit 5 2.1.4 Brand Awareness Analysis 6 2.2 Internal Analysis 8 2.2.1 Revenue Growth Analysis 8 2.2.2 CBBE Pyramid 9 2.3 SWOT Analysis 93.0 Key Issues 104.0 Strategic Alternatives 10 4.1 Strategic Alternative (A); Niche Market 10 4.2 Strategic Alternative (B); Joint Venture into Mass Market 115.0 Strategic Recommendation; Rebrand-Strengthen Awareness-Enter Mass Market 136.0 Case Lessons 157.0 Appendices/Bibliography 16
  • 3. 1.0 Case OverviewBurt’s Bees had been growing by over thirty percent over the previous four years. The companyis the Brand leader in the natural personal care category, itself growing by fifteen percent overthe same period. The original vision of Burt’s Bees founder Roxanne Quimby was to ultimatelyreach “everyone, everywhere”. The opportunity to grow its brand in the mass market is alucrative one for the company. However critics and some customers have commented thatBurt’s Bees was becoming too commercial, losing the authentic elements that has led to itssuccess.Also in 2006 John Replogle became CEO of Burt’s Bees and he strongly believed that Burt’s Beescould bring natural personal care to the forefront of mainstream personal care. Under hisleadership the product range would be changing rapidly, it would still stock the brands classicsand many of these products would continue to carry the brands early symbol; Burt’s beardedface. However new product lines were about to appear among them a complete line of hair careproducts. Replogle believed this was the way in which to break into the mass market. Howeverstill the question remained: how could Burt’s Bees realize Roxanne Quimby’s vision of growingthe brand without distancing itself from the people, values and narratives that made itsuccessful thus far?2.0 Analyses2.1 External Analyses 2.1.1 Strategic Mapping
  • 4. It is clear from our strategic map that Burt’s Bees are a strong player in terms of brand awareness in their individual natural market. However as we shift to the right of the map we can see how brands awareness’s increases and also how the nature of the product changes. It is important to highlight that all the brands listed at the top and to the right, traditional, are in the mass market. Therefore it is evident that before any move is made Burt’s bees will need to strengthen their brand. 2.1.2 Competitor Analysis Burt’s Bees is in an emerging market, the natural & organic personal care market has a 15% growth rate in the past year and the growth rate will highly likely to continue in the future. As a result, the industry has shown huge potential and highly competitive. In fact, NPC is still a niche market under the personal care industry. Key players in the mainstream personal care sector have shown interest and started to launch their natural personal care brands. Although some of them claimed to be natural, but they are widely accepted as pseudo-natural. Despite the natural elements of the products, Burt’s Bees and other NPC brands are also indirectly competing with those mass market brands. There are 6 main competitors in the natural & organic personal care sector: Brand Distribution Channel Price to Product Brand Trial Usage Revenue Burts Specialty Awareness (million) BeesBurts Speciality Stores, Health Premium Skin & Lip 54 26 19 101*Bees Stores, Drug Stores CareAveeno Food Stores, Drug Stores, Similar Skin Care 95 29 19 200 Mass Retailers, Speciality StoresToms Mass Market Channels, Lower Oral & Body 39 7 6 50of Health Stores, Speciality CareMaine StoresKiss My Health Food Stores, Higher Sun & Skin N/A N/A N/A 75Face Speciality Stores, Care Website, CVS.comNatures Health Food Stores, Higher Hair Care 15 2 1 30-40Gate Speciality Stores, Website, CVS.comJASON CVS Stores Similar No Specialty 8 3 3 20-25Avalon Higher No Specialty 34 3 1 40*Figure from sales in 2003 was $60 million, sales growth rate over 30%, take 60*130%*130%= $101.4 million for 2005.
