Market Analysis for The Body Shop's Expansion into Argentina

This report analyzes The Body Shop's potential expansion into the Argentine market, focusing on product nomenclature, brand theory, market analysis, PESTEL analysis, consumer insights, niche markets, and consumer attitudes. The study explores segmentation, targeting, and positioning strategies for the company's growth.

Individual Written Report
Student Name-
Student ID-
1

Contents
1.0 Introduction..........................................................................................................................3
2.0 Product/Service Nomenclature and Brand Theory...............................................................3
2.1 Kotler’s product levels analysis through Company, Brand, Product/Service..................3
2.2 Core, Formal and Augmented ('CFA') Analysis...............................................................4
2.3 Kapfaerer’s Prizm.............................................................................................................4
2.4 Ansoff Matrix...................................................................................................................5
3.0 Analysing the Market...........................................................................................................5
4.0 PESTEL Analysis.................................................................................................................7
5.0 Examination of Markets by Segment, Target, and Position.................................................8
5.1 Segmentation....................................................................................................................8
5.2 Targeting...........................................................................................................................9
5.3 Positioning........................................................................................................................9
6.0 Consumer Journeys and Insights........................................................................................10
7.0 Examining Niche Markets..................................................................................................10
8.0 Analysis of Consumer Attitudes and Behaviour................................................................11
References................................................................................................................................13
2

1.0 Introduction
Founded in England in 1976, The Body Shop is now a worldwide leader in the cosmetics and
skincare industries (Thebodyshop.com, 2023). Company, Brand, and Product/Service are the
three tiers of the company's product/service naming scheme derived from Kotler's product
levels analysis. This paper will analyse a potential overseas market for The Body Shop's
growth beyond its current domestic market. This study will justify the new market option and
locate unmet needs and emerging opportunities driven by the market. The potential for
extending British markets into Argentina is the primary emphasis of the paper.
2.0 Product/Service Nomenclature and Brand Theory
2.1 Kotler’s product levels analysis through Company, Brand, Product/Service
Kotler's product levels analysis provides a framework for examining a company's offerings.
The Body Shop's commitment to ethical and sustainable practices is its main advantage at the
company level (Ma et al. 2021). The company has always been open about its goals to
improve people's lives via items inspired by nature and positively impact the world through
sustainable practices. The Body Shop, for one, has long been against animal testing and, in
1996, became the first global beauty brand to advocate for a ban on animal testing in
cosmetics. Effective and high-quality all-natural and organic personal care products are The
Body Shop's generic product at the brand level (Thebodyshop.com, 2023). The natural
components, eco-friendliness, and ethical business practices are the cornerstones of the
brand's identity.
The ingredients are obtained fairly and sustainably, and the brand's packaging is constructed
from recycled materials. As a result, the brand has developed a solid reputation in the beauty
sector as a sustainable and ethical brand (Thebodyshop.com, 2023). At the product/service
level, The Body Shop should provide the characteristics people look for in all-natural
cosmetics and toiletries. Customers can trust that the company's goods are safe and won't hurt
3

the environment since they are made with organic and natural components. Additionally, the
augmented product level of the company contains elements that go above client expectations,
such as its refill scheme and recycling programme (Thebodyshop.com, 2023). Because of
this, the brand has built a dedicated following of consumers who respect its commitment to
ethical and sustainable business practices.
2.2 Core, Formal and Augmented ('CFA') Analysis
The Core, Formal, and Augmented (CFA) analysis examines the many levels of value
provided by a company's goods or services (Zanger et al. 2022). When applied to The Body
Shop, this framework reveals that the store's natural and organic items most directly
contribute to a feeling of well-being and self-care. The overt benefits are the goods' high
standards of quality and safety, as well as their eco-friendliness and commitment to ethical
manufacturing. The company's refill and recycling programmes, which provide extra value to
environmentally concerned consumers, are part of the augmented benefit, which also includes
additional services that go above and beyond what customers anticipate (Thebodyshop.com,
2023). The CFA analysis of The Body Shop emphasises the importance of the company's
commitment to sustainability and ethical practices as part of the brand's value proposition.
2.3 Kapfaerer’s Prizm
Kapfaerer's PRIZM is a segmentation technique that divides American families into one of 68
distinct lifestyle categories according to demographic and behavioural factors (ADLE, n.d.).
The "Urban Edge" PRIZM, which comprises young, diverse, and educated people living in
Urban areas, is the target audience for The Body Shop. They are a wonderful match for The
Body Shop's brand principles since they are socially concerned and appreciate environmental
sustainability (Thebodyshop.com, 2023). They value high-quality personal care products and
are ready to spend a premium for them, and they are interested in organic and all-natural
ingredients.
4

