This is the marketing plan my team and I created for a student marketing competition to revitalize the cosmetics department. I chose this to showcase both my marketing knowledge, analysis, and my ability to write professionally and strategically. It\'s a group project, but I functioned as an editor for the entire thing. I had a very heavy hand in writing the strategies section and completely wrote the budget/financial analysis sections. I also did the concept mockup in the appendices.
22. Costco – Warehouse club. Wholesale pricing strategy utilizing membership fees and bulk packages, catering to small business customers. Positions itself as a minimal décor, low overhead operation appealing to business customers and large families looking for low priced brand name goods in bulk.
23. Safeway – Supermarket. Grocery store with a slightly upscale flavor. Carries fresh meat and produce, along with consumer packaged goods at higher prices than discount retailers. Sales still rule this retailer, providing value to budget minded shoppers. Positions itself as a lifestyle grocery chain for families looking for smart, fresh, and healthy choices. Located in local neighborhood shopping centers.
24. Ulta –More than 346 stores in 38 states. One stop shopping beauty superstore with a value emphasis. Assisted self service by trained employees. Provide s cosmetics, fragrance, hair-care, skincare, bath and body products and salon styling tools, as well as salon hair-care products. High product breadth, with over 21,000 products offered. Full-service salon also available in every store. Modern store environment and décor. Has a points based customer loyalty program. Large stores, typically 10,000 square feet.
25. Sephora –International with over 560 stores. Assisted self service format. Sells skincare, color, fragrance, makeup, bath & body, and hair-care products. High end luxury shopping for cosmetics. Emphasis on service by highly trained knowledgeable employees. Very generous sampling policy. Offers many high end and boutique brands. Important private label brand has value pricing and innovative cosmetics, such as makeup for legs.. Many specialized areas within the store with services for nail, hair, brow, and more. Has a points based customer loyalty program.
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28. All the shelves should be made of clear glass, for a more stylish look and to increase visibility/decrease shrinkage.
29. Include mirrors angled downwards above the outer shelves to increase visibility/reduce theft. Also include pull-out mirrors within the aisles themselves for customer use.
30. Ensure the lighting is bright, both to highlight the section and ensure proper makeup appearance.
31. The cosmetics area will be divided into three color-coordinated sections for different price range shoppers to promote easy shopping. Each aisle within the cosmetics area will have its own special name that will go by brand, then cosmetic type (mascara, lipstick), and each aisle will be based on price; three rows of displays. For example aisle names can be: savvy (inexpensive) shoppers, wise (mid-range) shoppers, chic (premium) shoppers – for the few products that cost a bit more. Customers will become familiar with the aisle names and get excited to shop in their personal aisle. Each of these sections will have a subtle color theme on the using the color of the shelves and the floor. Inexpensive will be yellow, mid-range will be green, and premium will be lavender.
32. Premium will be located in the middle, right where the customer walks in. This will force them to see the expensive cosmetics before anything and highlight them. Cheap will be on the left shelves and mid-range will be on the right. The front short shelves will contain accessories/brushes on the right and nail polish on the left.
33. Target should have more product sample testers that are easy to find, especially on face makeup—foundation, face powders – these testers can be kept near the employee working in the section. This will increase awareness, increase purchase satisfaction, let customers judge effectiveness, and induce trial. It will also help promote exclusive Target brands like Boot’s. These testers should be very visible, obvious, and consistently highlighted so that they are easy to find.
34. Expensive products will have only one display product with the rest locked in a case. If a consumer wants the product they will have to ask the Target cosmetics specialist, during off peak times there will be a large, obvious call button that will call a regular target employee to cosmetics. Since this is during off peak times, the response time should be very quick. This will prevent the loss of expensive items as the items will be kept locked in a case.
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36. Cosmetics companies can pay to have their products shown on the screens, raising revenue as well as entertaining and informing customers of new products and their use. The screens can tell them locations of specific products as well as informing customers about special promotions occurring. It will also increase browsing time.
