Marketing Plan Lush Cosmetics

This marketing plan will introduce the steps which will help to take Lush cosmetics forward in the year July 2010 to June 2011. The plan will analyse Lush cosmetics current situation (internal and external threats, suppliers and customers attitude and Lush’s main competitors).

The plan will then introduce a year’s tactical decisions which will take Lush cosmetics forward. 2. 2. Lush cosmetics history Lush cosmetics produces handmade cosmetics using organic fruits and vegetables, essential oils and safe-synthetic ingredients in all their products.

They are against the use of animal fat in their products; In addition to that they are also against animal testing and perform tests solely with volunteers (people). In 1994 the founders Mark and Mo Constantine opened their first Lush store in Poole in the UK where the company’s headquarters is today.

Today Lush has now more than 600 stores in 43 countries and has targeted 1000 stores in the future. Lush cosmetics produces and sells a variety of handmade products, including face masks, soaps, bath bombs, bubble bars, hand and body lotions and hair treatments.

2. 3. Purpose of the Marketing Plan This marketing plan is to help Lush cosmetics to increase sales, revenue, profit and increase customer awareness in the coming year. This will be done by improving on the sales and marketing tactics on the existing products. 1. 4. Lush Cosmetics Mission Statement

Lush cosmetics produce handmade cosmetics using organic fruits and vegetable, essential oil and natural ingredients. Lush cosmetic is strongly against animal testing and uses volunteers for their products testing and do not trade with companies that test on animals.

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Lush do not package its products and if they have to then only in recyclable packages. Lush do not spend money on adverts or pay famous people to advertise their products. The only adverting Lush does is mailing the Lush Times (their own news papers) to customers and give out to shoppers, all the people in the lush Times are employees and customers.

Also Lush has cut off intermediates and trade direct with its suppliers to offer them the best price and have also form partnership with some suppliers to supports the environment. Lush supports campaigns such as environmental issues, conservation of the natural world, animal welfare and human rights and spend about 2% of its profit on supporting charities. 1. 5. Lush Cosmetics Market Lush is trading in the cosmetics market and offers its customers organic and handmade quality products with no added scientific chemicals and none of the ingredients is tested on animals.

Lush products are popularly known for its strong smell, freshness and its unique shapes and forms like cheese, cake or jelly. Lush cosmetics believe in equal opportunity for all and therefore employ anyone regardless of the cultural background, Lush trades only with suppliers who do not test products on animals and trade with main suppliers to cut off any intermediary. Lush cosmetics do not have a specific customer base they sell to anyone but most of their customers tend to be young age females.

Lush cosmetics is an ethical company, the company’s philosophy is to protect the environment therefore all their products are not packaged if any the recyclable package is use. Lush also campaign against air pollution and therefore aim to air-freight less than 5% of its raw materials. It has also advised its entire staff not to take any UK mainland domestic flight when on business trips. Lush saves energy by using solar panels to heat water, doing Carbon Trust energy survey to reduce energy consumption and replacing its old machines with more energy efficient ones. 1. Situational Analysis 2. 1.

Current Products Analysis Lush cosmetics current products are bathing soaps and shampoos, shower gels, jellies and scrubs, facial and body skincare, haircare, fragrances and spa. 2. 2. Product Description All Lush products are handmade using natural ingredients such as cocoa, Shea butter, and natural preservatives. 2. 3. Current Pricing Lush cosmetics is using a price skimming strategy to price their products. This strategy means the products prices are set high compared to their competitors. This strategy allows them to recover their sunk cost quickly before competitors bring similar products on the market. . 4. Current products prices The bath emotibombs, bath ballistics, bath malts, soaps and shower jelly products are in the price range from ? 1. 90 to ? 5. 00 per/100g. The shower gels, shower smoothies prices are between ? 5. 50 to ? 15. 00 per/250g. The skin and hair care products are sold in the price range of ? 5. 00 to ? 15. 00 per/100g. The solid fragrance price is between ? 4. 95 to ? 6. 25 per/10g. The karma and vanillary atomiser are sold between ? 21. 95 to ? 25. 95 per/30g and the other karma and vanillary products are sold between ? 2. 95 to ? 1. 25 per/100g. 2. 6. Current distribution Lush products are sold only in Lush shops and can also be ordered online (Lush website). 2. 7. Current promotion Lush cosmetics products are advertised only in Lush magazine (The Lush Times), online (Lush website) and display in show case in Lush shops. 2. Current Target Market Analysis 3. 1. Target Market approach Lush cosmetics uses a form of viral marketing or viral advertising to reach its target customers. This is made by people who have experienced their products and then spread it by word of month.

