Online Retailing Comparison Guideline (3210) (F23)

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MKT 3210 Fall 2023 Comparisons within the Beauty Retailing Industry using Sephora and Ulta Beauty Kelby Lewis MKT 3210-W1 Retailing Management Fall 2023 9

MKT 3210 Fall 2023 1. Overview of the Retailers a. Sephora Sephora is a well-known retailer in selling beauty and cosmetics. Sephora focuses on specialty beauty retailing for consumers all over the world. Key merchandise for Sephora includes makeup, skincare, fragrances, haircare, beauty accessories and so much more. Their website address is located at https://www.sephora.com/ . Sephora corporate headquarters location is in Paris, France. Sephora is owned by LVMH Moet Hennessy Louis Vuitton. CEO of Sephora is Jean-Andre Rougeot as of January 2022. Chief Marketing Officer is Deborah Yeh as of January 2022. Chief Merchandising Officer is Artemis Patrick as of January 2022. Sales for Sephora in 2020 : 2021 : 2022 : b. Ulta Ulta is a demanded retailer known for their beauty and cosmetics, specializing in beauty retailing. Their key merchandising categories are also makeup, skincare, haircare, fragrances, beauty tools, and salon services. Their website address is located at www.ulta.com . Ulta corporate headquarters location is in Bolingbrook, Illinois, USA. CEO of Ulta is Mary Dillon, as of January 2022. Chief Marketing Officer is Shelley Haus as of January 2022. Chief Merchandising Officer is Dave Kimbell as of January 2022 as well. Sales for Ulta Beauty of 2020 was approximately $7.4 billion. In 2021. Ulta reached nearly $7.8 billion in sales. For 2022, Ulta reached BLAH BLAH BLAH in SALES !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 9

MKT 3210 Fall 2023 2. Comparison of Key Target Consumer Segments (1 page) a. Sephora (Retailer A) 1) Demographic segmentation variables For age, Sephora predominantly targets young adults and millennials, typically aged between 18-34. The brand aims to capture the beauty interests of this age group by offering a wide range of trendy and innovative products. Sephora demographics within gender includes catering to both men and women, its primary focus remains on female consumers, with a significant emphasis on providing a diverse and inclusive range of products for all genders. Sephora’s target consumers often fall into the middle to high-income brackets, as beauty products sold at Sephora are often premium and associated with quality. The brand also appeals to educated consumers who value skincare and beauty expertise. 2) Psychographic segmentation variables Sephora positions itself as a brand for individuals who aspire to a certain lifestyle and are willing to invest in premium beauty products. The brand appeals to those who identify with an aspirational and fashion-forward social class. Sephora caters to consumers who lead busy lives but still prioritize self-care and beauty routines. The brand targets those who view beauty as a form of self- expression and seek products that align with their personal style and preferences. Sephora’s target audience includes individuals who are trend-conscious, beauty enthusiasts, and value experimentation with new beauty trends and products. 3) Behavioral segmentation variables Sephora attracts consumers for various visit occasions, including routine beauty shopping, special occasions, and trend-driven purchases. The brand is positioned as a go-to destination for both everyday beauty needs and unique, limited-edition releases. Consumers visiting Sephora seek not only quality beauty products but also a unique shopping experience. Sephora provides a wide range of beauty brands and offers in-store services, contributing to the overall customer experience. Sephora places a strong emphasis on customers' loyalty through its Beauty Insider program, rewarding customers for their repeat business. The brand encourages loyalty through exclusive perks, discounts, and personalized recommendations. (Tip: Pay attention to people featured, graphics, dominant colors, font size and type, emphasized features, and layouts of the landing pages.) b.Ulta (Retailer B) 1) Demographic segmentation variables Ulta Beauty targets a broad age spectrum, attracting teenagers to mature adults. The retailer’s diverse product offerings cater to the skincare and beauty needs of consumers across different life stages. Ulta appeals to all genders, offering an inclusive and diverse range of beauty products. The retailer’s marketing reflects a commitment to providing a welcoming environment for customers of various gender identities. Ulta’s Beauty target consumers come from various income levels and educational backgrounds. The retailer aims to be inclusive, offering a mix of affordable and premium beauty products to accommodate different budgets. 2) Psychographic segmentation variables Ulta positions itself as a retailer accessible to a wide range of social classes. While offering premium beauty brands, Ulta also provides affordable options, making it an attractive destination for 9

