the woolworths good beauty journey - positioning a brand...
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The Woolworths Good Beauty Journey-
Positioning a brand within a brand
A Teaching Case Study
Research Report
Presented to
The Graduate School of Business
University of Cape Town
In partial fulfilment of the requirements of the
Masters in Business Administration Degree
By
Nigel Cowling
Supervised by Dr Mlenga Jere
Date: 9th December 2011
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Acknowledgements
This report is not confidential and may be used unreservedly by the Graduate School of
Business.
I would like to thank all the members of the Woolworths Beauty Team, especially the Head
of Beauty Joanne Wilson for her unwavering support, and her Personal Assistant, Ruwaydah
Cerfontyne for organising all the requested interviews. I wish Woolworths, and more
specifically the Woolworths beauty division, every success in the future.
I would like to further thank Dr Mlenga Jere for supervising me during the process of
compiling this report, and encouraging me throughout. I have thoroughly enjoyed working
with him during this project.
I certify that this report is entirely my own work, and all references are accurately
represented.
Signed:
Nigel Cowling
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TABLE OF CONTENTS:
1. INTRODUCTION ................................................................................................................. 1
1.1 Theme ............................................................................................................................... 1
1.2 Learning Objectives ......................................................................................................... 1
1.3 Motivation ........................................................................................................................ 2
1.4 Context ............................................................................................................................. 2
1.5 Significance ...................................................................................................................... 2
1.6 Scope and Limitations ...................................................................................................... 3
1.7 Assumptions ..................................................................................................................... 3
1.8 Ethical concerns ............................................................................................................... 4
2. LITERATURE REVIEW ...................................................................................................... 5
2.1 Introduction ...................................................................................................................... 5
2.2 South African Beauty Industry ......................................................................................... 5
2.3 Brand Personality ............................................................................................................. 6
2.4 Beauty Consumers ............................................................................................................ 7
2.5 Corporate Social Responsibility ....................................................................................... 8
2.6 Private Label Brands ........................................................................................................ 8
2.6.1 Benefits of Private Label Brands to Retailers ........................................................... 8
2.6.2 Suppliers relationship .............................................................................................. 10
2.6.3 Customer proneness ................................................................................................. 10
2.6.4 The Private Label situation in South Africa ............................................................ 16
2.6.5 Summary of PLB Literature ................................................................................... 18
2.7 Conclusion to Literature Review .................................................................................... 19
2.8 Implications for the design of this case study ................................................................ 20
3. CASE METHODOLOGY ................................................................................................... 22
3.1 Data sources ................................................................................................................... 23
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3.2 Data collection ................................................................................................................ 23
3.3 Writing the Case ............................................................................................................. 24
3.4 Research Criteria ............................................................................................................ 24
3.5 limitations of this Methodology ..................................................................................... 25
4. CASE STUDY: The Woolworths Good Beauty Journey- Positioning a brand within a
brand ........................................................................................................................................ 26
4.1 Background .................................................................................................................... 26
4.1.1 Woolworths ............................................................................................................. 26
4.1.2 Private Label Brands ............................................................................................... 27
4.1.3 The Good Beauty Journey ....................................................................................... 28
4.2. Anne’s Dilemma ........................................................................................................... 28
4.2.1 Meeting 1: Lou ........................................................................................................ 30
4.2.2 Meeting 2: Beth ....................................................................................................... 31
4.2.3 Lunch ....................................................................................................................... 32
4.2.4 Meeting 3: Charnel .................................................................................................. 34
4.2.5 Meeting 4: Shelly..................................................................................................... 36
4.3 Assignment Questions: ................................................................................................... 37
Appendix 1: .......................................................................................................................... 38
Appendix 2: .......................................................................................................................... 41
Appendix 3: .......................................................................................................................... 44
Appendix 4: .......................................................................................................................... 48
5 INSTRUCTOR NOTES........................................................................................................ 55
5.1 Case Summary ................................................................................................................ 55
5.2 Background .................................................................................................................... 55
5.3 Teaching Approach ........................................................................................................ 57
5.4 Target Audience ............................................................................................................. 57
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5.5 Learning Outcomes of the case: ..................................................................................... 57
5.6 Discussion Questions and main points ........................................................................... 58
5.6.1 Question 1 ................................................................................................................ 58
2.6.2 Question 2: ............................................................................................................... 62
2.6.3 Question 3: ............................................................................................................... 64
5.7 Timing ............................................................................................................................ 66
6. APPENDICIES .................................................................................................................... 68
7. PLAGIARISM DECLARATION ........................................................................................ 79
8. BIBLIOGRAPHY ................................................................................................................ 80
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1. INTRODUCTION
Private label brands (PLBs), also known as store brands, are those brands that are owned by,
and exclusively sold through, a specific retailer (Beneke, 2010). PLBs represent an
opportunity for retailers to increase loyalty and margins. But building a private label range is
complex, as the products have to represent the values of the business, but also represent an
appealing alternative to the national brands that customers generally favour. This teaching
case study explores these complexities, and how difficult a balance between brand values and
commercial goals can be to strike.
1.1 THEME
To achieve this, the case focuses on the Good Beauty Journey (GBJ), an initiative within the
beauty department of Woolworths, a South African retailer. It tracks the challenges that are
faced by the head of the beauty division, as she attempts to decide the strategic direction that
GBJ should take. This dilemma is a good example of the different forces at play within a
private label brand, as she has to align her beauty range with the Woolworths core values,
while simultaneously maximizing profitability and differentiating the range from the market.
The GBJ is an initiative aimed at positioning the Woolworths private label beauty products
with a unique point of difference in the market, by focusing on adhering to set of principles.
These principles, which are aligned to the general business values of the Woolworths brand,
are aimed at driving sustainable product development and procurement throughout this
product range. This is seen as a combination of corporate social responsibility (CSR) and
profit strategy, as these principles supported the market leading CSR initiatives of
Woolworths, while also offering customers a different choice, as very few (if any) beauty
brands had similar principles in place- hence potentially increasing driving sales.
1.2 LEARNING OBJECTIVES
This case encourages the following key learning objectives for students:
o To provide students with an insight into the complexities and challenges in
building a private label brand
o To expose the students to the difficulties of positioning a brand
o To invite students to feel the challenges and stresses of making real business
decisions
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1.3 MOTIVATION
This case is a valuable illustration of the complexities of building a private label brand, as the
GBJ supports the values of the Woolworths brand, but these same characteristics do not
support the beauty division in growing sales or profit, due to circumstances explored in the
case. The GBJ makes Woolworths Beauty a market leader in both ethical and sustainable
sourcing, which reflects Woolworths’ “Good Business Journey” positioning, as well as
differentiating it from the competition. However this GBJ has added cost to its products, and
has not increased sales, hence reducing profitability. As Woolworths beauty has to reflect
Woolworths own brand values, it cannot redefine itself as a separate brand, and has no real
sway over its advertising budget.
This case therefore serves as a good example of trying to combine differentiation and
profitability, while being constrained under an umbrella brand, a common dilemma faced by
private label brands.
1.4 CONTEXT
Within this context, with Woolworths Beauty trying to redefine itself as a brand within a
brand, other retailers are also focusing on their private labels. Private labels are seen as
having the ability to increase both customer loyalty and profit margins, and South Africa’s
PLB sales only make up 11% of total retail sales, against a world average of 22% (Planet
Retail Report, 2008). Thus most local retailers are looking at PLBs as a possible source of
future growth.
Another key contextual issue prevalent to this case is the recent arrival of Walmart to South
African shores. Walmart is seen by many as a market leader in Private Label Brand execution
worldwide, and thus local retailers are further motivated to focus more resource into the
development of their PLB ranges.
1.5 SIGNIFICANCE
The significance of this study has to do with the two themes (other than the contextual
considerations mentioned above), one being the nature of Woolworths business, which is
predominantly reliant on PLB’s, and the other being the intricacies of PLB development,
which impact all aspects of the value chain, and hence have implications for a number of
business disciplines.
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Woolworths is a predominately private label based department store retailer (which is unique
in South Africa), with 60% of their products being PLB, and 95% of their profit being
generated from this private label majority (showing the profitability potential of PLBs). This
would make them the market leader in PLB thinking in the country. The brand is also a world
leader in sustainability and ethical sourcing (In 2010 Woolworths was named International
Responsible Retailer of the Year at the World Retail Congress for the second time in three
years). This demonstrates that not only are Woolworths a worth company in terms of their
sophistication of thought towards PLBs, but also that their thinking around corporate social
responsibility is also first class.
The study of private label brands also has significance in the general field of marketing, as a
PLB is a microcosm of a value chain in its entirety. The design and execution of a PLB range
contains all aspects of the value chain, from designing the product and its packaging,
sourcing raw materials, distribution, advertising, product ranges, sales, and after sales service.
Therefore a study of PLBs has ramifications for suppliers, manufacturers, advertisers, and
sales people alike.
1.6 SCOPE AND LIMITATIONS
The scope of this case study is limited to the “Good Beauty Journey” intervention as it does
not attempt to explore the positioning of the Woolworths brand as a whole. The ethical
discussion about the role of business in society (in terms of sustainability, the environment,
and social upliftment), while an underlying theme of the case, is not directly explored. As the
learning objectives revolve around private label development, the decision was made to not
include these issues of sustainability, as it would cloud the intended learning outcomes.
However, this case could form a useful support to such a discussion.
There is risk that due to the unstructured nature of the interviews, the author’s biases could
have influenced the writing of the case. This risk has been partly allayed by interviewing
managers who have conflicting points of view regarding the subject matter, hence providing
multiple perspectives.
1.7 ASSUMPTIONS
The following assumptions have been made:
The case assumes that students have a basic understanding of the Woolworths brand.
A short description of the brand is given in the case and appendices, and non-South
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African students could do additional background research on the Woolworths website,
as links are provided.
The case is written as a third person description of the series of one-to-one meetings
between the head of beauty and her team. To avoid unnecessary complications, these
meetings have been written as if each team member simply presented their view of the
GBJ with no real discussion, and thus the case assumes that students will understand
that this is not an accurate portrayal of how business meetings are conducted, but
rather for illustrative purposes.
1.8 ETHICAL CONCERNS
The main ethical concern of the author is not to over-simplify the issues described in the case,
and therefore paint the Woolworths team in a negative light. In the opinion of the author, the
GBJ is an ambitious initiative, which is market leading and a great example of how CSR
should be approached. In writing the case, every effort has been made to accurately portray
the complexity of the issue, as well as the good intentions and sophisticated thinking of the
relevant management team.
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2. LITERATURE REVIEW
2.1 INTRODUCTION
This literature review will look to explore the key concepts within this case study. The review
will start by looking briefly at the beauty industry of South Africa, followed by an overview
of the research around brand personality and the beauty consumer, as these two areas tie
closely to what Woolworths are trying to achieve in positioning their beauty brand. Finally,
research into private label brands is discussed, and as this is the central theme of the case, this
section will receive the most attention.
2.2 SOUTH AFRICAN BEAUTY INDUSTRY
South Africa’s fragrance, cosmetics, and toiletries industry is seen as producing products that
observe high manufacturing standards, with South African products being well received by
consumers in both local and international markets (Kohler, 2010). Inputs into fragrance and
cosmetic products include unique raw materials, like chemicals fragrances, essential oils,
thickeners, surfactants, preservatives, colorants and active ingredients (Kohler, 2010). Many
of these materials are imported, causing costs of logistics. Following manufacturing,
packaging becomes essential, with many manufacturers now employing vertical integration,
and packaging products themselves.
Figures from Datamonitor show that South Africa’s make-up market generated total revenues
of $118.7m in 2008. Also in this year, the country’s personal hygiene market had revenues of
$340.8m, the fragrance market showing revenues of $412.5m, and the hair care market sales
of $235.1m.
South African’s very high Gini coefficient means that “interestingly, despite these seemingly
significant revenue figures, the local fragrance, cosmetics and toiletries market is regarded as
having one of the lowest per capita expenditures in the world” (Kohler, 2010, pg. 6). This
market is thought to have huge growth potential, with many international firms seeing it as
the gateway to the African market.
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Woolworths uses both local and international suppliers for the manufacturing of its beauty
products. A key strategic goal of relaunching the Woolworths Beauty Brand was this
perceived growth potential of the beauty market.
2.3 BRAND PERSONALITY
Beauty brands are typified by having strong personalities, due to the high emotive nature of
this category’s consumer (to be discussed in the next section). Brand personality can be
defined as "the set of human characteristics associated with a brand” (Aaker, 1997, pg 347).
As opposed to products which are bought based on their physical attributes, brand personality
generally applies to more emotive product categories (Keller, 1993).
A widely used framework when assessing brand personality is that of Jennifer Aaker, who
uses 5 separate characteristic through which a brand can be defined. They are sincerity,
excitement, competence, sophistication, and ruggedness. Each of these is then broken down
into a number of descriptors, to further specify each characteristic. (Diagram 1).