They have also joined social networks such as facebook and messages are spread very quickly on such networks. Lush also have customer forum where people join to share their experience with products with one another. Lush have shops across cities and high streets, therefore the strong smell attracts many shoppers into the shop. Lush also produce a Lush Times which is mailed to registered members and also available to pick in shop for free. This strategy is to keep regular customers up to date of the new products and also give window shoppers something to remind them of Lush.

Lush cosmetics have targeted a niche market producing high quality cosmetics with natural ingredients for all target groups who wants to spend a bit more for their well being. Lush cosmetics have also targeted the gift market where it have very high sales in occasions such as Valentine’s Day and Christmas where everyone want something extraordinary for their love ones. Lush have the strategic advantage over it competitors of being different compared to its competitors (being handmade, having unique shapes, batch produce, strong smell, natural and ethical). (see Porters Generic strategies). 3. 2.

Porter’s Generic Strategies StrategicTarget| Strategic Advantage| | | Uniqueness perceived by customers| Low cost position| | Industry wide| DIFFERENTIATIONLushBody shop| OVERALL COST LEADERSHIP L ’real, Max factor, | | Segment only| FOCUSNo. 7, Fashion fair, Bobbi brown,| 3. 3. Demographic profile Although Lush cosmetics products are not the cheapest on the market, the customers base range from all age group, different social backgrounds, gender and all income classes. This is because of the quality, uniqueness and natural ingredients that attribute to their products. 3. 4. Target Customers

Lush products are used in everyday life, Lush targets all and sundry. Lush also targets those who shop on special occasions such as Christmas or Valentine’s Day because of the unique shape, design and smell of the products. Lush products are rated as premium and quality products in the cosmetics market (see product position map). 3. 8. Product Position map Premium Price Body Shop LushNo. 7 QualityStandard L’Oreal Boots & ASDA St. Ives (99p Shop) Own Brand Low Price 3. 9. Customer Attitude Many customers associate Lush products with teenagers and middle age women and many with the perception of being too expensive.

Most customers attitude towards Lush change after they use the product. Customers who are familiar with Lush products regard the products as value for money because Lush uses natural ingredient. A number of their customers also buy from them because they support their campaigns such as against animal testing, Fair Trade and charity supports. Loyal Lush customers purchase through the usual channels that is online or at the shop. They also receive a regular update on new products (Lush Times). Other customers purchases on occasions such as Christmas and Valentine’s Day as gifts for family and friends.

There are also customers who walk in due to the locations of the shops (on high streets) or the strong smell of the products drives them in. Lush does not have a big customer base compared to most of its competitors such us L’Oreal, but Lush’s regular customers have associated with Lush not the brand but quality and value for money. (see table below) 3. 10. 1. Customer satisfaction Satisfaction with various beauty retail brands, December 2009 Base: All internet users aged 18+ who have ever visited the brand 3. 10. Purchasing process Lush cosmetic has a criterion a supplier has to have before they will trade with the supplier.

Anyone who wants to trade with Lush must not test its products on animals. Lush travel direct to its suppliers to see the conditions the suppliers are living under. It has also form partnerships with most of its raw material suppliers in countries such as Africa and Asia to support those farmers and pay them fair prices for their products, through this they can control them and stop the environment from destroying. Lush cosmetic trade with the suppliers direct, Lush does not use any intermediary when purchasing raw material, this is to ensure suppliers get a fair price for their products and also support these suppliers.

