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A SOOT analysis of the company has been done to recognize and spot the areas which are influencing the company’s business. Based on the proposed strategies by the company for next year, an Nations Matrix strategy analysis has been done to ascertain and check the feasibility of future market growth. 2. Scares Cosmetics Scares Cosmetics was established In the year 1972 In France. It focuses on innovating, producing and selling its products in beauty as well as hygiene segment. With its effective and productive moves over the years, the company has performed well.
With zero debt and reinvestment of the profits in new deeds, it created a position amongst top 10 players in the French Cosmetic Market. With advanced technology and manufacturing amenities, the company’s production Is spread across three different areas 1 . Cosmetics 3. Wet wipes The Brand portfolio of Scares can be generalized under following brands Coring De Farmer C. De Farmer Paris Institute Photo Comma Apart from the above businesses it also deals in Private Label Brands business line and BIB line.
Scares Cosmetics also spends valuable amount of its finances across two salient features: ) Quality Assurance practice – Centralized Quality unit along with separate Quality centre at every site. 2) Investment in Research and Development – 4% contribution from annual sales goes to R&D investments. 20% of new innovative formulae are incorporated into manufacturing. Market Dynamics in Italy Due to the global economic downturn in later half of the year 2008, there was a considerable decrease in the utilization and buying strength of the consumer.
Despite unfavorable conditions, retail industry experienced a growth of 2. 4% in 2008 with an increase in non-store selling and the big groups continued their expansion of stores and products. Overall, even with a lot of global economic problems faced by the Italian Cosmetics market, the development rate increased up by 2. 2% in 2008. Due to identified increased beliefs, preference of consumers in Italy to purchase from specific retail outlets, online and directly, there was a decrease in sales of hypermarkets as well as in the supermarkets.
The key players in the Italian Cosmetics Market are L’Oreal, P, Pampers and J. 3. Present Situation faced by Scares in Italy The global economic distress across the country restricted business growth but still mom situations were favorable & some were unfavorable for Scares Situations favoring Scares Private Label Business line was somewhat more stabilized. Contribution towards revenue with a growth rate of 80% with more margins. 93% of Company’s revenues under its in-house brands were capitalizes in independent stores, with highest in Chuan due to continued business relationship.
Effective marketing and increased spending in the advertising of Baby line Cosmetics and spreading more awareness of the brand increased sales in the baby line with elevated margin. Situations not favoring Scares Slow stock turnover leading to delighting from Conrad chain leading to decline in revenue. Total Revenue declined by 5% on year to year basis and set targets were far too away from achievement and were negative (30%) Coring De Farmer and Institute Photo were struggling from major problems. Extension of Disney License could not be achieved into company’s favor.
Association with store chains like USED and Italy’s top retail giant Coop could not be achieved. Failure to initiate and launch a new segment of its product line for adult face as well as body-care. High revenues could not be inverted into high profits due to high retail costs for product listing and promotion and also due to increased taxes. 4. SOOT Analysts Based on the information collected from the Scares Cosmetics case study, a SOOT analysis is performed below to analyses the strengths & weaknesses which are internal factors and opportunities & threats which are external factors. Solomon, Marshal, Stuart, Barnes, & Mitchell, 2009) STRENGTHS Products were built on proficient level of advanced technological operations and marketing. Maximum sales percentage was from own brands covering majority market and luxury segment. Substantial investments of money in Quality assurance practices and ensured continuous strive towards quality improvement. ISO 9001 :2000 Certification to ensure regular checking of various improper practices in the business. % from its annual revenue were dedicated towards Research & Development and deployed 20% of the new and innovative formulas into production. Management’s belief in continuous adaptation in business lines with varying consumer inclinations and market changes. The brand positioning strategy of integrating nature and to produce more natural and safer products influenced and approached o the consumers well. Good marketing activities in Baby line promotion consecutively effected in more sales with high margin.
Private Label Business was consistently steady even in the global economic worrisome situation. Baby cosmetics prospects for the company. Improvising on increased marketing budget, spreading brand awareness and introducing new products in the baby line indicates positive adherence of the company to grow. WEAKNESSES Stock turnover turned too slow sometimes which caused the delighting from one of the store chains which possibly would decrease revenue. Failure to list any of company’s adult face & body care commercial products in the Italian Market.
Envisioning or anticipation by managers for a decline in independent store revenues instead of its successful performance in 2007 and 2008 where revenue was 93% under company’s brands in independent stores. Although Chuan was its channel with highest revenue but instead of very high percentage of retail costs I. E. 70% imposed on the company in this SOB line, the account profitability had to be largely compromised, the company still considered continuing with them and with PAM which had cost 67% n retail cost.
Failure to find a retail channel with lower retail costs or finding a new channel. Ineffectiveness in creating Business development. Extension of Disney License product line could not be achieved. No satisfactory outcome from the steps taken to initiate business with some of the retail store chains. Variable and the fixed contract charges for the promotion and the listing of its product in stores were creating hindrance in company’s growth. OPPORTUNITIES Wet wipes line of business held bright future for the company.
Favorable increase in the luxury market during economic distress. Increased selling in non-store retail sector than store-based, mainly due to high drift of consumer towards online retailing. Strategic investment in this sector may turn out exceedingly well as this sector is still far from maturity phase. Utilization of their in-house Research and Development by invention of new formulae would act as an added advantage over Private Label producers due to their limited budgets for R&D and limited ability of discovering innovative formulae.
With their plan for prime focus on further promotion of Baby products, it can create high revenues with higher margins and increased share in the Baby line sector. Increased attraction of aged population towards anti-wrinkles, firming and nourishment cosmetics were amongst the prime growth sectors in Italian market. Business development with Disney & Sincere goods might prove to be better in the years ahead. THREATS Negative projection of brand because of the usage of the word farm as it gives a distress, increase in cost of transportation & raw materials which were not favorable for the business.
Decreased utilization and buying strength of the consumer. Expansion of big groups in the retail sector in terms of stores and their product offering, with strong focus on private label products. With increased advertising and reduced prices, they stole the market share from smaller, still dominant independent retailers. Downtrend in hypermarkets and the supermarkets because of the consumer preference to purchase cosmetics from specialized channels of retail in Italy.
From the SOOT analysis carried above for Scares Cosmetics and by matching the SOOT data for looking for any strengths, weaknesses, opportunities and threats that can be capitalizes upon any loopholes The ideas that generates from the analysis concisely are Company should cut down its high retail costs imposed by few store chains by lowering their business with them. It should initiate some non-store retailing such as online retailing which has increased consumer attraction by entering into online retailing or non-store retail selling and should also adapt to trending changes like increased attraction for cosmetics focused on aged consumers.
There should be an increased focus on company’s major products and new products in cosmetics line together with adequate investment in marketing activities and spreading awareness f the brand across all sorts of consumers and markets with good brand projection strategy and at the same time it should continue its private label business to improve its financial business position. The company should also continue to utilize its in- house R for continuous innovation and launching of new products and should also work for future business development with old and new accounts. . Competitive position of Scares in Italian Cosmetics Market Due to aggressive competition in the Disney products segment, Scares targets were not reached and were actually reduced by 39% instead of their estimated goal of 40% increase, thereby lowering their competitiveness in the segment. Successful launching of new baby product line with a 78% increase in revenue on year to year basis with achieved target of their marketing investment in print media, in-store and in leaflets for the same segment displayed their increased market share and dominance.