Source: Aaker, J. L. (1997). Dimensions of Brand Personality. Journal of Marketing Research
Figure 1: Aaker’s Brand Personality Model
This is a useful tool, and helps to understand what a brand like Woolworths is trying to do
when positioning itself in the consumers’ mind. However it must be kept in mind that this
model, while being over 8 years old, is also designed for the US consumer. There is very little
academic study of what brand personalities mean for the South African, and more broadly
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African, consumers. Many large companies are starting to do this type of research for
themselves, but this has yet to be consolidated into a definitive model.
But his criticism aside, it can be observed that Woolworths seems to be positioning
themselves as a “sincere” type of brand, looking at concepts like wholesome, and down-to-
earth. This wholesomeness seems to be based on their commitment to corporate social
responsibility and quality simultaneously. This concept plays on the trust ideal, where
customers can trust in both the quality and efficacy of the product, as well as Woolworth’s
sourcing practices. The fundamental nature of this trust concept in brand building is
emphasised by Aaker (1996) who defines this idea of how much a consumer would trust the
brand as one of the only few brand equity matrixes that applies across all product categories.
As Woolworths sells a multitude of product categories, this brand management strategy
seems to be an insightful one.
2.4 BEAUTY CONSUMERS
One of the key concepts when analysing how consumers perceive product categories is one of
consumer involvement (Guthrie & Kim, 2008). Guthrie and Kim (2008) go on to say that
involvement can be used to measure the amount of product interest and significance to the
consumer. “Because of its function in enhancing the personal appearance and style of
consumers, cosmetic products represent a type of product category in which consumers are
likely to be involved in both the purchase and usage process” (Guthrie & Kim, 2008, pg.
116).
Beauty products serve customers’ highly personal needs, affecting self-esteem. This research
shows that cosmetics customers mostly buy products to enhance how they feel, and thus any
brand strategy or marketing employed by cosmetic brands must play to this driver. This
shows a slight dis-connect with the positioning of the Woolworths beauty brand, as it seems
to be focused on representing the Woolworths mother brand’s personality of high social
responsibility, and therefore may reduce this category appeal to some of its potential
customers, following the logic of the above research.
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2.5 CORPORATE SOCIAL RESPONSIBILITY
Seigel and Vitaliano (2007) define corporate social responsibility (CSR) as firms engaging in
activity that seem to advance a social agenda above what is required by law. The research on
CSR is vast and they all suggest different activities for business, some encouraging business
to proceed with CSR and others criticizing such a role (Prothero & McDonagh, 1992).
It is clear that Woolworths sees CSR as being fundamental to its strategy, and this should not
be seen as a purely selfless act, as Seigel and Vitaliano (2007, pg 773) highlight so well:
“Recent theories of CSR assert that firms engage in “profitmaximizing” CSR. That is,
companies are assumed to be socially responsible because they anticipate a benefit from these
actions. Examples of such benefits might include reputation enhancement, the ability to
charge a premium price for its output, or the use of CSR to recruit and retain high quality
workers. These benefits are presumed to offset the higher costs associated with CSR, because
resources must be allocated”
This has clear parallels to Woolworth’s strategy, as the additional sourcing costs involved in
their “Good Business Journey” are seen as necessary to build brand equity. Given that higher
income groups are most likely to demand high quality products, CSR as a signal of product
quality is likely to be connected with upscale goods that typically yield higher margins
(Prothero & McDonagh, 1992).
2.6 PRIVATE LABEL BRANDS
The literature on PLBs primarily centres on the USA markets, but there is some research
starting to emerge from other regions. It is important to bear this in mind when reviewing the
current thinking around PLBs, as although valid for the US markets, automatic transference
of these conclusions into a South African setting cannot be assumed.
2.6.1 Benefits of Private Label Brands to Retailers
There is common agreement in research that the primary benefits of PLBs to retailers are
higher margins and increased consumer loyalty (Ailawadi, Pauwels, and Steenkamp, 2008).
PLB’s deliver higher retail margins
Higher margins for PLBs are largely attributed to two factors. Firstly, lower variable costs
allow retailers to purchase most PLB’s at whole prices slightly above marginal costs, hence
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the wholesale price for PLBs is lower than wholesale prices for national brands (Hyman et al,
2009).
The second factor that can lead to higher margins for retailers is they are required to spend
less on R&D and product launch. Hyman et al (2009) use retailers slotting fees as an example
of ways these launch costs are reduced for PLBs, as well image building costs. Retailers can
use the strength of their brand to launch these PLBs, without the need for additional
advertising spends. Vahie & Paswan (2006) contend that a strong store image linked to the
private label brand is vital to the success of the brand. Hence if the retailer has a strong
image, for example on quality, then the private labels linked to the retailer will not require
additional marketing resources.
From this it can be deduced that Woolworths strong store image is fundamental to their
success as a predominantly PLB store. Woolworths therefore does not require high marketing
spend to drive customers to their products, as their reputation for quality is already built in
the minds of the consumer.
Private Label Brands build consumer loyalty
Numerous articles cite building store loyalty as a major benefit to PLBs. The Private Label
Association contend that private label store brands give the chains a way to set themselves
apart from the competition and enable them to offer customers more choice, and hence to
build loyalty. Retailers now realise how the effective marketing of PLBs can increase store
loyalty (Richardson et al, 1996).
But it is not a simple matter of creation of PLB’s will increase loyalty. Ailawadi et al (2008)
found that some consumers were loyal to private labels in general, and not to a specific
retailer, hence clear causal relationships cannot be drawn. This idea was first discovered by
Rao (1969) who found in his study that when customers switched stores, those consumers
who were prone to buy private label products switch immediately to their new store’s PLBs.
This brings an interesting element to the statement that “store brands help retailers increase
store traffic and customer loyalty by offering exclusive lines under labels not found in
competing stores” (Richardson et al (1996, p.181). This would indicate that loyalty is only
increased when the consumer sees a difference in the PLB offering between retailers. Hence
the management of the PLB range is crucial to the gaining of consumer loyalty. An example
of this, cited by Ailawadi et al (2008) is that of J.Sainsbury’s, a UK retailer, who lost market
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share due to the over-reliance of PLBs in some sectors (a share of over 60%) which turned
customers off, making them feel like their ability to choose being constrained.
The quality of the PLBs also has an effect on the related store loyalty they create. This
relationship between quality and price, to be explored in more detail later in this review, has a
direct effect on consumer loyalty. Hoch & Banerji (1993) found that retailers can gain
increase market share, and hence loyalty, by offering high value private labels.
This idea of the direct link between quality and loyalty is further built on by Richardson et al
(1994) who comment that
“A focus on quality as opposed to price could produce more favourable perceptions of store
brands and increase consumers' loyalty toward these products. Because store brands are only
available at their owners' chains, this increased loyalty then could be uniquely transferred to
the chains themselves”
These findings again show why the Woolworths business model is such a success. Not only
do they offer high quality PLBs, but these products are not available in any other store, hence
building fiercely loyal customers. This loyalty then plays into the previous point of a
reduction in a need to advertise, as their customers are already sold on products before they
are even released. This being said, it cannot be over-exaggerated that Woolworths reputation
for quality is fundamental to this model working.
2.6.2 Suppliers relationship
It must be kept in mind that most own labels are not produced by the retailer. Manufacturers
may decide to produce for PLBs to increase economies of scale, utilize spare capacity, and to
increase sales without increasing marketing spend (Baltas, 1997). Thus retailers are reliant on
having these types of relationships with suppliers, or else their ability to produce PLB’s is
greatly reduced.
Woolworths are no difference, with relationships with their suppliers being of vital
importance not only to ensure quality, but also to advance their CSR agenda, which can only
be achieved through total supplier compliance.
2.6.3 Customer proneness
Consumer perceptions of PLB’s are of fundamental importance to retailers, as ultimately this
perception is what will bring success. As a result, there is a very large sway of research in this
regard, which is commonly known as consumer proneness to PLBs.
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The seminal work on this concept was done by Richardson, Jain and Dick (1996), when they
attempted to design a framework to describe what drives the selection of private label brands.
They identified five key factors that influence consumer proneness to PLBs (familiarity,
extrinsic cues, risk, variability, and quality) which will now be used as a structure for this
review of the research around proneness to PLBs.
Familiarity
In the study, Richardson, Jain and Dick (1996) found a very high relative importance placed
on familiarity, which they deduced to mean that consumers who are familiar with PLBs are
likely to see them as high quality, low risk products, producing good value for money. Thus
consumers who do not know these products may see them with scepticism.
Baltas (1997) also notes that possible reasons for people with very similar socio-economic
backgrounds have different perceptions to PLB’s is down to their degree of experience with
the PLBs.
But naturally this familiarity, and subsequent loyalty to PLBs, needs to start with an initial
purchase, and so the other factors below would contribute to the likelihood of this happening.
Woolworths is a well-known brand and due to its standing as being the supermarket store of
choice for the higher LSM groups, it is very familiar to those with disposable income.
Extrinsic Cues
The Private Label Manufacturers Association claim that PLBs’ ingredients are of equal if not
better quality that national brands. This does not help to persuade the consumer to make the
initial purchase, as in most cases a taste test or trial is not possible. Therefore consumers
cannot analyse the internal cues of the product, so they have to rely on the external cues.
External cues are define broadly by Richardson, Jain and Dick (1996) as including price,
brand name, and packaging, which are all really easily recognisable and interpreted by the
customer. Hence these external cues often act as surrogate indicators of quality.
Increasing Consumer Proneness through Pricing
Beneke (2010) describes how retailers often use “me too at a cheaper price” strategy to try to
promote their products, meaning that they try to make the consumer view the PLBs as
identical to the national brand but at a cheaper price. A good example of this is:
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“A major selling point for private labels is their lower price relative to national brands. For
instance, an 18-oz. box of Kellogg's corn flakes costs $2.95 while the same size box of a local
retailer's store brand costs $1.69. That is, the price of the store brand is about 43 percent
lower than the national brand price. Those consumers who are willing to pay a 43 percent
premium for Kellogg's will purchase the national brand while those who will not pay the 43
percent premium would purchase the store brand.” (Sethuraman, & Cole, 1999, pg. 340)
But the reasons why consumers purchase a product also influence their perception of price.
Consumers are willing to pay a higher price for national brands in categories that give high
amounts of consumption pleasure (Sethuraman, & Cole, 1999). Therefore, PLBs will
struggle to have a relatively high price compare to these national brands in products
categories where hedonistic motivation for the product is high. This study goes on to find that
in everyday low prices pricing strategies, PLBs tend to do better.
Price also represents an external cue and provides some of the most important forms of
information on offer to customers when deciding which product to purchase (Jin and
Sternquist, 2002). They also go onto find that 40% of the average customer’s information
search about a product is price. So price is not simply about how much a customer has to pay,
but also sends clear messages to the customer about the quality of the product.
This ties into the findings of Jin & Suh (2005), who found that price and quality should be
examined together as they are so closely inter-related, showing that when a consumer is
weighing up the quality of the product, the price point is key to the opinion that they form.
However, studies like in Hoch & Banerji (1993) find that found that quality is more important
than price, and so pricing strategy of the PLB’s depends largely on the quality (or perceived
quality) of the product, and the relative importance of quality to the consumer when buying
this particular product.
This was also found by Richardson, Dick and Jain (1996), discovering that perceived quality,
for both store and national brands, is more strongly associated with wiliness to purchase than
is perceived price, or value for money.
But there has been a recent shift in strategy regarding price and quality on behalf of some of
the retailers and their PLB product range (Lui and Wang, 2008). For example Tesco and
Sainsbury’s (two of the big UK retailers) have both started “finest” and “taste the difference”
private labels respectively, which are priced higher than many national brands, as through its
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packaging and ingredients offers the customer premium quality. These new high-quality PLB
strategies are designed to create store differentiation and thus increase consumer loyalty
(Corstjiens and Lal, 2000).
So the research on pricing and PLBs is conflicting in parts. It seems that the impact on
pricing is dependent on the consumer, and how they perceive the price-quality relationship.
Consumers who think that high price means high quality will not be motivated to try a lower
priced PLB (Mandhachitara et al, 2008). This would indicate why some retailers have tried to
differentiate their PLBs with high quality cues and high prices, as discussed previously.
However, if a customer is more concerned with value, then a similar quality, cheaper price
strategy might appeal to them. But price is not the only indicator of quality to consumers, as
often it is the strength of the brand and packaging can be the deciding factor.
Woolworths seem to structure their PLBs around this high quality and high prices cues.
However this does not necessarily mean that their products are more expensive than the
national brands, just that the lower quality lower priced national brands are not offered in
store, and therefore their PLBs, while on average a higher price point that other supermarkets
PLBs, may still be the lowest priced products within their stores.