MKT 3210 Fall 2023 consumers with different spending capacities. Ulta caters to diverse lifestyles, emphasizing individuality and self-expression. The retailer’s product selection includes a mix of trendy, high-end items as well as practical, everyday beauty solutions, appealing to consumers with varying lifestyle preferences. Ulta’s target audience is characterized by individuals who express their personality through beauty choices. The retailer celebrates diversity and encourages customers to embrace their unique styles and preferences. 3) Behavioral segmentation variables Ulta attracts consumers for various visit occasions, including routine beauty shopping, special events, and salon services. The retailers position itself as a one-stop destination for all beauty needs, encouraging frequent visits for both product purchases and beauty services. Consumers visiting Ulta seek a wide range of beauty products and services. Ulta provides a diverse selection, including skincare, makeup, haircare, and fragrance, addressing the multifaceted needs and preferences of its customers. Ulta has a robust loyalty program, Ulta Beauty’s Ultamate Rewards encourage repeat business through points, discounts, and exclusive perks. The program caters to both occasional and frequent shoppers, fostering brand loyalty. (Tip: Pay attention to people featured, graphics, dominant colors, font size and type, emphasized features, and layouts of the landing pages.) (Tip: Retailer B’s target segments can be similar to those for Retailer A. But, the two retailers’ target segments cannot be exactly the same. ) c. Differences Product Range Emphasis While both Sephora and Ulta cater to a diverse audience, Sephora often emphasizes luxury and trendsetting products, attracting consumers seeking premium beauty experiences. In contrast, Ulta places a strong emphasis on inclusivity by offering a broad range of products, including affordable and drugstore brands, making it a more accessible choice for a wider consumer base. Shopping Experience Sephora often focuses on creating a luxurious and experiential in-store environment, with a strong emphasis on beauty expertise and personalized consultations. Ulta, while also offering a positive in-store experience, positions itself as a more practical and inclusive destination, combining a variety of beauty products with salon services and a wide range of price points. The emphasis on accessibility and a diverse range of offerings sets Ulta apart in terms of the overall shopping experience. [Describe at least two (2) meaningful differences between the target consumer segments of Retailer A and Retailer B. Provide your reasons for each difference. This should be a paragraph with 5 lines or more.] 9