Lush is very selective about its supply network, they do not trade with distributors who test products on animals. 3. 11. Market size and Forecast Due to the recession there has been a decline in consumer confidence in the cosmetics market which has led to a fall of about 7% in sales in the first quarter of 2009. That said, there is some anticipation that the sector will recover in the near future (see table below). 3. 8. 1 Size and Forecast Beauty Retailing – UK – January 2010 – Sector Size and Forecast| | UK: Health and beauty retailers’ sales, 2008-14| | 2008| 2009 (e)| 2010 (f)| 2011 (f)| 2012 (f)| 2013 (f)| 2014 (f)| |  |  |  |  |  |  |  |  | | Health & beauty specialists (? bn)| 4. 14| 3. 85| 3. 95| 4. 07| 4. 2| 4. 33| 4. 45| |  |  |  |  |  |  |  |  | | All retailers (? bn)| 254. 7| 260| 264. 5| 270. 2| 276. 5| 283. 2| 289. 9| |  |  |  |  |  |  |  |  | | Health & beauty as % of all retail sales| 1. 63| 1. 48| 1. 49| 1. 51| 1. 52| 1. 53| 1. 54| | (excl. sales tax, at current prices)|  |  |  |  |  |  |  | | NB: excludes Boots the Chemists and NHS receipts through all pharmacies| | Source: National Statistics/Mintel|  | . 12. Beauty retailers` prospects There are some observations made in relation to the forecast period in the whole beauty retailing. * Supermarkets such as Boots and Superdrug have established a stronger presence in cosmetics market and they will continue to challenge on price. * It could prove difficult to coax some consumers out of their habit of never paying full price on their products. Some cosmetics retailers such as Lush will therefore have to work even harder to convince shoppers that ‘they are worth it’, if they are to break out of this discounting cycle. However, niche operators like Lush could start to benefit from trading later in the forecast period as consumer confidence picks up. * The over 65s tend to be more conservative and more sceptical consumers of beauty products. In some ways they have been one of the few ‘minority’ groups that have escaped the protection of political correctness. They have been overlooked for too long and it will be age-relevant rather than anti-ageing products that present the biggest opportunity for wooing these consumers. * There is also expectation to see more niche internet pure players gaining attraction over the next five years.

This includes those specialising in male grooming, because the anonymity factor and online experience both appeal strongly to men in this market. 3. Current Competitors Analyses 4. 1. Competition in the cosmetics market is very strong. Competitors such as Boots who bring similar products as Lush on the market for lower price makes it more competitive. Lush’s’ main competitor Body Shop is also seen in the same price category therefore the threat is not that high. (see Lush competitors in the table below) 4. 1. 1. Lush Competitor

Beauty Retailing – UK – January 2010 – Retail Competitor Analysis| UK: Leading beauty specialists, 2008/09| Retailer | Operations| No. of outlets| Sales (? m excl. sales tax)| Notes| Profiles| Alliance Boots| Pharmacy/health & beauty| 2,591| 6,343|  | P| AS Watson Europe (Hutchison Whampoa/Hong Kong)| Drugstores/ perfumeries| 1,316| 1,400|  | P| Superdrug| Drugstores/in-store pharmacies| 915| 1,075|  |  | Savers Health & Beauty| Drugstores| 234| 161|  |  | The Perfume Shop| Perfumeries| 167| 164| (a)|  | |  |  |  |  |  | The Body Shop| Beauty| 338| 173| (e)| P|  |  |  |  |  | Bodycare Health & Beauty| Drugstores| 60| 57|  |  | The Fragrance Shop| Perfumeries| 103| 45| (d)|  | Space NK| Beauty| 63| 44|  | P| Lush| Beauty| 87| 42|  | P| Effective Cosmetics| Beauty| 10| 35| (b)|  | Molton Brown| Beauty| 43| 33|  | P| Crabtree & Evelyn| Beauty| 43| 26| (c)|  | L’Occitane (France)| Beauty| 40| 19| (g)|  | Penhaligons| Perfumeries| 14| 8| (h)|  | (a) Store numbers includes Ireland. (b) Previously known as Virgin Cosmetics. Sales estimated. (c) Store numbers estimated. (d) 2007/08 data. (g) 2007/08 data. Includes concessions. h) Standalone stores as at December 2009. P = Profile included in this report| Source: Company Accounts and Annual Reports/Mintel| 4. 2. Competitive advantage Lush cosmetics has the advantage of being handmade and fresh, all the ingredients are natural with no added chemicals and all the products are tested on human not on animal. Lush products are classified as quality, vegan and environmental friendly. 4. External forces Analyses 5. 1. Environmental factors * Political: Political issues that can affect Lush cosmetics can be “political unstableness” in countries where Lush gets its raw materials from.