Increasing Consumer Proneness through Brand Name and Packaging
Richardson, Dick & Jain, (1994) found in their study that regardless of the category or the
actual ingredients sampled, ingredients coupled with the national brand were found to be
favourable to the same ingredients coupled with the store brand. In other words, the same
thing in a different package was found to taste different to consumers. This indicates the
challenge that new PLBs face when competing with an established national brand.
But this brand strength can work in the retailers favour, as Baltas (1997) found that
consumers’ perception of the store itself having an effect on how the stores private label
products will be perceived.
De Wulf et al (2005) more recently found that national brands still enjoy a good level of
brand equity, and when the consumer knows the brand their brand associations increase the
perception of quality. This means that consumers often don’t or can’t make the distinction
between their perception of quality (extrinsic cues) and the real quality of the product
(intrinsic cues). But this branding impact can play in the store’s hands too, and they also
found that for 3 out of 4 store brands, brand equity exists when consumers are loyal to the
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store carrying the brand. So if the retailer has a strong brand name (like known for quality
products) then its PLBs will be perceived favourably by the consumer. This shows the
relationship between PLB’s and store loyalty can work both ways. The consumer may be
attracted to the store due to the good quality of its private label range (as discussed earlier), or
they could be attracted to the PLBs because of a strong positive brand identification with the
store itself.
Packaging has become a tool for promoting the brand (Underwood & Klein, 2001). This
highlights the importance of packaging on the customers’ view of the product. Suarez (2005)
sees the gap between PLBs packaging and that of the national brands as being non-existent at
times, citing that PLBs packing to be of an excellent standard.
Another interesting point that Suarez (2005) raises is one of shelf positioning. She find that
Spanish retailers, who she claims are very developed in their management of their PLBs, are
positioning these products to the right hand side of the competing national brand, which gives
them an advantage due to about 90% of consumers are right handed. She also warns against
oversupply of PLBs on shelves as there is a saturation point over which having more PLBs on
the shelf will not increase sales.
These points go to prove how sophisticated the thinking around PLBs has become, and how
all these factors are being used to help convince the customer of the quality of the stores’
private label products.
One of the keys to Woolworths positioning as a high quality retailer is their focus on
packaging. This is especially prevalent in the beauty and homewares divisions, and has thus
led to Woolworths being perceived as a one of the top gifting destinations in South Africa.
Risk
Regardless of how much effort goes into the design of the packaging, pricing, and brand
building strategy of PLB ranges, there is always a perceived inherent risk for consumers in
switching to a PLB.
Perceived risk associated with using a PLB product will be an important factor in determining
the consumers’ propensity to consume (Richardson, Jain, and Dick, 1996). This risk can take
the form of actual risk in terms of real danger if the quality of the product is not sufficient, or
social risks.
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Thus consumers will feel less motivated to buy a PLB if the perceived level of risk in the
product category is high (Narasimha & Wilcox, 1998). Batra & Sinha (2000) also discover
that if the consequences of a purchase mistake are high, then the interest in the private label
offering reduces. For example, a customer would not want to experiment with getting a new
lower cost baby food, due to the perceived risks of a wrong purchasing decision
Social risks also play an important role, for illustration Liversly and Lennon (1978) argue that
English consumers serve national brand tea to guests but drink less expensive private label
team when not observed by others. This concept of social risk will be explored further when
reasons for South Africa’s low PLB market share is discussed.
Due to Woolworth’s stringent quality control practices, actual quality risk is perceived as
very low, but for the beauty division, social risk may be a key stumbling block. Woolworths
is not perceived as a beauty destination, and therefore there is an inherent risk in purchasing a
highly emotive product like a beauty product from such a store. This issue will be explored
further during the case and in the teaching notes.
Variability
Tied very closely to perceived risk, is the perceived variability of quality across the category.
Narasimhan and Wilcox (1998) argue this, finding that perceived risk rises as the variation
across the product quality increases. This phenomenon leads to the conclusion that when the
customer cannot confidently access the quality of the PLB, then they will perceive this
product as risky (Batra & Sinha, 2000).
So a consumer’s proneness to PLBs is a consequence of their level of familiarity, their
perception of the price, quality, packaging, brand, and the associated risk and variability of
the product.
The Woolworths beauty division, while benefiting from being positioned under a brand
which encourages customer proneness to purchase its PLBs, due to its positive value,
packaging, and quality cues, still may struggle to gain trust from its consumers due to the
possible social risks inherent in buying a beauty product from a supermarket brand.
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2.6.4 The Private Label situation in South Africa
As mentioned previously, the PLB’s market share in South Africa is about 10%, which is
well below the world average of 23%. Beneke (2010) seems to have contributed the only
article that deals with PLBs in the South African context, but some of the Asian PLB markets
have been studied, and so some insights can also be gained from these, as the PLB market
penetration in this region is as low if not lower than South Africa.
Hoch and Banerji (1993) find that the contribution of PLBs over a country’s retail sector are
based on the concepts like market size, concentration, sophistication, and management talent.
This is not a good predictor in this country’s case, as most of the retail market of South
Africa is both sophisticated and well developed. But Jin and Suh (2005) contend that there
are other consumer characteristics that have an impact on PLB prolificacy for which PLB
research in other international markets (non-western) has been scarce.
De Mooij and Hofstede (2002) propose that collectivist cultures are less likely show
preference towards PLBs than individualistic cultures, since collectivist cultures tend to rely
more heavily on external cues like well-known brands. This is due to two primary drivers,
according to their research. One is of face and status, possible fearing loss of status by going
for a perceived inferior brand, and secondly the need for harmony in collectivist cultures, and
hence the preference for long-term relationships with national brands.
This point is further emphasised by using the Asian example, which has a collectivist culture
similar to the majority of the South African market. Asian people tend to do activities
together in groups, thus their shopping choices are likely to be influenced by group norms
and interpersonal factors (Mandhachitara et al, 2007). This is contrasted with US culture,
which is highly individualistic, so people feel comfortable to shop alone, and make decisions
independently. Burgess and Steenkamp (2006) contend that culture, low product knowledge,
and demographic characteristics (like low income) promoted group decision making in
purchases in the largely black mass-market segment of South Africa.
Perceived knowledge of the product also plays a role in PLB success. In the study by
Mandhachitara et al (2007), they found that American consumers considered themselves to
have a greater market knowledge that their Thai counterparts. Without the product
knowledge, compared to the Americans, Thai people relied more on extrinsic cues, such as
price, to infer quality, hence preferring national brands.
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It would be logical that, given the low income base a majority of South African consumers
work off, the traditionally cheap PLB’s would be very popular here, but this is not the case.
Mandhachitara et al (2007) found in Thailand that:
“A price differential of 30% is very considerable and could possibly reflect a product of
lower quality. Since Thai consumers consider price to signal quality when making purchase
choices, a more effective strategy maybe to offer private label products at higher prices closer
to the national brand level, thus partially addressing the lower perception associated with
deeply discounted prices” (pg. 80).
Beneke (2010) also found that South African’s were generally sceptical towards PLBs.
Packaging for local PLBs were generally seen as of a very poor quality, causing consumers to
infer poor quality in the product itself, which led to only one in three of his sample having a
positive perception towards PLBs. Beneke (2010) finds that manufacturer-retailer
relationship to be a hindrance to optimal PLB growth in South Africa, due to the very limited
number of major suppliers, and so retailers often don’t have the necessary bargaining power
to convince these producers to supply their PLB ranges.
From the current research, there is no clear understanding in what has caused this lack of
PLB penetration in the South African market. It seems that a predominate collectivist culture
does not encourage PLBs, and that a reliance on price as an indicator of quality also favours
the national brands. It is interesting to note that in low income areas, the cheapest product is
not automatically favoured, as logic would predict, due to social risks.
This research doesn’t seem to apply to the Woolworths model, and hence could be criticised
as generalising a little. The following assumptions of this research could be seen as being
flawed when applied to Woolworths:
The research contends purchasing a PLB could lead to a drop in status, due to being
perceived as inferior to national brands. This is not the case in Woolworths, as it is
perceived as being superior to some national brands, and thus could be seen as an
aspirational PLB
The research assumes that PLBs will offer a cheaper alternative, and hence reduce the
perception of quality, due to the quality price dynamic. This again is not the case in
the Woolworths model for, as discussed previously, Woolworths is perceived as being
an expensive destination, helping to enforce the perception of quality
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2.6.5 Summary of PLB Literature
The current PLB literature is varied and multifaceted. To aid the design of the case, and to
simplify the thinking toward this subject field, the author compiled the following propositions
to summarise this section:
PLBs do give retailers an opportunity to increase profits by increasing margins and
increasing consumer loyalty (Ailawadi, Pauwels, and Steenkamp, 2008; Hyman et al,
2009; Vahie & Paswan, 2006; Richardson et al, 1996)
Consumers are more prone to PLBs if they are familiar with PLBs, and don’t perceive
either a social or health risk in purchasing the PLB (Richardson, Jain and Dick, 1996;
Baltas, 1997; Batra & Sinha, 2000; Liversly and Lennon, 1978)
How consumers perceive the price-quality relationship will have a large impact on
their perception of PLB pricing policy (Richardson, Jain and Dick, 1996; Lui and
Wang, 2008; Jin and Sternquist, 2002; Mandhachitara et al, 2008)
PLB packaging and the relevant brand strength of the relevant retailer has an impact
on consumer’s proneness to PLBs (De Wulf et al, 2005; Suarez, 2005; Richardson,
Dick & Jain, 1994)
One study has shown that South African consumer do not perceive PLBs favourably
(Beneke, 2010), possibly due to their predominantly collectivist culture (De Mooij &
Hofstede, 2002; Mandhachitara et al, 2007; Burgess and Steenkamp, 2006) and past
PLBs being poorly packaged (Beneke, 2010)
It can be clearly seen by the conclusions above that a number of dynamics combine to
determine the relative success of a PLB. This literature further demonstrates the need for
further research into understanding what has caused this lack of PLB prevalence in South
Africa, and what can be done by retailers to increase their revenues through PLB growth.
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2.7 CONCLUSION TO LITERATURE REVIEW
In order to compile this study, the author first has to use this literature as foundation to its
design. To do this, the question “what does this mean for Woolworths’ beauty?” needs to be
explored. Below are the main points out of each section, as they apply to Woolworths Beauty
and the GBJ:
Beauty Industry in South Africa
The local beauty industry relies on some international supply of raw materials, so
GBJ’s ability to be able to work with these supplies easily is critical
It is predicted that there is huge growth potential in this local industry, so Woolworths
Beauty is well placed to take advantage of this, possibly using GBJ as one of its
strategies
Brand Personality
Brand personality gives a brand human-like characteristics which consumers identify
with. GBJ is an attempt to further strengthen this personality, but whether this is the
right personality for a beauty brand is in question.
Beauty Consumers
Beauty consumers are generally highly involved with their purchases, and therefore
emotionally connected with the beauty brands themselves. GBJ should work to
encourage this involvement and hence further build drive to purchase.
Corporate Social Responsibility
CSR research shows that companies undertake CSR as they see actual benefits driving
from such initiatives. This would apply to GBJ, so broadly speaking GBJ should
either increase sales, reduce costs, or have some other measurable benefit to
Woolworths
Private Label Brands
To be a successful venture, GBJ should have the following characteristics:
o Enable higher profit margins
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o Encourage loyalty
o Pricing that is aligned to competitors, but also implies quality
o High quality packaging
o Reduce consumers’ perceived risk in purchasing, both in terms of financial
and social risks
2.8 IMPLICATIONS FOR THE DESIGN OF THIS CASE STUDY
The application of these propositions in the GBJ context uncovers the main underlying
themes which will be explored during the data collection and interviews processes. These
themes are highlighted in the table below, in the form of key issues to be addressed.
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Table 1: Impact of Literature Review on Research
Key Proposition found in Research Impact on Case Study
Many of the raw materials use in South
African Beauty industry are imported
The added complexity of the GBJ will inevitably
affect the process of dealing with large international
supplies. The extent of this impact will be explored.
The South African Beauty industry is
seen as having huge growth potential
Exploration into how Woolworths Beauty are
attempting to attract new customer segments will be
conducted
Woolworths has a brand personality well
described as “sincere”
How the Woolworths Beauty brand uses this
personality to its advantage is important to grasp, as
well as how well this concept helps to sell the
Woolworths beauty brand
Cosmetic category is typified by high
consumer involvement
The degree to which the GBJ drives consumers to
believe in the Woolworths beauty brand must be
assessed, within this context of it being a high
involvement category
Companies have CSR because they
anticipate a benefit from these actions.
A comparison between the predicted benefit of GBJ
and the actual benefit will be drawn
Lower variable costs If a primary benefit of a PLB range is lower variable
costs, then the degree to which GBJ hampers this
benefit will be explored
Familiarity Woolworths may be a familiar household name, but
how it is actually perceived as a beauty destination is
a key concept
Social risk plays a large role in the
consumer’s proneness to PLBs
How the GBJ is perceived, and by implication the
Woolworths beauty range, is important in
understanding how much social risk is attached to
buying this range of products.
