Evaluating Sephora's Market Strategies and Objectives

Sephora is a leading beauty retailer known for its innovative retail approach, strategic partnerships, and customer engagement tactics. This report examines Sephora’s market positioning through its partnership with the LVMH group, digital engagements, and loyalty programs. The analysis explores how these strategies contribute to their success in capturing a significant share of the makeup and fragrance markets. It also highlights recommended marketing tactics that can further enhance Sephora's growth, such as leveraging technology-driven in-store experiences and expanding social media collaborations. Additionally, the report discusses potential avenues for increasing sales through product sampling and loyalty rewards. By addressing these elements, Sephora aims to solidify its reputation as a forward-thinking leader in beauty retail.

Sephora Marketing Strategies 1
SEPHORA MARKETING STRATEGIES
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Table of Tables
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Sephora Marketing Strategies
Introduction
Sephora was founded in 1969 under the name Shop 8. The company began by identifying a niche
market of selling high-end makeup. When it began operating, Sephora was the only seller of this
product with the exception of department stores. Therefore, in the early years when the store was
formed, this was a brand new idea where the different Sephora stores sold makeup exclusively
for various brands. The concept spread among the people very fast, and Sephora became one of
the most popular makeup stores (Ortiz, 2016).
In 1999, the company launched its website Sephora.com. The company at this time offered at
least thirteen thousand products and more than two hundred brands. By the end of the year 2009,
Sephora was reported to have nine hundred and eighty-six stores in twenty-three different
countries and more than two hundred and fifty stores in North America alone. Currently, the
company is operational in more than twenty-four European countries, and it has two hundred and
eighty stores in the United States and Canada (Holson, 2017).
The relationship that now exists between Sephora and JcPenney commenced in the year 2006.
This partnership blossomed, and the number of Sephora stores located in the middle of JcPenny
shops have increased considerably. The two have planned to ensure that by the end of this year,
there will be more than six hundred and fifty Sephora stores operating inside JcPenney shops that
are in operation (Anderson, 2017). Apart from JcPenney, Sephora also collaborated with OPI in
2008, XpressSpa in October 2010, and QVC in 2011.
Aside from makeup products, Sephora also offers products of other different categories. These
include; skincare products, men products, accessories, and other body and bath products. Such

Sephora Marketing Strategies 4
products include; Urban Decay, Nars, Stila, as well their Sephora collection that is
exclusive (WILSON, 2016).
The perception that Sephora has created in the marketplace is that it is a high-end beauty store
which sells its products in retail and which offers designer products with knowledgeable and
expert advice from people who work in the beauty departments. The company also created
Sephora University which is aimed at informing people are aspiring to be beauty consultants on
all the essential beauty products that they need to know and understand about (Holson, 2017).
This is also the institution where the company’s employees are trained.
Sephora has employees who are experts in the beauty field. This aspect of expertise also comes
with the company’s brand name. There is a value added to the products that are sold to the
customers. The beauty products offered by Sephora-being more expensive as compared to other
beauty products-give the customers a feeling that they have reached their ideal selves and this
leads to aspirational shopping. The image the company portrays is perceived as being fashion
forward when compared to that portrayed by their competitors (Ji, 2016). This is mostly because
the majority of products that Sephora advertises are used in fashion shows, therefore, supporting
the notion that the company is a luxury and trend retailer of beauty products.
This paper provides an analysis of the marketing issues at Sephora. The major issue that is faced
by Julie Bornstein-the chief marketing and digital officer at Sephora as well as the company’s
vice president-is how two million dollars should be allocated to the marketing of products
through social media (Loeb, 2013). Alongside this issue, many other issues are considered with
the intention of providing solutions to optimize returns in Sephora in spite of the different
constraints such as competition.

Sephora Marketing Strategies 5
Competition
Competition should be very well analyzed by any company to ensure that the company does not
lose its market share and to make sure that it remains competitive. Sephora faces competition
from different retailers of beauty products, but its main competitor is ULTA. This is because the
company offers a wide assortment of products and services which Sephora does not provide.
About half of the makeup sold by ULTA is drugstore kind of makeup. ULTA describes itself as a
one-stop shop where it offers hair salon services across all the stores (Ji, 2016). They also offer
skin care spa, and their make-up products have different price ranges.
The main advantage that Sephora has in the face of this high competition level is its high level of
global exposure. Sephora has stores in twenty-three countries across the globe, and it is still
growing. Conversely, ULTA has only three hundred and eighty-nine which are all located in
forty states in the United States (Loeb, 2013). Another advantage that has enabled Sephora to
remain more competitive than ULTA is the fact that the company offers exclusivity on a variety
of the high-end products that it provides. This exclusivity provides the customers with a feeling
of prestige as they shop at the different retail points. This can, however, serve as an advantage
and a disadvantage for Sephora. This is because it is prestigious, but it may lead to the loss of
some customers who may be unwilling to pay more for the designer products (Koonce, 2017).
Another significant competitor against Sephora is Macy’s. Today, Macy’s holds the highest
market share. This is attributed mainly to its strong brand presence and its promotional
marketing. Majority of Gen x and baby boomers shop at Macy’s. However, research has
indicated that Sephora is slowly taking customers away from Macy’s. The table below shows
different competitors of Sephora and their market shares.

