Sa Sa Cosmetics, Harvard Business School
Sa Sa Cosmetics is a well-known of largest cosmetic and beauty retailer service in Asia which is pioneering the concept of discount cosmetic retail stores in Hong Kong. The case explained the company background of Sa Sa developed by Simon and Eleanor Kwok (Figure 1). Besides, the case also describes how Sa Sa became successful and facing the problems in the organization and discusses the recent initiatives and strategies that were undertaken to sustain growth momentum and undertook some marketing research studies to guide. The research findings appear to confirm that Sa Sa may have some major problems. As 2001 comes to a close, Sa Sa contemplates what else can be done to improve profitability and keep on growing.
There are some reasons for Sa Sa’s early success. Sa Sa was creating value for its customers by providing them with quality products at a fair price. Sa Sa was first of its kind to pioneer the concept of discount store for the cosmetics (create and control). It did fast in the initial stages of the business (compete) by making the stores bigger and better from 40 sqft in 1978 to 750 sqft in 1985 to 10 stores in mid 1990s. Sa Sa was able to provide value to its customer by keeping the purchase prices low by using “parallel importation” and passed saving to the customers.
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One of the other important factor was Sa Sa listened to its customer demand (which products to stock). Sa Sa allowed the customer to touch and feel the cosmetics products that drove the demand. We also see Sa Sa’s strategy to deter the new entrants by holding onto old location. They controlled the inventory depending on the sales rate and the shelf life of the products. Sa Sa uniquely combined the combined the cosmetics product knowledge to advice the customer and provided the products at lower cost in 1|P ag e
comfortable environment, thus creating value for the customer for the first time that no one has done before. This is Resource Based View, outcome of which gave Sa Sa a competitive advantage. Sa Sa proclaims growth in the face of many environmental disagreements, including the Asian financial crisis in 1999. Building rents, combined with lower-than-expected data tourism harbingered on-going turbulence in its core market, Hong Kong. Under pressure to maintain the field, other reasons for concern were continued losses from its operations in China and the poor performance of the separation of beauty services. In addition, it was found that Sa Sa faced positioning paradox – to be inexpensive retail, procurement of goods from parallel imports, while trying to project an image according to the requirements of the prestigious global brands it is provided.
In my opinion, the biggest challenges facing by Sa Sa is the new competition from other cosmetics discounters; Bonjour Cosmetic & Rainbow Group, drugstore chain; Watson’s & Manning, and department and specialty stores. Sa Sa had struggled with new management was employed to help turn around the business and significant improvement had been made to maintain the profitability and stay on top of competitors. Besides, the Sa Sa’s pricing strategy was to offer value for money, which according to Simon; did not necessarily imply the lowest price for each product.
Sa Sa set prices within the customers’ comfort-zone, which were considerably lower than the MSRP. However, Sa Sa’s competitors like Bonjour offers competitive prices on the established brands and gives promotional offers periodically. Bonjour also frequently introduces new foreign products in their stores. I think, Sa Sa have to changes their pricing strategy to offer more competitive prices and gives promotional offers periodically like Bonjour have done. I reckon that these changes will make more profit and attract more customers to their
The great brand name by Sa Sa have to maintain and improve so that more customers will be attracting with their own products. According to market research data, Sa Sa strong in many outlets and convenient location, have many broad brand choices and trendy products, and their sales agents are knowledgeable and provide good customer service. However, Bonjour is strong in lowest price and promotional offer, but not Sa Sa. Professional stores are “one-stop shop” for customers to shop for cosmetics and accessories. Professional stores offer a wide variety variety of cosmetics cosmetics brands in different quality and price tiers, catering to different needs of customers.
However, quality of products available in professional stores is less assured as there may be other substandard parallel imports and even counterfeit products being sold in the professional stores. Hence, Sa Sa should change their strategy to get cheaper price and sell in lowest price with high quality products like its competitor.
In conclusion, there are some recommendations I would like to impress here is communicate the brand position to increase brand credibility which is the communication will highlight the range of brands they stocks. Besides, to make the brand relevant to the core and the products that available at Sa Sa will also available at other fine stores. Sa Sa also need to diversify into Holistic Health and Wellness business and go franchisee route to increase more brand touch points. The targeted at teenagers with to reach out the teenage audience and urban working women, while focusing on range of products, premium imagery and value will make Sa Sa more lucrative and competitive with others.