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3. CASE METHODOLOGY
Yin (2009) defines a clear difference between case-based and teaching-case studies,
concluding that teaching cases are not formal research. Leedy & Ormrod, (2010) agree with
this, as they contend that formal research intentionally tries to advance the understanding of a
topic, and communicate these findings to others.
Roberts (2001) agrees, and contends that a teaching case aims to pose a question and then
allow students to analyse the case, in order to gain an insight into the problem or topic raised
in the case. As such, the teaching case is there to instruct students through engaging with
them.
Another difference between case studies and teaching cases that Yin identifies is that a
teaching case does not need to have the “rigour and fair presentation of data” (2009, pg. 5) of
case study research. The goal of the teaching case is to “establish a framework for discussion
and debate among the students” (2009, pg. 5). As one of the primary aims of this study is to
illustrate the complexity of PLB development, the teaching case approach is the right method.
The Woolworths Good Beauty Journey was selected as the subject for this case study for the
following reasons:
Woolworths’ Head of Beauty was open and motivated to work with the author on this
research
Woolworths is the leading PLB retailer in South Africa, and thus had a great deal of
sophistication in their thinking towards PLBs
The GBJ provides a microcosm of the intricacies faced in managing a PLB (and any
product line for that matter), as it
o Has a clear start point, and is currently being reviewed by senior management
o Contains elements of product design, sourcing, packaging, and positioning
o Faces challenges despite having a strong mother brand
The challenges facing GBJ offer an opportunity to students to gain insight into the
complexity of managing a brand/ product category/ product range, and how a senior
management team can often have conflicting views of how a project should be
managed
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3.1 DATA SOURCES
This teaching case will primarily focus on qualitative data. This is due to the nature of the
decisions contained in its central theme. “The essence of a case study, the central tendency
among all types of case study, is that it tries to illuminate a decisions or set of decisions: why
they were taken, how they were implemented, and with what result” (Schramm, as cited in
Yin , 2009, pg. 17). As the future of the GBJ is a strategic decision based on product
positioning, and not quantitative concepts like pricing, this qualitative information is the
critical data that students must use to apply their thinking to the case. Some quantitative
information is given in the case, but these are simple percentages, which add secondary or
contextual information. This quantitative data was given openly by the Woolworths
management team during the various interviews
3.2 DATA COLLECTION
The data collection will come primarily from in-depth interviews, as well as any
documentation made available. Leedy & Ormrod (2010) contend that interviews in a
qualitative study are rarely as structured as interviews in quantitative studies, instead being
open-ended or semi structured, revolving around a few central themes. It was important in
this study to have semi-structured questions to allow accurate comparison between the
different managers. These questions will revolve around the central themes of their
involvement and understand of the good beauty journey, and their own opinions of the
initiate.
Each of the managers interviewed represented a different element to the GBJ, given the full
spectrum of perspectives toward the initiative. These managers’ names have been changed in
the case to ensure anonymity. They were:
o Head of Beauty
o Sourcing and Technology Manager for Beauty and Homewares
o Chemist
o Commercial Manager for Branded Beauty
o Buying Manager of own label beauty
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3.3 WRITING THE CASE
The case is designed for the class room, encouraging participation and debate from the
students. This is dependent on students’ critical thinking to answering questions posed,
through well-reasoned discussions (Leedy & Ormrod, 2010).
The author believes that for the students to gain the most out of completing the case, they
should be made to feel like they are in the actual situation of the Head of Beauty, and having
to make the decisions she has to make.
To achieve this, the case is written as a dialogue between the Head of Beauty, and each of her
team. This was in the form of a series of hypothetical meetings between her, and each of her
team individually. The meetings, in this format, have not actually taken place, but the points
that are made by each team member were made during the data gathering interviews with the
author.
This dialogue style also adds to the complexity of the case, for it requires the student to
decode the information. This is a replication of actual management practice, for managers are
never given a clear set of propositions from with to deduce their decisions, but rather have to
make sense of complex sources of data. This case looks to encourage this thinking in the
students.
3.4 RESEARCH CRITERIA
Yin (2009) identifies three tests that have been commonly used to test for the quality of
research using a case study approach: construct validity; external validity; reliability. Each of
these tests will be defined below, illustrating how each of these risks will be mitigated by the
researcher.
1. Construct Validity ensures that the correct operational measures of the concepts are
being researched (Yin, 2009). In this study, the key concept being studied is that of the
PLB development within Woolworths. To ensure that this focus remains throughout, the
researcher set questions that ask specifically about the GBJ, therefore not allowing
general discussions to dilute this focus, like general topics of the positioning of the
Woolworths mother brand, and the role of CSR in business.
2. External validity seeks to define the domain to which a study’s outcomes can be
generalised (Yin, 2009). This teaching case is transferable by its very definition, as the
learnings that students will gain from completing the case will be able to be applied in
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multiple settings. As Yin describes above, it’s the outcomes of the case that must be able
to be generalised, and thus the knowledge students will gain in answering the questions
set are the outcomes, and will be applied in future scenarios that have any similarities to
these learnings.
3. Reliability demonstrates that the operations of the study, like the data collection methods,
can be repeated, with comparable results (Yin, 2009). This will be accomplished by the
research using a pre-determined set of questions, which will be consistently asked to the
relevant parties.
3.5 LIMITATIONS OF THIS METHODOLOGY
The following limitations of this methodology have been identified:
o The Head of Beauty will have more information at her disposal to make the decision
that is possible to include in the case, hence this decision may be vague in parts for
the student. This however does not hinder the learning objectives of the case.
o Loosely structured interviews could lead to some themes only being raised, and hence
explored, during some of the interviews. This again does not hinder the learning
objectives, as this lack of rigid consistency is prevalent in business practice.
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4. CASE STUDY: THE WOOLWORTHS GOOD BEAUTY JOURNEY-
POSITIONING A BRAND WITHIN A BRAND
Anne arrived at her office early, on the fourth floor of the Woolworths head office in Cape
Town’s city centre. As we waited for the lift, she read the quote from the CEO etched on the
wall, saying “Our values are the heart and soul of Woolworths”. Today she had an important
decision to make, one which she had been facing ever since she had joined as head of the
beauty division 2 years ago. This decision, that ultimately she alone would have to take,
revolved around the future of the “Good Beauty Journey”, a set of principles that were
established 4 years ago (before she joined the Beauty division) to govern how the
Woolworths Beauty private label range would be sourced, manufactured, and packaged. She
had 4 meetings back to back today, with all the relevant stake holders in her team, after which
she was hoping to make the final decision. She entered her office and as she waited for her
laptop to boot up, she reflected on the Woolworths brand and the Good Beauty Journey
(GBJ).
4.1 BACKGROUND
4.1.1 Woolworths
Woolworths is one of the largest retailers in South Africa, aiming at the higher income
groups. They describe themselves as:
“the only retailer of its kind in the country, offering fashion, food, beauty and homeware
under its own brand name, as well as some carefully selected, well-known brands including
Country Road and Trenery” (www.woolworths.co.za). (See Appendix 1 for a further
description of the Woolworths business).
In 2007 Woolworths undertook the “Good Business Journey” aimed at making a difference
both socially and environmentally. This is further described in their investor relations
literature:
“Our aim is to ensure that the strategy and objectives as well as the performance of the
(Woolworths) group are evaluated with reference not only to its financial results, but to its
overall performance. We further believe that all the elements of governance, economic
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growth, transformation, social development and the environment will create shared value for
all of our stakeholders.” (Woolworths Good Business Journey report, 2011)
(See Appendix 2 for a description of the Good Business Journey).
4.1.2 Private Label Brands
Woolworths is unique in the South African market, for it offers general merchandise and food
that is 60% private label brands (PLBs), with this making up 95% of their profit. Private label
products, also known as store brands, are those products that are designed, bought and
exclusively sold through a single retailer. Only 11% of South Africa’s retail sales are from
PLBs, with the average worldwide sitting at 23%. PLBs add obvious complexity to the value
chain, as it requires a completely different business model, as all aspects of the product, like
packaging, raw materials, and distribution need to be managed by the business themselves.
However, there are the following advantages to PLBs:
Higher Margins
Higher margins for PLBs are largely attributed to two factors. Firstly, wholesale prices are
generally lower than those of national brands, as the retailer can purchase their stock at prices
only slightly above marginal costs. Secondly the retailer can launch products without the
need for additional advertising spend, as retailers can use the strength of their brand alone to
launch new products. For example, if a retailer has a reputation for quality (like Woolworths)
then they would not need to spend much of their advertising budget convincing customers of
the value of a new range they release.
Private Label Brands build consumer loyalty
Numerous resources cite building store loyalty as a major benefit to PLBs. The Private Label
Association contend that store brands give the chains a way to set themselves apart from the
competition and enable them to offer customers more choice, and hence to build loyalty. This
would be a fundamental to the Woolworths customer proposition, as the PLBs that they offer,
and the related quality, cannot be found anywhere else in South Africa. This leads to a loyal
customer base among the higher income groups, while positioning themselves as an
aspirational brand to the middle income groups.
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Control
Woolworths also retains tight control over most of its categories by not allowing suppliers to
hold large proportions of the product mix. This allows Woolworths flexibility to build ranges
and mixes as they see fit, without being dictated to by their suppliers, enabling Woolworths
to build their products around their customer insight and research.
4.1.3 The Good Beauty Journey
The Good Beauty Journey (GBJ) was launched in 2006, with its goal being:
“To position Woolworths Private Label Beauty products with a unique point of difference
and innovation in the marketplace. In keeping with the organisational Good Business
Journey, the Good Beauty Principles were developed to drive sustainable product
development and procurement from raw materials through to production, testing, legal
compliance and external endorsements” (Woolworths Good Beauty Principles Presentation,
July 2011).
Good Beauty was seen as meeting two simultaneous needs, both of launching the
Woolworths Beauty Brand (and thus offering a point of difference), and keeping within the
business’s Good Business Journey. See appendix 3 for a description of the seven Good
Beauty Principles.
4.2. ANNE’S DILEMMA
Now, 5 years on, Anne is facing some difficult decisions regarding the future of the GBJ. The
main causes for the dilemma are:
Sales
The GBJ had not had any real impact on sales since it was introduced, with some instances
where sales actually decreased because of the change in ingredients.
Marketing
The Beauty divisions advertising budget was set at 2% of sales by the centralised advertising
department, compared to most beauty brands which operate off at least a 12% of sales. As
this budget was for the entire beauty division, it is used to position the Woolworths beauty
brand, advertise the national brands, and explain the GBJ. Last year Anne had put together a
proposal for an additional R10 million to support the entire Woolworths Beauty (GBJ
included) re-launch. This proposal was declined vehemently.
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Due to this lack of advertising budget, the only way Woolworths beauty told their customers
about the GBJ was on the product’s packaging, on the website when purchasing a product,
and on the occasional poster in store. The image below shows an example of how the GBJ is
described and promoted on the product’s packaging. This picture shows a hand cream, but a
similar message is presented on each Woolworths private label beauty product, if space on
the packaging permits.
Figure 1: An example of the GBJ description on the packaging (here a hand cream)
Beauty not a business priority
This lack of advertising was a symptom of the perspective the business held towards the
beauty division. By contributing 6% towards total Woolworths sales, even with its high
profitability, beauty was seen as a support department, as opposed to a central business tenet,
like Food or Clothing.
Cost
Predictably, the GBJ added some costs in production. This cost was predominantly made up
by raw materials being more expensive, and time implications for the development of new
ranges. Due to the trail blazing nature of the GBJ, most local and international suppliers had
to develop formulations especially for Woolworths, leading to longer development time. For
example, if Woolworths wanted to develop a range with Liu & Fung (the world’s leading
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consumer goods sourcing company) it would normally have taken 6 months, but with the
added complexity of GBJ, of having to reformulate and redesign packaging, it would take 18
months.
4.2.1 Meeting 1: Lou
Anne’s first meeting was with Lou, who started within the beauty department a year ago. He
is the Sourcing and Technology Manager for Beauty and Homewares, responsible for
sourcing strategy, both in terms of supplier and profit planning. Lou started the meeting by
discussing his concerns about the GBJ.
“My two concerns about Good Beauty Journey are that our customers don’t know about it
and its costing us 15-20% extra”. Lou went on to explain that while he understands the ethics
behind the initiative, and respects how it supports the Woolworths values, he doesn’t see it
making business sense.