  • 5. Tom’s of Maine: Owned by Colgate-Palmolive, estimated sales of $50 million in 2005. Specialize in oral and body care products, price at slightly low than Burt’s Bees. Tom’s is number one in the natural oral care with 60% share in US$. Products sold in specialty stores, health food stores, mass-market channels such as CVS, Walgreens and Target.Kiss My Face: Sales over $75 million in 2004, Kiss My Face covers most product categories, and has two product lines. Original natural personal care products priced similar to Burt’s Bees and the “certified organic” line is generally higher. Kiss My Face is launching a new makeup line. It is also the sunscreen and moisturizer sponsor of US Ski & Snowboard Teams 05-06. Distribution channel includes health food store, specialty venues, own website, and CVS.com.Nature’s Gate: Estimated sales of $30-40 million in 2005, Nature’s Gate was the number one in natural hair care category. Three lines of products, classic priced similar to Burt’s Bees and the other two higher. Products are sold through health food stores, specialty venues, own website and CVS.com.Jason: Estimated sales of $20-25 million in 2005, JASON offers a broad range of products priced in line with Burt’s Bees. Want to challenge Burt’s Bees in the mainstream drug channel, started a partnership with CVS.Avalon: 2 brands under Avalon, Avalon Organics and Alba Botanica, estimated sales of $40 million. Alba Botanica is priced similar to Burt’s Bees and Avalon Organics higher. Owned by the same company of JASON, will be part of the challenge in the mainstream channel.Aveeno: Principal pseudo-natural competitor in the mass-market. Estimated sales of excess $200 million, Aveeno offers a full range of products which are sold in food, drug, specialty stores and mass retailers. Aveeno will launch a new line of anti-aging products. Aveeno has a huge brand awareness advantage over Burt’s Bees.Other mass market competitors in the personal care industry include Johnson &Johnson’sNeutrogena (sales $1 billion), Garnier, L’Oreal’s $400 million brand, Herbal Essences, $700million Procter & Gamble brand. Those brands all have natural element in their products, butthey are currently still classified as pseudo-natural. 2.1.3 Category/Product Range AuditBurt’s Bees currently offers a large range of natural personal care products including lip, bath,baby, skin care, and etc. There are some products (e.g. handmade candles which made up half oftheir sales in the early years, their most mentioned Bay Rum after shave balm, and somelipsticks especially the fig colour) have been discontinued due to various reasons. Ingredientsare claimed to be at least 98% natural and proven to be effective before launching. The productalso reflects the highly respect to environment and social responsibility, packaged with recycledmaterials. One of the most notable features of Burt’s Bees’ products is the efficacy, which isalways tested and proven to be highly effective. This also refers to the healing effect of eczema
  • 6. mentioned in customer’s NPC NPC Current Competitor NPC Category quotes in exhibit 8 of the Penetration Growth Offering Offering Feasibility case. Smell is also Cosmetics 2.2% 18.8% No No No Feminine Hygiene 2.2% 12.6% No No No another feature that Nail Care 2.6% 7.2% No No No Burt’s Bees valued Fragrances/Aromatherapy 4.3% 14.3% No No Yes highly compare to No(was Shaving 5.3% 13.4% No Yes others. They believe that offering) smell is one of the most Oral Hygiene 9.9% 13.5% No(was Yes Yes attractive and appealing offering) Deodorant 10.4% 18.3% No No No feature of personal care Yes(ready to products, that also has Haircare/Colouring 11.5% 17.1% No Yes launch) been proven to be a Baby Care 13.3% 14.4% Yes Yes N/A signature feature of Bath 23.2% 14.0% Yes Yes N/A Burt’s Bees products. An Bath/Toilet Soap 