Burt’s Bees ‘Leaving The Hive’

Seánpaul WalshKenneth KiernanMaeve Mc Quillan

Case StudyOriginal vision is to reach ‘’ Everyone, Everywhere ’’By expanding into the mass market will Burt’s Bees run the risk of becoming too commercial?How can Burt’s Bees grow the brand without distancing itself from the people and values that made it successful so far?

OverviewAnalysis

ExternalInternal

Key IssuesStrategic Alternative (A)Strategic Alternative(B)Chosen StrategyCase Lessons

Competitor Analysis

Category Product Range Audit

CategoryNPC

PenetrationNPCGrowth

CurrentOffering

CompetitorOffering

NPCFeasibility

Cosmetics 2.2% 18.8% No No NoFeminine Hygiene 2.2% 12.6% No No NoNail Care 2.6% 7.2% No No NoFragrances/Aromatherapy 4.3% 14.3% No No Yes

Shaving 5.3% 13.4%No (wasoffering)

No Yes

Oral Hygiene 9.9% 13.5%No (wasoffering)

Yes Yes

Deodorant 10.4% 18.3% No No No

Haircare/Colouring 11.5% 17.1% No YesYes(ready to

launch)Baby Care 13.3% 14.4% Yes Yes N/ABath 23.2% 14.0% Yes Yes N/ABath/Toilet Soap 23.6% 13.5% Yes Yes N/ASkin Care 27.4% 13.4% Yes Yes N/A

Usage by Brand

Brand Jul-05 Jun-06 % DifferenceDove 57 56 1% lossOlay 33 36 3 % increaseNeutrogena 29 32 3 % increaseHerbal Essence 27 25 2 % decreaseL’Oreal 28 32 4% increaseChapstick 40 50 10% increaseBlistex 35 30 5% increaseAveeno 14 19 5% increaseNivea 12 9 3% decreaseGarnier 10 18 8% increaseAveda 7 8 1% increaseBurt’s Bees 13 19 6% increaseTom’s of Maine 6 6 Stayed the sameAvalon 1 1 Stayed the sameAlba 1 0 1% decreaseNatures Gate 1 1 Stayed the sameAubrey 1 1 Stayed the sameJason 3 3 Stayed the sameDr. Hauska 1 0 1% decrease

Brand Awareness

DoveOlay

Neutro

gena

Herbel

Essen

ce

L'Orea

l

Chapsti

ckBlist

ex

Aveen

oNive

a

Garnier

Aveda

Burts Bee

s

Tom's O

f Main

e

Avalon

Alba

Nature'

Gate

AubreyJas

on

Dr. Hau

ska0%

20%

40%

60%

80%

100%

120%

Brand Awareness June 2006

Brand Awareness

Strategic Mapping

Distribution Breakdown and Market Share

2002 2005 Growth ’02-05

Gift/Specialty Stores 39.9% 31.2% -8.7%

Health Stores 29.0% 15.2% -13.8%

Drug Stores 9.0% 29.3% 20.3%

Distributor 5.1% 12.8% 7.7%

Grocery 6.0% 6.9% 0.9%

Other 11.1% 4.7%` -6.4%% of Respondentswho consideredbrand natural

Annual Ad Spendas a % of revenue

2005 % MarketShare, NaturalGrocery

2005 % MarketShare, DrugStore Channel

Burt’s Bees 0 0 7.3 0.4

CBBE Pyramid

SWOT Analysis

Strengths• Effective Product• Customer Loyalty• Experienced Mgmt

Team• Organic

Weaknesses• Low Brand Awareness• Mixed Channels• Varied Image

Opportunities• Huge Growth Markets,

Low Penetration• Unique Competitive

Advantage

Threats• "Just Another Do-

Gooder"• Higher Price

Key Issues• Product Line

• Brand Strength

• Retailer Relationships

• Management Change

• Where Next

• New Competitive Environment

Strategic Alternative (A)Staying in the Niche Market

• Focus on natural personal care Niche Market

• Increasing Market Share to dominate the natural personal care Niche Market

• Continuing to use Gift stores, Health stores and Speciality stores as main distribution channels

Strategic Alternative (A) Implementation

• Improving Retailer Relationships– Continuing to Withhold Trade Terms

(E.g. No discounts from mass retailers)

• Spa Chain Partnerships– New, Specialised Distribution Channel– Professional Image and New Use for Burt’s Bees

Products– Spa Chain with similar core values (natural)

Strategic Alternative (A) +Advantages+

• Has worked in the past, and has led to the current success of Burt’s Bees

• Easy to implement, doesn’t require much change or expense

• Niche market retailers will fully utilize eye-catching “hive” merchandising

• By improving relations with niche retailers, recommendations and word-of-mouth will increase

Strategic Alternative (A)-Disadvantages-

• Limited potential for growth in niche market

• Limiting the potential for large-scale success

• Revenue is increasing in mass channels and decreasing in niche channels

Strategic Alternative (B)Joint Venture Into Mass Market

•Joint venture with Herbal Essence (pseudo natural, 97% brand awareness).