“As a sourcing manager I have to remain objective, and cannot be swayed by emotions. The
Good Beauty Journey just doesn’t make commercial sense, as we don’t have the budget to
tell our customers about it, so it is not a point of difference. On the sourcing side, we need to
make it more practical, by looking at what ingredients do we really need to exclude, and
which we can leave in. Some of the ingredients that we avoid using, which add cost, aren’t
even proven to have negative consequences for our customer. For example, there is no
scientific proof that mineral oils are bad, yet we exclude them from our formulation, adding
expense. We need to strike a balance between benefit to customer and profitability”
Lou and Anne then discussed how the Good Beauty Journey fitted into the umbrella brand of
Woolworths, and agreed that some aspects of the Good Beauty principles, like animal testing
and safety, would never be compromised, but some of the stipulations that were put in place
in the sourcing of the ingredients would need to be looked at, as the 15-20% extra production
cost was worrying, even though it was an estimate.
On leaving, Lou agreed to get his technical team to analyse how much Woolworths could
potentially save if products did not use Good Beauty principles, but still upheld the basic
Woolworths values. As Lou left, Beth was waiting to enter, with a pile of files and papers in
her arms.
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4.2.2 Meeting 2: Beth
Beth sat down at Anne’s meeting table, allowing the files to spill onto the table. Beth is a
highly qualified chemist, and was involved with the creation of the Good Beauty Journey
from its inception 5 years ago. She was instrumental in designing the pillars for Good Beauty,
in response to the need identified 5 years ago to make the Woolworth’s Private Label beauty
range differentiate itself from the market.
Beth feels frustrated that Good Beauty is misunderstood by the business:
“Everyone is looking at changing the principles of GBJ, and looking at making them less
strict, allowing more ingredients to be used, but I don’t think anything needs to change. The
main reason people want these changes is because they think that GBJ is very expensive.”
Beth then produced a number of documents, and spread them on the table in front of Anne,
saying:
“I have done some rough calculations on how much the GBJ costs us. I have asked our
suppliers to give me quotes on three products, a hand wash, moisturizer, and a lipstick. For
each product I wanted to see how much it would cost with GBJ and without. You can see
from my calculations that in each case the GBJ version is only between 1.5% and 4% more
expensive. This is nowhere near the 20% that have been spoken about in the office.”
This was a surprise to Anne, as she had been expecting the cost to be much higher, so she
asked Beth her view on why there was this overestimated perception, to which Beth replied:
“When we first started with the GBJ there were a lot of additional costs in developing new
formulas and ingredients. We worked closely with suppliers, and even though the suppliers
bore most of the development costs, we initially underestimated how much it would cost us in
both development, and lengthening of time to market. Also, 5 years ago some of the
ingredients that we decided to use were not commonly available, and hence were expensive
compared to the commonly used raw materials.
“But both these additional costs have been greatly reduced over the last few years. Our
suppliers are now comfortable with these formulations, and hence production time and raw
material costs are roughly on par with where they were previously. The ingredients we use
are now used extensively by other brands, and this increased demand has increased supply
and driven down prices. I think that people believe the GBJ is expensive because of its
history, but most of these costs are no longer being incurred.”
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Anne agreed that a more accurate breakdown of how much GBJ was actually adding to the
overall expense of each product was needed, and she told Beth about the project that Lou was
undertaking to define these costs. But Anne had another concern. She worried about Liz’s
contention that the beauty team didn’t understand the good beauty journey, so she asked Beth
what she meant by that, to which Beth replied:
“GBJ is a set of principles. We are building further trust in the Woolworths brand with our
customers. All our beauty products are ethical, safe, mild, gentle and natural. We are the only
extensive beauty range to offer this in South Africa, if not the world. If customers want to use
products that have ingredients that we don’t subscribe to, then they can buy from our branded
range which does offer these components.
“Good beauty offers us the chance to differentiate ourselves from the competition, by
offering this point of difference. If we decide to dilute these principles, then our products will
become the same as every other, losing a major point to build the Woolworths Beauty brand
around.
“But for GBJ to work, we need the customers to know how different our products are. This
education of our customers is vital, and I don’t see how we can expect sales to increase if we
don’t tell customers about it. We need to have a phased advertising approach, which focuses
on each of the seven principles separately, because trying to tell the customer everything at
once is impossible.
Anne could see how passionately Beth believed in the GBJ, and as she watched Beth leave
her office, she thought that if they could get their customers’ to believe in the brand as much
Beth, then Woolworths Beauty would take off.
4.2.3 Lunch
Anne’s head was spinning, the balance between commercial goals and business values
seemed near impossible to find. She saw how vital it was to have an accurate summation of
how much the GBJ is actually affecting the bottom line, but this was a contentious process to
go through, as it inevitably leads to debate between commercial goals and company values.
But did this miss the point? If Woolworths are committed to these values as a way of doing
business, and a point of difference for its customers, then surely doing an in-depth cost
analysis was irrelevant?
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Anne decided to get some air, and take a stroll to the nearby Woolworths store to grab some
lunch. The beauty department was at the front of the store, so she wandered around the
various counters. It always cheered her up to see the outcome of her teams’ hard work on the
floor. She was very happy with how the new ranges looked, and her team had done a great
job both in the packaging and the formulations. The shelves looked beautiful, and she felt a
small smile starting to form at the corner of her mouth. She saw a group of three teenage girls
looking at nail varnish, seemingly liking the new colour range, judging from their coo’s and
laughter.
On a whim, she approached the group, and introduced herself. She asked if she could have a
two minute chat about the beauty range, and the girls were very happy to chat, as they felt
important being asked their opinion. The conversation went as follows:
Anne: Do you girls like our new colour range?
Girls: Yes, we love it, especially the creams and beiges!
Anne: Do you read about beauty much?
Girl 1: Oh yes, it’s a hobby for us, we try to read as much as we can not only about local
fashion, but also international trends in magazines like Vogue, Elle, and Marie Claire. We
know lots about fashion.
Anne: Do you guys know about the Woolworths Good Beauty Journey?
Girl 2: No, don’t think so, is that a new range?
Anne: No, it’s a way that we make our products, with no harmful chemicals and cruelty to
animals.
Girl 3: Oh, you mean like the bunny
Anne: Yes, that’s the Beauty without Cruelty logo, but it’s much more than that.
Girl 1: We care about the environment, and animals, but aren’t all beauty products the same
in how they make their stuff
Anne: Not at all, you girls should read the back of your beauty products, and see what care
the manufacturers take in making the products, like the bunny.
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Anne was conscious that she was taking the girls’ time, so she thanked them for their time,
and told them she was glad that they enjoyed the new colours, and should keep loyal to the
quality products that Woolworths offers. As she walked away she was struck by how hard it
was to explain the GBJ to them in one or two sentences. How could they expect to educate
their customer if she couldn’t describe it in two sentences?
They also did not seem surprised at this initiative by Woolworths, as they seemed to trust the
brand. But, most worryingly, Anne wasn’t sure that they girls really cared. These were the
next generation of Woolworths’ customers, but they didn’t seem too concerned about the
issues that Anne had raised about GBJ. Woolworths, being customer centric, always tried to
build their offer around their customers’ wants and needs. Is GBJ what the customer wants?
4.2.4 Meeting 3: Charnel
After eating her favourite prawn salad (at her desk as usual), she prepared for her meeting
with Charnel. Charnel is the Commercial Manager for Branded Beauty, and is responsible for
the procurement, marketing, and selling of the branded beauty range in Woolworths. She is
an expert in the beauty industry, with 22 years experience in everything from formulation to
sales consultancy.
Beauty brands were brought into Woolworths 5 years ago, as a destination for customers.
Only 18 stores had beauty branded labels, with 120 stores offering the private label beauty
range. Stores are predominantly private label, as Woolworths does not want to lose any
control of their product categories.
After pouring herself and Charnel a coffee from her office side-table, she thanked Charnel for
meeting her and explained that she was looking at making a final strategic decision regarding
the GBJ. She then asked Charnel what she thought of Good Beauty. Charnel considered the
question, sipping her steaming coffee, and answered:
“I think Woolworths beauty is a gold mine. It frustrates me that we are not being allowed to
capitalize on this potential. Beauty is a very different business from any of the other divisions
that we have at Woolworths, and with only 6% contribution, we are seen as being a periphery
department. Woolworths needs to treat beauty differently…Regardless of the merits of GBJ,
it will never blossom in current format.
“Our current business model is assisted self-service, which is completely different from the
extensive, personalised service required in a beauty business. Selling beauty is all about
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selling hope, and you can’t sell hope with a gravity feed. You have to have highly
personalised service, consulting with the customer about what would work best for them.
“This means that the recruitment, training, and management practices currently employed by
us are not suited to Woolworths beauty. Until this changes it’s going to be impossible for our
beauty division to grow and take advantage of the huge potential here. As you know, I have
been in beauty for 22 years, so trust me when I tell you, we have a huge opportunity here”.
Anne empathised with Charnel’s points, so ask for her perspective on the GBJ, to which
Charnel replied:
“I think you guys have done a beautiful job on the new ranges. The bath and beauty range is
great, and you are tackling the difficult job of building a brand in colour well. From my point
of view the GBJ has a couple of key challenges.
“First, if it’s costing us 20-30% extra to produce the products then it doesn’t make
commercial sense, especially if we not telling our customers about it. Some of these costs
could be defended, as it does increase costs to be a market leader in PLBs, but these costs
should also include advertising budget, which is not the case in Woolworths beauty.
“So I think that your positioning is right, but another challenge you face with Good Beauty is
that it is hard to make principles glamorous. Brands need a point of difference to succeed in
the highly competitive market of beauty. The GBJ could be this differentiator, but does this
point of difference resonate with our customer, seeking beauty and hope. Beauty is a very
emotional category, with women (and nowadays men) looking for the product to enhance
their mood, and boost the way they feel about themselves. The right lipstick can make a girl
feel sexy, but how sexy does GBJ make our customer feel? GBJ is a very bold initiative, but
we have to ask ourselves the question, do our customers really care?”
Anne had to smile, she appreciated both Charnel’s passion and honestly. Anne joked that
customers are only ethically minded until they are asked to pay more for a more ethical
product, and then most customers forget these principles. Anne and Charnel were laughing
about this when there was a knock at the door, and Shelly poked her head around the corner.
Charnel looked at her watch, gasped at the time as she was late for her next meeting, and
rushed out of the room, leaving Shelly to take her seat.
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4.2.5 Meeting 4: Shelly
Shelly is the Buying Manager of private label beauty. She is responsible for creating the own
label ranges, based on trends and customer’s needs. Shelly started the meeting talking about
the focus group that she had just held in Johannesburg. She slid a hard copy across the desk
to Anne, who glanced at it before returning her attention to Shelly:
“I am just going to pick out some highlights from the focus group, but have a look through it
afterwards, as it makes for very interesting reading. Firstly, and I think most importantly, a
lot of the girls hadn’t even tried any of the Woolworths cosmetic ranges. They knew that
Woolworths had these products, but they are seen as not being suitable for dark skin. One girl
also mentioned that she found that the eye-liner wore off too quickly, so a general concern
about efficacy there too.
“The girls also seemed hesitant to approach sales people in Woolworths, but they are happy
to have someone sell to them. Interestingly they named Edgars as having very pushy staff,
but they liked it because it meant they got to try the products.
“They are very fashion savvy, but also price conscious. The Woolworths brand is very well
regarded for quality, but as I said earlier, not even considered for cosmetics, not for pricing
reasons, more because our products are not seen as fashionable or having great performance.
“This is such a pity, because I think that we have a huge opportunity to make these future
customers of ours feel as strongly about Woolworths beauty as they do about Woolworths
food and clothing.”
Anne tried not to get side tracked into talking about Woolworths beauty in general, as she
wanted to focus on the GBJ today, so she asked Shelly what she thought these findings meant
for the GBJ, to which Shelly replied:
“The feedback just further highlights that we aren’t communicating with our customers, as
none of them mentioned anything to do with GBJ. But I also fear that this is an impossible
message to give our customers. In one of our stores, for example, we have a huge poster in
the beauty department, which tries to tell the customer about all the different aspects of the
Good Beauty principles. A customer is not going to stand in front of this advert, reading it for
2 minutes. You can’t tell a customer 10 things at once, you need to stay under 10 words
really.
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“I also feel that prioritising the Good Beauty Journey in advertising is not the best strategy. In
the focus groups, no-one mentioned anything about ethics in beauty, and I don’t believe that
this initiative would attract our future market which is the young black LSM 6-10. They are
after glamour and high fashion, as well as products that work very well with black skin.
These girls are the future, they know what they like and I am not sure Good Beauty is part of
that. Our current loyal customers are getting old, and once they are gone who is going to take
over?
“GBJ is a wonderful ideal, and I am proud of the Woolworths values, but we are never going
to be able to be an ethically pure company. Take this lipstick for example. As you know
South Africa does not have the facilities to recycle the black plastic holders we package our
lipstick in. They are recyclable, so adhere to our principles, but cannot be recycled here, so
they go in the land fill. I guess I am trying to say that our principles can only go so far, and at
some point we will be doing some damage somewhere. I love the Woolworths values, but am
not sure if we are trying too much with GBJ, with little or no benefit to our shareholders.”
