NATURA: GLOBAL BEAUTY MADE IN BRAZIL

- Deciding if natura, the largest direct sales beauty company in brazil, should invest in
russia
- Founded by seabra as a small store in sao paulo, brazi in 1969
- Recently estahlished a new direct-selling operation in mexico, and venezuela and
colombia were likely to join naturas portfolio in coming years
- Company had just opened a flagship store in paris
- Actively seeking other growth opportunities worldwide
- Naturas international development was met with mixed reviews from industry analysts
and investment bankers
- Carefully though-out growth stragtey or just ambitions
- Natura is brazils biggest domestic cosmetics company → considered one of the best
brands in brazil, was a leading company in the sustainable use of brazils biodiversity,
and was known as one of that countries best employers
- Knew their proven ability to face global competitors in their won market was no longer
enough
- Rapid consolidation of the global beauty industry was forcing smaller companies
to be even more aggressive in developing new product lines, segmenting existing
markets, and challenging the previously strong borders between the mass and
prestige sectors

THE BRAZILLIAN BEAUTY MARKET

- Brazil is a melting pot of ethnic origins and cultures
- High income equality that had deep historical and regional roots

BRAZILIAN MARKET MAIN TRENDS

- Brazil ranked 3rd worldwide in deodorants and hair-care products
- The cultural importance of self-image in brazil helped boost pharmaceutical sales of
products and services that enhanced attractiveness and self-confidence
- Carnival and the general sensuality that seemed to permeate rbazillian culture often
gave foreign observers the impression that brazil was unusually permissive nad
liberated, especially compared with other predominantly roman catholic nations

NATURA
- The door-to-door distribution system allowed natura to expand at low marginal cost even
during economically adverse periods
- Invested in a few select countries in south america but without focus/planning the results
were unimpressive
- In 1994, natura decided to pursue a new international business and opened an operation
in argentina

PRODUCT LINES AND BRAND

- Sold premium, high-margin cosmetics and personal-care products to middle- and
upper-class customer segment sin brazil
 - The brand was present in all main categories of the cosmetics market but was most
prominent in fragrances and perfumes, creams, lotions, and makeup
- Continuous reinventing and reformulating of its product portfolio was crucial to naturas
marketing strategy
- To continuously innovate and develop products in-house, natura acquired patents and
technology form universities and research centers in brazil and abroad
- Six months to five years
- Natura focused particular research efforts on skincare products and on the sustainable
use of ingredients from brazils biodiversity

OPERATIONS
- Naturas main operations were concentrated in its exquisite “espaço natura” facility, an
integrated production, logistics, and R&D center situated in a replanted green area on
the outskirts of seo paula
- Four production units
- Split between in-house vs. outsourced product manufacturing
- Vertical warehouse

SALES AND DISTRIBUTION

- Mainly female sales representatives
- No exclusivity contract
- Middle-class housewives selling to their friends, independent professionals, etc.
- catalogue -based retailing was practically nonexistent in brazil, naturas catalogues
became an important sales tool, and frequent updates provided the consultants with a
rason to pay repeated visits to their clients
- Naturas focus on sales allowed consultants to place orders at any time and to place mor
than one order within the same cycle, with the company adapting its logistics and
distribution arrangements and costs to this end

NATURAS LEADERSHIP MODEL

- Often described as one being
- Greek philosopy
- Seabra described the use of manipulative advertising in the cosmetics industry as a
“cultural crim”
- He sought, instead, to help people find the inner beauty within themselves
- Three foundsers closely monitored new products and brands to ensure that they were
fully consistent with the overall vision of the company, and they were prepared to wait to
launch a product until they felt completely confident that it was in sync with the
companies vision

NATURAS CULTURE AND CORPORATE SUSTAINABILITY

- The result of these different styles and mind-sets was an organizational culture
charactertizzed by its openness, transparency, and respect for its stakeholders
 - Middle management was constantly challenged and empoweredto assume new projects
and loftier goals
- New talents were developed in-house or hired from the outside, creating a diversified
gorup of amnagers
- Naturas marketing philosophy was that behind each product, there would be a concept
capturing the emotions, feelings, and aspirations of its customers
- Sold its beliefs to its customers
- Another important feature of the company was the perception that its success was a
consequence of its ability to intimately connect universal values to some eprcieved
brazilian characteristics

THE GROWTH OF COMPETITION

- In the 70s and 90s the market was relatively closed to imports, and competitors wer
emostly multinational companies hwo manufactured mass-market products locally
- The relative isolation of the market until the early 1990s had facilitated the growth of
firms like natura, which were developing higher-quality products designed especially for
local customers

MARKET DESCRIPTION
- The brazilian cosmetics and toiletries market was one of the largest and most developed
in altin america
- Multinationals and local niche players catered to its complex, ethnic, cultural, climatic,
and socieconomic characteristics
- These firms generated an icnreasingly competitive environment and stimulated overall
capacaity for developing more technologically advanced produced and produced tailored
to the requirements of a broad range of consumers
- Among the industry segments, the predominance of the personal-hygeiene sector clearly
reflected the success of products associated with primary needs that had a low per unit
value and a large retail market presence
- Sales channels in brazil played an important role in industry dynamics
- supermarkets/hypermarkets were the dominant channel

NATURAS INTERNATIONAL GROWTH

- Naturas global ambitions were born early but took two deceased to come to fruition
- Made its first attempt to go international through an agreement with an outsourced
distributor in chile
- Naturas decision to expand internationally coincided with political and macroeconomic
changes in brazil
- Stabilization
- We had learned that successful penetration of a new amrket is a long process and
involves building brand equity, quickly developing a sizable network of consultants,
managing and promoting their productivity, as well as mastering logistics and distribution
- Triple-bottom-line concept
- Financial, philosophical, and emotional
 - Cost of capital, another key variable in any growth strategy and even more sensitive for
companies operating in emerging markets, was not as much of an issue for natura as for
other companies expanding abroad

THE ARGENTINEAN LESSON

- When hired a manager from avon to open operations the results were unsatisfactory
- Different companies with just the products in common
- Argentina faced worst political and economic crisis ever
- Decided to keep prices steady and would change them if and when local salaries
were adjusted

SHOPPING AT THE CAPITAL OF BEAUTY

- Natura opened in paris
- New sales paradigm
- Opened a retail store

THE MEXICAN HYBRID MODEL

- Similar to brazilian market
- However, if mexico was considered a good market in terms of distribution
channels, it was poor in terms of brand amangeemnt and would require a
different strategy
- Especiialy bc natura was a late entrant
- Introduced several new marketing tools that could ehlp develop brand awareness

CREADTING A GLOBAL FACE