2.4 Ansoff Matrix
The Body Shop has largely concentrated on the Ansoff Matrix customer's product
development strategy, which entails developing new products or enhancing current ones to
meet shifting customer demands (Cleberg, 2019). For instance, the company has just released
a new line of hair care items, including shampoo, conditioner, and treatment products. They
have added new ingredients, textures, and perfumes to their extensive product ranges. For
instance, the brand introduced the Tea Tree Oil line of skincare products with a target
customer base that suffers from acne (Thebodyshop.com, 2023). They also make new
products every season that are limited edition, like their Christmas gift bundles or Valentine's
Day specialities.
5

3.0 Analysing the Market
Forces Explanation Impact
Threat of new
entrants
The existence of well-established local and
international players, the high regulatory
obstacles and the substantial expenditure needed
for brand recognition all contribute to making the
danger of new entrants to the Argentine
cosmetics market somewhere between low and
medium.
Medium
Bargaining Power
of Suppliers
Because of the scarcity of indigenous raw
material providers and the reliance on imported
inputs, Argentine cosmetics firms are at the
mercy of their suppliers, who have considerable
negotiating power.
High
Bargaining Power
of Buyers
Because of the country's economic volatility and
the abundance of competing cosmetics brands,
Argentine shoppers might be picky about where
they spend their money.
High
Threat of
substitute products
The rising awareness of the need for personal
cleanliness and grooming in Argentina has led to
a rise in demand for personal care products,
which is expected to continue.
Low
Competitive
Rivalry
With local and international players competing
for market share, Argentina's cosmetics sector
confronts intense competition.
High
Competition from new companies is a major factor influencing the cosmetics market in
Argentina. Due to well-established players like L'Oreal, Avon, and Natura, this force is
deemed weak to moderate (Puder and Tittor, 2023). High regulatory obstacles and the
substantial cost needed to establish a well-known brand also pose serious challenges to new
competitors. Due to a scarcity of indigenous raw material providers and heavy reliance on
imported inputs, suppliers have considerable influence over prices in the Argentine cosmetics
business. The increased cost of raw materials impacts companies' profit margins. Due to the
country's economic volatility, which has led to a decrease in discretionary income, and the
availability of several cosmetic brands, both local and international, Argentine consumers
6

have a lot of leverage when haggling over prices (Delpiani et al. 2020). As a result, shoppers
nowadays are more selective of products based on their relative affordability.
Substitutes provide less of a problem for Argentina's cosmetics business, which is seeing
rising demand for products like theirs due to a greater cultural emphasis on cleanliness and
appearance (Shi, 2020). The demand for cosmetics among Argentine consumers is enormous
and is only anticipated to rise. Finally, the existence of several domestic and international
players striving for market share has led to intense competitive competition in the Argentine
cosmetics sector. These players' product innovation, marketing, price, and distribution
networks all play a role in their fierce competition (Puder and Tittor, 2023). Market share and
brand awareness are strong for the industry giants, notably L'Oréal and Natura.
7