•“Smaller firms would seek alliances with bigger more powerful companies is because of the credibility boost, technology leveraging and access to a market which a larger player is likely to bring to the table” Sherman (2003)

•Another possible reason for joint ventures is to integrate product lines. Sherman (2003)

•Careful thought into choosing partnership

Strategic Alternative (B) What’s In It For Herbal Essence?

Pros+Expansion of the product portfolio

+Possibility of becoming a fully natural product line

+Acquiring a percentage of Burt’s Bees passionate and loyal customer base

+Dominant brand image on shampoo line

Cons-Complication of the product line which may cause brand confusion with the consumer

-Re-pricing strategy may need to be implemented if Herbal Essence are to go down the natural product route

-Herbal Essence already has high brand awareness why would it run the risk of compromising this

Strategic Alternative (B) What’s In It For Burt’s Bees?

Pros+Opportunity for shampoo line to reach the mass market

+Herbal Essence currently have a 97% brand awareness in the personal care market

+Increased capital and larger distribution channels available to Burt’s Bees

+Joint venture with a large player in the “pseudo natural”, at least its not a traditional personal care product company

Cons-Loosing the authenticity of their brand resulting in disillusioned customers

-They have just come up with their own natural shampoo range, do they want to jeopardise that?

-Herbal Essence bring limited knowledge to the joint venture e.g. hair care

Strategic Alternative (B) Overview

• The benefits of the strategy for Herbal Essence greatly out weigh the benefits for Burt’s Bees

• Burt’s Bees will be forced to give up a certain amount of control (Sherman, 2003)

• The risk of becoming too commercial

• Possibility of too much brand confusion, other strategies may need to be looked at

Chosen Strategy:Rebranding-Strengthen-Enter Mass

Market

Rebranding

Rebrand1.Niche Market

Campaign Build Up2. Selected Mass

Market3. Entry4.

Why Rebrand?

• Image Problems• Growth is possible without compromising• Use that loyal customer base more effectively• Sustain value whilst creating new value• Retaining core values of the product but

simply architecting a structured brand and product portfolio

Strategy Implementation I

1. Rebrand• New Logo

– Brand Personality

• New Value Proposition– Healer

• Differentiation• Increase Ad Spend

– TV, Online, Communities

• 6 Months

“embodiment of personality traits of the consumer in the brand itself”

(West, Ford & Ibrahim, 2006; P259).

Umbrella Brand

.

Hair care Skincare Men’s Baby Outdoor Body Face Care

Strategy Implementation II

2. Build Up Campaign• Niche Market Build• New Advertising• New Unified Packaging• Promotion

– Sample Days – Coupons– Television – burtsbees.com– Social Media

• Use Customers

Strategy Implementation III

3. Selection• Re-assess Consumer Awareness• Select Categories:

– Hair care, Nail Care, Shaving, Skin Care and Fragrances

– High Growth Rate, Low Penetration

• Select Channels:– Drug stores, Distributors and

Grocery– Most Profitable Revenue

Increase– Try keep Gift Stores but it will be

hard

Strategy Implementation IV

4. Entry & Future• Enter Selected Markets &

Compete• Monitor Performance• Don’t over-do it all at once• Gradual Long Term• Key is to sustain value• Future:

– Honey & Lemon Drinks– Certified Stamps

Will it Work?

Our chosen strategy is achievable and realistic because of recent consumer demand trends for organic natural products and because we are not compromising the core values of the product but simply architecting a structured

brand and product portfolio whilst sustaining and growing existing customer value

Case Lessons• A clear consistent Image is key• Business is about making a decision and implementing it, there

will always be consequences but it’s about weighing them up• Change can happen without compromising your values

“An idealist believes the short run doesn’t count. A cynic believes the long run doesn’t matter. A realist believes that what is done or left

undone in the short run determines the long run”

Sydney J. Harris (1917-1986), American Journalist.

“All growth is a leap in the dark, a spontaneous

unpremeditated act without the benefit of experience.”

Henry Miller (1891 - 1980),US Author.

Thank You For Listening