Political unstableness such as civil war can lead to stop or delay in delivering raw material. * Environmental: Lush spends about 2% of its profit in charities which campaign on environmental issues. Many people shop at Lush because they care about the environment. Lush have to continue with its believes to keep these customers. * Social: Many elderly people have the perception of Lush being for young age and middle age women and also lot of men have the perception that it is only women who visits Lush shops. Lush has to try and change this perception of people. Technological: Everything is made by hand, Lush do not depend too much on technology. When the business changes into mass production in the future it needs some technology to speed up production. * Economical: The recession has also affected Lush economically because consumers do not have much money at their disposal, therefore consumers turn to cheaper substitute product. * Legal: Since Lush’s main suppliers are outside the country, there are some foreign regulations that Lush has to oblige to when buying raw material from abroad.

Also Lush has to oblige to rules and regulations when bringing raw materials into UK. 5. Summary SWOT Positive| Negative| Internal| External| StrengthsHigh street shopsNatural ingredientsUnique selling pointNot many direct competitorsValue for moneyNatural ingredients| WeaknessLack of advertisingHigh cost in raw materialsSelective in suppliers| OpportunitiesInnovation to engage customersSupporting known charity eventsGrowing own raw materials| ThreatsIncrease in competitorsPremium price, New entriesEconomical down turnImitations of Lush products| 6. Marketing strategy and Objectives 7. 1.

Marketing strategy The marketing strategy that Lush cosmetic uses is the uniqueness of its products, the natural ingredients and the testing procedures. This has given Lush a sustainable competitive advantage in the market. 7. 2. Financial objectives The financial objective for Lush cosmetics is to increase in revenue and sales, to reduce production cost and to increase the number of shops globally. 7. 3. Marketing objective The marketing objective is to increase the customer awareness, increase the market share, to develop new products, to enter into new market segments and protect the environment. . 4. Identifying Lush marketing strategy Ansoff Markets| Products| | Existing| Market PenetrationThrough: Viral marketing, Lush Times, Lush Forum, Lush website, social networks| Product DevelopmentThrough: New products (perfumes, Spa), Product extension (new product design, new smells) | | New| Market DevelopmentDeveloping new segments (Perfumes, Spas), Overseas markets| DiversificationRelated diversification (Spa)| 7. Determine Marketing Objectives For the next year the marketing objective for Lush cosmetics will be the same but we will aim to improve it.

Also the aim will be introducing new segments such as air fresheners self made soaps and making selected segments available in selected shops. 8. Marketing strategy The marketing strategy that will be used to take Lush cosmetic forward next year is: * Market Penetration: This will be done by improving the way Lush advertises to gain more customers from its competitors. * Market Development: This will be done by advertising the perfume and spa segments more effective.

