The topic of this dissertation is the strategy of The Body Shop and the successes and failures of their strategy. In addition, significant focus is placed on the developments and changes in strategies used to gain sustainable competitive advantage for the future, which are in a response to unfolding issues within the cosmetics and toiletries industry.
METHODOLOGY
This section provides a detailed account of the research undertaken to complete this dissertation and further, goes on to analyse the strengths and weaknesses of each particular method. It is used to give support of the benefits thought to be associated with each research method.
LITERATURE REVIEW.
This section provides a general overview of the industry in which The Body Shop operates – the cosmetics and toiletries industry. It highlights main competitors of The Body Shop both direct and indirect and details a breakdown of the market. Sales figures, sales growths, profit figures etc… are tabulated to illustrate the position of various companies which compete in the cosmetics and toiletries industry and discussion focuses on how and why it can be argued that The Body Shop is the largest, or at least, one of the largest companies within its industry.
This makes for an effective starting point leading onto the introduction and background of the dissertation and its topic.
Chapter 1 – Introduction & Background.
This section gives a brief summary of the type of company The Body Shop is and the nature of its products that it manufactures and sells. In particularly, it gives an overview of The Body Shop’s present place within the cosmetics and toiletries industry. It details current statistics on the number of countries in which the company operates, the number of languages in which the company operates, the number of The Body Shop stores worldwide, the company’s number of employees, sales figures, profits in Sterling pounds and the turnover in Sterling pounds.
A company history is included providing the story of how and why the company founder, Anita Roddick, started The Body Shop. Leading onto the story of the first shop it then details the strategic history of the company.
Finally, it discusses how typical Body Shop traits and characteristics e.g, the five different sizes of bottled products, were developed through both emergent and deliberate strategies, namely the strategy for expansion: franchising and the company’s attitude towards advertising.
This section provides an introduction to The Body Shop and a background to the company and its strategy thus, making a good foundation on which to build the dissertation.
Chapter 2 – The Strategy of The Body Shop & How it was put in Place
This section deals with The Body Shop’s core strategy: ethical, social and environmental responsibility: profits with principles.
It outlines in detail how the strategy is decided, who decide it and thus, how the finishing touches to the strategy are made. Further, it describes and analyses the implementation, monitoring and controlling of the core strategy under the headings of human & civil rights, environmental protection and animal rights.
Chapter 3 – Failures & Successes
This section looks at the downfalls The Body Shop has had to face and at how the company responded to the adverse effects these had. It then leads onto the strategic action taken by The Body Shop to counteract these negative issues.
Success stories of The Body Shop and its strategy are also discussed in this section. Key success factors attributed to The Body Shop’s strategy are analysed in a summary of the success of the company.
Chapter 4 – Developments & Changes for the Future
This section makes up a significant part of the dissertation. It concentrates on the strategic issues facing The Body Shop that have mainly emerged as a result of developments within the cosmetics and toiletries industry.
A careful analysis of the competition, the increase in competition and strategies to gain competitive advantage takes place in this section. It focuses on differentiation through new product launches, physical differentiation and image differentiation. A vital element highlighted in this part is the importance of advertising and consequently the company’s recognition of this factor and thus, The Body Shop’s changing attitude towards advertising.
This section also briefly looks at the suggestion that there are problems associated with the rebel brand image, analysis of this issue from two opposing perspectives takes place.
In addition it investigates the changing structure of the management team and the proposed US join venture.
CONCLUSION
The conclusion literally concludes the dissertation, giving a brief account of its main points within each of the chapters.
METHODOLOGY
Research can be conducted either on a continuous or occasional basis. For the purpose of this dissertation the research was continually carried out. This frequency of research is beneficial in that it highlights patterns and measures performance over time. I feel that this advantage is specific to the dissertation because it was important that I could identify, discuss and analyse any trends in The Body Shop’s strategy and thus, accurately assess its success or failure to be able to provide a constructive section on the future of the company’s strategy.
There are several types of research: continuous, ‘ad hoc’, desk research and field research. A significant amount of the research conducted for this dissertation was desk research. Desk research, “is so called because it refers to that type of research data that can be acquired and worked upon mainly by sitting at a desk,” Crouch & Housden (1996)..
It is often called secondary research and makes a good starting point, as it is an efficient and inexpensive method of gathering information. Another advantage is that a vast amount is available. Desk research, or secondary research, is also a particularly useful way of familiarising oneself with the report (or in this case, dissertation) and acts as a catalyst to the generation of ideas, which can aid in the formulation of recommendations and conclusions.
Desk research can take either the form of internal research or external research. Internal desk research is probably the most sensible place to start. It consists of company publications. Information provided on items such as accounting data, products and sales, company history etc… is useful as a foundation on which to build a report. For this dissertation my first action was to write to The Body Shop. I requested items such as company history and background, campaign information, any audits published, the Annual Report 1998, a profile on the founder Anita Roddick and any other information that they thought relevant to the strategy of the company. I clearly stated my purpose for the request and provided examples of sources where I intended to get additional information. I received everything that I had requested and with that came The Body Shop Catalogue (useful for product and price information) and a list of places I could attain further information for example, The Body Shop published books and Anita Roddick’s books/biographies.
The next step is what is called external desk research. The Government publishes a large amount of external research information every year. However, a significant quantity of external research data is available from trade organisations, trade publications, banks and various official associations. The external research conducted for this dissertation was through sourcing various journals and newspapers for example, Economist and The Guardian. Extensive use of Keynotes and Business Ratio Plus publications on the cosmetics and toiletries industry was also made.
Despite the advantages of internal and external research data: a vast amount is available, efficiency, inexpensive, provides a good foundation for recommendations and conclusions, acts as a familiarisation process and as a catalyst to the generation of ideas, there are some limitations.
Some of the data required may not be available or may not even exist. Quite often secondary information doesn’t provide enough information to enable a person or organisation to write a report. Specific to internal desk research, the disadvantage is that you only obtain what the company wishes you to see. This could mean the omittance of important information on company activities. Specific to external desk research, the disadvantage is that it may be, “of too general a nature to be applicable to any specific problem,” Crouch & Housden (1996).
This is where field research can come in useful. “Field research is so called because it is concerned with the generation and collection of original data from the field of operation (of the company). The (person) determines exactly what information is necessary and from whom they need the information and then set about acquiring it. The data is thus specific to the purpose for which it has been acquired and is often called primary research because of this,” Crouch & Housden (1996).
Field research for this dissertation took the form of dissertations written by former students of the University of Paisley on subjects such as the cosmetics industry and The Body Shop. They were particularly useful in exemplifying a structure for the dissertation, providing additional information specific to the subject and in offering support to any arguments, recommendations and conclusions I might potentially have made.
Research for this dissertation was mainly carried out through making extensive use of the University of Paisley’s library resources, the Paisley Public Library, the Mitchell Library of Glasgow and The Body Shop publications.
LITERATURE REVIEW
Industry Structure
The cosmetic and toiletries industry can be divided into cosmetics and toiletries. Cosmetics are mainly what are called colour cosmetics (make-up) for example, lipsticks, eye shadows, foundations, nail products etc… Toiletries encompass five different product types: oral care, hair care, skin care, personal washes and men’s toiletries. These product types can be further differentiated for example, hair care: shampoos, conditioners and styling products.
In 1997, the UK market for cosmetics and toiletries was estimated to be worth �4 billion; toiletries making up almost 75% of total worth. The cosmetics market on its own was estimated to be worth �530 million in 1998.
Overall, the cosmetics market had been having some difficulties. A change in fashion trends and a change in demographics led to a decrease in the usage of cosmetic products. The fashion to wear ‘no make-up’ increased in popularity but companies are now managing to recoup with the return to colour. There are now less people in the under 25’s market with the maturity of the ‘baby boomers’. The additional threat of own label products from grocery retailers and chemist superstores entering the market is putting strain on established brands. This is particularly significant in terms of the increase in competition facing The Body Shop with Boots’ and Superdrug’s introduction of own label naturally based products line, or what is probably more accurately called ‘retailer brands’.
