Birchbox

By Jie Ma, Shaoxia Lin, Qianxue Yuan and Marni Perlmutter

Agenda● Company Overview● Market Summary● SWOT● Market Competition● Target Identification● Marketing Strategies

○ Integrated Marketing campaign○ Grow Men’s Business○ Partner with Higher-End Brands

● Financials and Budgeting ● Recommendations

2

Company Overview

● Founded in 2010● Ecommerce

subscription service● Beauty & Skincare

samples for women ● Expanded men

business in 2012

International Expansion

● Acquire JolieBox in Europe in September 2012

● Launch website in Canada in fall 2014

Physical Store

● Open in the Soho, New York City in fall 2014

3

Market Summary

4

● Growing subscription-based E-commerce

● Most popular type:

○ “Product Discovery”

○ Commodity Automation

SWOT

5

Strengths Weaknesses

Unique Business Model Limited Brand Partnerships

Easy to Navigate Website Lack of Marketing

Opportunity to Buy Elsewhere

Opportunities Threats

Partner with High-End Brands Similar Brands in the Marketplace

Celebrity Partnership Smart Sampling from Department Stores

Additional Brick & Mortar Stores

Grow Men’s Busienss

CompetitionCompetitors

● Located in over 16 countries● $21 monthly for 5 deluxe-sized

luxury samples● Include a detailed description

card● Offer gift options

● Personalized sampling service● Choose up to 6 of 9 samples● $12 per month● 1-month or 3-month

subscribers pay $2.99 shipping fee

● Founded in 2011 by Michelle Phan

● YouTube makeup-tutorial sensation

● Glam Bag with deluxe samples and full-sized products

● $10 per month

6

7

Characteristics Generation X35-54

Generation YMillennials18-34

Generation Z Under 18

Population 41 million 71 million 23 million

Family environment Family unstability;better educated

More financial support from family

Highly diverse and sophisticated

Life stage Reaching peak in career Young professionals; young family

Students

Attitude toward technology

Digital Immigrants Digital Natives Technoholics-entirely dependent on IT

Market SegmentsDemographics

8

● Online cosmetic/skin care retailers

● Large populated regions dominance

● The Southeast and Mid-Atlantic regions are the main markets for trade

Market SegmentsGeographics

● 74% first choice is in-store

● Millennials tend to purchase online

● Gender differences in purchasing beauty goods

○ Women have more opinions

○ Men are more sensitive to price

9

Market SegmentsBehavioral

Target Market

10

Millennials

- fun, pleasure, confidence are important

- more likely to share opinions

- try new brands

18-34 23.5% of total population

Increasing spending power57% online buyers are millennials

62% influenced by social cause marketing

- functional, simplicity are important

- more likely to choose male specific products

- 27% like to shop for skincare products

Marketing Campaign- 3 Parts

11

● Objective: Increase customer engagement by 40% in 2015

● Strategies: Integrated Multi-Channel Marketing Plan Grow Men’s Business Partner with Higher-End Brands

Integrated Marketing Campaign

● Target: Millennial Women● Goal: Increase brand awareness and drive customer

engagement● Tactics:

○ Celebrity Partnership○ Print Media○ “Show us Your Box”○ “Explore Beauty”

12

Celebrity Partnership● Create brand personality ● Relatability● Social Media engagement● Lauren Conrad partnership

13

Print Media● Spring and Fall 2015● Utilize celebrity partnership● Collage of images from social media

campaigns

14

“Show Us Your Box”● February-March● Unboxing post on Facebook and Instagram● Select 2 best posts per week 100 loyalty points/customized box

● Select 1 best post at the end $50 presents/ beauty service @Soho store

15

Show us your box @Birchbox

“Explore Beauty”● April-May social cause month● 30 second video campaign● Brand value rebuilt● Award 20 videos with limited

edition boxes and 2 promotion

codes

16

Grow Men’s business

17

Many male targets still have not heard

about BirchboxThey do not find

value in paying $20 a

month for a box

The men's sector in the physical store at Soho

remains small with few visitors stop by

Current issue

Grow Men’s business

Concept of Women’s Box: “Discover Beauty”

Concept of Men’s Box: “Find something new without efforts”

18

Key Message

19

Grow Men’s business General Review

Large Company Partnerships

20

Who

● Employees in 15 large companies, such as consulting company, media

agency and PR agency and etc, and then expand

Why● Young professionals are more likely to look for male-specific personal

care products● Easily influenced to try out different brands● Higher purchasing power

To encourage Young Professionals to subscribe by offering the first month free

21

Large Company PartnershipsTo encourage Young Professionals to subscribe by offering the first month free

Campus Reps Program

22

To raise brand awareness among male college students

Why

● Important influencers on social media

● Potential loyal customers to Birchbox in the future.