23.6% 13.5% Yes Yes N/A interesting point made Skin Care 27.4% 13.4% Yes Yes N/A by their Chief Marketing Officer Indursky, “we don’t ask consumers to help in creating products, we use them to validate, not create”. However, customer feedback in Exhibit 8 has shown huge desire with the discontinued products. Which we believe that the decision of discontinue those products was made without any research. Our table below shows the potential of each of the category in the personal care market including traditional, pseudo-natural and natural product categories, including the penetration of each natural product category in the market and its growth over the past year. The table below combined Burt’s Bees and competitors offerings of each of those product categories. Burt’s Bees’ current offering only include those have the highest penetration of natural personal care products (bottom 4), despite the above average growth rate of them. Looking at other categories, a lot of them have huge potential considering of the penetration and the growth rate together. That might be a good indicator for future research and development. However, some of them may not be feasible to the core vision of natural. For example, cosmetics may not be fully natural considering. 2.1.4 Brand Awareness Analysis Brand Awareness June 2006 The graph to the left is broken into three parts, the bar charts in blue120% represent traditional personal Dove100% care products. The green charts Olay are both natural and Pseudo-80% Neutrogena natural products and finally the Herbel Essence yellow represents Burt’s Bees. We60% LOreal have included both natural and40% traditional products into the Chapstick analysis as we felt it was20% Blistex important to consider both aspects 0% Aveeno of the market due to the Nivea opportunities of expanding into the mass market. As we can see Garnier Burt’s Bees has only 54% brand Aveda awareness in comparison to Dove
  • 7. and Olay who have the highest at 99% each. If we look even closer we can see that the leadingnatural product brand is Aveda at 63% while in the Pseudo-natural range Aveeno is a clearleader at 94%. A possibility for Burt’s Bees only coming in at 54% could be down to the fact thatthey do not rely heavily on marketing communications and advertising to promote their brand.Although this is not a major factor when it comes to the natural market however it is somethingthat will be need to be considered if entering into the mass market.Once again the colour scheme is thesame as above; Burt’s Bee’s is coming in Trial-June 2006at 29% which is quite low in comparison 80%to the brand leaders in the market. Also Dove 70%the comparison can be made with the Olaynatural products where we are the 60% Neutrogenamarket leader which is great to see 50% Herbal essencebecause Aveda (natural product) wasabove us in the brand awareness chart 40% LOrealhowever we have now jumped above 30% Chapstickthem in the trial of products table. Blistex 20% Aveeno 10% Nivea 0% Garnier Aveda Burts BeesCurrent Usage of BrandsBrand July 2005 June 2006 % DifferenceDove 57 56 1% lossOlay 33 36 3 % increaseNeutrogena 29 32 3 % increaseHerbal Essence 27 25 2 % decreaseL’Oreal 28 32 4% increaseChapstick 40 50 10% increaseBlistex 35 30 5% increaseAveeno 14 19 5% increaseNivea 12 9 3% decreaseGarnier 10 18 8% increaseAveda 7 8 1% increaseBurt’s Bees 13 19 6% increaseTom’s of Maine 6 6 Stayed the sameAvalon 1 1 Stayed the sameAlba 1 0 1% decreaseNatures Gate 1 1 Stayed the sameAubrey 1 1 Stayed the sameJason 3 3 Stayed the sameDr. Hauska 1 0 1% decreaseThe % difference table shows us that Burt’s Bees has grown by 6% from July 2005 until June2006 in regard to usage of its products. This is the largest growth out of the entire of the naturalproduct market and the third highest in the overall personal care products market.
