TLDR A leading cosmetics firm experienced a 20% drop in market share from heightened competition and outdated digital platforms. This prompted a strategic pivot to digital innovation and sustainable products, yielding a 25% increase in online sales and regaining 20% market share in the sustainable segment. This underscores the need to align digital transformation with consumer values and continuous innovation.
TABLE OF CONTENTS
1. Background 2. Market Analysis 3. Internal Assessment 4. Strategic Initiatives 5. Strategic Analysis Implementation KPIs 6. Strategic Analysis Best Practices 7. Stakeholder Management 8. Strategic Analysis Deliverables 9. Revamp Digital Customer Experience 10. Adopt Sustainable Product Innovation 11. Strategic Analysis Case Studies 12. Additional Resources 13. Key Findings and Results
Consider this scenario: A prominent cosmetics company is at a critical juncture, facing the strategic challenge of Value Creation through strategic analysis in a highly saturated market.
External challenges include a 20% decline in market share due to increased competition and changing consumer preferences towards sustainable and digital-first brands. Internally, the company struggles with outdated digital platforms which limit customer engagement and data analytics capabilities. The primary strategic objective is to leverage digital innovation to enhance customer experience, streamline operations, and regain market leadership.
The company stands at a pivotal point, requiring a thorough examination of its current challenges and opportunities. It appears that the core issues stem from the company's slow pace of digital adoption and an underleveraged online presence, which are critical in today’s digital-first consumer market. Additionally, operational inefficiencies have escalated costs and hampered the company’s agility in responding to market changes.
The cosmetics industry is witnessing rapid transformation, driven by technological advancements and shifting consumer behaviors. Digital channels are becoming increasingly vital for customer engagement and sales.
Examining the competitive landscape reveals:
Emerging trends focus on personalized beauty solutions, eco-friendly products, and digital engagement. The industry is shifting towards:
A STEER analysis highlights Socio-cultural shifts towards sustainability, Technological advancements in e-commerce, Environmental concerns influencing product ingredients, Economic fluctuations affecting discretionary spending, and Regulatory changes around product safety and environmental impact.
For a deeper analysis, take a look at these Market Analysis best practices:
The organization's strengths lie in its established brand and extensive product portfolio. However, it struggles with digital marketing strategies and e-commerce optimization.
A MOST Analysis reveals a misalignment between the company’s Mission to lead in cosmetics innovation and its Strategies, which have been slow to adapt to digital trends. Objectives related to market share and customer engagement are not supported by current Tactics and operational capabilities.
A Value Chain Analysis indicates inefficiencies in inbound logistics and marketing. Enhancing the digital platform could streamline operations and improve customer engagement.
A Digital Transformation Analysis underscores the need for a comprehensive digital strategy encompassing e-commerce, mobile applications, and data analytics to drive personalized marketing and improve operational efficiency.
KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.
These KPIs provide insights into the strategic initiatives' effectiveness, allowing for timely adjustments and demonstrating progress towards the company's strategic objectives.
For more KPIs, take a look at the Flevy KPI Library, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.
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To improve the effectiveness of implementation, we can leverage best practice documents in Strategic Analysis. These resources below were developed by management consulting firms and Strategic Analysis subject matter experts.
Successful execution of the strategic initiatives depends on the active involvement and support of both internal and external stakeholders, particularly the digital transformation and product development teams.
Stakeholder Groups | R | A | C | I |
---|---|---|---|---|
Product Development Team | ⬤ | |||
Digital Transformation Team | ⬤ | |||
Marketing and Sales Teams | ⬤ | |||
Suppliers | ⬤ | |||
Customers | ⬤ |
We've only identified the primary stakeholder groups above. There are also participants and groups involved for various activities in each of the strategic initiatives.