4.0 PESTEL Analysis
Political
● Inflation rates in Argentina reached a
staggering 54% in 2019 (O'Neill,
2023). This is only one of several
economic crises that the country has
experienced in the past.
● The Argentine government has
enacted policies to support domestic
manufacturing, such as a 35% tax on
imported goods
(Taxsummaries.pwc.com, 2023).
Economic
● Due to the COVID-19 pandemic,
Argentina's economy is expected to
see a 10.5% GDP contraction in
2020 and significant inflation rates
(Repositorio.cepal.org, 2022).
● In 2023, the cosmetics industry in
Argentina earned $5.02 billion in
revenue, with an annual growth
forecast of 4.76% (Statista.com,
2022).
Social
● A recent poll found that 64 per cent
of respondents ranked environmental
protection as a top priority. (Atske,
2020).
Technological
● The number of smartphone users in
Argentina is projected to grow from
the current 31.21 million to 35.18
million by 2025 (Statista.com, 2023)
a fast expansion in Argentina's e-
commerce market has been fast
expanding, which is expected to
reach $8,890.4 million by 2023
(Statista.com, 2023).
Environmental
● The Andes Mountains, the Pampas
grasslands, and the Atlantic coastline
are only a few examples of
Argentina's varied ecosystems
(Nationalgeographic.org, 2023).
● A renewable energy law and the
establishment of national parks are
only two examples of environmental
protection policies the Argentine
government has put into place.
Legal
● Ingredients, labelling, and marketing
must all adhere to strict guidelines in
Argentina's cosmetics industry.
● A complicated legal structure and
extensive bureaucratic procedures
hinder foreign enterprises from
investing in Argentina.
The considerations above may affect the Body Shop's potential entrance into the Argentine
market. For instance, the high inflation rates and protectionist policies might make it
challenging for the company to import its products into Argentina. But because The Body
Shop is well-known for its ethical and sustainable business practises, the increasing demand
for eco-friendly and sustainable products creates an opening for the company. The company
may also benefit from the widespread use of mobile devices and the expanding online
8

shopping market in Argentina to access a larger customer base. The Body Shop may also face
difficulties in Argentina because of the country's strict regulations on the cosmetics industry.
The company is responsible for ensuring that its products adhere to the government's safety
and labelling requirements. Because of the country's convoluted legal framework,
international investors may find it difficult to enter the Argentine market. The PESTLE
analysis shows how many external variables could affect The Body Shop's foray into the
Argentine market. There is a rising demand for ethical and sustainable personal care
products, and the company may capitalise on this trend by establishing a presence in
Argentina and minimising associated risks.
5.0 Examination of Markets by Segment, Target, and Position
5.1 Segmentation
Segments Segmentation
Demographics Age- 18–45 years old
Gender- Mostly females
Income- Middle- to high-income
Psychographic Values- Sustainability of the environment and social responsibility
Personality- Socially conscious, empathic, and ethical
Lifestyle- Health and wellness-oriented
Behavioural Usage rate- Frequent Users of Beauty and Skincare Products
Ocassion- Regular and exceptional use
Benefits sought- Sustainable, high-quality, and natural beauty
products
Geographic High foot traffic zones in Argentina, such as retail malls and busy
streets, are subject to the Urban and suburban.
The Body Shop would target middle-income individuals, especially females between the ages
of 18 and 45, who value environmental sustainability and social responsibility. The target
market's personality, values, and lifestyle choices will all be taken into consideration in The
Body Shop's psychographic segmentation, which will be based on the brand's own core
beliefs. The Body Shop's major customer behaviour in Argentina will be habitual users of
9

skincare and beauty products who want sustainable, high-quality, and natural products.
Additionally, the target market will probably utilise beauty products regularly and
occasionally. Geographically, The Body Shop will likely open stores in urban and suburban
regions with high foot traffic, such as shopping malls and main thoroughfares, where its
target market often shops and congregates. Overall, this segmentation will be consistent with
the brand values and target market that The Body Shop has established in other countries
while also accounting for the specifics of the Argentine market.
5.2 Targeting
The Body Shop's product market in Argentina would be middle to high-income females
between the ages of 18 and 45 who value environmental sustainability and social
responsibility and are regular consumers of skincare and beauty products.
5.3 Positioning
Figure 1: Positioning Map
(Source: Author)
10