On the other hand, the toiletries market is faring better as people are seduced by functional ingredients – e.g., vitamin enhanced shampoos and moisturised body washes, hypo-allergenic properties and naturally-based products. The increase in the use of naturally based products has been triggered by The Body Shop’s success encouraging companies to enter the market. The rise in toiletry usage by men is also an important growth factor within the market.
The cosmetics and toiletries industry can be divided into three different sectors: Manufacturers of cosmetics and toiletries, Importers and distributors of cosmetics and toiletries and Suppliers and compounders of fragrances and essences. The Body Shop is categorised under the sub-sector Manufacturers of cosmetics and toiletries.
In the dissertation, discussion of this sub-sector is relevant to the subject as other companies of this sub-sector act as direct competitors of The Body Shop for example, L’Oreal (UK) Ltd, Revlon Manufacturing (UK) Ltd and Elida Faberge Ltd.
Discussion of the Importers and distributors of cosmetics and toiletries sub-sector is specific to the topic of The Body Shop’s strategy as companies of this sub-sector act as indirect competitors of The Body Shop for example, The Boots Company PLC and Superdrug Stores PLC. Companies such as these are indirect competitors because The Body Shop control their own distribution of their own products through company-owned stores and franchised outlets whereas many producers of cosmetics and toiletries rely on companies such as Boots and Superdrug to retail their products.
Discussion of the Suppliers and compounders of fragrances and essences sub-sector would not be entirely relevant to the dissertation because this information does not specifically relate to the topic; companies of this sub-sector neither directly nor indirectly compete with The Body Shop for example, Dragoco (Great Britain) Ltd and Creations Aromatiques Ltd.
Major companies within the cosmetics and toiletries industry include Procter & Gamble (Health & Beauty Care) Ltd, Elida Faberge Ltd, L’Oreal (UK) Ltd, The Boots Company PLC, Superdrug Stores PLC and The Body Shop International PLC. Many of these companies operate on an international scale.
Industry & Company Performance
The Cosmetics & Toiletries Industry
The cosmetics and toiletries industry as a whole is experiencing steady growth in sales and profits. Over a period of three years between 1994/97, sales have increased by an average of 9% per year and profits have risen by an average of 2% per year.
Average Sales & Profits Figures for Manufacturers of Toiletries & Cosmetics
UK figures 1996/97 1995/96 1994/95
�’000
Sales 35, 684 33, 784 30, 667
Pre-Tax Profits 1, 828 2, 171 2, 011
Taken from “Business Ratio Plus: The Toiletries & Cosmetics Industry,” (1998).
In the year 1996/97, manufacturers of cosmetics and toiletries accounted for 57% of total sales in the UK, some �1, 248.9 million. This sub-sector comprises of 55 companies which, operate in the UK, though many also operate on an international scale.
Average Sales & Profits Figures for Importers & Distributors!
Of Cosmetics & Toiletries
UK figures 1996/97 1995/96 1994/95.
�’000
Sales 19, 149 17, 699 15, 692
Pre-Tax Profits 746 517 497
Taken from “Business Ratio Plus: The Toiletries & Cosmetics Industry,” (1998).
In the year 1996/97, importers and distributors of toiletries and cosmetics accounted for 38% of total sales within the industry in the UK, some �823.4 million. This sub-sector comprises of 63 companies, which operate in the UK, though many also operate on an international scale.
Cosmetics & Toiletries Companies
The following table highlights the performance of the ten largest companies by sales in the UK.
Sales League Table of the Cosmetics & Toiletries Industry as A Whole
PART 1
Sales �’000 1996/97 1995/96 1994/95
No. 1 *The Boots Co.PLC 4, 578, 800 4, 124, 700 4, 308, 100
No. 2 *Superdrug Stores PLC 684, 773 641, 512 619, 990
No. 3 *Gillette (UK) Ltd 373, 664 305, 180 269, 231
No. 4 *Paterson Zochonis PLC 350, 348 361, 041 286, 778
No. 5 *Robert McBride Ltd 278, 375 268, 460 241, 850
No. 6 The Body Shop International PLC 270, 800 256, 500 219, 700
No. 7 L’Oreal (UK) Ltd 259, 198 250, 673 226, 999
No. 8 *Elida Faberge Ltd. 255, 740 217, 581 192, 584
No. 9 *Warner Lambert Ltd 252, 769 249, 012 221, 262
No. 10*Avon European Holdings Ltd 224, 443 219, 584 226, 688
PART 2
CAGR % Sales % change Sales % change
1994/97 1996/97-1995/96 1995/96-1994/95
No. 1* 3 11 -4
No. 2* 5 7 3
No. 3* 18 22 13.
No. 4* 11 -3 26
No. 5* 7 4 11 No. 6 11 8 15c
No. 7 7 3 10
No. 8* 15 18 13
No. 9* 7 9 5
No. 10* 0 2 -3
CAGR = Compound Annual Rate (Sales Growth)
*”Figures for certain companies may not be used to generate totals and averages, either because the company is large and has significant interests in other industry sectors and would therefore bias any calculations in which it is included.
Taken from “Business Ratio Plus: The Toiletries & Cosmetics Industry,” (1998).
Of the top five largest companies, Boots and Superdrug are probably more important as indirect competitors of The Body Shop. Though these are two companies are categorised as importers and distributors of cosmetics and toiletries they do produce and sell their own label naturally-based products (‘retailer brands’) thus, making them competitors of The Body Shop. Gillette’s main trading activities include manufacturing and distribution of razor blades, razors and writing instruments – a significant proportion of operations focus on the shaving market (face ad body). Paterson Zochonis’ primary trading activities include household cleaning products and the processing of edible oils and fats.
Information detailing the companies main or additional trading activities is particularly important in reference to (*, previous page) as it highlights that the sales figures of the top five cosmetics and toiletries companies are bias. This is because the companies gain profits from other financial investments whereas companies such as The Body Shop and L’Oreal are true cosmetics and toiletries companies who focus on that market.
It could then be argued that The Body Shop is indeed the largest cosmetics and toiletries manufacturing and retailing company by sales in the UK with L’Oreal closely following behind in second place. Not many branded products have their own retail outlets and of such companies none are as distinguished as The Body Shop. Many branded products rely on companies such as Boots and Superdrug for distribution.
Boots own beauty and personal care products made up 4% of total sales in the UK in 1996/97, approximately �1.3 billion. Sales of these products had increased by 7.8% in the last year and with the No. 7 cosmetics products line at the forefront, sales of cosmetics had soared by 19%. Boots, reaching a mass market hugely dominates distribution within the UK. In 1998, Boots cosmetics sales made up a huge 33% share of the cosmetics market. In the same year, Boots had a turnover of �4, 975, 600, 000.
Superdrug has experienced a steady growth in sales of 5% per year in the three year time period 1994/97. The company introduced over 1400 own label products during the year 1996/97 and now have in excess of 700 stores in the UK. Superdrug had a turnover of �749, 500, 000 in 1998.
The Body Shop has been categorised as a manufacturer of cosmetics and toiletries but it also retails these own label naturally based products through company-owned stores and franchises worldwide. The UK cosmetics and toiletries market makes up 17% of the company’s number of stores and 26% of retail sales. The Body Shop’s turnover generation is divided geographically as follows:
UK – 39%
USA – 27%
Europe – 15%
Asia – 13%
Total sales turnover for 1998 was �293, 100, 000 and net worth was �130, 300,000.
Recent Developments
In the last year, within the UK cosmetics and toiletries industry (including international companies operating in the UK) companies have either been hugely or slightly affected by the strength of the Sterling pound or by the economic crisis of Asia.