Learn more about Stakeholder Management Change Management Focus Interviewing Workshops Supplier Management
Explore more Strategic Analysis deliverables
The strategic initiative to revamp the digital customer experience was underpinned by the utilization of the Kano Model and the Customer Journey Mapping framework. The Kano Model, developed by Noriaki Kano in the 1980s, categorizes customer preferences into five categories: Must-be Quality, One-dimensional Quality, Attractive Quality, Indifferent Quality, and Reverse Quality. This framework was instrumental in understanding which features of the digital platform would delight customers versus those that were merely expected or could potentially dissatisfy if not properly implemented. The organization took the following steps to apply the Kano Model:
Simultaneously, Customer Journey Mapping was employed to visualize the end-to-end experience of customers interacting with the digital platform. This approach allowed the team to identify critical touchpoints and pain points in the customer's interaction with the brand online. The team meticulously:
The combined application of the Kano Model and Customer Journey Mapping led to a significant improvement in the digital customer experience. The redesigned platform saw a 40% increase in user engagement and a 25% increase in online sales within the first year of implementation. Customer feedback highlighted particular appreciation for the new features that were categorized as Attractive Quality, confirming the efficacy of the Kano Model in guiding feature prioritization.
For the strategic initiative of adopting sustainable product innovation, the organization deployed the Triple Bottom Line (TBL) framework and the Diffusion of Innovations theory. The Triple Bottom Line approach, which emphasizes the three P's—People, Planet, and Profit—guided the company in evaluating the sustainability of its new product line not just from an economic perspective but also considering social and environmental impacts. The process involved:
Concurrently, the Diffusion of Innovations theory, developed by Everett Rogers, was applied to strategize the market introduction of the sustainable product line. This theory helped the organization understand how new ideas and products spread within a market or culture. The implementation steps included:
The strategic application of the Triple Bottom Line framework and the Diffusion of Innovations theory resulted in the successful launch and adoption of the sustainable product line. Within two years, this initiative not only achieved its goal of capturing a 20% market share in the sustainable cosmetics segment but also elevated the brand's reputation for environmental and social responsibility. The company's commitment to People, Planet, and Profit resonated strongly with consumers, driving both sales and brand loyalty.
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Here is a summary of the key results of this case study:
Evaluating the results, the initiative to revamp the digital customer experience and adopt sustainable product innovation has been largely successful. The 25% increase in online sales and 40% boost in user engagement are significant achievements that underscore the effectiveness of the Kano Model and Customer Journey Mapping in enhancing digital platforms. The achievement of a 20% market share in the sustainable cosmetics segment within just two years is a testament to the strategic application of the Triple Bottom Line framework and the Diffusion of Innovations theory. However, the results also highlight areas for improvement. The expected increase in online sales was targeted at 30% within 18 months, but only 25% was achieved in the first year, suggesting that there may have been challenges in fully realizing the potential of the digital revamp. This could be due to external market factors, or possibly internal execution challenges. Additionally, while the brand's reputation for environmental and social responsibility has been elevated, continuous innovation and commitment will be necessary to maintain and grow this perception in a highly competitive market.
Based on the analysis, the recommended next steps include a deeper dive into understanding the gap between the expected and actual increase in online sales, possibly through customer feedback and market analysis, to identify and address any barriers. Further investment in advanced data analytics and AI could enhance personalization on the digital platform, potentially driving higher sales and engagement. For the sustainable product line, ongoing innovation and expansion of the product range, coupled with a robust marketing strategy that leverages social proof and influencer partnerships, will be crucial to sustaining growth. Additionally, exploring partnerships with sustainability-focused organizations could further strengthen the brand's commitment to environmental and social responsibility.
The development of this case study was overseen by David Tang. David is the CEO and Founder of Flevy. Prior to Flevy, David worked as a management consultant for 8 years, where he served clients in North America, EMEA, and APAC. He graduated from Cornell with a BS in Electrical Engineering and MEng in Management.
To cite this article, please use:
Source: Ecommerce Customer Experience Enhancement for Niche Retailer, Flevy Management Insights, David Tang, 2024
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