6.0 Consumer Journeys and Insights
Pain points Explanation
Searching Finding a nearby store that sells The Body Shop's products may be
difficult, and this can cause pain points for customers. People looking
for products like these could look for them at department stores,
online, or in speciality shops. Delights may include learning about
the brand's commitment to sustainable, natural products.
Selecting Customers may have challenges while selecting the appropriate
product for their skin type and issues. Through in-store consultations,
product samples, and online quizzes, The Body Shop can provide a
personalised purchasing experience. Finding the ideal product that
satisfies their requirements and values may delight them.
Buying Customers may encounter pain points throughout the purchasing
process, such as lengthy wait times, ambiguous pricing, or a lack of
available payment choices. The Body Shop can simplify things by
allowing online purchasing, many methods of payment, and
transparent pricing. Receiving a personalised shopping experience
and knowing you're helping a socially conscious brand are both
examples of delights.
Using Customers may have difficulties using the products successfully or
may have an adverse response to them. The Body Shop has the
means to provide help in the form of online lessons, in-store
demonstrations, and a customer service hotline. Delights include
discovering the advantages of natural, high-quality products and
feeling good about how they affect the environment.
Complementary
goods and
services
Customers may value getting free products or services like cosmetics,
spa services, or fitness courses. The Body Shop may provide
promotions and packages that improve the customer experience in
line with its values. Feeling pampered and well-treated by the brand
might be among the delights.
Disposing of/
Returning
Disposing of or returning products that did not meet customers'
expectations may challenge customers. The Body Shop can provide
recycling programmes, eco-friendly packaging, and transparency.
Delights include obtaining superior customer service and feeling
good about responsible consumption habits.
7.0 Examining Niche Markets
The Body Shop can capitalise on Argentina's expanding vegan cosmetics and male personal
care market.
11

As more people become environmentally and socially conscious, there has been a growth in
demand for vegan products in Argentina (Curti et al. 2022). The Body Shop has the chance to
capitalise on its established image as a natural, cruelty-free product brand by launching a line
of vegan skincare and beauty products. The company may meet the demands of the vegan
market if it formulates products using only plant-based materials and uses recyclable or
compostable packaging (Jeong and Chun, 2022). The company may encounter competition
from well-established local vegan companies in Argentina.
The male personal care market in Argentina is another potential niche for The Body Shop to
enter. The beauty industry in Argentina has historically catered to women, but there has been
an increase in the demand for male grooming products in recent years. The Body Shop may
want to develop a new range of men's skincare and grooming products to address male
customers' needs and preferences (Rubiano Matulevich and Viollaz, 2019). Products for
facial hair care, sun protection lotions, and all-natural deodorants are all examples. However,
marketing resources may need to be allocated so that customers know the advantages of
purchasing male-targeted products and the company can set itself apart from the competition.
8.0 Analysis of Consumer Attitudes and Behaviour
In recent years, Argentine consumers' views and behaviours have changed, impacting the
cosmetics industry. The demand for natural, organic, and eco-friendly products has increased
as people become more conscious of environmental concerns (Puder and Tittor, 2023).
Consumers are becoming more conscious of the ingredients in their skincare and cosmetics
products and are ready to pay a premium for products that correspond with their values.
Additionally, there has been a movement in consumer behaviour towards purchasing goods
and services online. With consumers increasingly turning to online product platforms to buy
their beauty products, e-commerce sales in Argentina have been continuously rising (Delpiani
12

et al. 2020). The COVID-19 epidemic has intensified this tendency as consumers are forced
to switch to online purchasing due to lockdowns and social distancing measures.
Companies' ethical and sustainable practices are becoming more important to Argentine
consumers. This entails thinking about things like not using animals in testing, using fair
trade materials, and using recyclable packaging (Shi, 2020). Consumer loyalty and trust are
more likely to be earned by brands that put these values first and take a transparent approach
to their sourcing and production processes. For instance, the local brand Sibaris has grown in
popularity in Argentina due to its emphasis on organic and natural ingredients and its
commitment to fair trade and sustainability practices (Puder and Tittor, 2023). Similarly,
international businesses like Lush and The Body Shop have garnered popularity in Argentina
for their ethical and sustainable practices.
13

