Sephora Direct: Investing in Social Media, Video, and Mobile
1. Assuming she receives the additional funding, how should Bornstein allocate her budget across
the various digital categories? Given that the additional funding requested must be shifted from
Sephora’s other marketing spending, where would you propose to cut? Why?
Analyzing the data of 2010, (Exhibit 5), we can see that 45% of the resources are spent by
Sephora in retail marketing, such as catalogs, store animations and print followed. 35% are spent
in online marketing that include searching, affiliate and social media, and the final 20% in the
beauty market, like emails, gifts and events. The major part of media are used for traditional retail
spending which needs to be cut down, due to the increase in the number of people who use digital
media today.
Also, through the development of technology, the people who use the traditional pieces of media,
like newspapers, catalogues and magazines, is decreased. However, the number of people who
use Smartphones or tablets to read has increased. For this reason, I think it’s important to reduce
the number of prints, because the majority of Sephora customers is composed of women between
25 and 35 years old, who prefer digital media rather than print media. Furthermore, the catalogue
still represents a good image for the brand, therefore I think the correct way is not to eliminate it all
together, but decrease the number and send it to only selected customers.
Possible solution about Budget allocation:
Mobile – 35%
Beauty Talk – 20%
YouTube – 20%
Twitter – 10%
Facebook — 10%
Video contests – 5%
Mobile — 35% ($350,000) — Today, the mobile app is the most popular way to stay connected
with Sephora, do to almost every customer owning a Smartphone. The developing cost for a
mobile App is between $100,000 and $200,000, plus maintenance cost close to $20,000 per year.
Also, after analyzing the prediction, there is an increasing of the Android market in the US,
consequently the allocation is justified to improve the mobile service. Also, with this allocation,
Sephora can consider the idea to develop an App optimized for the iPad.
Beauty Talk – 20% ($200,000) – The platform used by Sephora to connect with its beauty insiders,
consumers and potential customers. Through this platform, Sephora is able to recognize its “
super-user”, the customer, who have a lot of contact with other customers and Sephora
employees. With this allocation, Sephora could integrate Facebook and Beauty Talk to care for a
common and easy to use platform, eliminating any existing problems.
YouTube – 20% ($200,000) – Used to promote how the product could be used by the customer, for
this reason, with an allocation of $200,000, Sephora can create 10 different videos (the cost for
each videos it close to $20,00 each one) providing tutorials about its product.
Twitter – 10% ($100,000) — Twitter is considered a good platform for customer interaction.
Considering, Sephora has 100,000 followers on twitter, this allocation can be justified in terms to
increase the number of followers and to promote some advertising campaign through some
specific hashtag (#).
1. Assuming she receives the additional funding, how should Bornstein allocate her budget across
the various digital categories? Given that the additional funding requested must be shifted from
Sephora’s other marketing spending, where would you propose to cut? Why?
Analyzing the data of 2010, (Exhibit 5), we can see that 45% of the resources are spent by
Sephora in retail marketing, such as catalogs, store animations and print followed. 35% are spent
in online marketing that include searching, affiliate and social media, and the final 20% in the
beauty market, like emails, gifts and events. The major part of media are used for traditional retail
spending which needs to be cut down, due to the increase in the number of people who use digital
media today.
Also, through the development of technology, the people who use the traditional pieces of media,
like newspapers, catalogues and magazines, is decreased. However, the number of people who
use Smartphones or tablets to read has increased. For this reason, I think it’s important to reduce
the number of prints, because the majority of Sephora customers is composed of women between
25 and 35 years old, who prefer digital media rather than print media. Furthermore, the catalogue
still represents a good image for the brand, therefore I think the correct way is not to eliminate it all
together, but decrease the number and send it to only selected customers.
Possible solution about Budget allocation:
Mobile – 35%
Beauty Talk – 20%
YouTube – 20%
Twitter – 10%
Facebook — 10%
Video contests – 5%
Mobile — 35% ($350,000) — Today, the mobile app is the most popular way to stay connected
with Sephora, do to almost every customer owning a Smartphone. The developing cost for a
mobile App is between $100,000 and $200,000, plus maintenance cost close to $20,000 per year.
Also, after analyzing the prediction, there is an increasing of the Android market in the US,
consequently the allocation is justified to improve the mobile service. Also, with this allocation,
Sephora can consider the idea to develop an App optimized for the iPad.
Beauty Talk – 20% ($200,000) – The platform used by Sephora to connect with its beauty insiders,
consumers and potential customers. Through this platform, Sephora is able to recognize its “
super-user”, the customer, who have a lot of contact with other customers and Sephora
employees. With this allocation, Sephora could integrate Facebook and Beauty Talk to care for a
common and easy to use platform, eliminating any existing problems.
YouTube – 20% ($200,000) – Used to promote how the product could be used by the customer, for
this reason, with an allocation of $200,000, Sephora can create 10 different videos (the cost for
each videos it close to $20,00 each one) providing tutorials about its product.
Twitter – 10% ($100,000) — Twitter is considered a good platform for customer interaction.
Considering, Sephora has 100,000 followers on twitter, this allocation can be justified in terms to
increase the number of followers and to promote some advertising campaign through some
specific hashtag (#).
