In 2003, The Body Shop had given up on a refill programme, as only 1 per cent of Body Shop customers used the service, this shows that The Body Shop has weakness in doing research, as subsequent to dropping the refill programme, they adopted another involving recycled bottles. (Source: Item 3) It can be argued that the ethics of The Body Shop are more important than their profits, as they are selling goods that are costing them more to produce, due to their environmentally friendly image.
However, using their environmental friendly image to produce costly goods could be their unique selling point, if they didn’t have this image they would be similar to companies such as Boots plc. In 2001, The Body Shop had taken the opportunity of gaining a supply deal with Norfolk Essential Oils, the deal was part of a community trade programme to promote fair trade for farmers worldwide. This shows that The Body Shop has taken opportunities to encourage fair trade, this shows that taking opportunities such as this, helps them gain more success and gain more customers who see this as a positive factor boosting their reputation.
(Source: Item 4) In 2003, competition was upping their game and had increased there market share, resulting in a decrease of the market share of The Body Shop, this shows that their aim to grow was put to a halt, therefore they have not been fully successful with their growth strategy. (Source: Item 6) Using franchises to grow has been a very successful strategy for The Body Shop, as figures in Item 5 show that from 2000 to 2004 the number of stores under the brand, have increased greatly, in 2000 they had 1,730 stores this increased by 277, as in 2004 they had 2,007 stores.
When a new franchise of The Body Shop is opened a contract is made, which contains rules, such as the franchisee having to pay a lump sum fee and an annual payment based on a percentage of the turnover. Franchisees benefit as all the advertising is done by the franchisor. The Franchisor of The Body Shop benefits because it is operating in widely diversified markets (50 markets) without the need to have expertise and knowledge on economies it operates in. The franchisor can expand operations without having to find large amounts of capital for investment.
Another reason behind the success of The Body Shop is their ethos in wanting to continuously grow (Source: Item 5) and reap full benefits of being a global brand. Their success rate can be supported by their annual turnover from 2000 to 2004 (Source: Item 7), their turnover has increased from i?? 330. 1 to i?? 381. 1 (UK sterling, million), both the turnover and the number of stores increases greatly over the period of 5 years indicating that they have been successful in growing to the point which has enabled them to increase the number of stores and turnover.
Increases in Profits and market share have allowed them to spend more on research and development, this has allowed them to produce goods that have taken them into new markets. The Body shop have entered a niche market, this is what makes them different to companies such as Boots and allows them to compete on higher levels. The Body Shop has increased their market share, making it harder on competing companies. Entering so many markets has given the opportunity to operate on many stages, and sell a variety of goods.
Their environmentally friendly has given them a competitive advantage, as they have achieved a unique selling point in spending more on the cost of production on products to ensure they are environmentally friendly. For The Body Shop to further their success, they could introduce an award card for customers to save points, which would allow them access to discounts, vouchers and other promotions. They could also uphold their reputation through constant advertising and willingness in offering quality products with natural ingredients.
Additionally they could focus on lean production to cut costs and improve the quality of products. In conclusion to this essay The Body Shop has been very successful with its growth strategy. As a company they have realized the opportunities for growth, assessed these opportunities and taken them. They have been successful in entering 50 markets, some of which are niche markets and introducing new goods and services, which have been successfully advertised. In my opinion The Body Shop has been very successful with its growth strategy.