37. A Target employee that is trained and familiar in cosmetics should be located near the entrance of the cosmetic department and near the premium section. This person will be able to answer any questions, promote products, and make recommendations, while keeping an eye on questionable consumers to prevent shrinkage. Overall this will give customers a more personal experience as well as make an educated decision on what they are purchasing, leading to a happier consumer that will be likely to return more frequently. This will also discourage shoplifters.
38. This employee would work during peak times, when there are more customers and a higher chance of theft.
39. Utilize a problem-solution marketing approach towards product promotion. One possible implementation is having a large sign in a highly visible location. This would be the “problem of the week” space where Target would put a problem the consumer has, then lists a product or brand as a solution to that problem. For example, it could say “Some Name - Dear Target, my mascara is running! What should I do? Hey Some Name, you want to use good quality mascara. Try our waterproof mascara brand x or product y. This could also help facilitate up selling or cross-selling, if the recommendation is for a complementary product that the customer is not buying.
40. Conduct “recycling specials”--bring in old used makeup containers for recycling at Target and receive a discount off new purchases. This reinforces Target repeat purchasing behavior. It also increases the responsible image of Target as a hip, young retailer that cares about the environment. It effectively appeals to value-conscious customers by giving a discount, yet it is a more unique promotion than a coupon.
41. Conduct targeted marketing promotions for special events by leveraging the registered user base of target.com. Other good ideas would be birthday specials for free or heavily discounted makeup, grand re-opening event for remodeled cosmetics section with samples, premiums, and sign-ups for promotions. Customers could even take advantage of the birthday specials just by showing a driver’s license and writing down their name and e-mail. This would be promoted through signage and by the cosmetics employee.
42. Utilize customer/employee review signage which has reviews and recommendations from real people, highlighting the usability and comparability of cosmetics carried at Target to other brands. This personalizes the shopping experience, fosters a connection to Target, and facilitates a social shopping experience. This also highlights specific products, raising awareness for effectiveness of certain cosmetics. This strategy also has a lot of appeal to young generations of customers, who have grown up with interactive/social-networking applications that allow content creation by a network of their peers.
43. Have a weekly (or bi-weekly/monthly) changing large sign that features makeup that is actually sold at Target, but applied on real people. It could be labeled “model of the week” with a tagline like “real people wearing real cosmetics” with a smaller byline “sold at Target.” The customer gets to see the makeup in use, the products are identified and promoted, and the customers get more involved in the cosmetics section, since it features them as models. This will help increase loyalty and satisfaction. Customers will see the cosmetics in actual use. Research has shown that customers trust people who are like them, and that this trend is only increasing with the prevalence of social networking.
44. Highlight Target Glimmer opening through multiple channels. Highlight cosmetics revamp and services through the Target Style blog, website, newspaper inserts, and in-store signage. Use/promote samples, exclusive brands, and birthday specials, recycling specials, screens, remodeled areas to build awareness, traffic, and loyalty.