References
ADLER, M.R., BRAND ANALYSIS OF FERRARI USING KAPFERER’S BRAND-
IDENTITY PRISM MODEL. ORGANISATIONAL BEHAVIOUR AND LEADERSHIP
THEORY IN PRACTICE, p.65.
Atske, S. (2020) As economic concerns recede, environmental protection rises on the public's
policy agenda, Pew Research Center - U.S. Politics & Policy. Pew Research Center.
Available at: https://www.pewresearch.org/politics/2020/02/13/as-economic-concerns-
recede-environmental-protection-rises-on-the-publics-policy-agenda/ (Accessed: April 19,
2023).
Cleberg, C., 2019. Strategic Success: The Ansoff Matrix vs. The Balanced Scorecard.
Curti, C.A., Lotufo-Haddad, A.M., Vinderola, G., Ramon, A.N., Goldner, M.C. and Antunes,
A.E.C., 2022. Satiety and consumers' perceptions: What opinions do Argentinian and
Brazilian people have about yogurt fortified with dairy and legume proteins?. Journal of
Dairy Science, 105(11), pp.8782-8791.
Delpiani, G., Delpiani, S.M., Antoni, M.D., Ale, M.C., Fischer, L., Lucifora, L.O. and de
Astarloa, J.D., 2020. Are we sure we eat what we buy? Fish mislabelling in Buenos Aires
province, the largest sea food market in Argentina. Fisheries Research, 221, p.105373.
Jeong, J. and Chun, J., 2022. Sustainability Practices and Implications of Fashion Brands at
the Vegan Fashion Week. 한한한한한한한한한 pISSN, 24(4).
Ma, E., Bao, Y., Huang, L., Wang, D. and Kim, M., 2021. When a robot makes your dinner:
a comparative analysis of product level and customer experience between the US and
Chinese robotic restaurants. Cornell Hospitality Quarterly, p.19389655211052286.
Nationalgeographic.org (2023) South America: Physical geography, Home - National
Geographic Society. Available at: https://www.nationalgeographic.org/encyclopedia/south-
america-physical-geography/
14

&sa=D&source=docs&ust=1681914196797622&usg=AOvVaw1850c967jQCb0CF6rh8S26
(Accessed: April 19, 2023).
O'Neill, A. (2023) Argentina - inflation rate 2004-2027, Statista. Available at:
https://www.statista.com/statistics/316750/inflation-rate-in-argentina/%23:~:text
%3DInflation%2520in%2520Argentina%2520was%252054,depression%2520from
%25201998%2520to
%25202002&sa=D&source=docs&ust=1681913461852591&usg=AOvVaw0bRVa-
ZAYLuuTWuG83_iod (Accessed: April 19, 2023).
Puder, J. and Tittor, A., 2023. Bioeconomy as a promise of development? The cases of
Argentina and Malaysia. Sustainability Science, pp.1-15.
Repositorio.cepal.org (2022) -2 38 preliminary overview of the economies of Latin America
and the ... Available at:
https://repositorio.cepal.org/bitstream/handle/11362/46504/PO2020_Argentina_en.pdf
(Accessed: April 19, 2023).
Rubiano Matulevich, E.C. and Viollaz, M., 2019. Gender differences in time use: Allocating
time between the market and the household. World Bank Policy Research Working Paper,
(8981).
Shi, Z., 2020. Research on College Students' Cosmetics Consumer Market and Marketing
Strategy. Revista Argentina de Clínica Psicológica, 29(4), p.613.
Statista.com (2022) Beauty & Personal Care - Global: Statista market forecast, Statista.
Available at: https://www.statista.com/outlook/cmo/beauty-personal-care/worldwide
(Accessed: April 19, 2023).
Statista.com (2023) Argentina: Number of smartphone users 2018-2028, Statista. Available
at: https://www.statista.com/forecasts/285600/number-of-smartphone-users-in-argentina
%23:~:text%3DIn%25202019%252C%2520there%2520were%252031.21,revenue%2520in
15

%2520Argentina%2520in
%25202019&sa=D&source=docs&ust=1681914101998511&usg=AOvVaw34OS_nlCcDwr
YEByY_kkVL (Accessed: April 19, 2023).
Taxsummaries.pwc.com (2023) Argentina, Corporate - Taxes on corporate income.
Available at: https://taxsummaries.pwc.com/argentina/corporate/taxes-on-corporate-income
(Accessed: April 19, 2023).
Thebodyshop.com (2023) About us: The body shop history: The body shop®, About Us | The
Body Shop History | The Body Shop®. Available at:
https://www.thebodyshop.com/en-gb/about-us/a/a00001 (Accessed: April 19, 2023).
Zanger, V., Meißner, M. and Rauschnabel, P.A., 2022. Beyond the gimmick: How affective
responses drive brand attitudes and intentions in augmented reality marketing. Psychology &
Marketing, 39(7), pp.1285-1301.
16

17