This has had various affects within the retailing sector. Superdrug experienced a continuous growth in 1997/98 as sales rose by 9.4% to �49, 500, 000. The Body Shop has experienced difficulties in its US market as sales fall for the fifth consecutive year. The company owns 203 of its 290 US outlets and now faces a number of lawsuits from US franchisees.
Future Prospects
As society tends to a more environmental outlook, usage of chemically-based products is likely to decline. This therefore, increases the market for naturally-based products. With several companies within the cosmetics and toiletries industry having introduced their own label naturally-based products line for example, Boots; Superdrug and L’Oreal, competition is expected to increase. It is apparent that many companies who are already established as producing and selling natural cosmetics and toiletries products, namely The Body Shop, will come under threat also from large supermarkets as they enter the market with the introduction of label naturally-based products line for example, Sainsburys and Asda. Already a significant trend is appearing within the industry in response to this: private label personal care products make up only 23% of the cosmetics and toiletries market whereas supermarket, personal care products make up 40% of the market. 4pggXeNi5
Chapter 1 – Introduction & Background
The Body Shop is a manufacturer and retailer of skin and hair care products based on natural ingredients. Based in the United Kingdom (UK) it is now an international company operating in 47 countries, spanning 24 languages. Now with 1594 stores worldwide the company employs over 4000 employees. The Body Shop made �604.4 million in worldwide retail sales, a turnover of �293.1 million and an operating profit of �38.1 million in the fifty-two weeks ended 28 February 1998.
The original company to produce and sell naturally based products, it created a whole new market sector. With over 400 skin and hair care products and over 500 personal hygiene and accessory items it is estimated that between 1997 and 1998 a sale was made every 0.4 seconds with over 86 million customers visiting The Body Shop stores worldwide.
Presently, the company’s Chief Executive Officer is Patrick Gournay and Anita Roddick, The Body Shop’s founder, is Co-Chairperson with her husband, Gordon Roddick.
Company History
The history of The Body Shop starts with its founder, Anita Roddick. The daughter of Italian immigrants, she grew up helping her parents run the family caf�. Having made travel her dream and ambition, when she was old enough she went to work for the International Labour Office of the United Nations in Geneva, on a Kibbutz in Israel and at the International Herald Tribune in Paris. Through these occupations she fulfilled her dream and travelled the world. It was through this travelling that Anita was exposed to exotic countries such as Mauritius, Polynesia and Tahiti. Witnessing the women’s skin and hair care rituals she said, “I just lived as they did and watched how they groomed themselves without any cosmetic aids. Their skin was wonderful and their hair was beautifully clean.” Observing these women use cocoa butter and pineapple juice as skin treatments was the initial inspiration for the first Body Shop.
After returning from her travels, Anita Roddick met and married her husband Gordon Roddick. When he got the travelling itch Anita was left to support herself and their two daughters. And so, in 1976 she opened the first Body Shop in Brighton funded by a �4000 bank loan. The shop was to sell skin and hair care products made from the natural recipes she had discovered whilst on her travels.
Strategic History
Anita Roddick on discussing the success of The Body Shop states, “It is so easy. First, know your differences and exploit them, then talk about the image of your company as well as the products, and finally be daring, be first and be different. One of the rules of any successful company is to find out what your original features are and shout them out from the rooftops.” This would imply that strategies are deliberately executed by the company but in contrast it can be shown that some strategies of the company that have gained The Body Shop competitive advantage are in fact not part of any strategic plan but have arisen through a lack of choice and lack of resources: strategy having to be adapted to emergent issues.
“Incrementalists argue, new strategies largely emerge over time, as managers proactively piece together a viable course of action or reactively adapt to unfolding circumstances,” de Wit & Meyer (1998). This is precisely what The Body Shop has had to do in the past. For example, the company trademark and the green d�cor of The Body Shop stores were chosen because at that time the circle shape was the only inexpensive copyrighted design available and the green paint was used to cover cracked and mouldy walls in the first shop. It is probably thought that the circular design of The Body Shop is to symbolise the Earth and the green is to symbolise naturalness.
The variety of sizes The Body Shop sells its products in were originally to fill up shelf space when the company could only produce and sell 20 products. The original packaging was plastic bottles supplied free by a local hospital and to save the bottles customers were encouraged to bring them back for refills. To this day The Body Shop still sells its products in five different sizes and still offers refills.
One other feature that is thought of, as typically Body Shop is the information leaflets detailing product ingredients, its origins and its uses. This too was not part of some carefully structured plan but was originally implemented to reassure customers of their purchases. Often the products are lumpy, grainy or have a less than pleasant smell, which may put customers off. To alleviate this problem The Body Shop started providing the information leaflets.
A prime example is The Body Shop’s expansion strategy of franchising. Franchising, as a means of expansion was another strategy that was applied due to emerging issues, in this case financial issues. Expansion was going to be expensive so Anita and Gordon Roddick came up with the concept of ‘self-financing’ thus, allowing for the growth of The Body Shop not only in the UK but also on a worldwide scale. The concept held that if someone could finance himself or herself then the Roddicks would grant them a license to use the name of the company and its products. Presently, there are approximately 5000 applicants dreaming of being the next Body Shop franchisee.
The Body Shop’s strategy does tend towards a deliberate perspective also. Deliberate strategies usually appear where the environment is stable or at least is predictable. The Body Shop’s decision not to make use of conventional advertising or marketing was part of a carefully thought out plan. It is only recently that they have implemented an advertising marketing strategy with the television advertisement for ‘Divine’ chocolate (the cocoa is sourced through the Trade Not Aid programme).
Whilst The Body Shop did not undertake conventional advertising, social marketing has played a vital role. This is a form of indirect advertising whereby the advertising is not actually carried out by the company but through editorial coverage in magazines and newspapers writing about the company, its products and its beliefs.
“Building a reputation as the West’s most caring cosmetics company has helped Britain’s Body Shop to out-perform the London share index by a factor of 45 since its flotation in 1984. Yet Body Shop has done nothing especially novel (many of its competitors also shun testing); it was simply one of the first firms to realise that wearing its ethics on its sleeve added greatly to the value of its brand,” The Economist (1992). In fact, it was Anita Roddick’s ability in public relations to build up a good reputation that has helped make The Body Shop a top brand without the use of advertising.
A prime example tells the story of the first shop. Standing between two undertaker companies, its neighbours complained about the name given to the shop – The Body Shop. They contacted Anita Roddick through their solicitor suggesting that she changed it. Anita, rather than re-name it or fight it out in court, anonymously gave the story to a local newspaper. The newspaper then printed the story gaining The Body Shop considerable media coverage. Anita Roddick has since been quoted as saying, “We never paid for an advert since.” Consequently, The Body Shop has relied on the Marks & Spencer concept that advertising isn’t needed if a company has built up a favourable public image.
One factor, that has even helped the company defend itself against competition is that it is, “marketing education, an approach that has always been extremely effective for the company, particularly since natural products cannot be patented,” Grigsby & Stahl (1997). The company has made great strategic use of educating their customers. As The Body Shop states, “Our products tell our story. Just look beyond the label. There is a world of information there.” Leaflets provide information on the products origin to the company’s attitude towards animal testing. Customers then feel enthusiastic about The Body Shop products creating word of mouth.
Customer word of mouth has been particularly successful in fuelling growth of sales. The reputation of The Body Shop of providing quality products and a high level of customer service has promoted this word of mouth. This strategy has created problems for any would-be me-toos as they can’t easily copy Anita Roddick’s information and knowledge gleaned whilst on her travels.
Chapter 2 – The Strategy of The Body Shop & How it Was Put in Place
“Strategy is about two things: deciding where you want your firm to go, and then how you want to take it there,” Economist (1998). The Body Shop states in their International Mission Statement that they will continue, “to passionately campaign for the protection of the environment, human and civil rights, and against animal testing within the cosmetics and toiletries industry.” The company describes itself as, “a high-profile advocate of social and environmental causes.” In fact, ethical, social and environmental responsibility is at the very core of The Body Shop’s strategy: profits with principles.