Also making the perfume segment available in selected departmental store such as House of Fraser, John Lewis or Selfridges) and increasing the national and international store outlets. * Product Development: This will be done by innovating new products such as Air Fresheners and Self made soaps (customers can select the flavours and ingredients they want and the soap will be done for them). * Diversification: This will be done by taking the spa segment also out of the shops by opening spas where only Lush products will be used. 9. Tactical Marketing Programs

This section of the marketing plan is going to give clear details how the plan will be carried out. This section will give detailed and tactical decisions that will be carried out in areas like product, price, place and promotions that will help Lush cosmetics to achieve its goals for next year. 11. 1. Target Market The target market will remain the same (see current target market analyses). 11. 2. Product Lush cosmetic currently produce bath, shower, skincare, and hair care products. It also produces perfumes and has a Lush spa which exists only in Lush shops.

Lush products have no packaging and if any, then only recyclable packaging. Lush products do not have any labels because of the package free nature of the products. The tactic that will be taken will be to introducing new products such as self made soaps and air fresheners to attract more customers and also improving on existing products. * Customised soaps: This will attracts more customers because they can select their own fragrances. * Air fresheners: Lush is known for its strong smell, bringing products such as air freshener will sell very well because the business already has that image. Lush Spa: Lush spa outlet at the moment is only in Lush shops, the plan is to take Lush Spa out of the shop. They are investing in a new spa facility which is expensive, the alternative plan is to form partnership or rent a space in selected existing spa where only Lush products will be used or sold. This will increase sales and the brand will become more popular. This will also have effect on the overall sales of Lush. 11. 3. Promotion Currently, Lush only forms of advertisement are through the Lush Times, Lush forums, social websites and viral marketing (regular customers telling other people about their experience).

Since Lush does not spend money on mass media advertising, the plan will be to improve the existing methods and make it more effective. * Lush Times: Currently, Lush Times is only for pick up in shops and mail to registered members. The plan is to handout the Lush Times outside the shops by having someone stand outside the shops at least for an hour a day to give them out to passer bys, and also collect their personal information for mailing special offers. * Lush Forum: The Lush forum is at the bottom of the Lush website where is very difficult to find.

The plan is to improve the forum by making it interesting by writing regular visitors comments in the Lush Times and reposition of the forum on the wide by bringing it on the top bar. * Social Networks: Lush has joined many social networks such as face book. The plan is to join more social networks and instead of the people searching to invite Lush, Lush will search for people to join them. Also the social network sites will be improved by making it similar as the website with new products and regular updates. * Viral Marketing: “The 5 for 5 Plan”. This plan is to give a product up to ? 5. 0 pounds to customers who introduce 5 new customers within a period of 3 months and spend in average up to ? 50. 00 pounds. * Charity Event: The plan is to sponsor more charity events where Lush can display banners to create more awareness. 11. 4. Place The distribution channels that Lush uses at the moment are only direct sales. Lush products are sold only in Lush shops and online on the Lush website. The plan is to improve the direct sales mechanism and also go into indirect sales using strategic advantage (segment only / focus strategy). This will increase the competitive advantage of Lush. 1. 4. 1 Direct sales * Franchising: During the year the plan will be to go into franchising, this is mainly giving other investors the right to sell Lush products. In this case the investor owns the shop, but Lush controls the way the product should be sold and marketed and determines the standard of the business. Lush will receive an initial fee from the investor and an on – going management fee. * Internet: Although there is an online shop, the plan will focus more on online advertising by registering with more social networks and sending regular business up-date to members.

Also the customised soaps will be available online where customers can select the different smells (such as vanilla, lemon, cherry) and shapes they want online and this will be sent to them. This will raise more awareness and therefore increase sales. * Shop: The hand out of the Lush Times outside the shop which will be introduced this year will create more awareness and through that sales will increase. * Geographic: This year’s plan will be to open more shop outlets in towns and countries where there are no Lush shops. Selective Retailers: The idea is to rent a space in departmental stores like House of Fraser and Debenhams and display the Lush products with Lush own employee and check out. This same method will also apply to the Lush Spa where a space in selective spa or fitness clubs will be rented to sell Lush products with Lush employee and check out independently from the spa or fitness club. 11. 4. 2. Indirect sales * Selective Retailers: This year’s plan is to select products that have packages and can easily be bar coded (because is the first time only try ith perfumes) available in selected departmental shops such as Selfridges and House of Fraser and perfumeries like Douglas. * Spa: Lush products will be sold to selective spas that will buy from Lush for discounted price and sell it as the original Lush shop price. 11. 5. Price The price of the products will remain the same across country i. e. in the UK all Lush product prices will be the same no matter where it sold either in Lush shop or departmental store. There will be no changes in price because Lush wants to maintain the image of being premium and quality and ethical.