MKT 3210 Fall 2023 3. Comparison of Merchandise (2 pages) [Section 3 Tip: This section should be based on your observations and analysis of the retailers’ websites (not their smartphone apps) accessed with a computer (not with your smartphone).] (Section 3 Tip: Variety and assortment are covered on p. 38 of the textbook.) a. Sephora (Retailer A) 1) Variety The major product categories on Sephora’s website include makeup, skincare, haircare, fragrance, bath & body, tools & brushes, men’s grooming, gifts, and Sephora collection. Evaluation - Sephora’s extensive variety of product categories aligns well with its target consumers. The diverse range caters to the multifaceted beauty needs of individuals, offerings options for daily routines, special occasions, and self- expression. This variety resonates with Sephora’s audience, which includes beauty enthusiasts seeking both premium and affordable products. The inclusion of tools, men’s grooming, and the Sephora Collection enhances the brand’s appeal to a broad demographic, reinforcing its position as a comprehensive beauty destination. (List all major product categories available on Sephora’s website. Then, evaluate how well this level of variety serves Sephora’s target consumers identified in Section 2.) 2) National and private-label brands Major national brands on Sephora’s website include Fenty Beauty by Rihanna, Huda Beauty, Urban Decay, Anastasia Beverly Hills, Too Faced, Dior, and Clinique. Evaluation – Sephora's selection of major national beauty brands aligns with its target consumers by offering a diverse range of high-quality products. The inclusion of popular and trendsetting brands such as Fenty Beauty and Huda Beauty caters to beauty enthusiasts seeking luxury and innovation. Sephora’s commitment to featuring well-known and reputable brands reinforces its position as a go-to destination for premium beauty. While private- label brands are not mentioned, introducing them in categories like skincare or tools could provide a more affordable option, appealing to a broader consumer base. (List major national brands offered on Sephora’s website and evaluate how well those national brands serve Sephora’s target consumers identified in Section 2.) (If private-label brands are offered on Sephora ’s website, list them and mention which national brand(s) they compete with. If private-label brands are not offered, suggest in which categories Sephora should offer its private-label brands and why.) 3) Assortment The specific category chosen is moisturizers. Price for moisturizers ranges from $30-$100. Skin type is all skin types. Price range levels include $30-$40, $40-$50, $50-$60, $60-$70, $70-$80, $80-$90, and $90- $100. (7 levels through price range). Assortment Level Calculation: 1(Product Type) x 7(Price Range) x 1(Skin Type) = 7 SKUs. The assortment level for Clinique moisturizers in the skincare category, considering product type, price range, and skin type, is calculated to be 7 SKUs. This calculation accounts for the various preferences of Sephora’s target consumers, allowing them to choose Clinique moisturizers tailored to their specific needs based on price and skin type. 9

MKT 3210 Fall 2023 [Choose a specific product category (e.g., women’s jeans) and then a national brand in that category. Then, calculate the assortment level (i.e., the number of SKUs ) of the national brand in the category. Describe what assortment factors (e.g., price level, fabric type, color) you used for your calculation. You must show your calculation for the number of SKUs of the national brand.] [Tip: If this is more convenient, you can choose a narrowed-down product category (e.g., gaming laptops) and use as assortment factors the filter areas (e.g., price, brand, video card, color, RAM) available on the website. Do not choose filter areas that are not directly related to the products (e.g., customer rating).] (Tip: An example is illustrated on p. 332 of the textbook. Your selections of assortment factors and the number of levels within each assortment factor do not need to be precise or accurate. Emphasis will be on learning this SKKU calculation process, not on arriving at an accurate SKKU number.) b. Ulta (Retailer B) 1) Variety Major product categories on Ulta’s website include makeup, skincare, haircare, fragrance, bath & body, tools & brushes, men’s grooming, gifts & value sets, and Ulta Beauty collection. Evaluation – Ulta’s wide variety of product categories aligns effectively with its target consumers. The comprehensive selection caters to diverse beauty needs and preferences, appealing to individuals of varying ages, genders, and lifestyle choices. The inclusion of the Ulta Beauty Collection provides an exclusive and affordable option, reinforcing Ulta’s commitment to serving a broad consumer base. This level of variety ensures that Ulta remains a versatile destination for beauty enthusiasts seeking both premium and budget-friendly options. (List all major product categories available on Ulta’s website. Then, evaluate how well this level of variety serves Ulta’s target consumers identified in Section 2.) 2) National and private-label brands Major national brands on Ulta’s website include MAC, Urban Decay, Maybelline, Redken, Clinique, Benefit Cosmetics, and Morphe . Evaluation – Ulta’s selection of major national brands aligns well with its target consumers by offering a diverse range of reputable and trendsetting products. The inclusion of both high-end brands like MAC and drugstore favorites like Maybelline caters to the varied preferences and budgets of Ulta’s audience. While private-label brands are not explicitly mentioned, the inclusion of Ulta Beauty Collection as a private-label brand provides consumers with affordable alternatives, serving Ulta’s commitment to inclusivity. (List major national brands offered on Ulta’s website and evaluate how well those national brands serve Ulta’s target consumers identified in Section 2.) (If private-label brands are offered on Ulta’s website, list them and mention which national brand(s) they compete with. If private-label brands are not offered, suggest in which categories Sephora should offer its private-label brands and why.) 3) Assortment 9

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