45. Promote brushes and makeup bags to induce customers to visit Target Glimmer. Even if the customer buys their makeup at other stores, they can still buy brushes at Target. Brushes and makeup bags can be used with any makeup products so they will be attracted to the new cosmetics section. They will then be exposed to the new products, specials, services, and featured items—raising awareness.Action Plan & Schedule<br />June 2010- Development of Market Situation<br />We created a market description, reviewed the competition and created a SWOT Analysis <br />July 2010 – Development of Marketing Objectives and Strategy<br />Defined positioning statement and marketing mix (product, price, promotion and distribution)<br />August 2010 – Remodel of Cosmetics’ Section<br />Clear out cosmetics area<br />Hire 3 knowledgeable cosmetics people to answer customer questions and concerns<br />Train person on all brands and products with emphasis on more expensive items<br />Only one person will work at a time, but this person will be there at all peak hours<br />Replace shelving with eye level, glass shelving units and extend end shelves<br />Insert two touch screens into end rows; and <br />Restock shelves with products according to value, price, and type. <br />October 2010- Soft Opening of the cosmetics section<br />The area will open with minimal promotions. The only promotions at this time will be within the store. The reason for a soft opening is to prepare/train staff so they know how to deal with customers and the work efficiently and effectively within the cosmetics department. They will collect information and photos for customer reviews and recommendations. <br />November 2010 - Grand Opening of “Glimmer” the Cosmetics Section at Target<br />This is when we will actually begin implementing our sales promotions and customers will be able to experience “Glimmer” the cosmetics store within Target. We will advertise the grand opening of the new cosmetics section widely, and especially on the Target Style blog. Once the cosmetics area is open, customers will have the ability to shop by price or color. They will also be able to ask questions and get answers from an expert. They will be able to find out about promotions and products by interacting with the touch screens and through in-store signage. The first month will be important for creating buzz and excitement, therefore coupons, testers, samples and free product giveaways will be implemented. Lastly, we will uphold Targets signature use of signage that will inform customers about the new area of the store: Glimmer. Our number one goal of the cosmetics remodel is to prevent theft and create a destination for young cosmetics users where they feel comfortable and excited about shopping for makeup. <br />Budget<br />Here is a breakdown of the major costs:<br />The remodel:<br />Wages:<br />Another major cost would be hiring and training the cosmetics employee. Assuming the employee works 6 hours a day, 7 days a week, at $9 an hour this would be a yearly salary of $19,710. <br />Promotions:<br />The cost of promotions would have minimal set-up costs since they leverage existing assets. Acquisition of customer reviews/recommendations and photos of customers would be minimal since this could be done by employees and through the Target website. The only costs would be a printing allowance for new signage, estimated at $600.<br />Adding the salary costs of $19,710, promotion costs of $600, and nonrecurring remodel costs of $34,200, the first year implementation would have a $54, 510 total cost.<br />Revenues<br />The following is a sensitivity analysis of possible annual revenue increases resulting from our proposal. This is based on the information we received during the Target store tour that cosmetics sales were approximately $160,000 for a period of 6 weeks.<br />However, Target should keep in mind that our proposal includes multiple measures to reduce shrinkage, effectively an increase in revenues. Thus, our proposal has additional increases not reflected in increased sales. The following is a sensitivity analysis of shrinkage decrease cost savings.<br />Assuming shrinkage losses of 1.51% of sales gives a dollar figure of $20,938 in losses. If sales increase by a low estimate of 5%, then shrinkage increases to $21,985. If our proposal decreases shrinkage by a conservative 5%, this would be a savings of $1,099. Thus a conservative total increase in revenues, would be $69,333 + $1,099 - $54,510 = $15,922 net gain within the first year.<br />NPV and MIRR Analysis<br />We also calculated the Net Present Value and the Modified Internal Rate of Return for our project, using the conservative assumptions of sales growth in the previous section.<br />Briefly explained, these two analytical techniques are used to decide whether a capital improvement project will add value to a company and how much. <br />NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account. If the NPV of a prospective project is positive, it should be accepted. However, if NPV is negative, the project should probably be rejected because cash flows will also be negative.<br />The MIRR is basically a rate of return on an investment that is a measure of profitability.<br />Assumptions: A period of 5 years was used in these calculations. A WACC (Weighted Average Cost of Capital) of 8% was calculated from publicly available information. A gross margin of 30.5% was taken from the 2009 Target Annual Report. The sales increase and shrinkages reduction is assumed to be both 5%, as previously noted.<br />Interpreting these results, since the NPV is positive this project would add value to Target as a company. Specifically, this 5 year period of cash inflows would add $29,888 of value to this particular store after costs. The annualized compounded rate of return on this investment would be 22%.<br />Appendices<br /><layout floorplan picture><br />