Anita Roddick’s, “aim is to prove that business can and should be a force for positive social change. The company believes that its values are every bit as important as its products and profits, using its stores as platforms to promote its core campaigns of human rights, animal protection and environmental issues,”
Taken from company profile of Anita Roddick.
The Body Shop approach to ethical business operates on three levels: –
1) Compliance: opening up to defined standards of human rights social welfare and worker safety, environmental protection and, where relevant, wider ethical issues like animal protection.
2) Disclosure: only through public disclosure can a real process of dialogue and discussion with stakeholders be achieved and the right direction chartered for the future.
3) Campaigning: to play an active part in agitating and campaigning for positive change in the way the business world works, with the ultimate aim of making a impact on the world at large. be.
Taken from the company profile.
In terms of how strategy is decided, Anita Roddick carries out what can be called an ‘environmental scanning’ to find out where the market is going and to see what competitors are doing and then, in her own words, she, “walk(s) in the opposite direction.
Whilst Anita Roddick is certainly a talented woman (particularly in public relations), as a strategist it appears that she probably provides the creativity and inspiration for many of the company’s strategies but others for example, Patrick Gournay the Chief Executive of The Body Shop, very likely develop these strategies to be more realistic so that they can be implemented. As Gordon Roddick says, “this is very much Anita’s company, the rest of us make her dreams come true.” Anita Roddick is a creative person; heavily relying on intuition and vision but logical input from colleagues is used to give balance to the strategy.
The Body Shop’s strategy is manifested in its personality: individuality, responsibility, activism, realism and service.
Human & Civil Rights
“We aim to use our influence and our trading relationships to raise awareness of human rights issues,” The Body Shop.
Human Rights Campaigns.
Over a decade ago in 1988, The Body Shop launched its first human rights campaign. Starting what was to be a long-term relationship with Amnesty International, the campaign coincided with the 40th anniversary of the Universal Declaration of Human Rights.
Since then The Body Shop has continuously campaigned to positively change and improve human rights through several campaigns. Most recently, the company launched the ‘Make Your Mark’ campaign in 1998 to commemorate the 50th anniversary of the signing of the Universal Declaration of Human Rights and to focus on the plights of human rights defenders around the world.
Community Trade & Suppliers
The Body Shop started making it a customary practice to source its ingredients and other raw materials from communities in need in the late eighties. The programme is called Trade Not Aid (Community Trade). Presently, the programme provides direct and indirect employment for over 1000 people and trades in 19 countries such as Nepal, Mexico, Ghana, India, the United States, Zambia, Brazil, Bangladesh and Italy.
The most recent addition to this programme is the new Bergamot aromatherapy product range containing Community Trade sourced bergamot oil from Calabria, Italy.
The Body Shop ethically audits other suppliers before the company will agree to purchase the manufacturers products. One of these manufacturers states, “I am very much aware that The Body Shop is wanting to be environmentally accountable, so much so that they want to actually ensure that their suppliers go down that road as well.
The Body Shop Supporting Women
“Roddick’s position is that cosmetic companies, having no social conscience, sell products by deceiving and exploiting women, telling them that they have some product that can give women back their youth. The Body Shop expressly promotes feeling good over looking good. The company prides itself on selling ‘well being’,” Grigsby & Stahl (1997). A prime example of this sentiment is The Body Shop’s character for the self-esteem campaign, Ruby, launched internationally in 1997. Portraying the average women, she is featured in The Body Shop’s adverts alongside the caption, “there are three billion women in the world who don’t look like supermodels and only eight who do.” In early 1998, the advert won an equality award form the Norwegian Board of Gender Equality and later on won the prestigious Campaign Press Advertising Award in the UK for the Best International Press Advert.
The Body Shop has also supported women through a number of campaigns: in 1995 ‘Women’s Rights are Human Rights’, in 1995/96 ‘STOP Violence Against Women’, and has sponsored research projects for Oxford University and the Sophia Institute in Singapore dedicated to investigating the self-esteem of young women.
Employees & Franchisees
The Body Shop’s strategy of social responsibility is also evident in its attitudes towards the company’s employees and franchisees. Within the company there is an extensive commitment and trust on the part of the employees and franchisees. Each employee and franchisee believes that their small contribution adds to the overall success of the company. Indeed The Body Shop has been described as ‘close-knit’ and a ‘happy clan’. Bo Burlingham states that, “it arouses enthusiasm, commitment and loyalty more often found in a political movement than a corporation,” as cited in de Wit & Meyer (1998). Top management encourages these relationships through what she describes as flooding its, “employees with newsletters, videos, brochures, posters and training programs, to convince them that while profits may be boring, business does not have to be.” This creates a buzz of energy and a great deal of excitement, supporting Anita Roddick’s idea that business can also be fun.
One example of how The Body Shop’s strategy of social responsibility is manifested in its attitude towards its employees is the workplace nursery. The nursery was built and equipped in 1991 for the children of head office staff at a cost of �1million to The Body Shop. Another example is that after five years of employment with the company, employees and franchisees are granted a six-month sabbatical. Almost all employees and franchisees use this period to take part in volunteer work abroad.
Customers
The Body Shop’s dedication to customer care is instrumental in further implementing its social responsibility. Anita Roddick says, “we have found that when you take care of your customers really well, and make them your focal point, never once forgetting that your first line of customers are your own staff, profitability flows from that.” The Body Shop’s main customers are predominantly females in their teens and twenties and through the ‘Ruby’ campaign discussed earlier the company has surely gained an increase in popularity. Through this campaign they have challenged the image of the ‘perfect’ woman that has been featured in advertising for many decades now, aiming for a more realistic approach and cleverly at the same time sympathising with the average woman that has had to compare with this ‘perfect’ image for so long.
This approach to advertising truly embodies The Body Shop’s mission to be faithful to its customers and its mission, “to sell cosmetics with the minimum of hype and packaging. To promote health rather than glamour, reality rather than the dubious promise of instant rejuvenation.
The Social Audit
The Body Shop monitors and controls its strategy dedicated to positively changing and improving human and civil rights through The Social Audit. This is carried out annually measuring and reporting on the company’s actions involved with Community Trade and suppliers, women, employees and franchisees, customers and additional human and civil rights campaigns. It is used to highlight any problems and thus, any changes that may have to be made. It also focuses on specific actions that have been successful which also guides The Body Shop in making strategic decisions for the future.
Environmental Protection
“If you are into manufacturing, then you are into producing more and more…all I do is clean up my own mess,” Anita Roddick.
The Body Shop’s view held on the environment, to protect it, is obvious in many of its operations. Recycling, both in-house and external, is an integral element of this. The company makes a great effort to limit waste through using recycled paper for the packaging of its products and through using raw ingredients from renewable sources wherever possible. In addition it tries to eliminate unnecessary packaging preferring minimal packaging. The Body Shop recycles any packaging waste and any kind of Body Shop packaging those customers bring back.
Customers again play a significant role in recycling through The Body Shop’s refill policy. Customers can bring empty plastic bottles originally used as packaging for The Body Shop’s products and get a refill. This reduces the waste of the bottles and encourages the re-use of them. This policy was further emphasised by the ‘Re-use, Refill, Recycle’ campaign in 1992. More than one million bottles were returned over that year in the UK. Since that year The Body Shop’s main products now use recyclable packaging, 13% of its products require no packaging at all. This is quite an achievement for a company in an industry that is most associated with large quantities of waste.
A further example of the strategy dedicated to pursuing environmental protection concerns two wastepaper baskets. At Littlehampton head office, two wastepaper baskets are used, one for non-recyclable waste and one for waste that can be recycled. The Body Shop also holds training courses on recycling for its employees.