  • 8. 2.2 Internal Analysis 2.2.1 Revenue Growth AnalysisDistribution BackgroundBurt’s Bees currently sell directly to distributors, bypassing wholesalers in order to maintainpremium pricing and dictate trade terms. Offering generous margins, stocking Burt’s Bees wasan attractive idea for personal care retailers, despite their no-returns policy and withheld tradeterms.Traditionally, the company have retailed through speciality stores, starting off in the gift shopmarket, as there were few entry barriers. However, Roxanne Quimby knew this couldn’t carrythe business, and wanted to get Burt’s Bees to “everyone, everywhere”. The company opened sixretail stores, but were forced to close due to lack of retail competencies and resources withinthe company. Quimby realized that ultimate success lay in mass-market distribution, and inSeptember 2004, Quimby signed a deal to distribute Burt’s Bees line in CVS and Walgreens drugstores.However, with the company beginning to move into mass distribution, there has been somebacklash from smaller retailers, with some leaving Burt’s Bees. Up to now they have tried tocombat this by dissuading large retailers from offering customer discounts, to help smallerstores compete, but a few speciality stores have felt this is not enough.Burt’s Bees tend to stock in “hives”, a standout product display, which CVS have allowed up tonow due to shelf space maintenance. However, with the growing new product range, the hiveswill no longer fit the full range and they may be forced to move from the distinctive hive to theshelf.Revenue by Channel: 2002 2005 Growth ’02-05 Gift/Specialty Stores 39.9% 31.2% - 8.7% Health Stores 29% 15.2% - 13.8% Drug Stores 9% 29.3% + 20.3% Distributor 5.1% 12.8% + 7.7% Grocery 6% 6.9% + 0.9% Other 11.1% 4.7%` - 6.4%As we can see from the table above, patterns of revenue through distribution channels hasdramatically changed since 2002, with high growth in revenue through drugstores, considerablegrowth through distributors, and slight growth through grocery stores. Revenue from gift,speciality, health stores and other channels have all dropped significantly. % of Respondents who Annual Ad Spend as 2005 % Market 2005 % Market considered brand a % of revenue Share, Natural Share, Drug Store natural Grocery Channel Burt’s Bees: 0 0 7.3 0.4We can see from Exhibit 4 that although Burt’s Bees revenue from grew by 20.3% up to 2005(ref. Exhibit 2), they still only commanded 0.4% of the drug store channel market share. Thiscould be attributed to their lack of spending on marketing communications and advertising. The
  • 9. leading competitor in this channel is Aveeno, who spent 90% more on advertising, resulting in a1.1% market share. 2.2.2 CBBE PyramidThe CBBE model can be seen as an integrated perceived image from its customer’s point of view,with a mind route that a person follows to become a loyal customer. (See Appendix A)Start from the bottom is the salience stage, where an individual receives the basic informationof the brand (product category, brand name, product name, etc.), through the marketing of thatbrand or can be his/her own research in today’s two way communication environment. Thenhe/she may purchase that brand to become a customer, there are two different routes thathe/she may take to form a brand image. The left hand side is the rational route, and the right isemotional, each consists of two dimensions. To become a loyal customer, he/she may have bothrational and emotional perceptions of that brand. The rational route is very objective and moreabout the product rather than the brand, the two sub headings are performance and judgment.Performance is very fact based which would be for example the performance of that product,price, durability and even design and style. Judgment is the actual rational stage: he/she wouldjudge the product and the brand in terms of perceived quality, trustworthiness and superiority,and then decide to switch or not. The emotional route is nearly the total opposite of the rationalroute. It is more subjective and may not have to tie with the physical product but the brand. Thetwo dimensions are feelings and imagery. Imagery is what the customer see the image thathe/she would have if link it to him/her. It is highly dependent on the brand personality andendorsement that the brand has been built over time, and also may be influenced by otherpeople around him/her. Feeling is the emotional touch that a brand gives this person, whichcould be highly influenced by public relation management and crisis management (in badsituations) and etc. Approaching to the top of the model is the brand resonance, which is acombined image and/or a sum up of all the bits and pieces that make the brand differentiatedfrom its competitors. This model indicates how a customer views a brand and what makeshim/her loyal to the brand. It also gives us an idea of how to build a brand that is highly likely togain customers and their loyalty.2.3 SWOT Analysis Strengths Weaknesses • Effective Product • Low Brand • Customer Loyalty AwarenessAfter compiling our external and internal analysis we • Experienced Mgmt • Mixed Channels Team • Varied Imageconstructed a SWOT analysis. • OrganicStrengths:Burt’s Bees have a strong loyal customer base built on Opportunities Threatsthe back of an effective product that does exactly what • Huge Growth Markets, Low • "Just Another Do- Gooder"it says it does. It is almost 100% organic and is backed Penetration • Higher Price • Unique Competitiveby a new experienced management team. The Advantagecompany’s owners, AEA, are also specialists in buildingimage and sales.Weaknesses:
