POSTGRADUATE PROGRAM IN

MANAGEMENT
(PGPM – Batch 2020-22)
(MIS)
Case Analysis
Sephora Direct: Investing in Social Media,
Video, and Mobile
GROUP 10 – Section B
20P061 – Aastha Mittal
20P071 – Aman Pratik
20P091 – Mohak Agarwal
20P0101 – Sagar Jain
20P0111 – Taruman Chahal

Management Development Institute

Gurgaon
March, 2021
Introduction:

Sephora Direct is the world's largest beauty store, with a $2 billion annual turnover. Luis Vuitton
recognized the brand and acquired it for $262 billion in 1997. It started as a single perfume store in
France in 1969 and has since grown to 52 locations. In 1998, the company expanded into the US
market and opened its first store in New York. By 2010, Sephora had 1,000 stores worldwide, with
450 in the United States. The business then joined up with JC Pennys. Sephora featured 288 prestige
labels and 20,000 items. There were several rivals for the brand, but Ultra was the most closely
linked, with different marketing strategies. Sephora controlled 30% of the online market in the
United States and had tens of thousands of followers and reviews on social media sites.

Problem Statement:

The problem with Sephora Direct is that Julie Bornstein, the company's Senior Vice President, wants
to double the current budget for social media, video, and smartphone in 2011. Bornstein and her
team must explain what the company can benefit by winning in social media, as well as how to
assess the progress of Sephora's digital efforts. Bornstein understands that his organization must
preserve its business creativity, as well as decide where to distribute funds and how to assess the
performance of their operations. They understand how difficult it is to determine ROI when deciding
the best investment level.

Goals for Strategic Marketing:

I agree that the majority of the budget should be spent strategically on improving service quality and
investing more in mobile apps, beauty talks, and YouTube.

 Double your marketing budget and learn what "success" means in the digital world.
 Improvement of existing channels - Mobile - Beauty Talk - YouTube Channel -
Facebook/Twitter - Sephora Direct.
 Increase the number of videos and demonstrations of product usage to become a sales
leader as well as a leader of tutorials, and boost the digital experience.
 Use online and in-store surveys to gauge customer loyalty.
 To draw buyers, encourage more activities in stores with make-up experts who teach
common make-up mistakes.
 Give customers discount to convince them for online shopping.

Possible Solution for Budget Allocation:

Exhibit 5 reveals that 45 percent of the budget is spent on retail marketing events such as catalogues
and shop animations in 2010. Online marketing, which involves social media and search, receives
35% of the budget. The remaining 20% is allocated to the beauty industry, which includes emails,
gifts, and activities. Because of the rise in social media use, conventional media spending should be
reduced and allocated to new media, according to these figures. Furthermore, as technology
advances, conventional forms of media such as magazines and newspapers are becoming obsolete,
and the business can spend less money on these forms of advertising. However, as the use of
smartphones and tablets has increased dramatically, the number of prints should be decreased, as
the majority of Sephora's customers are between the ages of 25 and 35, and prefer digital media to
print media.
Allocation:

Mobile – 30% ($300,000): Because almost every person/customer owns a Smartphone, the mobile
app is the most common way to stay connected nowadays. The cost of creating an app ranges from
$100,000 to $200,000, plus the cost of maintenance. With this support, the company should
concentrate on developing mobile services, such as Android and iPad apps.

Beauty Talk – 25% ($250,000): Sephora uses this forum to engage with its existing and future
customers who are beauty insiders. Sephora will use this allocation to incorporate its Facebook and
Beauty Talk customers who often contact Sephora employees and provide a common and quick
forum to identify any current issues.

YouTube – 25% ($250,000): This was previously used by the company to advertise how a product
could be used and had a positive return. It is one of the most popular social media platforms, and
the company should increase its presence there. As a result, Sephora should continue to invest in
this platform and have more product tutorials.

Twitter – 10% ($100,000): Twitter is regarded as a trustworthy forum for consumer engagement.
Sephora should use this budget to increase its following and encourage ads through hashtags.

Facebook – 10% ($100,000): With nearly a million followers and fans, Facebook has the most power
and direct contact channel. Sephora will improve customer relationships and foster Beauty Talk with
a $100,000 budget.

Proposed Metrics to Use:

Quarterly Reviews: Each quarter's sales report will assist the organization in evaluating their success
on various social media platforms as well as evaluating target customers.

Number of Sales: The organization can also use number of sales as a metric to make monthly and
annual comparisons. They can also compare the number of sales made before and after the
promotion period.

Web traffic: Using this measure, they'll be able to see how many people visit the website to get
updates and purchase products.

Number of likes/comments/shares: Sephora has a large social media presence; as a result, they can
build various social media indicators to assess customer satisfaction.

Demographic of Users: The other possible metrics could be analyzing number of women and
men follow the Sephora, their ages, range of each people that share and comment. Knowing
demographics will help Sephora to communicate with its consumers more effectively.

All of these metrics will help Sephora increase customer loyalty and build stronger relationships with
existing customers while also attracting new ones in the long run. It would also contribute to
increased revenue and market share in the long run.