All the indirect sellers will receive a commission on the number of products they sell. 11. 5. 1. Online prices The online price will be the same as the shop prices, there will be only additional postage cost added to the products which will depend on total weight package. 11. 5. 2. Indirect sales prices All the indirect sellers will receive a commission or a discount on number of products they sell or buy. The commission or discount will be 30% of Lush profit made on the product. The high commission will attract more indirect sellers and as the indirect increases the percentage can change next year. (see new price list below) 1. 5. 3. New price list Products| Seize (g)| Direct sales price from (? )| Online price from (? )| Indirect sales Retailers (? )| Indirect sales Spas/Fitness clubs (? )| Bath soaps/ shampoos| 100| 1. 90–5. 00| 1. 90-5. 00 +postage| | 1. 90–5. 00 -30%| Shower gels| 250| 5. 50–15. 00| 5. 50–15. 00 + postage| | 5. 50–15. 00 -30%| Solid fragrances| 10| 4. 95–6. 25| 4. 95–6. 25 + postage| | 4. 95–6. 25-30%| Perfumes| 30| 21. 95-25. 95| 21. 95-25. 95 + postage| 21. 95- 25. 95 -40% | 21. 95- 25. 95 -30%| Self made soap| 100| 1. 90-5. 00| 1. 90-5. 00 + postage| | 1. 90-5. 00 -30% | Spa Full body massage| 2hrs| 125. 0| | | | 12. Cost

The financial implications will be the money needed to acquire new shop outlets and to open spa studios. There will be also money needed to pay the departmental stores and a percentage of Lush’s profit will go to the indirect sellers. 13. Advantage The advantage of this marketing plan is Lush is going to generate extra revenue through franchising. Also there will be no additional cost, all shops and online employees will remain the same and carry out duties such as collecting personal details and handing out Lush Times, e-mailing information and updating social networks websites. 4. Implementation The implementation of the plan will be monitored by a timeline which will start from July 2010 to June 2011. The timeline will show when each decision made or duty will begin. This timeline will support the plan and guide the implementation throughout the project so that the goal can be achieve by June 2011. (see timeline) 15. Control The marketing plan will be assessed every 3 months till the end of June 2011 to make sure the marketing plan is effective and providing the promised result as stated in the plan.

The control will be done by comparing previous year’s figures (customer base, sales figures, and customer feedback) to the current figures. * Customer base: This will compare the number of current strategic customers to the number of customers at the end of June if the number of customers have increased or not. This will prove if the promotion strategy was effective or not. * Sales / Revenue: At the end of June the sales and revenue figures will be compared with the previous year figures. This will show the effectiveness of this marketing plan, i. e. f customers trust the product they will still buy it, regardless of their economical status. * Customer feedback: At the end of June the business will collect customer feedback from its strategic customers to find out if they like the changes and the new direction of the business. 16. Evaluation My evaluation of this marketing plan will tackle all possible gaps which appear to be in areas such as promotion, place and product. The plan will improve Lush’s advertisement, will increase Lush’s sales outlets and have indirect sellers who will be paid on commission basis.

It will also introduce customised products which will attract more customers. This plan is not going to accrue much cost to Lush, the money that Lush will invest in the additional outlets will assets to the business. This plan will be very effective because it will directly or indirectly improve on Lush’s cosmetics existing marketing strategy which needs some attention, this one year marketing plan will definitely take Lush cosmetics forward. References Live hearing from Lush marketing director Lush. co. uk Lush Times Keynote. com Mintel. com Module handouts