  • 10. Although Burt’s Bees’, as stated above, have a loyal customer base they clearly lack a clearunified brand image. They are using eight different logos and text on their products which is aserious factor to reconsider before entering the mass market. As a result of this, customers wereunable to recognise the brand in surveys taken. Another weakness of the company is that theyare performing across so many distribution channels. This can prove a difficulty for a smallbrand and it could be suggestive that they become more select in their channels.Opportunities:As Burt’s Bees are hoping to enter the mass market, this provides the company with a greatopportunity to continue rapid growth and sustain value. This can combine with the company’sunique competitive advantage of being 99% organic.Threats:Burt’s Bees must also be aware of the threats facing them such as consumers perceiving them asanother “do-gooder” and questioning the truth behind their product. They also face a hugethreat of entering the mass market with their current price as consumers in mass markets maychoose the less expensive option.3.0 Key Issues Product Line: Large Product Line and some popular/unpopular products. Urgent need to cease discontinuing habit and disappointing customers. Brand Strength: Very poor brand strength. At present not leader in niche market in terms brand awareness and a long way off of competing in mass market. Sustainability needed. Retailer Relationships: Working with small retailers and maintaining those relationships is very important to sustain value and to grow. Must weigh options of distribution up also. Management Change: New management team may bring different views to company and also different direction. Must be careful how situation is managed. Where Next? Stay in niche market or go straight to mass market. New Competitive Environment: Regardless of which direction the company goes, they are facing new competition from both pseudo and traditional competitors as claims to be natural are widespread by everyone.4.0 Strategic Alternatives 4.1 Strategic Alternative (A); Staying in the Niche MarketBurt’s Bees has continued to grow consistently over the last number of years, experiencing anenormous increase in their loyal customer base. The customer comments in Exhibit 8 show thattheir current product line brings high customer satisfaction, generating positive word-of-mouth.The company has relied on this positive word-of-mouth as a promotion tool, and it has lead tothe brand’s rapid growth in the niche market.As mentioned in the distribution background, Burt’s Bees success began by retailing throughspeciality, health and gift stores. Through these channels, Burt’s Bees products get pride ofplace, having their own beehive-shaped display unit in catch the customer’s eye.
  • 11. It is clear from the evidence given in the case that this strategy is working for the company.They are continuing to grow by brand-loyal customers referring friends and family, and their100% natural core values lie at the heart of the “fan” culture than surrounds the brand.Continuing to focus on the niche market has some real potential for the company. According toParrish’s 2004 study on niche market strategy, “all of the study respondents (retailers) statedthat they have seen increased sales since implementing a nice market strategy.” Parrish alsonoted that in order for a niche market strategy success depends on a number of product andmarket variables. The product and brand must be differentiated, which with Burt’s Bees currentquirky branding and 100% natural ethos seems to already be working in growing theircustomer base. There needs to be perceived value for the customer, which is evident in thetestimonials. The merchandising mix is important, and we feel that Burt’s Bees’ current “hive”merchandising strategy catches the eye of potential customers in specialty stores, and this willcontinue to allow them to be effective in the niche market.We have some suggestions for expanding their current niche-market strategy to gain marketshare in the category. We suggest building their relationships with retailers in the niche market,in order to maximize retailers’ recommendations of our product to niche market consumers,and increasing market share. This is already being done to an extent by their withholding tradeterms with mass retailersWe also suggest going into partnership with a major spa chain, with a similar value system toavoid deflection from the brand. If we could get a spa chain to use Burt’s Bees productsprimarily, we could ass perceived value to the product, use the health spa as a means toemphasise the 100% natural element of the product offering, and increase brand awarenessacross the market. Customers