The Body Shop has run a series of campaigns in an attempt to generate worldwide awareness of environmental protection. The first campaign was launched in 1986, ‘Think Globally, Act Locally’, in association with Friends of the Earth. Over the years The Body Shop has campaigned on acid rain, the ozone layer, the burning of the rain forests, tree re-planting, nuclear testing, energy use and waste reduction, PVC packaging and most recently for government support of the Hemp industry.
The Environmental Audit
The Body Shop monitors and controls its strategy dedicated to the protection of the environment through The Environmental Audit. This is carried out annually measuring and reporting on the company’s actions related to environmental issues such as recycling, waste, energy use, the company’s use of transport and water. The aim of the audit is to help the company, “become an environmentally sustainable business – meeting the needs of the present without compromising the ability of the future generations to meet their own needs.
Animal Protection
The Body Shop was the first international cosmetic company approved under The International Standard on ‘Not Tested on Animals’ and in 1990 began its ‘Against Animal Testing’ campaign. In 1996 this campaign evolved into ‘Ban It’ and the largest against animal testing petition was presented to the European Union. The petition had been signed by 4 million people and achieved a ban on the sale of animal tested cosmetic products and ingredients from June 2000 depending on the development of alternative testing..
The Body Shop itself does not test its products or ingredients on animals and ensures that any of their purchases from suppliers are also not tested on animals.
The Body Shop has also fought against the illegal trade of endangered species with the ‘Save the Whale’ campaign in association with Greenpeace and a 3 million-signature petition demanding a tightening on laws against the trade. Additionally, The Body Shop and its franchisees take part in fundraising for wildlife preservation.
Products of The Body Shop are instrumental in raising awareness of animal protection issues and carry messages to customers and even suggest actions that can be taken. The Animals in Danger product line is principally how this strategy is executed. The Animal Protection Audit
The Body Shop’s strategy dedicated to the protection of animals is monitored and controlled through The Animal Protection Audit. Carried out every year, it measures and reports on the company’s actions related to animal protection issues such as animal testing and endangered species. Quite importantly it assesses purchasing criteria according to the International Standards Organisation standard ISO 9002. This standard measures The Body Shop’s suppliers’ adherence to specific requirements. It is important that the company’s suppliers meet all the requirements because if they didn’t then The Body Shop would be accused of being hypocritical in executing its strategy dedicated to the protection of animals.
Chapter 3 – Failures & Successes idea.
“The Body Shop has long since been held as a paragon by all who believe that good profits and good ethics go hand in hand. Since the early 1980’s the toiletries firm has made its stakeholders rich, growing into a global giant on the strength of a reputation for environmentally friendly products. Suddenly, however, the company has fallen from grace,” Economist (03/09/94).
‘The Fall from Grace’
“Business ethics are all the rage at business schools. But, as recent ‘whistle-blower’ cases show, being nice has its price in the real world,” Economist (19/08/95).
In the early 1990’s, The Body Shop had to contend with a spate of negative press. It soon emerged that the company’s ‘Not Tested On Animals’ claim was not 100% true when an ingredient in one of The Body Shop’s shampoos was known to be fed to mice by some American scientist.
The Body Shop also had to deal with the damaging effects of a lawsuit. A television station in America broadcast a report challenging the company’s ‘Not Tested On Animals’ claims. The Body Shop won the six week lawsuit and was awarded$415, 000 in compensation. However, it was not compensation enough for the increasing scepticism questioning The Body Shop’s integrity as a socially, ethically and environmentally responsible company, particularly when the company’s ‘Trade Not Aid’ programmed was deemed not to be as ethical as it seemed. This ultimately led to The Body Shop’s share price to fall by 15% as sales and profits dropped.
The Body Shop took strategic action in 1992 when they implemented a company environmental audit. Its purpose was to confirm to The Body Shop and its customers that the company’s profits with principles claim was more than just a claim, that it was in fact the truth. The audit measures and reports on all aspects of The Body Shop’s operations for example, waste management and energy efficiency, complying with the European UnionEco-Management and Audit Regulation.
Then in 1994, with the publication of a 65 page report disputing the allegations claiming that it was all down to an ‘obsessive campaign of vilification’ by Jon Entine, an American journalist.
Most significantly The Body Shop changed their labelling from ‘Not Tested On Animals’ to ‘Against Animal Testing’. In reality they cannot guarantee that a third party has not at some time tested their products or ingredients on animals. This is The Body Shop’s way of taking an honest stance whilst maintaining the impression that they are a company who fight and will continue to fight against animal testing.
The Successes of ‘Profits with Principles’
Colour Cosmetics
A move into colour cosmetics was a particularly risky strategy for The Body Shop to undertake as it might seem to, “be inconsistent with their philosophy and approach,” de Wit & Meyer (1998) on and to beauty. However, Anita Roddick already had an argument prepared. Having commissioned Dr. Jean Ann Graham of the United States to carry out extensive research into the psychology of makeup, Anita’s argument that the wearing of makeup psychologically supported women was strengthened. This was endorsed further by The Body Shop’s view that beauty is about realism and not glamour as exemplified by the Ruby campaign discussed earlier.
The Body Shop’s colour cosmetics line proved to be successful making up approximately 10-15% of the company’s turnover and increasing at a steady rate. The makeup product line has since been re-launched as part of the company’s image differentiation strategy, which is discussed in section four.
The Hemp Range
More recently, The Body Shop launched its newest product range in March 1998. The Hemp Range spurred a huge drug-related moral dilemma. Anita Roddick had already envisaged this outcome and through her love of public attention, both personal and company-related, The Body Shop’s new product range gained substantial media coverage. Anita’s rebel-like stance was further endorsed by such things as personally handing out cannabis seeds at the launch and the slogan for The Hemp Range moisturiser: “It softens your hands without short-term memory loss.” Former Conservative Home Office minister, Ann Widdecombe, was angered by Anita’s actions aswell as The Body Shop’s new product launch and claimed that together they were making a mockery of serious drug issues.
This particular product launch could have had serious consequences for The Body Shop as it was fairly risky strategic action to take and could be described as ‘raw politics’. As said by Anita Roddick, “We’re taking risks again. Hemp is high in protein, essential fatty acids – and confusion! And its back! Demystifying hemp and championing hemp farmers all over the globe while trying to rid the world of dry skin is FUN!” The new product range was only expectedly going to trigger a degree of controversy but The Body Shop used this to their advantage. The company stated that their goal was not to promote the use of drugs but quite the opposite.
The Body Shop hoped to educate consumers and the rest of the public on the difference between hemp and marijuana. They emphasised that hemp is one of the world’s best moisturisers, that it is a crop containing less than 1% delta-9 tetrahydracannabinol (THC, psychoactive properties) and that the crop has 25, 000 potential uses. In contrast, marijuana contains up to 20% THC thus, making it a narcotic drug. Leaflets and posters are found in outlets explaining the major differences between these two crops, this information has also been detailed in newspapers and journals. The Body Shop further hoped to gain government support for the hemp farming industry.!
The five hemp products quickly became UK best sellers for The Body Shop and made up 5% of the company’s UK turnover only a month after its launch in March 1998.
Campaign Achievements
Through a number of campaigns, The Body Shop has reached their goals set for positively changing and improving human & civil rights, environmental protection and animal rights. This shows that the company strategy must be successful in meeting its own criteria: to promote profits with principles. A brief account of these achievements is listed over the page.
Human & Civil Rights:
� In 1989, The Body Shop increased support for the Brazilian Yanomami’s survival as they were threatened by the destruction of their lands by timber and mining companies.
� In 1995, when Ken Saro-Wiwa and eight other Ogoni activists were sentenced to death, The Body Shop endeavoured to save their lives. Unfortunately, the executions of the activists took place later that year. However, The Body Shop redoubled its efforts on behalf of the Ogoni and went on to campaign for the Ogoni 19 in 1996/97 (the campaign spanned 17 countries). This campaign went on to win the Best International Campaign and Campaign of the Year at the PR Week Awards in the UK.
