A group presentation for the undergraduate marketing class at UC Berkeley, Haas School of Business, Spring 2009.

1. Kyle Matson
Max Niu
Jason Lee
: LEAVING THE HIVE
Moving a niche brand mainstream

2. ROAD MAP
Problem Statement

Background

Key Competitors

Recommendation

Basis for Recommendation

Range of Options Considered

Action Steps

Assumptions


3. PROBLEM STATEMENT
John Replogle, CEO of Burt’s Bees must

decide how to expand the company, a
popular niche brand, into the personal care
mass market.

4. BACKGROUND
September 2004 - CVS/Walgreens

partnership established
 December 2007 – Acquired by Clorox
 Leads in awareness-to-usage rates
 Attempting to refocus offerings – lackluster
results from Cosmetics line

5. KEY COMPETITORS
Key Annual Sales Notes
Categories
Face Care, $200m Brand is not all
Body Care, (estimated) natural; strong
Lip Care, position w/
Baby Care opinion leaders
and Sun Care (dermatologists)
Hair Care $30-40m (2005) Packaging
emulates
conventional
beauty prods.

6. KEY COMPETITORS (CONT.)
Key Annual Notes
Categories Sales
Face / Skin $75m (2004) Pursues a youthful
Care image in face/skin
care
Soap and $20-25m
(2005)
Bath
Owned by Hain
Celestial
Skin Care $40m
(estimated)

7. RECOMMENDATION
Develop distinct product offerings and
merchandising methods for each channel.

8. Recommendation (cont.)
• Launch New Lines
1
• Differentiate Between Channels
2
• Promotions
3
• Minimize barriers to entering mass-retail
4

9. 1. LAUNCH NEW LINES
Low market share in Bath and Hair Care

categories
 Categories have strong NPC penetration and
growth
 Avoid Cosmetics, Fragrances and Oral Care
markets

10. 2. DIFFERENTIATE BETWEEN CHANNELS
Mass-Market Specialty
•All lines
•Select high-growth
categories (bath, hair,
lip and skin care)

11. DIFF. BETWEEN CHANNELS (cont.)
Positioning
Relative to NPCs
Relative to
traditional

12. DIFF. BETWEEN CHANNELS (cont.)
Target Customers
CURRENT NEW
Mass retail
Health &
customers not
Environmentally
yet aware of NPC
conscious
prod. benefits
Avoid: consumers
Relatively higher
who prioritize on
education levels
price alone

13. DIFF. BETWEEN CHANNELS (cont.)
“The Hive”
 Advantages
 Increase product visibility
 Spatial concentration of all product lines
 Minimizes space needed on retailers’ shelves
Disadvantages

 Can only stock a limited number of SKUs

14. DIFF. BETWEEN CHANNELS (cont.)
“The Hive”
 Specialty Stores: In-
line shelving
 More SKUs being
offered to specialty
stores
 Visibility is less
important

15. DIFF. BETWEEN CHANNELS (cont.)
“The Hive”
 Mass Retailers: Keep products in Hive
 Limited number of SKUs being sold to mass
retailers
 Allows all products to be stocked near each other
store visibility of diverse product range
Enhances

16. 3. PROMOTIONS
Induce trial and increase visibility

 Pastsuccess with promotions that involved
product trial
48% 73%
Awareness Trial Usage

17. 4. MINIMIZING BARRIERS
Terms of Trade
Offer performance-based incentives

 No price promotion
Allow returns on products

 Reduce retailers’ risk

18. 4. MINIMIZING BARRIERS
Stocking
Outsource to “rack-jobbers”

 Employ 2-3 sales analysts nationally
 Willcompensate for loss of sales data provided
by in-house stocking staff

19. BASIS FOR RECOMMENDATION
BB has access to a greater number of

customers at the mass-market level
 Starting with high-growth categories can
help gauge later expansion
 Appease loyal customers and specialty stores
while expanding into mass retail

20. RANGE OF OPTIONS CONSIDERED
Offer all SKUs to both channels

 Tiering of the product line
 Purging product line of slower-growth SKUs
 Use / abandonment of the “hive” uniformly
across all channels

21. ACTION STEPS
• Pursue further mass-retail contracts
1.
• Make trade terms performance-based
2.
• Promotion - Provide healthcare professionals
with samples for patients
3.
• Promotion - Samples via newspaper
4.

22. ASSUMPTIONS
Bath and Hair Care lines are ready for

market
 NPC market will maintain its high growth
rate
 Savings from outsourcing will exceed costs of
sales analysts
 Manufacturing efficiency will improve,
allowing the company to keep diverse SKUs

23. THE UPSHOT