would then ideally see the benefits of Burt’s Bees product range,and may become long-term users of the product range. Spas could also be used as an extraspecialised distribution channel within the niche market, selling Burt’s Bees products tocustomers alongside Burt’s Bees Spa Treatments and to non-spa customers.This strategy is achievable. It’s worked in the past, will continue to work, will be easy toimplement and changes will be minor. However, while there is rife opportunity to developmarket share within the niche market, our concerns about this strategy lie mainly in the realitythat staying within the niche market will limit the company’s potential for growth. While theycan continue to grow in this area, by limiting themselves from the mass market, they aremissing out on the chance to reach the majority of the market. Is it possible for Burt’s to reachits potential for success by staying in this fixed niche market, and never expanding beyond it? 4.2 Strategic Alternative (B); Joint Venture to enter mass marketIf we look back at the analysis our low level of brand awareness is a major factor on expandinginto and competing in the mass market. In order to rectify this problem we choose to join with astrong “pseudo natural” brand already established in the mass market such as Herbal-Essence.Currently Herbal Essence has a $700 million brand which repositioned itself as a pseudo-natural product line within food, drug, and mass stores. Herbal Essence is a large player in thepersonal care market in comparison to Burt’s Bees. According to Sherman (2003) the reason asmaller firm would “seek alliances with bigger more powerful companies is because of thecredibility boost, technology leveraging and access to markets which a larger player is likely tobring to the table”. One of the possible reasons for joint ventures or strategic alliances is to
  • 12. widen or integrate product lines (Sherman 2003). Therefore we suggest that for the Herbalessence Shampoo range they would keep their brand image, however Burt’s Bees would need tobe mentioned in all aspects of the branding process. While for the rest of the Burt’s Bees productportfolio the opposite would occur.When considering a joint venture as a possible growth strategy give careful thought to the typeof partner you are looking for and what resources you and the partner will be contributing tothe newly formed entity (Sherman 2003). Therefore let us look at both the positive and negativepoints for each company individually if the strategy was to become a reality:Herbal Essence:+Their current product line only includes shampoo, by joining with Burt’s Bees they have theopportunity to utilise the full product portfolio which Burt’s Bees has to offer. This could lead toan increase in revenue for the brand due to the expansion of the product range.+They are currently positioned as a “pseudo natural” product line; the partnership with Burt’sBees can help them establish their products as fully natural. This allows Herbal Essence tocompete within the niche market of fully natural products which will further strengthen thecompany’s future growth.+They will still be the main brand image on their shampoo range; they can also use the newshampoo which Burt’s Bees has developed and market themselves as 100% natural.+By joining with Burt’s Bees they will acquire a percentage of the loyal and enthusiasticcustomer base that Burt’s Bees currently have. The case tells us that these customers areinvaluable to the marketing of the company because they love the product so much they becomeambassadors for the product range and promote the product to anyone who will listen.-Herbal Essence is currently only supplying shampoo to the market, by joining with Burt’s Beesthis may complicate the product line which may result in customer confusion. Also the fact thatBurt’s Bees will be the main brand image on the rest of the product range other than shampoothis may lead to further confusion.-If they are to enter into a niche market of “natural products” they may need to re-price theircurrent products to a more premium price similar to that of Burt’s Bees due to the fact that thecosts will be higher if going 100% natural. This again may cause confusion with their currentcustomer base and they may lose some of their existing customers.-Herbal Essence already has high revenue and good brand awareness among consumers, whywould they need to merge with a smaller company who offer a different product line.Burt’s Bees+Burt’s Bees clearly state that they would like to develop a full range of shampoo, which in 2006they finally came up with a fully natural shampoo product. If they were to merge with HerbalEssence a specialised shampoo company, this would help them to develop and expand theirshampoo line across all channels of distribution.+As the analysis show Herbal Essence have a massive 97% brand awareness in the personalproduct care market and by Burt’s Bees merging with such an established firm this will allowthem to distribute their products to the mass market.+The revenue and distribution channels which Herbal Essence currently has will help Burt’sBees expand and develop their full product range.