This final point resonated with Anne as Shelly left her office. All her team had valid points
about the GBJ, but she had to consider what is best for the shareholders. Shelly was right
about considering Woolworths future customer, so she picked up the focus group report and
read it intently (see appendix 4).
After closing the report she reached over to her notebook, and opened to a clean, blank page.
She always used this book to jot down her thoughts, helping her to develop decisions. She
wrote “the future of GBJ” at the top of the page, and started to write….
4.3 ASSIGNMENT QUESTIONS:
1. Describe the key challenges that the Good Beauty Journey faces?
2. What are the positive and negatives for Woolworths beauty of being a private label
brand, and having to trade under the Woolworths name?
3. What options does Anne have in deciding the future of GBJ?
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APPENDIX 1:
Woolworths Business description:
MAKING THE DIFFERENCE EVERY DAY
Known to generations of South Africans as ‘Woolies’, Woolworths is the only retailer of its
kind in the country, offering fashion, food, beauty and homeware under its own brand
name, as well as some carefully selected, well‐known brands including Country Road and
Trenery. Woolworths also offers a range of financial services in partnership with Absa Bank.
Since its founding in 1931, Woolworths has earned its unique position in the South African
landscape by remaining true to its core values of quality, integrity, style, innovation and
sustainability and to its promise of offering high quality and exceptional value, and by
constantly working to make ‘the difference’ for its customers every day.
OUR BUSINESS
We’re passionate about quality, value, service, innovation and sustainability and about
putting our customers first. This means we’re always working to deliver on trend, top quality
products that offer great value and finding ways to make a difference to the lives of our
customers.
QUALITY AND VALUE
Over the years we’ve kept our promise to earn the trust of our customers and set the
benchmark for quality. Our commitment to superior quality and value means we’re always
thinking of new ways to do things better and add more value to your life.
LEADING THROUGH INNOVATION
In every area of our business, we’re bringing you the best we can find ‐ from revolutionary
new fabrics and exciting new foods to pioneering sustainability initiatives and making sure
our products are responsibly sourced.
Our ‘Farming for the Future’ initiative is all about improving soil and water quality, saving
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water and encouraging biodiversity – without adding to the price. As part of our Good
business journey , we’re working with our farms to give back to nature and preserve our
precious resources for generations to come.
SUSTAINABLE GROWTH
Because we believe in the principles of responsible citizenship, we’re focused on
environmental and economic sustainability and building successful partnerships with our
suppliers and communities to make sure our community is healthy, safe and secure. We’re
actively engaged in economic upliftment projects around South Africa and work with
numerous small (often community‐based) enterprises who supply Woolworths with
everything from fresh herbs to beautiful bed and table linen.
We strive to innovate, uplift, educate and make a difference in communities across South
Africa. For example, every month, we donate more than R1.5 million on behalf of our
customers to schools, charities and environmental organisations through our MySchool My
Village My Planet programme.
MAKING THE DIFFERENCE
Staying true to our core values means we depend on our strong tradition of integrity and
culture of service. Our focus on innovation and passion for excellence ensures we make a
difference to all South Africans, now and in the future.
FAST FACTS ABOUT WOOLIES:
We are the first South African retailer to sponsor the Organic Exchange to drive
South Africa’s first commercial organic cotton crop
We send over 700 tons of plastic clothes hangers for recycling each year
Almost a third of our in‐store signage is made of recycled materials and our new
stores use new shelving made from 90% recycled paper and 10% begasse from sugar
cane
We donate over R250m of surplus food and clothing to needy charities each year
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Our stores have energy efficient light fixtures and automated lighting systems to cut
our electricity consumption and carbon footprint
We’re the only retailer that’s part of the Worldwide Fund for Nature (WWF) Water
Neutral Scheme, which means we balance the water we use with projects to supply
fresh, clean water into the environment
We’re trialling two new, environmentally refrigeration technologies – one in our
stores and another in some of the trucks that deliver our food to our stores
We transport our fresh foods in plastic crates so there are no cardboard boxes to
throw away – we’ve been doing this since 1967
Date accessed: 03/11/2011
Source:
http://www.woolworths.co.za/store/browse/contentTemplate2.jsp?categoryId=cat280024
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APPENDIX 2:
Our Good Business Journey:
OUR PLAN TO MAKE A DIFFERENCE IN OUR COMMUNITIES, OUR COUNTRY AND OUR
WORLD
These days the word ‘sustainability’ is part of everyday speech. We talk about sustainable
fibres, sustainable ecosystems, and sustainable businesses. But just a few years ago the idea
of a big business announcing its commitment to sustainability was nothing short of
revolutionary. But that’s exactly what we did when we announced that Woolworths had
embarked on a journey towards sustainability. We call it our Good business journey.
In brief, our Good business journey is our comprehensive plan to make a difference in four
key areas: transformation, social development, the environment and climate change ‐ all
challenges facing not only South Africa, but the world at large.
Why a journey? Because real change is not achieved overnight – it happens one step at a
time.
Our customers are showing their support for our Good business journey – more and more
people want to know and understand where their products come from and be sure they are
sourced ethically and without harm to the environment.
Our customers help us make a difference to our communities and environment and we’re
committed to providing them with as much information and help as possible. Our own
people support our programme and are bringing elements of sustainability into their daily
jobs and lives. And we’re pleased to say, it’s changing the way we operate.
BACKGROUND
Our journey till now
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Transformation, social development and the environment have been deep at the heart of
our business from the very beginning. But, in 2007, we realised that the only way to achieve
real change would mean fundamentally changing our approach to business. This led to the
start of a journey that we believe will not only take us forward into the future, but will help
shape a better future for our children and grandchildren.
It’s not a journey we have undertaken alone. We have invited and encouraged our suppliers,
business partners, NGOs and our customers to join us and are heartened by the willingness
and enthusiasm so many of them have shown. The best journeys, after all, are those where
the experience is shared.
Initially we set goals for ourselves which we believed we could achieve within five years. As
we suspected, some are proving easier than others. And like so many journeys, we’ve found
ourselves taking unexpected side trips and occasional detours. We’ve learned from all of
them. And, in general, we’re pleased with the progress we’ve made to date towards the
goals we set for 2012 and extraordinarily proud to have been recognised for our efforts by
being named international Responsible Retailer of the Year by the World Retail Awards
twice in three years.
We are also very proud of some of our achievements and the milestones we’ve reached: our
Farming for the Future initiative, our reduction in energy usage, our involvement in driving
South Africa’s first commercial organic cotton crop, our continuing commitment to making
food security a reality for all South Africans, our growing number of enterprise development
projects, our commitment to water neutrality, our pioneering work in CO2 refrigeration, and
the expansion of some of our educational initiatives, to name but a few.
Our customers expect us to take the lead in all areas covered by our Good business journey,
and that’s exactly what we will do. With over 400‐plus stores, millions of customers and a
network of over 1000 suppliers, efforts will open up new opportunities, create new targets
and ensure that our journey is dynamic and makes a difference to our communities, our
country and our world.
GOVERNANCE
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Checking how we stack up
We have to be able to measure our progress on our Good business journey to see how
we’re doing. This means ensuring we have the highest level of corporate governance and
implementing effective structure, policies and practices across every area of our business.
We have prioritised more than 200 indicators to help us score our performance across each
pillar of our Good business journey and we monitor progress at every level of the business.
Operationally, each business unit has specific targets to achieve within their business
strategy and it is this team work that is delivering results.
Good progress has been made and we’re thrilled with our 2010 total sustainability
measurement score of 84%. It’s the first time we’ve beaten the 80% benchmark for good
performance.
Our board sustainability committee is headed by a non‐executive director and ensures we
keep focused on a single point of view and direction for all our focus areas.
Internal audit teams check and verify the progress indicators twice a year and we have
regular external assessments. Our BEE status is assured by the BEE verification agency CC
and our carbon footprint data is externally verified by the Global Carbon Exchange.
Date accessed: 03/11/2011
Source:
http://www.woolworths.co.za/store/browse/contentTemplate2.jsp?categoryId=cat320428
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APPENDIX 3:
The Good Beauty Principles
Natural Ingredients
• Mineral oil replaced with plant oils (cannot claim due to non- content disclosure
clause governed by the Cosmetic, Toiletry & Fragrance Association (CTFA) of South
Africa.
• Petrochemical derivatives replaced with alternatives.
• Only natural ingredients that were chemically modified to enhance ingredient benefits
were allowed. Had to be verified by raw material suppliers.
• Ingredients researched to ensure that they do not originate from a petrochemical
source.
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Mild & Gentle
• Ingredients with adverse public perception avoided where possible.
• Internationally approved preservatives used at minimum effective levels to reduce
exposure to chemicals.
• No Parabens in underarm products.
• All cleansing agents obtained from natural sources – minimum levels used in
formulation.
• Allergen composition of fragrance oil formulation minimised.
• No artificial colourants in leave on products – all creams and lotions are white.
High Quality
• Active ingredient performance thoroughly tested and verified.
• Where possible, natural ingredients to be sourced from Fair Trade or community
upliftment programmes.
• Good Manufacturing Principles (GMP) focus at production facilities via auditing
process.
• Compliance to SA and EU legislation.
• Contract manufacturers to be certified or in process of certification to ISO 9000 &
ISO 14000.
Safety
• Every product formula assessed for safety by a qualified toxicologist – excludes
colour and fragrance.
• Eye products tested by opthalmologist.
• Full MSDS document control.
• Accredited test labs used for performance testing eg. SPF, Dermo etc.
• Challenge testing of all products to ensure efficacy of preservatives.
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• Microbiological and stability testing of every product.
• Fragrances conform to international fragrance safety requirements (IFRA, RIFM).
No Animal Ingredients
• No ingredients derived from animal sources except where animals are not harmed in
any way.
• Written assurances required from suppliers
• Independent audits conducted to ensure compliance to animal testing policy.
No Animal Testing
• No animal testing performed on all finished products.
• No ingredient used in any Woolworths products to have been tested on animals –
nominated cut-off date 1 January 2001.
• Written assurances required from suppliers showing compliance to cut-off date.
• MSDS product safety assessment also used.
• Endorsed by Beauty Without Cruelty
Sustainability
• Accelerate Transformation
• Drive SA procurement
• Skills development and equity ownership.
• Social Development
• Fairtrade.
• Environmental Focus
• Increase organic and sustainable ingredients offering
• Accelerate conservation and biodiversity programmes
• Reduce and recycle packaging from source to customer
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• Responsible raw material sourcing
• Climate Change
• Reduce carbon footprint
• Energy savings
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APPENDIX 4:
Project: BEAUTY – NOVEMBER 2011
FOCUS GROUP RESULTS
METHODOLOGY
Two focus groups were held on consecutive days.
The first group focused mainly on bath/body and the second on colour cosmetics.
Skincare was discussed at the first group and came up spontaneously at the second group.
SAMPLE
The first group comprised ten women aged between 22‐35 and the second group 13 women
aged between 19‐35. The LSM split was 30% 6‐7 and 70% 8‐10 but because the second
group was larger, there were more LSM 8‐10 participants present.
The criteria for attending the focus groups was that the participants are regular Woolworths
food and/or clothing customers but do not currently purchase Beauty. However, some
participants did indicate at the groups, that they had purchased some of the Woolworths
Bath and Body products.
In total there were 2 Indian women, 1 coloured woman and 20 Black women as “dark
complexioned” women were invited to mitigate race sensitivity.
50% of each group had attended a Woolworths Foods Focus group/s before and 50% had
not attended a Woolworths Focus group before. This is a tried and tested methodology
which ensures easy ice‐breaking and interaction, particularly when time is limited.
All women who attended, work full‐time (please see attached attendance registers); with
the exception of three students. They work mostly at middle management level in a
Corporate environment, although there were teachers and business owners present too.
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The participants encompassed single women, couples and those with families (mostly young
children), although two women have teenage children, albeit being 35 ‐ as they had their
kids in their early twenties.
INTRODUCTION
The participants introduced themselves by name, gave details of their household and what type of
work they do.
EXPLORATION OF CUSTOMERS’ LIFESTYLES
This area was only covered on the second day because of time constraints.
Family is of primary importance to all participants – no matter what their life‐stage.
Participants concurred that their children are extremely important to them. They are doing
all they can to educate their children which is of primary importance.
Participants concurred that their careers are important.
There was also concurrence that close friends are important.
Special events, for example, planning a forthcoming wedding is important.
Several of the women mentioned their mothers “who sacrificed so much for them” as being
very important in their lives.
What are do you do for fun? What do you enjoy?
The single participants concurred that they enjoy ‘partying’, going out, ‘clubbing’ and seeing
friends.
Some participants (mostly the couples and those with children) concurred that their tastes
have changed; and quality time with loved ones gives them the most enjoyment in their
lives.
What are your goals for the next 2‐3 years?
There was unanimous consensus from the majority with children ‐ that they would like to
see their families educated, comfortable and settled.