The Body Shop Working With Women:
� In 1995, a collection of over a million petitions against the abuse of women’s rights spanning 25 markets.
� In 1995/96, raised awareness of domestic violence of women and raised government provision for support services and refuges for female victims.
� In 1997, the ‘Ruby’ campaign was successful in raising awareness of the self-esteem of women; the campaign even won an award.
Environmental Protection:
� The replanting of over a million trees was achieved in 1990 through the 2 week campaign ‘Once is Not Enough’, The Body Shop planted a tree for every bottle refilled.
� Over one million bottles were returned by customers the year following the 1992 ‘Reuse, Refill, Recycle’ campaign.
Animal Protection:
� The Body Shop was the first international cosmetic company to be approved under The International Standard on ‘Not Tested on Animals’.
� The UK, Netherlands and German governments banned tests on finished cosmetic products in November 1997.
� After six years of campaigning to ban the sale of animal tested products, the European Union have now agreed to the ban stating that it will be effective from June 200 depending on the development of alternative testing.
Key Success Factors
Leadership
Leadership is defined as, “influence, that is the art or process of influencing people so that they will strive willingly and enthusiastically toward the achievement of the group’s mission,” Lynch (1997).
Anita Roddick has a huge influence over The Body Shop and the staff; she is especially talented at arousing excitement and fire among her staff. Anita endeavours to inspire and capture the imagination of the customers and employees of The Body Shop. “Nowhere is the alignment between company and employee beliefs more evident than beauty product’s retailer, The Body Shop,” International Journal of Retail & Distribution Management (1997).
Anita’s way of thinking can be said to be very ‘third way’, very ‘idiot savant’. Her creative brain gives her a strong entrepreneurial, visionary and intuitive sense of leadership. A parallel between Virgin’s Richard Branson can be seen. Both leaders thrive on causing a fuss, breaking the norms of their specific industries. Both view risk-taking and change as the way forward and motivate employees through their dynamic and individualistic personalities.
Anita, “believes that the empowerment of people,” de Wit & Meyer (1998) is vital in making consumers and employees feel that their contribution, though it may be small, is still of relevant significance. “Our idea of success is the number of people we have employed, how we have educated them and raised their human consciousness, and whether we have enthused them with a breathless enthusiasm,” Anita Roddick.
This sentiment is manifested in the form of the New Academy of Business founded by Anita Roddick. Business education is a great source of interest for Anita and the New Academy of Business encompasses all that she believes in and stands for through recognising that changes must be made in the business world in a response to societal developments. The Academy concentrates on the scope of socially responsible business practices and visionary leadership.
Though she believes that The Body Shop can provide for the business skills needed by employees, she states that the commitment to and belief of social, ethical and environmental responsibility must be inherent in an employee’s attitudes and values as this can’t be catered for by The Body Shop – “What we can’t control is the soul,” Anita Roddick.
Anita can be described also as, “charismatic, outspoken and determined,” de Wit & Meyer (1998). Her inner drive is inherent in her shared vision approach. Senge (1990) as cited in de Wit & Meyer (1998) states that this approach follows such that:
1) “The whole organisation is involved in developing the mission and objectives.
2) “The leader helps the organisation develop a shared vision of its future and the changes required to achieve it.
To further explain this concept, Senge (1990) as cited in de Wit & Meyer (1998) quotes Lao Tsu, “The wicked leader is he who people despise. The good leader is he who people revere. The greater leader is he who the people say, ‘We did it ourselves’.
In any statement Anita Roddick makes she always attributes the success of The Body Shop to everyone involved, frequently using the word ‘we’. Anita encourages employees to take an interest in The Body Shop; posters in the store canteens for employees create encouragement with slogans like ‘Break the rules’ or ‘Think frivolously’. Anita and her company has successfully captivated people who identify with a commitment to the company’s values and with a belief that companies can be vehicles of positive social change.
Due to Anita Roddick’s successful leadership skills she has won many awards including the Business Woman of the Year in 1985, the Business Enterprise Award for the company and in 1988, the royal family awarded her the Order of the British Empire.
Quality & Service
Lynch (1997) states that in many markets it is imperative for a company to provide a superior service to that of their competitors to be able to effectively compete in a highly competitive market. This theory is further supported by the suggestion that service is in essence an indicator of quality, this being perceived by the customer.
The first step is to be in tune with the needs and wants of the customers. The Body Shop were one of the first retailers to offer make-over services by their trained beauty consultants located in each of their outlets. Trained consultants also make use of colour charts and will offer facials. Now, many outlets retailing premium priced products provide such services thus, quality is simultaneously perceived with service.
In addition, employees of The Body Shop are friendly and willing to educate customers as they sell. This is inherent in the knowledge supplied by The Body Shop on a product’s origins, its uses, whether it is part of the ‘Trade Not Aid’ scheme etc… For example, a customer can walk into an outlet and buy a body lotion and at the same time discover a story of how women in Brazil collect the country-named nuts, which are bought by The Body Shop, so that these women can support their families.
As Lynch (1997) says, “Both service and quality have provided real opportunities in strategy. Their particular strengths lie in their attractiveness to customers and the difficulty that competitors face in attempting to match them. They have provided a means for companies to compete for customers in the market place.” It could be argued that this factor is what also helps The Body Shop differentiate itself from its competitors and therefore, creates competitive advantage.
Chapter 4 – Developments & Changes for the Future
The Body Shop have recently carried out a comprehensive strategic review of their operations and certain issues emerging within the cosmetics and toiletries industry have been identified. Strategic actions are called for and company state that they are ready to implement modifications and changes to their present strategies in the hope that they will define the future of The Body Shop. The main areas of importance are competition and strategy to gain competitive advantage, changes in the management structure and the US joint venture. There is also the possibility of the rebel brand image as being a future problem.
Competition & Strategy to Gain Competitive Advantage
The Industry/Product Life Cycle
Taken from Lynch (1997).
“The basic hypothesis is that an industry – or a market segment within an industry – (or a product) goes through four basic phases of development for corporate strategy. These phases can be loosely described as introduction, growth, maturity and decline,” Lynch (1997).
The Body Shop can be said to be in the growth stage: “Competitors are attracted by its (the industry’s/product’s) potential and enter the market: from a strategic perspective, competition increases,” Lynch (1997). Worldwide retail sales of The Body Shop are still growing though slowly. From 1997 to 1998 sales grew by only 5%. Profits are also suffering, said to be dull they grew by 19% between 1997 and 1998 compared with competitors whose sales rose by 27% in the same period. A huge increase in competition, for example, Boots The Chemist in the United Kingdom and Bath & Bodyworks in America, with the introduction of their own natural product lines priced below The Body Shop’s own products are growing in popularity.
Lynch (1997) states that if competition is strong in a growing industry then a company should attempt to improve market penetration and should invest to increase growth rate (and improve position). “Strategies that might be particularly successful include:
1/ bold initiative to capture market share and build on cost experience effects
2/ significant investment to develop the basic technology and adapt it to customer tastes and
3/ search for a viable customer base beyond the initial trialists – for example, a market segment,” Lynch (1997).
Anita Roddick’s own theory is to concentrate on The Body Shop rather than on its competitors. A sign on her office door reflects this attitude towards competition: Department of the Future. Franchisee Helen Mills says, “You can copy our past, but you can’t copy our future. No-one can copy Anita’s mind.
The Body Shop’s strategy has allowed them to set premium prices – the assumption that people are willing to pay more for quality and service, in particular if they think they are contributing to the support of social and ethical issues in terms of The Body Shop’s own views on environmental, animal and human rights. This has provided The Body Shop with the competitive advantage of differentiation. “Differentiation occurs when the products of an organisation meets the needs of some customers in the market place better than others. When the organisation is able to differentiate its products, it is able to charge a price that is higher than the average price in the market place,” Lynch (1997).