  • 13. +The joint venture is with a company that is in the pseudo natural range already, so at least it’s not as traditional product range company. -By merging with a company such as Herbal Essence they may lose the authenticity of their brand and this may result in once loyal customers becoming disillusioned with the brand. -Burt’s Bees has just established their natural shampoo, however by joining with Herbal essence this may compromise their new shampoo product. -Herbal Essence specialise in hair care however they do not have any other products which means they bring limited expertise to the joint venture. From a Burt’s Bees point of view the joint venture with Herbal Essence will allow an easier path to expanding into the mass market and it will also help them to expand their product portfolio especially the shampoo line. The venture would give Burt’s Bees access to greater capital and larger distribution channels. However it seems that the benefits for Herbal Essence entering into the joint partnership greatly outweigh the benefits for Burt’s Bees. The disadvantage for Burt’s Bees entering into a joint venture with Herbal Essence would be that Burt’s Bees would be forced to give up a certain amount of control (Sherman 2003). If going with this strategy Burt’s Bees also runs the risk of losing its authenticity and original core beliefs by joining Herbal Essence in partnership. The risk of joining the two brands together as one is too high and will more than likely result in brand confusion for the consumer. Burt’s Bees should explore other strategies to ensure market growth. 5.0 Chosen Strategy: Rebrand-Strengthen Awareness-Enter Mass Market For our chosen strategy, we have decided on a rebranding strategy to increase and strengthen the brand with the long term aim of expanding the brand within the mass market. As stated above we feel that the image of the brand is simply not sustainable to compete in the mass market and to an extent is the reason that the brand is not the most instantly recognized within the niche market. We believe that the number one issue for Burt’s Bees’ is to grow the brand without compromising the product i.e. ingredients. Niche Selected1. Rebrand 2. Market Campaign Build Up 3. Mass Market 4. Entry We believe the strategy will follow four key steps, above. To begin, we feel that a large part of the weaknesses of the brand can be accounted for by the lack of advertising spend and multiple imagery across product lines as discussed earlier. Therefore we suggest one logo for the entire product portfolio, See Above. We have developed a logo that is similar to the ‘Innocent Smoothies’ logo as we feel that this is an appropriate way to position the brand and differentiate the brand from competitor’s, both niche and mass market. As well as a differentiator, the characteristics of the brand, such as honesty, commitment, organic and fair-trade can be leveraged as part of the entire offering. Brand personality can be
  • 14. defined as the “embodiment of personality traits of the consumer in the brand itself” (West, Ford& Ibrahim, 2006; P259). Through this tactic we feel we can compete with the larger traditionalcompetitors in the mass market as consumers will associate their own characteristics e.g.honesty with the brand more clearly. This strategy of rebrandingshould take approximately six months to one year we believe andshould create a clear unified umbrella brand for the company tobring forward when moving into the chosen market. Thisnew simple logo can also improve customer’sperception of brand, see CBBE Appendix B. Skincare Facecare Body Hair Outdoor Baby MensA clear unique value proposition needs to be defined for the company along with the brandimage. We believe that the best way to this is to develop a proposition is around the healingpowers of the products. Many customers have praised the products for their healing powers sothis is a key customer insight and would be the strongest pillar to build the brand on.Following this we suggest that a large portion of turnover is put into an advertising budget andnew packaging with the new branding as currently there is no advertising spend. This can bedone through sample days in store, coupons, television advertising, unifying the one imageonline at burtsbees.com, incorporating social media into the media plan (customers as brandambassadors) and billboards.After time has been spent building up the brand image within the niche market, we feel Burt’sBee’s should assess their consumer awareness again and relate it to their competitor’s. Weestimate that by then, the awareness figures will have raised and then the company will besufficiently equipped to compete within the mass