Body Shop the Business Model

¶ … Body Shop

The Business model

According to *Psterwa;der's Business model canvass, the 9 building blocks for a business model are:

Key partners -- with which partners do we leverage our business

The Community Trade is their key partner. They gain their provisions through small suppliers. Other partners are 'Earth Aid' and a 3-year partnership with MTV international

Key activities what key activities do we need to run the business

The Body Shop carries a wide range of products for the body, face, hair, and home. Although its logo is 'natural', the Body Shop does not claim that all its products are 'all-natural', but that, if not 'natural', they are 'inspired by nature and many of them feature oils that are supposedly healthy for the body and uplifting for the mood. Their most popular oils and ingredients that they featured in many of their products are marula oil and sesame seed oil that is sourced through the Community Fair Trade Program.

Value propositions -- what do we offer each of out client segments

They offer their clients beauty and domestic products constituent on holistic ingredients and on ingredients that are good for the environment. Their enterprise is based on Community Fair Trade program and therefore their activities appeal to a humanistic, liberal minded, middle to upper-middle class population that is interested in organic, natural products and willing to spend money on that. They also offer innovative products and a re constantly improving their current products in order to obtain customer safety and satisfaction.

4. Customer relationships - Customers' complaints and demands are taken very seriously with extensive research undertaken into desires and trend. The Body Shop places great onus on raising the self-esteem of their consumers and, at least say that they are, committed to helping customers look and feel their best. Continuous and broad research is constantly being perpetrated in order to assess that they are reaching their goals.

5. Customer segments -- who their customers are.

Their customer segment is a humanistic, urban, cosmopolitan, liberal minded, middle to upper-middle class population that is interested in organic, natural products and willing to spend money on that. The average age is 20-35 years male. Their income falling in the middle bracket (2500-5500 British pounds).

Their stated mission is to activate self-esteem; protect the planet; protest animal testing; support community trade; and defend human rights. Their packaging and branding focuses on environmental factors with their packaging being a sustainable green material and both products and bags made disposal and easy for recycling. They also show an evident concern for deforestation with their supply of palm oil and Brazil nut oil, for instance originating from forests that are in conserved areas. Their customer segments vivify and represent these values.

6. Key resources -- on which assets are they running their business

The Body Shop carves its niche via its natural or inspired by nature products. They carry a range of over 1200 naturally inspired ethically produced beauty and cosmetic products targeted at different female and male age groups of ABC1 grade.

Their key resources are also their ECOCERT certified organic skincare line, Nutrigenics (introduced 2010) shortly followed by a hairline (Rainforest Hair Care) that has been advertised to contain no parabens or colorants. Their store-produced antiperspirant deodorants are also original in that they contain no parabens or aluminum salts, using volcanic minerals instead.

7. Channels -- how do we reach each of our client segments

The Body Shop had its own retail stores and consultants. Their channels are the Body Shop stores, the Body Shop at Home scheme and Internet-based virtual presence.

8. Cost structure -- where are their most important costs.

Inflationary pressure during the last few years have caused the oil price to go up, as well as that of bio-diesel crops.

9. Revenue streams -- how do they earn money

The store earns money through their innovative, store-produced natural or natural inspired products such as the ECOCERT certified organic skincare line, their hairline toiletries, and their antiperspirant deodorants

Other popular products include: Body Butters makeup; full skin care ranges; a pediatrician approved baby range; and men's skin care (including Maca Root and White Musk).

Their pricing is relatively high due to high product differentiation.

SWOT analysis

Strengths

The Body Ship has almost 2, 500 stores in 61 countries. Started in the late 1970s to appeal to a market that has been increasingly enamored with natural ingredients and products, this market has only grown whilst trends for holistic and organic items have, if not stayed constant, certainly increased. In this way, the Body Shop not only managed to carve a niche for itself when inclination for natural products was just beginning but it has gained a reputation and foothold in this field, that a rare few have been able to beat.

The Body Shop is a mature market and a long-established company having a niche in the field. It has high entry barriers making for tough competition and little opportunity for new entrants. Their key strength is, therefore, their name, experience, and image. They also have the financial backing and experience of L'Oreal.

Weaknesses

The 1994 investigative article on the corporation, published in Business Ethics magazine resulted in a huge brouhaha in the international and national media, including its story running in the New York Times and on ABC World New Tonight. The story essentially demonstrated that the founder of the story, Anita Roddick, not only stole the store's name, design, marketing concept and most product line ideas from another store in Berkeley, California but she also fabricated her story of traveling around the world discovering exotic beauty ingredients. It was also found that Roddick's 'natural' products contained immense amounts of artificial colorings, scents and preservatives and that, despite claims of the Body Shop giving "most if its proceeds to charity," documents retrieved from Britain's Charity Commission showed that the Body Shop had not given anything to charity during the past 11 years. In fact, the Body Shop, despite presence of a Foundation is penurious in its philanthropy today. The story led to questioning the Body Shop as being a 'socially responsible' company and there was a 50% drop in the market value of shareholder's stock as well as the industry facing millions of dollars in claims by disenchanted industries that had bought their products. The company has never since then regained its former luster or credibility, a number of stores in the UK closed since and it lost a lot of money and supporters over the scandal. Still today, the case is cited widely in university business ethics classes.