shared via CourseHero com This study resource was This study source was downloaded by 100000832135806 from CourseHero com on 10 21 2021 10 56 08 GMT 05 00 https www coursehero com file 29683528 Sephora Direct Case Analysisdocx Sephora Direct Investing in Social Media Video and Mobile1 shared via CourseHero com This study resource was This study source was downloaded by 100000832135806 from CourseHero com on 10 21 2021 10 56 08 GMT 05 00 https www coursehero com file 29683528 Sephora Direct Case Analysisdocx Problem StatementIn general the Internet has transformed how companies promote and advertise to consumers In this day in age companies must adjust themselves accordingly as two way communication provides an avenue to speak to consumers directly receive feedback and satisfy their needs better However the ability to find quantifiable metrics to measure the efficacy of thisinvestment have been difficult Sephora is a cosmetic retail store with numerous prestige brands of cosmetics It operates 1000 stores in 23 countries which generate nearly 2 billion in sales making itself prominent in the market It also operates online as Sephora Direct which sells the leading beauty brands on its site Sephora has grown their brand by becoming keenly aware their customers wants and needs and then take advantage of technological improvements to reach out to consumers The Senior VP SVP of Sephora Direct is encouraged by these new social media platforms and the opportunities they offer to potentially increase customer awareness consumer loyalty and revenue The SVP believes these tools will improve Sephora sales and wants double the current 1 million dollar budget to explore new possibilities and ways to expand the existing media mix Therefore Sephora must decide whether to reallocate the current online media budget or increasethe annual budget for social media video and mobile platforms Situation AnalysisIn 2009 the U S beauty and personal care market was approximately 58 9 billion Page 3 Realizing that beauty can be an affordable luxury Sephora has been successful with print and in store advertising Also Sephora has kept up with the changing digital media landscape and has captured 30 on the U S online market making it the largest prestige beauty website Page 3 Its utilization of their Beauty Insider Program has allowed them to keep in communication with customers at a low cost Another avenue of consumer contact has been through the use of product ratings and reviews This online presence has created a direct path to hear the needs wants and experiences of consumers Sephora understood that more and more people spent time online visiting social media platforms Rather than become complacent they deicided the first step was create a website followed by a Facebook page which has attracted close to 900 000 fans see Appendix A Due tothe high volume of questions and inability of Facebook analytics to group similar questions together Sephora created a Q A section with their own website to allow consumers to see answers to previously asked questions Despite the Q A section it did not give information on whether it drove additional customers to purchase on the Sephora website In addition to Facebook Sephora has started to use Twitter and YouTube to supply content to their customers and other promotional giveaways Despite the fact that other competitors lacked mobile offerings Sephora saw an opportunity to add a mobile platform to enhance consumer experience and grab market share of the 2 4 billion mobile shopping industry Currently there is no set number of key metrics for Sephora to utilize to convert onlookers to buyers In addition there are high costs for occupying the digital space from 20 000 for video production to upwards of 200 000 for app creation with a 30 000 yearly 2 shared via CourseHero com This study resource was This study source was downloaded by 100000832135806 from CourseHero com on 10 21 2021 10 56 08 GMT 05 00 https www coursehero com file 29683528 Sephora Direct Case Analysisdocx maintenance fee see Appendix A Regardless Sephora is at a crossroad where it must determine which direction could have the greatest impact on acquiring new customers and establishing more loyalty with existing customers to help create more added services thereby increasing sales Major Strategic AlternativesTo pursue a strong position in digital media initiatives Sephora must take two major strategic alternatives under consideration 1 Do not increase the social media budget but allocate more to Sephora website and mobile applicationSephora could continue on the same digital media course that has allowed it capture the largest online market percentage 30 in the U S However by allocating more towards its website and mobile application it can capitalize on those loyal consumers that make up 80 of sales and 25 of shoppers that use smartphone during the buying process Page 5 9 Moreover Sephora s own data showed that an overwhelming number of clients access its website on a mobile device The disadvantage here is the cost associated with creating the mobile application which can cost anywhere between 100 000 to 200 000 and 20 000 to 30 000 for yearly maintenance Page 9 10 In addition Sephora has struggled in the past with finding the appropriate balance between allowing clients to share their own answers and providing expert opinion that could be perceived as biased Page 7 Also this could allow competitors an opportunity to move into the digital space and position themselves ahead of Sephora in consumerminds if they do not proceed on any digital initiative Finally the 10 of individuals who do not use Apple products will not be able to connect with Sephora via mobile platform 2 Increase the social media budget from 1 million to 2 millionThis alternative will allow Sephora to pursue digital initiatives at greater pace and diversify the amount of content It will also allow Sephora to engage in more opportunities that were previously ignored due to constraints on capacity or funding Specifically Sephora can double its budget from categories such as video production to mobile platforms see Appendix B While there is no formula to make a video go viral the additional funding can help Sephora own the video category by creating professional videos that can generate traffic as well as other advertisements and contests The downside is making sure that videos fit the brand image and does not sway away from the target market The