market.The next step for Burt’s Bees is to now carefully select which categories they will compete inwithin the mass market and which distribution channels to use. We recommend that they aim tocompete in the Hair care, Nail Care, Shaving, Skin Care and Fragrances categories as theserepresent the best opportunities for growth as all have relatively low penetration and highgrowth rates. As well as this, most of these categories are aligned with existing productsavailable in the Burt’s Bee’s range currently, thus lowering NPD costs.When selecting distribution channels, we feel Burt’s Bees’s priority should now be with drugstores, distributors and grocery as they are now a mainstream product. We would aim to be stillin gift shops and health stores through working close relationships with them, but acknowledgethat we are losing some of the uniqueness which may make the brand unpopular in thesechannels. However despite this we feel the reasoning is adequate as drug stores anddistributors are a growing trend in the company’s revenue streams as highlighted in analysis,cumulative gain of 28.9% of revenue in 2005. We feel that this is also adequate as in order toalign with the long term goal of seeing the product in all mainstream stores we must be willingto grow more.Finally as part of this strategy, we feel that Burt’s Bees should keep measures of their progressand understand that this is not an overnight strategy and is a long term strategy. Burt’s Beesshould not attempt to try to do too much and keep things simple. In order to grow they mustsustain current customers whilst providing the same value whilst attracting new customersthrough the improved image of the brand.
  • 15. Other suggestions regarding going mainstream we had were perhaps 5 years down the line,developing food products, i.e. Honey and Lemon Healing drinks for mass market. Anothersuggestion is perhaps looking into getting fair trade stamps of endorsement or 100% certifiedstamps.We believe that this chosen strategy is achievable and realistic because of recent consumerdemand trends for organic natural products and because we are not compromising the corevalues of the product but simply architecting a structured brand and product portfolio whilstsustaining existing customer value.6.0 Case Lessons It is very important to have a product portfolio that has a consistent brand image. At the moment Burt’s Bees products are quite diverse and this may cause customer confusion, especially when entering into the mass market. The original vision of the Burt’s Bees brand was to have their natural and earth friendly products reach everyone, everywhere. Although this may cause the brand to become too commercial, sometimes in business it’s about making a decision and implementing it in order for it to work for the company. The loyal customers of Burt’s Bees are integral to the future success of the company. As stated in the case they are very passionate and truly love the brand. Therefore whatever future growth strategy that Burt’s Bees decide on they must not offend their current loyal customers by compromising the authenticity and fully natural elements of the product range.
  • 16. 7.0 Bibliography/AppendicesBooks:West, Ford & Ibrahim, (2006). ‘Strategic Marketing’, Oxford Publishing.Doyle & Stern, (2006), ‘Marketing Management and Strategy’, 4th Ed., Prentice Hall.Keller, (2008), ‘Strategic Brand Management’, 3rd Ed., Pearson Education.Article:Sherman, A. (2003), ‘Growth through Joint Ventures and Strategic Alliances’, Fast track BusinessGrowth. Available at Business Source Complete.Journals:Parrish, 2004. “Retailers use of Niche Marketing in Product Development”. Journal of FashionMarketing & Management; Oct2010, Vol. 14 Issue 4, p546-561.
  • 17. Appendix A: CBBE Pyramid Brand Resonance Loyalty & Sense Of Community Judgement Feelings Perceived Quality Social Creditability Responsibility Performance for money Value Healthy Imagery 100% Natural Smell Values Healing Certified Endorsement Efficacy Bees are natural Brand Saliance Category Awareness(NPC), Relatively Strong Brand Awareness
  • 18. Appendix B: Declaration DeclarationWe hereby certify that this material which we now submit for assessmenton the programme of study leading to the award of MBA Marketing isentirely our own work, and has not been taken from the work of others,save, and to the extent that, such work has been cited and acknowledgedwithin the text of our work. Signed: _______________________ ID No: ______________ Date: _________ Signed: _______________________ ID No: ______________ Date: _________ Signed: _______________________ ID No: ______________ Date: _________ Signed: _______________________ ID No: ______________ Date: _________

×