Most have cars – but the few who do not – would like to own a car and a house.
Some of the singles would like to meet a partner – but others are content to be single.
All entrepreneurs would like to see their businesses flourish; and everyone would like to be
successful in their careers.
The students would like to graduate and enter the workforce.
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FOCUS ON BEAUTY
This report represents the summarized findings of both groups.
Focus group samples are small and therefore individual opinions are reported rather than
percentages.
Bath & body
Woolworths Bath and Body are purchased by 8 / 23 ‐ mostly for their guest bathrooms
(where they like the products to look good in their bathroom) and for gifting. They are
never put in the kids bathroom.
The preferred fragrance for bath and body is a fresh, clean smell rather than an over‐
powering floral scent.
The Ingredients range – Avocado was mentioned as well as “Energise”. Most recalled the
floral range but could not name them.
Bath and Body was briefly touched upon amongst the second group who were more aware
of WW Private label products.
Most find inconsistency in the availability of the ranges and when they cannot get what they
want, they will find something else and then not return to Woolworths.
Skincare
Clinique was used by one participant in the first group but the actual product was not
mentioned. This could be the SDS (social desirability syndrome) where a status product is
mentioned in a group environment – it was the only occurrence.
Clarins is what most would like to use, because it’s proven effective – but is perceived to be
unaffordable.
Body Shop skincare is used by one.
Avon is one.
Nivea is used by two of the participants.
The one student present at the first group uses Clearasil.
Clarins tinted moisturiser is used by the one Indian woman.
One participant mentioned that some products like L’Oreal are perceived to work for a few
months and then lose their effectiveness. This was the only mention of L’Oreal as a brand.
NB:
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Samples are exceptionally important because participants mentioned that black skin is
usually very dry.
Sunblock is very important in skincare products.
Samples
The majority would like the consultants to actively offer them samples. They are
embarrassed to ask for them.
Edgars consultants are perceived to be fairly aggressive but the majority like this because
they actually sell them the product.
Clarins consultants are widely regarded for giving excellent advice.
Samples, in little bottles which last a few days are preferable to sachets and some are
prepared to pay for them rather than make a mistake by buying the full size.
Colour Cosmetics
The key findings are, that although most buy a selection of make‐up brands, Revlon was very
prevalent, especially Colour Stay Foundation/Base in Caramel. “I have always used Revlon
since the day I started using make‐up because it works for me – and I have never tried
anything else” was a significant comment.
Those who don’t wear much make‐up tended to be in their thirties and are not anti‐make‐
up, but have not been advised and don’t know what to buy. They tend to be shy and need
active consultants who offer advice.
The majority buy their make‐up from Edgars (because the consultants give good advice),
Dischem – because of perceived good prices and the Dischem card and Clicks – who tend to
be highly regarded in giving advice and offering good prices.
It was interesting to note that although most of these women come from households where
the gross income exceeds R40K, they are still price conscious and Revlon is perceived as
being (good value for money), trusted, reliable and effective. Revlon is perceived to be a top
brand.
The top product – which every woman had in her bag, was lip gloss. Both wands and tubes
are purchased and used throughout the day. There is a status aspect to having a good
looking, wand to whip out, put on the table, offer to a friend etc. The aesthetic look is very
important.
They get very annoyed when they find products they like which have been discontinued.
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A lighter complexioned woman mixes two different Mac foundations to get her colour right.
A very dark woman finds it very difficult to get suitable base and powder at any store /
brand.
The majority are concerned about their eye‐liner and most use pencils – one with a smudge
brush.
Eye‐shadow – also an impulse buy – anything which looks good.
All participants knew that WW has a cosmetics range but none have really tried it. There is a
perception that it is not for black skin. One had tried a foundation and found it dried her
skin. Another had tried eye liner and found it didn’t last.
They would be proud use and show the Woolworths lip gloss shown.
There was an excellent perception regarding the price of WW foundation as it is less
expensive than Revlon – perceived to be R100 vs R180 but the majority would pay the extra
R80 because they know and trust Revlon.
Again it was strongly suggested that WW offer foundation in clear bottles so that they can
readily see the colour. Even if they open the packaging the dark container, makes the
product look darker. They don’t really like using the testers in the store as often the lighting
is deceiving.
The following answers came up in the interpretation of all discussions.
1. What type of shopping environment do you prefer?
For skincare and colour cosmetics, assisted is definitely preferred. The women welcome being
advised and assisted. For Bath and Body, they are happy to help themselves but would like someone
to speak to when ranges they are familiar with disappear; or are not available.
2. What are your concerns about your skin?
The most prevalent skincare concern is dryness. In terms of colour it is finding the right colour
base/foundation.
3. How important is the “brand” when it comes to:
a. Bath & body ‐ Woolworths preferred for gifting and guest bathrooms. Body Shop is
highly perceived. For kids Johnson and Johnson is preferred.
b. Cosmetics ‐ lip gloss – important that the brand be good as it is often visible,
otherwise brand is not as important as correct colour and efficacy. Revlon is
perceived to be a top brand.
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4. What do you think of private labels?
The majority buy the Clicks Oh So Heavenly range. They are not concerned with private labels and
will be loyal to products – branded or not – which are communicated to them and have proved to be
effective.
5. What is your most preferred method of being advertised to when it comes to Beauty
Products?
In‐store samples, samples in magazines, True Love, Women’s Health, Destiny, emails, and word of
mouth is extremely powerful. The Sunday Times and You magazine are read by all.
6. Who is willing to try the WW products?
Most will now try the WW make‐up, but are still sceptical about skincare, and will continue to buy
bath and body (probably more so)
7. If you could change one thing about WW Beauty what would it be?
Communicate that it is for all skin colours including black women, but don’t make one colour for all
black women. A variety of shades is needed in terms of foundation, powder and concealer.
CONCLUSION
The majority have never tried any Woolworths skin‐care and colour cosmetics and
products and black women need to be actively communicated. They are reserved
about approaching consultants but are open to consultants approaching them.
The colour cosmetic brand which the majority use is Revlon for base/powder
although they shop around for other products – especially lip gloss.
The majority use the most accessible and affordable Bath and Body products.
There was great diversity in their choice of skincare which represents an excellent
opportunity for WW to consider a deep moisturising skincare range for black women
The majority would be proud to ‘’flaunt’’ Woolworths lip gloss but at present they
do not associate WW with colour cosmetics ‐ so strong communication is required.
Input product, in high fashion colours, particularly sets of three small nail polish
bottles, 7 small lip glosses were well received but this needs to be explored further
with a younger sample.
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There is an enormous opportunity for WW to gain the trust of the cosmopolitan,
high LSM, black customer in Beauty as this has been achieved in Food and Clothing.
REPORT ENDS
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5 INSTRUCTOR NOTES
5.1 CASE SUMMARY
This case looks at a decision that the head of beauty at Woolworths is faced with. This
decision is a challenging one, due to the conflicting points of view of her team. The case
highlights:
the complexities and challenges in building a private label brand
the difficulties of positioning a brand
the challenges and stresses of making real business decisions
This case could support the teaching of the following topics within a course syllabus:
Marketing Strategic Planning- Market-orientated strategy
Opportunities in changing market environment- CSR Environment
Consumer behaviour- How social and psychological factors influence consumer
behaviour
At the time of the writing of the case, the strategic decision regarding the GBJ had not been
taken, and thus not included in these teaching notes. As the primary aim of the case is to
encourage students to apply their minds in exploring this scenario for themselves, this lack of
an actual outcome is virtually irrelevant.
5.2 BACKGROUND
Additional information, outside of the case study itself, are given in appendix 5 and 6, which
given more insight regarding Woolworths and their Good Business Journey, and were taken
from their 2011 Integrated report and 2011 Good Business Journey report respectively. This
information could also be shared with the student prior to the case or just used by the teacher
in preparing to facilitate this discussion. Appendices 1 and 2 were used in the case itself as
they are shorter, and encourage the student to do research online.
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Woolworths is a well-known South African department store, specializing consumer goods
(clothing, homewares, and beauty products), food, and more recently in financial services.
See Appendix 5 for an overview of the Woolworths business
Quest for Sustainability- the Good Business Journey
In 2007 Woolworths accelerated their sustainability effort though their much publicized
“Good Business Journey”. Woolworths see this drive as being key to growing their business,
and their research shows there to be a growing awareness and appreciation for the initiative
amongst customers.
They also see the good business journey as positioning Woolworths as an attractive
investment for the ethical and responsible investor, and this performance on the Johannesburg
stock exchange (the South African stock exchange) is testimony to this.
They also see this process of driving social and environment issues as encouraging
innovation and operational efficiency, estimating that they have saved over R80 Million
during this process. These positive results have led Woolworths to extend this initiative to
2015, and now they are further entrenching this into the way they do business by including
these measures in the balanced scorecards of their employees. This shows that this good
business journey is not simple window dressing, but one of their foundations of their overall
strategy.
The Good Beauty Journey (GBJ)
As discussed in the case, the GBJ was originally designed to differentiate the Woolworths
beauty brand. In 2006, Woolworths relaunched its beauty offering, by simultaneously
launching brands, and the Good Beauty Journey. In hindsight, some of the managers
interviewed believed that this was too ambitious, as they did not have the marketing budget to
support both these shifts.
Branded Beauty
Before this launch in 2006, Woolworths only sold its own PLBs through its beauty
department. Beauty brands were brought in to offer customers more of a beauty destination,
with this increasing the exposure of the new Woolworths beauty range.
The Woolworths Beauty Brand
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By relaunching the entire range, the beauty team were hoping to capitalize on the strong
brand that they traded under. This launch applied to all three axis of colour (make-up/ nail
polish etc.), Skin (Bath & Body), and Fragrance. This required a shift in positioning in the
customers minds, as previously Woolworths beauty was predominately known as a gifting
destination, meaning customers mainly saw these products as being suitable for gifts, and not
for their own consumption.
5.3 TEACHING APPROACH
This case can be used for the following subject areas:
Marketing- the case focuses on the challenges of building a product range, while
representing core values of a mother brand
Operations Management- The case shows how fundamentally important sourcing and
formulation is in FMCG’s
Sustainable Enterprise- the case highlights a practical scenario where the two goals of
profitability and sustainability are seemingly at odds
5.4 TARGET AUDIENCE
The case is aimed at MBA students who want to:
Gain an insight into brand building
Understand the tensions that exist within a PLB
Analyse the positive and negatives consequences of building a brand based on
principles or values
5.5 LEARNING OUTCOMES OF THE CASE:
To provide students with an insight into the complexities and challenges in building a
private label brand
To expose the students to the difficulties of positioning a brand
To demonstrate to students the difficulties of striking a balance between CSR
initiatives and profitability
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5.6 DISCUSSION QUESTIONS AND MAIN POINTS
The three questions posed at the end of the teaching case are designed to help achieve the
above-mentioned learning objectives by encouraging the students to grapple with the
fundamental themes of the case.
This teaching guidance is designed to help guide the teacher through the facilitation of the
students’ answers in the classroom. These points are not exhaustive, as the class discussion
could take a myriad of different directions, depending on the perspectives and insights of
both the teacher, and more importantly, the students.
5.6.1 Question 1
Describe the key challenges that the Good Beauty Journey faces?
This first question serves as foundation to the next two, so a majority of the time spend of the
class discussion should be spent around these points. The teacher should ensure each of these
sections is explored, by prompting the class if any are not initially proposed by the students.
Complex Message
The message of the GBJ is a complex one, as stated by a number of managers in the case.
The challenge here is that the message requires the consumer to be educated in many of these
concepts, like mineral oil, before the GBJ will be appealing to them. This requires a large
amount of information to be given to the consumer, which would require the consumer to
dedicating some time to its study- a luxury not often afforded many advertising messages in
today’s fast paced environment.
As stated by Hyman et al (2009), one of the primary benefits of PLBs is that the retailer does
not need to tie up additional expense in image building for PLB ranges, as they are associated
with the retailer already. This helps keep margins high, but these margins would be eroded if
the GBJ requires additional advertising spend to educate the consumer.
Focus groups also show that consumers are not surprised, and therefore not impressed by the
GBJ, as Woolworths has a great reputation for CSR and high quality. This would suggest that
marketing this GBJ to the consumer is not going to enhance their motivation to by the range,
as it is expected from the brand anyway.
As per Woolworths advertising policy, only 2% of revenue can be used for advertising. This
makes the complex GBJ message very difficult to adequately communicate, as this budget
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must also be used to advertise all the products within the category too, both private label and
brands.
As discussed in the literature review, one of the main reasons why PLBs can generate high
margins is the reduced costs in advertising. Thus PLB theory suggests that Woolworths’
customers are drawn to Woolworths PLBs because of the reputation of the brand (a strong
brand is vital for successful PLB development). This would therefore suggest that advertising
should not be required to build the brand of Woolworths Beauty separately, as it should be
solely used to either strengthen the mother brand, or tell the consumer about the product
ranges that are available.