Who

● Begin at big 10 campuses and then expand

23

Campus Reps Program & Refer a Friend Program

Partner with Higher-End Brands● Goal

○ Increase customer engagement● Target

○ High-end customers & who cannot afford these brands

● Tactics○ Collaborating to advertise new products○ Three-month “Birchbox Premium” service testing

24

● Reasoning

○ Millennials increased spending on premium luxury

fashion by 33% in 2011 over the year prior.

○ Strong visual representation to Millennials

Partner with Higher-End Brands

25

Advertise Partnerships● Collaborating with higher-end brands such as Dior, Philip B, Chanel and

etc. ● Customers can help spread the partnership news on social media.● Potential customers (high-end customers & who cannot afford luxury

brands) will subscribe.

Advantage for high-end brands:● Send samples to target profile● Avoid non-directed sampling● help track ratings and comments

Advantage for Birchbox:● Boost the number of subscribers● Increase revenue

26

Premium Test Program● 3-month testing (June to August)● $20 per month for 5 samples● Current subscribers add $10

monthly to join● Introduction video on Youtube

Channel● Social media, official website & in-

store27

Timeline

28

Sales Forecast

29

2014 2015 2016

Total Cosmetics Industry Sales Market

$58,790,000,000 $60,580,000,000

$62,460,000,000

Birchbox Total Sales $91,514,286 $127,870,000 $178,788,000

Birchbox Market Share 0.16% 0.21% 0.29%

*Birchbox Store opened in October 2014

● Financial Objective: ○ If Birchbox implements the proposed strategy, sales will increase

by 40% in 2015 and 2016.

30

$1,895,130

$1,277,000

$523,870

(2015)Total:$3,696,000Takes 4% of the total sales

Marketing Expenses

31

Breakeven

32

Break-Even Analysis

2014 2015 2016 2017

Total Revenue $91,514,286 $127,870,000 $178,788,000 $250,027,200

Contribution margin $46,562,286 $65,087,200 $91,030,080 $127,331,712

PV ratio 0.5087980019 0.509010714 0.5091509497 0.5092714393

Fixed cost $25,624,000 $29,410,100 $41,121,240 $62,506,800

Break-even point in dollars $50,361,833 $57,778,941 $80,764,339 $122,737,690

Measurement to SuccessIntegrated Marketing Campaign● Celebrity Partnership

o Impressions on Lauren Conrad website o Likes on her Instagram photos

● Print Advertising o Circulation

● Specialized Boxeso Boxes Ordered o Full-size products purchased from

samples included in these boxes● Celebrity Videos

o Views● “Show Us Your Box” Campaign

o Number of posts to hashtago Traffic to Birchbox.com

● “Explore the Beauty” Campaigno Number of posts to hashtago Traffic to Birchbox.com

33

Increase Male Subscribers● Marketing Events

o Number of attendees● Direct Email

o Number of receiptso Number of customers who use code

● Direct Marketingo Impressions to people seeing these ads

● Campus Representativeso Attendees to events on campus o Number of posts using #BirchboxCampus and

#BirchboxBrago Increase in subscriptions

● Refer a Friendo Increase in subscriptions

Partner with Higher-end Brands● Number of customers who participate in pilot program● Response to the program on social media (positive or

negative)

Implementation Control

34

Goal

Quarter 1 Quarter 2 Quarter 3 Quarter 4

Increase customer

engagement by 8%

Increase customer

engagement by 15%

Increase customer

engagement by

10%

Increase customer

engagement by

7%

Recommendations● Utilize all three tactics throughout 2015● In 2016, assess previous year success and

adjust budget accordingly ● Explore opportunity for website optimization

35

36

Thank you!