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Brand percentage of
market share
L Brands 22.20%
Sally Beauty
Holdings
21.40%
Ultra Salon 13%
Sephora 5.60%
Other 37.80%
Table 1
Marketing Methods
One of the main methods that Sephora uses to advertise itself is by the use of celebrity
endorsements. Different stars such as Jennifer Aniston and Kim Kardashian have launched their
fragrance lines at Sephora, and they were successful. The company also places ads in magazines
such as People’s style watch, Glamor, and Vogue. Sephora also uses their different products to
support different charitable causes (Loeb, 2013).
Sephora also makes use of digital marketing to communicate about its products. The company
makes use of Facebook, YouTube videos, Sephora’s beauty and blog, and Twitter to market its
products. Sephora’s YouTube page has forty thousand three hundred and ninety-nine subscribers
and more than one hundred and fifty videos that demonstrate makeup tutorials using the products
provided by the company. The YouTube page also contains different product launches, reports
on makeup trends, and exclusive celebrity products. The company has also managed to attract
many enthusiasts of makeup who create tutorials and exclusively use Sephora’s makeup products
(Koonce, 2017).

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Sephora’s Facebook page contains almost five million fans. The company’s Twitter page has
nine hundred thousand followers, and there are six hundred thousand Apple passbook
registrations. The posts put up on these social media platforms include; product reviews, hottest
new products, and sales. More than a third of all of Sephora.com’s traffic is caused by mobile
devices (Smith, 2015).
KPIs and The Marketing Mix
To address the major issue being faced by the company, it is vital for Sephora to define its key
performance indicators as well as define its optimal marketing mix. The key performance
indicators include sales targets for the different stores which in turn leads to sales targets for all
the employees, conversion rates of the different social media platforms, and levels of customer
satisfaction based on customers’ reviews. The optimal marketing mix for Sephora will combine
its different social media platforms with offline marketing with the objective of striking a
balance between the two to ensure maximum revenue.
The marketing mix is made up of four factors. These are price, place, people, and promotion.
The prices of the different Sephora products range from $6-$500 per product. This is because the
company sells luxury products as shown in the table below (McHugh, 2015).
Makeup Skincare Fragrance Bath &
Body
Hair Tools
$5 - $100 $5 - $225 $20 - $500 $8 - $300 $12 - $500 $6 - $350
Table 2
The promotion techniques used by Sephora include the use of gifts, value sets, and exclusive
online promotion. Different costs incurred in marketing include the maintenance of website and
applications and the costs incurred in the creation of videos. The place where marketing takes

Sephora Marketing Strategies 8
place is mainly online, but it also occurs offline in the different Sephora stores (Meyer, 2016).
Finally, the products have already been seen to be luxury and trendy beauty products. By
adopting the 4P’s marketing mix, Sephora will be able to cater for all its marketing needs and
consequently increase its profits over time.
SWOT Analysis of Sephora
Strengths Weaknesses
 iPad and iPhone app
 Website as well as a mobile site
 Has a great understanding of the target
market
 Makes use of social media extensively
 Has in-store face scanner and iPad
technology.
 Enjoys the presence of marketing
executives
 The company’s brand name
 High levels of customer loyalty
 Presence of an innovative culture
 Lack of scale
 Presence of outdated technology
 Poor cost structures
Opportunities Threats
 Presence of new technology
 More social media platforms that can
be exploited.
 Competition
 Showrooming where people search for
products at Sephora but then shop for

