Case Prep: Sephora

Let’s take a ride in the wayback machine to Fall 2010 in America.  The Great Recession had officially ended in September but unemployment was still high and growth had stagnated.  The bulging millennial generation was between 15 and 30, and were definitely leading in technology adoption, with 33% of US 15-24 year olds owning a smartphone ( The iPhone was launched in 2007 and the first Android smartphone was launched in 2008)   Led by millennials, everyone was starting to text, and figuring out which of the 100,000 or so available apps were useful for them.  This involved playing a lot of Angry Birds, checking each other out on Facebook, and, for millennials in particular, using social networks to share much more about themselves and their lives than any previous generation.  Everyone was still mostly shopping in person, but online sales were only 6.4%, but they were growing with Amazon already in a dominant position.

Key Decision Question:  From the list below, rank your priorities for the 2011 Budget. Why did you prioritize these items this way?

2011 Sephora Digital Programs: Possible Budget Items

    • Professional video production
    • Programs to grow user generated videos
    • Programs to grow Facebook/Twitter engagement
    • Programs to grow BeautyTalk engagement
    • App Development- Android plus new features to help in-store shoppers
    • App Development- Android plus new features to help online shoppers

Recommended Supporting Questions and Analysis

You do not need to submit answers to the questions below; use them to help structure and sharpen the analysis and insights that support your decision.

  1. Who is an ideal Sephora client? What are beauty care-related needs of these clients? What do you hypothesize about their decision-making processes? What is the Sephora Value Proposition and positioning, and how do they fit with their ideal clients’ needs and DMPs?
  2. What is the specific role of the retail store in the value proposition and positioning?
  3. What are the existing elements of Sephora’s promotional mix? What is their role in helping customers to discover and ultimately buy products from Sephora (to move through a buying process)? How effective are they in doing so? (note that the Sephora case refers to the promotional mix as the ‘marketing mix”. While we have discussed the marketing mix at a strategic level in terms of all 4Ps, the term “marketing mix” is also used to refer to the integrated mix of advertising, incentives and other promotional tools that an organization uses to reach, engage with, inform and persuade customers)
  4. What should be the primary goal each of the new digital campaigns aims to achieve? Who are you trying to affect? What specific client attitudes or actions are you trying to encourage related to your goal? What do you need to convey to clients to achieve your goal?
  5. How would you measure the effectiveness of the new digital campaigns?