According to Bain as cited by Lynch (1997), differentiation is the most effective barrier to entry. This argument is further supported and explained by the diagram below:.
Taken from Lynch (1997).
For competitors to successfully enter the market they have to offer similar products at lower prices or make extensive use of advertising, or both. But now with competitors introducing less expensive natural products sourced worldwide how can The Body Shop continue to implement its strategy of differentiation to gain competitive advantage?
Manufacturers within the cosmetics and toiletries industry have the ability, knowledge and technology to change production operations e.g., from producing shampoo to producing foundation. This form of growth strategy is commonly used within the industry through new product launches.
New product launches are successful in setting a company aside from its competitors. In 1997, the company’s New Product Development programme led to the introduction of several new products including the aromatherapy range and a total re-launch of the Colourings make-up products line. The Body Shop has recently introduced its new Hemp range, which has already proved popular. It made up 5% of UK turnover in April 1998 after its launch in March 1998. This success is expected to continue, The Body Shop is the only cosmetics and skin products retailer that sells such a range giving the company a monopoly on this particular type of product.
Product differentiation is a huge competitive advantage as it increases barriers to entry. “Product innovation (differentiation) may be classified into two broad types: physical and image. The physical products are mainly skin products,” Cochrane (1997). Differences in the physical sense provoke customers to have personal preferences allowing companies such as The Body Shop to further differentiate their products. The Body Shop’s packaging of products is a key physical difference which heavily contrasts with competitors’ product packaging and thus, allowing for differentiation. The Body Shop has already recently dealt with physical differentiation having launched a new store design in 1997 winning them the Retail Week Store Design of the Year award and in addition, having re-launched their makeup range. The Body Shop is only now implementing a strategy of image differentiation through advertising.
Advertising is important because it creates an image and enhances differentiation. “In the mind of the buyer and potential purchaser, (the product) consists additionally of a number of intangible factors which encompass expectations concerning attributes and benefits,” McCann (1990). Bain as cited by McCann (1990) discovered advertising to be the most significant source of product differentiation in the consumer goods industry in a sample that examines the product differentiation of 20 manufacturing industries. Through social marketing (discussed earlier) The Body Shop’s products have already been established as ‘different’ but this competitive advantage could be further exploited through advertising.
Cochrane (1997) states that there are three main reasons for advertising. One is that many purchases are infrequent, a second is that a purchase is often a gift and a third is that a product is associated with the six psychological drives: status, sex, beauty, security, health and children. Of these three reasons for advertising, all of them are relevant to The Body Shop but the third reason is particularly specific to the company. A high rate of brand loyalty is achieved when a product is associated with the six psychological drives. The first five psychological drives are satisfied by the cosmetics and skin products that The Body Shop retail. The Body Shop already has a certain degree of brand loyalty also gained through their high quality brand reputation. This is said to be a company’s greatest asset where competitive advantage is achieved through image differentiation. KI2Vr5n1Q
A significant development in the strategy of The Body Shop, which will help counteract increased competition, is the company’s changing attitude towards advertising. For the most part of the company’s existence The Body Shop has held a firm stance against the use of advertising believing that beauty is reality and not the glamour that other company’s in the cosmetics industry portray in their promotions. It is only recently that The Body Shop has made strategic use of advertising through a few select advertisements in the form of posters at bus shelters and train stations and on billboards and in national newspapers and magazines in response to the increased competition.
Another advantage that The Body Shop has over its competitors is umbrella branding. The Body Shop can launch new products safe in the knowledge that customers will, “perceive that they already know something about the product’s quality and will be more likely to purchase the product than if it were a similar product introduced by a firm under a lesser known brand name,” Cochrane (1997).
However, perhaps gaining and maintaining brand loyalty is the key. This is where direct marketing comes in but first lets deal with developing brand awareness. Since 1997 The Body Shop have published their own magazine called ‘Naked Body’. The magazine is retailed at a price of �2 or is free to customers who spend �10 or more in a single purchase. Typical articles include how to spice up your sex life, how Brazil’s land barons tried to stop women harvesting the wild babussu palm’s nuts, life stages and growing old and breeding disaster?: advances in genetic engineering. It is important to stress that it is a magazine and not a catalogue. ‘Naked Body’ is the printed embodiment of The Body Shop’s core strategy: ethical, social and environmental responsibility. At present The Body Shop is the only cosmetics and skin products retailer to publish its own magazine. Again this differentiates The Body Shop from its competitors simultaneously generating brand awareness.
In 1992 The Body Shop entered the home shopping market with its mail order catalogue, The Body Shop Direct. As The Body Shop state in their 1998 Annual Report, “For The Body Shop to flourish, we have to develop new modes of distribution. That is why The Body Shop Direct is a critical initiative for the company’s future.” Direct selling is instrumental in strengthening brand loyalty and in introducing new customers and this is exactly what the company hopes to achieve.
“In a viciously competitive world, its self evident that companies can only survive by concentrating on what they do best,” Caulkin (1996). The Body Shop has the edge on competitors through its funding and support of human rights, environmental and animal rights groups. And what The Body Shop does best is to differentiate themselves from competitors through taking advantage of the information and knowledge that Anita Roddick’s mind contains.
The Structure of the Management Team
The Body Shop announced last year that Patrick Gournay was to be appointed Chief Executive Officer effective as of 14 July 1998. It is hoped that Patrick Gournay (formally of the Danone Group) will help the company achieve its strategic plan and develop the brand of The Body Shop without losing everything that they stand for through his leadership skills, strong managerial capability and experience in the management of change. This is hoped ultimately to develop the company going forward. The Body Shop realised that such a task would be challenging and that the only way to be successful in reaching their aim was to strengthen their top management.
Anita and Gordon Roddick are now sharing the role of Co-Chairperson and Stuart Rose (formally the Managing Director) has now become Deputy Chairperson and is responsible for dealing with the identified issues in The Body Shop’s strategic review.
This strategic change in the management structure of The Body Shop further supports the suggestion that Anita Roddick’s creativity is balanced with the more rational perspective of top management. It has been recognised by the company that for the survival of the company within an ever-increasing competitive industry that focus on a strong management team who are committed to pushing the company into the future while maintaining the heritage of the brand is essential.
The US Join Venture idea.
As mentioned at the beginning of the dissertation in the Literature Review, The Body Shop are facing several lawsuits from their US franchisees. Of the 290 outlets in the US, the company owns 203 and 87 are franchised. Sales in the US market have also been reported to be falling for a fifth consecutive year.
As part of the strategic plan The Body Shop have decided that the only optimum option in strategic response to this issue is to transfer the management and at a later date the ownership of the US business to a joint venture under the management of Adrian Bellamy, one of The Body Shop’s Non-Executive Directors. This was set to be effective as of 19th June 1998 subject to a shareholder EGM.
Again it is hoped that a person’s extensive managerial skills would help project The Body Shop well into the future. In this case, it is hoped that Adrian Bellamy will curb the flagging US operations and greatly increase the company’s ability to retail effectively within an ever-increasing competitive industry. This is highly inevitable as Adrian Bellamy is extensively skilled in the management of US business and specifically of branded retail products for example, he is also currently a non-executive director of The Gap Inc, Gucci Group, Williams-Sonoma Inc aswell as several various other companies.
‘Rebel Brand’ Image – An Issue of Future Concern?
“Like other rebel brands formed in the 1970’s by charismatic entrepreneurs, The Body Shop has become a member of the ‘new establishment’ – part of the monolithic system of big business that it set out to challenge.
When being ‘new’ and ‘anti-establishment’ and therefore ‘better’ was the source of your success, how do you protect yourself when you lose the newness and have become part of the very establishment you rebelled against in the first place?” Richards (1997).