GBJ does not help to reposition Woolworths’ beauty brand
One of the strategic imperatives in relaunching the Woolworths beauty range was to make
Woolworths a beauty shopping destination. From the focus group and meetings in the case,
we can see that this is not the case. While the GBJ helps to enhance Woolworths overall
brand, it could be argued that it shifts the beauty brand away from the new position it seeks to
adopt.
Beauty clearly falls into this emotive product category, as “because of its function in
enhancing the personal appearance and style of consumers, cosmetic products represent a
type of product category in which consumers are likely to be involved in both the purchase
and usage process”. (Guthrie & Kim, 2008, pg. 116). These beauty consumers are highly
involved when buying from this category, as these products serve such needs as self-esteem
and enhancing how someone feels about themselves, by seeking to improve how they
physically look and their skin feels.
This would concur with the case, which describes how customers want to feel glamorous,
stylish, and excited about buying a beauty product, and the GBJ does not meet these needs. It
could be suggested that, while GBJ is a theoretically worthwhile initiative, it is not the
priority issue facing the beauty team.
From the interviews and focus group it seems like the Woolworths brand, while one of the
strongest in South Africa, is not associated with beauty products. Its customers seem to only
associate the beauty category with gifting, or bath and body. Changing this perception, and
making Woolworths a beauty shopping destination for all categories within the beauty
portfolio, must surely be the priority of any advertising that beauty undertake. This
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repositioning could be seen as an attempt to redefine the Woolworths beauty brand
personality.
Aaker (1997) defines brand personality as "the set of human characteristics associated with a
brand” (Aaker, 1997, pg. 347). As opposed to products which are bought based on their
physical attributes, brand personality generally applies to more emotive product categories
(Keller, 1993).
Therefore brand personality plays a fundamental role in beauty brands, and by implication the
Woolworths Beauty label. A widely used framework when assessing brand personality, is
that of Aaker, who uses 5 separate characteristic though which a brand can be defined. They
are sincerity, excitement, competence, sophistication, and ruggedness. Each of these is then
broken down into a number of descriptors, to further specify each characteristic (Figure 1).
Source: Aaker, J. L. (1997). Dimensions of Brand Personality. Journal of Marketing Research
Figure 1: Aaker’s Brand Personality Model
An interesting exercise to run with the class here is to have this brand personality model
displayed for the class, and then to ask the class where the Woolworths beauty brand
personality would like to fall. Based on previous discussions, it is clear that the two concepts
of excitement and sophistication would be the two primary traits.
The class should then discuss where they see the current Woolworths brand being positioned,
and sincerity and competency may be the two traits. This discussion would illustrate how the
GBJ, while supporting the Woolworths mother brand, does nothing to help the beauty brand
to move towards these new traits.
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Therefore, there is no strong evidence in the case that customers would be attracted to switch
to Woolworths beauty even if they knew about the GBJ in detail. This is partly because they
presume these things from Woolworths products anyway (and they still do not buy the beauty
products) and because beauty is a very emotive product.
This argument is further strengthened by the focus group findings, which highlight how
important glamour is to Woolworths target market, the young black higher LSM groups. This
idea of glamour is not aligned to the ideals of the GBJ, which seeks to advance CSR. The
literature review shows that many firms undergo CSR initiatives to maximize profits, but as
the CSR and glamour in beauty are not easily brought together, GBJ could be seen as not
making Woolworths beauty more attractive to their target markets, and hence superfluous.
It could also be argued that by not having these personality traits within the Woolworths
beauty brands, consumers may perceive a greater social risk in purchasing the products, as
they may not be seen as glamorous or sophisticated (for example).
The perceived risk associated with using a PLB product will be an important factor in
determining the consumers’ propensity to consume (Richardson, Jain, and Dick, 1996). This
risk can take the form of actual risk in terms of real danger if the quality of the product is not
sufficient, or social risks. Thus consumers will feel less motivated to buy a PLB if the
perceived level of risk in the product category is high (Narasimha & Wilcox, 1998).
Social risks also play an important role, for illustration Liversly and Lennon (1978) argue that
English consumers serve national brand tea to guests but drink less expensive private label
team when not observed by others. GBJ does not help customer to reduce this social risk, not
encouraging them to feel glamorous. It could be argued that the GBJ does help customers feel
sophisticated, due to the CSR element, but this message is so complex that it is not likely to
be understood fully by the consumer.
Additional Costs
GBJ is perceived by some of the management team as adding cost to their products, both in
time and in expense. Firstly, lower variable costs allows retailers to purchase most PLBs at
whole prices slightly above marginal costs, hence the wholesale price for PLBs is lower than
wholesale prices for national brands (Hyman et al, 2009).
Even though a project is underway to quantify specifically how much extra the GBJ is
costing Woolworths, there is little doubt that it adds to expense in some regard. This is
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expected, for often CSR is seen as adding expense, but this additional cost would ideally be
offset by either high profit margins or increased sales, neither of which are the case in the
GBJ.
The additional development costs can be very costly to the Woolworths beauty brand, as the
beauty industry is a trend led, seasonal category, and hence the ability to be agile and flexible
is key. This very ability is reduced by the GBJ if new suppliers have to be sought out and new
formulations and manufacturing practices have to be developed from scratch.
Service Model
As discussed in the case, Woolworths operates off an assisted self-service model, meaning
that the sales staff are not trained or managed to give highly personalized service to
consumers. This model works well for other divisions of Woolworths, but further hampers
the Beauty division’s ability to sell the benefits of the GBJ to the customer. As discussed
earlier, the principles and message of GBJ is not easily communicated, and thus would
require a sales consultant to take the customer through the characteristics and benefits. With
assistant self-service this is not possible, hence the customer remains predominantly unaware
of the GBJ.
2.6.2 Question 2:
What are the positive and negatives for Woolworths beauty of being a private label brand,
and having to trade under the Woolworths name?
This question could be addressed by splitting the class into groups, and getting each group to
either come up with positives or negatives. After the allotted time, teach group would present
back their thoughts, first the groups with positives, and then the groups with negatives. This
would help to ignite debate and hence encourage engagement.
Positive Consequences:
1. Brand trust/ loyalty
As the literature suggests, one of the key drivers of PLB trade is loyalty to the mother brand.
If customers are loyal to, and trust, the brand, then they will trust in its products. This means
that customers do not need to be convinced that the beauty products that are launched are of
high quality. Woolworths also dominates the high LSM grocery market, and hence has the
footfall already of customers with disposable income.
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2. Retail space
Woolworths beauty does not need to negotiate externally for retail space with other retailers,
as they are given space within the Woolworths stores. There is still negotiation required for
the beauty department to try to gain as much space as they can, but this is internal
negotiation, and hence would not be as detrimental to profitability. Woolworths Beauty
would also not be required to buy self-space, as they would have to if using third party
retailers.
3. Increased margins
Woolworths beauty does not need to outsource distribution of its products, and do not rely on
advertising to drive sales- as the Woolworths has strong brand equity (as discussed above)
and footfall based on its other divisions being in the same store. However, this argument is
reliant on the Woolworths brand positioning totally supporting the purchase of beauty
products, which is a questionable assumption.
Negative Consequences:
1. Business model (assisted self service)
As discussed earlier, Woolworths operate off an assisted self-service model, which is not
suitable for a beauty department. Due to the emotive nature of the products, and the
complexities inherent in their ingredients, offering customers high levels of customer service
is vital. This service will help to educate the customer as to the features of each product, as
well as to advise them on which product is best for their skin type or colouring.
Woolworths customer service strategy is designed around customers finding products
themselves, and asking for assistance if the right product is not found. As can be seen from
the interviews and focus group, customers may not feel comfortable in asking for help, and
thus may feel hesitant to try a new brand like Woolworths beauty. Therefore the Woolworths
beauty products are not being actively sold at the moment, due to being under in Woolworths
stores.
2. Advertising reduction
Woolworths beauty cannot have the advertising spend that other beauty brands benefit from.
The Woolworths internal policy, applied to all divisions, is 2%. Bearing in mind that the
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beauty industry standard is at least 12%, and often 20%, this puts Woolworths beauty at an
immediate disadvantage.
3. Woolworths brand is not glamorous
Using the Aaker model in the literature review, the Woolworths personality would be classed
as sincere, with concepts like quality, reliability, responsibility, and value being the key types
of words associated with the brand. This brand personality is good for selling food,
homewares, and even basic clothing, but not ideal for selling beauty. Being a Woolworths
brand would help the beauty range to be trusted for bath and body products, and gifting, for
in these ranges often the quality and value are of paramount importance, but for more trend
led categories like colour and perfume, concepts of fashion and trend may be of more
importance to the customer.
4. Not perceived as beauty destination
The focus group mentioned this, but Woolworths is not seen as a beauty destination, and
hence the beauty brand will be viewed with caution. This could increase levels of perceived
risk, both in terms of efficacy (will the products be able to perform) and social risks (whether
people negatively perceive my choice to buy Woolworths beauty products).
2.6.3 Question 3:
What options does Anne have in deciding the future of GBJ?
Here, students are given to opportunity to start to devise solutions to the dilemma faced in the
case. The role of the teacher is to ensure that the solutions given are realistic and valid.
Care must be taken not to allow students to suggest wholesale changes that could not be
enacted upon by Anne, as it must be bore in mind that Beauty comprises only 6% of
Woolworths’ total revenue, and hence has little bargaining power in the board room.
Below are some of the key suggestions that may emerge. Discussions should not be allowed
to stray too far off the GBJ topic. Students may start to discuss how Woolworths Beauty
should position itself, but this discussion should always be related back to its impact on the
GBJ, which is the point of the question.
As mentioned earlier, these possible solutions are not comprehensive, as an array of
suggestions could be proposed by the students. The aim of discussing these solutions is not to
arrive at the perfect answer, but rather to challenge the students to arrive at their own robust
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solutions, thus helping them to gain an insight into the complexities that often face senior
managers.
Possible Solutions:
1. Tiered
Anne could tier the GBJ, so that only the top tier product has these pure GBJ principles. This
could mean that the “best” range- being the most expensive, could pass the price of the GBJ
onto the consumer, but also then allow customers who are not motivated by the GBJ
principles to buy from the other ranges.
The main concerns for this option are both values and efficacy based:
Values
If GBJ is a set of principles which govern the way Woolworths Beauty run their brand, then
surely it cannot be applied to some products and not others. The counter-argument to this
could be that Woolworths already sell beauty brands that don’t use these principles already,
so the GBJ are being followed to the entire range already.
Efficacy
One of the concerns that this option doesn’t answer is that of efficacy. The interviews and
focus group both show how some products slightly lose their effectiveness due to GBJ
formulations (eg. eyeliner). By making the top tier product potential slightly less effective
due to natural ingredients, customers may not be willing to pay the higher price for this
reduced performance.
2. Water down GBJ/ Drop the GBJ:
An obvious solution is to drop or water down the GBJ principles. This would mean easing the
strictness of requirements, and then saving costs of formulation by being able to use less
expensive ingredients, and reducing the product development time and processes.
This could be achieved without dropping the GBJ initiative, as Woolworths define the criteria
for this set of principles for themselves, and even in a slightly watered down state, these
principles would still be market leading in CSR in beauty.
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These slight adjustments would not be noticed by virtually all of the Woolworths customers,
judging from the interviews, and thus would have no negative impact on sales. In fact, even if
the GBJ was complete dropped, many of the principles would still be applied, because all
Woolworths products must adhere to the Good Business Journey, thus guaranteeing high
levels of CSR anyway. The author would also argue that this Good Business Journey ensures
that the Woolworths Beauty will be a market leading CSR beauty brand, regardless of the
GBJ.
3. Samples
Allowing customer samples at a low price, or free, as suggested in the focus groups may help
to increase GBJ’s traction with the consumer for the following reasons:
Allow the GBJ story to be told in the packaging of the sample, as consumers are more
likely to read messages on sample packs
Demonstrate the efficacy of the products
Reduce perceived risk to the consumer
Decrease the reliance of these products on direct selling from sales staff, as the
customers can go away and learn about the products and try them out without having
to enlist the help of a consultant.
5.7 TIMING
The table below shows suggested times for each task within the completion of the case in
class:
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Task Time
Reading of case 30 minutes
Completion of assigned questions 45 minutes
Class discussion of questions in class:
Question 1 35 minutes
Question 2 20 minutes
Question 3 15 minutes
Total class discussion time 1 hour 10 minutes
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6. APPENDICIES
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Appendix 5:
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Appendix 6:
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7. PLAGIARISM DECLARATION
1. I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that it is one’s own.
2. I have used a recognised convention for citation and referencing. Each significant contribution and quotation from the works of other people has been attributed, cited and referenced.
I certify that this submission is all my own work.
I have not allowed and will not allow anyone to copy this essay/ assignment with the
intention of passing it off as his or her own work.
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