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 Emergence of new markets
 Emergence of new products
them in other places.
 The replacement of traditional
retailers.
 Emergence of substitute products
 Presence of intense competition.
 Poor global economy
 Changes in tastes of Sephora’s
customers
Table 3
Marketing Strategies
Statistics show that the average number of likes per day by Sephora are five hundred. This will
incur a cost of $400 and bring in fifty new customers. The Facebook messages also have a high
probability of having an impression on about six hundred people on a daily basis. This in turn
incurs a cost of $60,000 and brings in twenty-four thousand new customers.
Twitter has a likelihood of bringing in about twenty retweets in every campaign held by the
company. This in turn translates to a cost of $30,000 and brings in sixty thousand new
customers. In the case of google + campaigns, the company can hold twenty campaigns which
will cost the company ten thousand dollars and could consequently bring in ten thousand
customers and one hundred thousand brand impressions.
For google Adwords, there is a probability of two hundred people using the site which will lead
to a cost of a thousand dollars and two hundred customers joining the company. About five
hundred people are likely to use the Google business places. This will lead to a cost of two

Sephora Marketing Strategies 10
thousand and five hundred dollars and bring in five thousand new customers. For content
creation, the cost incurred will be based on whether it is video content, texts, or pictures.
Tests will incur a cost of one thousand, two hundred and fifty dollars and bring in three thousand
seven hundred and fifty customers. The pictures will incur one thousand dollars and bring in four
thousand customers. Two videos can be used which will incur forty thousand dollars and bring in
two hundred and sixty thousand dollars.
Sephora can then send out about five hundred thousand emails for marketing purposes. These
will incur five hundred dollars and bring in eight hundred and thirty-three customers. For
YouTube, Sephora can make use of ads and campaigns to reach people. They can use about ten
thousand ads which will incur a cost of fifty thousand dollars and bring in fifty thousand new
customers. It can also carry out a hundred YouTube campaigns that will cost it ten thousand
dollars and bring in twenty thousand new customers and create forty thousand brand
impressions. In the case of mobile app AdWords, there is a likelihood of one thousand units
being downloaded which will lead to a cost of ten thousand dollars and which will bring in one
thousand new customers.
Instagram could be used in carrying out two campaigns per month. These will cost the company
six thousand dollars and bring in six thousand new customers per year. The company can also
carry out contests in which it encourages people to participate and the winner is given a prize.
Six campaigns can be carried out annually which will cost the company three hundred thousand
dollars and bring in three hundred thousand customers.
The company can also make use of affiliate marketing which will cost it twenty-five thousand
dollars and in turn bring in twenty-five thousand customers. Search engine optimizations can

Sephora Marketing Strategies 11
also be used where the company will incur a cost of sixty thousand and in turn bring in six
hundred thousand customers. Sephora should not carry out mobile app development activities as
these will not bring in any income for the company. Finally, the company will partner up with
ShopKick which will cost it fifty thousand dollars annually.
Past financial Analysis of Sephora
The market for US cosmetics grew by more than $1 billion in 1999 (McHugh, 2015). This was a
growth rate of 6.6%. This growth rate was attributed mainly to spa positioning and niche lines.
The table below shows the growth in different beauty product categories.
Sales growth market
share
skin care products 5551 3.40% 28%
color cosmetics 6173 8.90% 31%
fragrance 3345 1.40% 17%
body and bath
products
3498 7.50% 17%
men's line products 1478 -2.50% 7%
Total 20045 6.60% 100%
Table 4
This shows that the market had a high potential for growth and expansion in the year 1999
(McHugh, 2015). At this period, the category that had the highest growth levels are color
cosmetics followed by body and bath products. These product categories are both provided by
Sephora. The market for beauty products has different price point classifications. These include;

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prestige, alternate or direct sales, specialty with spas and salons, and broad or mass
merchandisers. Sephora’s price point classification is for prestige purposes.
Of the different categories, the alternative category provided the highest volume and the largest
growth rate. The sales were $7,228,000,000, and the market share was 36%. Broad which came
in second had sales of $6,645,000,000. Prestige came in third place with $6,112,000,000 in sales
with a 31% market share (Taylor, 2017).
Market Segmentation
This analysis focuses mainly on the female market because it is the market most targeted by
Sephora. The women in this analysis are aged between twenty-five and sixty-five years old. At
the time of this research, there was a projection that the female population will grow at a rate of
5.18% from the year 2000 to 2025 in the whole of the United States. There were 33,642,000
women with a college education used in this study and 87% of them-29,293,000 women-reside
in major cities (Fiorletta, 2017).
Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
potential
customers
income levels
<$35,000 21,475,000 22,548,75
0
23,676,18
8
24,859,99
7
26,102,99
7
5%
>$35,000,
<$74,999
10,276,000 10,789,80
0
11,329,29
0
11,895,75
5
12,490,54
3
5%
>75,000 1,891,000 1,985,550 2,084,828 2,189,069 2,298,522 5%