Pam Robertson, director of strategy at Intrabrand, claims that, “Anti-establishment companies can remain successful provided they keep moving the brand on and are sensitive to what consumers are thinking.” However, she argues that The Body Shop failed to do this. She praises their ethical positioning but states that when competitors adopted similar strategies that this competitive advantage (differentiation) was reduced.
To some extent it has been shown that the increase in competition has had a negative impact, as expected, but some may argue that The Body Shop have not failed in recognising their customers needs. The Body Shop has acknowledged that the increase in this type of competition poses a threat and has considered some strategic modifications. It would be unrealistic to suggest that The Body Shop overhaul their image in strategic response to the rise in competition as this would undermine everything that the company has stood for for the last twenty-odd years. Despite the rise in competition, The Body Shop still has the upperhand as discussed in the previous section and therefore, Richards’ argument suggesting the rebel brand image as a problematic issue for the company could be argued to have no firm basis and have no real relevance such that it would make The Body Shop concerned.
CONCLUSION
The Body Shop’s strategy can be described as a mixture of both emergent and prescriptive. Through the emergent and prescriptive strategies The Body Shop has become one of the most successful and well-known companies throughout the world and within its industry.
Anita Roddick’s flair for visionary leadership is balanced by the more logical input of top management in particular the Chief Executive Office, Patrick Gournay. Her idealistic strategy of ethical, social and environmental responsibility: profits with principles, is executed through a number of campaigns and activities. This strategic involvement is carefully monitored and controlled by The Body Shop’s Values Report which is printed annually and encompasses The Social Audit, The Environmental Audit and The Animal Protection Audit.
The Body Shop has taken risks in terms of strategic action that it has taken in the past e.g, the move into colour cosmetics and The Hemp Range, but has been victorious in taking advantage of the situation and using it to the company’s benefit. The Body Shop has also been successful in reaching the goals of many of its campaigns.
Though The Body Shop has experienced some difficulties, namely negative press questioning The Body Shop’s integrity as a socially; ethically and environmentally responsible company, the key success factors of its strategy (leadership, quality and service) have pulled the company through these troublesome times.
Leadership, quality and service have been instrumental in the success, which has led to The Body Shop being one of the UK’s most international retail outlet as Anita Roddick claims.
Anita’s dynamic and individualistic personality has ultimately led to her visionary sense of leadership. She endeavours to make a positive social change, believing that companies such as The Body Shop can act as strategic vehicles for this. Anita has inspired and captivated both the consumer and the employee by her use of creativity. She encourages people to make a contribution emphasising that every little thing counts as it all comes together to make a difference. Her successful leadership skills have helped make The Body Shop what it is today and the company now has huge support, commitment and dedication from its customers and employees.
Lynch (1997) states that by offering a superior service to that of competitors that a company is then able to effectively compete in a highly competitive market. In essence, service is an indicator of quality as perceived by the customer.
Firstly, it is essential to have an understanding of customer needs. The Body Shop was one of the first outlets to offer a makeover service by their trained beauty consultants and soon many others followed. Mainly, today it is outlets retailing premium priced products that offer such a service – quality is thus, simultaneously perceived with quality.
The Body Shop employees are friendly and willing to educate customers as they sell. This form of service is additionally inherent in the company’s supply of information on product uses, origins, stories of ‘Trade Not Aid’ foreign employees etc…which is readily available to customers.
A strategy of superior service and thus, perceived quality, is instrumental in creating competitive advantage as it makes it difficult for competitors to compete using similar methods. Ultimately, it is a successful strategy that enables a company to effectively compete in a highly competitive market.
However, top management of The Body Shop has recognised that changes in the cosmetics market, most importantly increased competition, require the company to implement some modifications and changes into their strategy. Anita Roddick has her own theory on how to tackle the problem of increased competition and that is to ignore what competitors are doing as she feel safe in the knowledge that her own creativity cannot be duplicated by any competitor. It is this creativity that has been a driving force behind developing new product ranges, the knowledge having been gained on a unique and personal level by Anita Roddick herself – so it is obvious why this creativity cannot be duplicated.
The Body Shop’s new product development strategy helps the company stay ahead and meet the immediate needs and wants of its customers. The Body Shop has competed through differentiation and according to Bain as cited by Lynch (1997); this is the most effective barrier to entry. The company’s New Product Development programme ensures that the company is set aside from competitors, sometimes even having the advantage of monopoly on a market as exemplified by the new Hemp range launched in 1998.
The Body Shop has made some changes again in terms of product innovation but in this case it is a focus on image. A new store design was launched in 1997, the purpose being to up-date the company’s retail outlets appearance and thus, appear modern and more fitting within the present day. The Body Shop has only recently made strategic use of advertising also in response to the increase in competition, advertising is said to be the most effective source of differentiation.
The Body Shop has the competitive advantage of umbrella branding, which creates brand loyalty. The company has acknowledged that by gaining and maintaining brand loyalty that they can sustain and gain market share and therefore, continue to survive alongside competitors as they adopt similar strategies. Direct marketing is the fastest growing area in the world of marketing. Through direct marketing’s main special competency of relationship building The Body Shop hope that they can generate brand loyalty. In response the company has launched ‘Naked Body’, a magazine which embodies The Body Shop’s core strategy: profits with principles, to stimulate awareness. The Body Shop also launched The Body Shop Direct in 1992, a home shopping mail order catalogue, targeting and reaching out to new and existing customers.
A further strategic issue that has arisen is the issue of top management. Patrick Gournay was appointed Chief Executive Officer of The Body Shop effective as of 14th July 1998. It is believed that his extensive leadership and management skills particularly those in change management would help develop the brand of the company without losing its heritage and thus, ultimately lead The Body Shop into the future.
The Body Shop realised that strengthening the top management was an essential part of the strategic plan. Anita and Gordon Roddick now chair the role of Co-Chairperson and Stuart Rose was promoted to Deputy Chairperson.
This move supports the suggestion that the more rational perspective of top management balances Anita Roddick’s artistic flair for business. It is also obvious from this move that The Body Shop has acknowledged the fact that this type of balance in strategy is essential for survival in an ever-increasing competitive industry.
Another area of the strategic plan for significant change is the US business. Currently The Body Shop has 83 franchised outlets in the US aswell as over 200 company-owned outlets. The Body Shop has recently been facing several lawsuits from US franchisees. Sales in the US market have fallen again for the fifth consecutive year.
The Body Shop is now transferring management and at a later date ownership of the US business to a joint venture under the management of Adrian Bellamy, a Body Shop Non-Executive Director, effective as of 19th June 1998 subject to a shareholder EGM.
It is hoped that Adrian Bellamy’s extensive experience within the US business and quite importantly, with branded retail products will help curb the flagging US operations and consequently, increase the companies capability to retail effectively within an ever-increasing competitive industry.
Another issue discussed was the rebel brand image. Argued by Pam Robertson, director of strategy of Intrabrand, to be a problem for The Body Shop because the company has failed to recognise its customers needs and thus, have allowed themselves to fall prey to the increase in competition as competitors adopt similar strategies.
However, on the other hand, it could be argued that The Body Shop have not just recognised their customer needs but have also met them. The Body Shop still has the upperhand in being the original company to set up with a social, ethical and environmental responsibility focussed strategy: profits with principles. And that can never be forgotten.
In conclusion, The Body Shop has the ability, knowledge, expertise and competitive advantage to survive well into the future having proved that it can cope with and adjust to changes within the cosmetics and toiletries industry. The Body Shop’s risk taking strategy is significant in pushing the company forward in a competitive market. The Body Shop, once said to have a rebel image, is not afraid of taking risks particularly as the company’s whole culture is immersed in a global revolution of human & civil rights, environmental protection and animal rights, hugely influenced by Anita Roddick’s visionary, intuitive and creative leadership.
