SWOT Analysis for Eve Pearl / Makeup Line
Chris Cagle
Zach Christensen
Vicki Hauserman
Natalie Laughridge
David Loosle
Salt Lake Community College
Management 1600 -- Instructor: Eric LeDuc
Introduction
Eve Pearl is a privately owned and operated cosmetic boutique that is named after its
owner, Eve Pearl. It was started about seven years ago when Ms. Pearl created her first
foundation while working as a makeup artist for The View. Her product line contains mineral
based makeup and skin care. Her products are sold to a very exclusive market at premium
prices. She now has over one-hundred products with some priced as high as $98! In 2011, she
mentioned that her revenue was around one-million dollars just in online sales. This online
market covers ninety percent of her total revenue. Ms. Pearl is weighing her options to sell her
products on ShopNBC a Home Shopping Network (HSN).
There are opportunities for improvement in marketing her products.
The first
opportunity is to increase her walk-in traffic to her boutique. This will help slow the cash drain
of supporting her “Swanky” address, as it costs five-thousand dollars a month for rent through
2018, when her lease runs out.
Some problems involved with Eve Pearl include the high cost of her boutique location
and her need to increase foot-traffic to it. Logistic problems; including longer shipping periods
due to small orders being shipped in from Asia, which could lead to excessive shipping costs.
There are some key things that Ms. Pearl should be focusing on. First, to increase walkin clientele, she can advertise on-line with “Swanky” websites such as Nordstrom, Dillards, etc.
If this doesn’t work Eve could look into finding a less-expensive place to set up her boutique.
Finally, with the help of ShopNBC, implement a line of products especially for men, i.e. cleanser,
exfoliates, and moisturizers.
Strengths
Ms. Pearl has many strengths that could be used to her advantage. Utilizing these
strengths properly could help her expand her customer base while allowing her to still be able
to sell her products for a premium price over other cosmetic companies. With certain
intangibles that Eve Pearl possesses such as an established product and performance in the
entertainment industry that most competitors cannot claim, as well as unique, high-end
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products made with skin-care nutrients and well established online sales help give the company
strengths that they can utilize to help increase sales and grow their business.
“Eve Pearl is a 5-time Emmy winning celebrity Makeup Professional with over 18 years
experience in TV, film, theater, and print. “ (Huffington Post 2012). Eve Pearl started out as a
makeup artist and eventually became the makeup artist for the hosts’ of ABC’s The View where
she first developed foundation and concealer products. She has done numerous behind the
scenes work as a makeup artist for several shows including Saturday Night Live, 20/20, Good
Morning America, and The Academy Awards among many others. She has also done on air
segments giving cosmetic tips on shows such as NBC’s The Today Show, The View, Live with
Regis and Kelly, and Extra. All of this on-air exposure as well as experience in the demanding
entertainment industry helps establish value to the brand in a competitive and heavily
saturated marketplace, where brand differentiation is hard to come by.
Her products contain special skin-care nutrients including antioxidants, omega-3, and
anti-inflammatory agents which is the infusion of cosmetics with nutrients. These products
have the benefits of helping a person achieve a desired look with cosmetics but with the added
benefit of nutrients. This makes the product more unique in a market place that demands
product differentiation to ensure success from such a relatively small company.
The anchor store/boutique is located in the “Swanky” Upper East Side of New York City.
This location has served as a backdrop for numerous newscasts and television shows. This kind
of exposure is invaluable, especially for a company that sells high-end cosmetics that needs that
kind of brand distinction. It also helps the brand be more desirable.
She also has popular promotional videos, on You Tube, that demonstrate their products
and makeup application techniques. This allows for the products to be seen by people of all
demographics; which can help the company develop into a desirable brand. While most women
may not be able to afford to buy Eve Pearl products, they would aspire to use them after
watching the videos. This would be very helpful if the company ever decided to do a more
affordable diffusion line (step-down-brand).
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They have well-established online sales that account for 90% of the company’s
revenues. Online sales are expected to be the future of retail sales methods. The company
already has a firm base to grow the business online if they were able to expand their customer
base with a diffusion line of more affordable cosmetic products or with better saturation in the
high-end cosmetics market. This combined with their online instructional videos will help the
company show more potential in online sales than in a store-front type business model.
Weaknesses
Her boutique business is struggling to generate enough sales to break even. She has
tried many traditional strategies to increase foot-traffic to her boutique. Eve Pearl has not
realized success with these attempts and cash flow is still a concern.
This weakness will
continue to pull from profit margin to cover expenses that do not create a positive return. It
has taken three years to break even on her monthly lease. With several years left on the lease
Eve Pearl must increase sales at her boutique therefore improving her profit margin.
Weak supply chain, sourcing, and manufacturing areas of business are effecting
customer relations and smooth operation. This relates to weak skills of planning, organizing,
leading, staffing, and controlling company resources.
There are some weaknesses that could result from doing business with ShopNBC. Their
customer satisfaction policy is very strict toward the seller. The 100-percent return policy can
leave a company with many of their sales returned as well as corresponding cuts on invoices.
ShopNBC only pays for what they sell and are ill-timed with their payments. The reputable Eve
Pearl image could be damaged by being interpreted as cheap, resulting with an expensive
product selling for less. Therefore if business with ShopNBC is not successful, the company will
have to go to contingency plans, turnaround, divestiture, and maybe even liquidation.
Company reports show that online sales account for 90% of the revenue. Weakness
occurs when a company does not further online markets by expanding growth strategies
through internet business. If internet business is where the majority of the company’s strength
is, then the company must increase focus toward internet business. If the company does not
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utilizing e-commerce to its full capacity, by creating new solutions to further internet success, it
is a weakness.
The primary external weakness of Eve Pearl is determined by the outcome of
involvement with Shop NBC. During a Claudia Chan interview in February 2012, Eve Pearl
stated “my big vision for the Eve Pearl brand right now is expansion” (Pearl). With the focus on
expansion, Eve Pearl must consider weakness of this vision if only relying on ShopNBC for
expansion.
Opportunities
Home shopping networks (HSN) may have once been considered “schlocky” or low end
but the image has dramatically changed. Many entrepreneurs now use HSN’s as a way to
launch their products or mass market them. Partnerships with names such as Heidi Klum,
Jessica Simpson, Elle magazine and Sephora has helped to reshape the image of HSN into one of
trendy high-end products.
Over the years home shopping networks have shown themselves to be a great way to
market products. With viewership near 100 million homes it is a good opportunity for the right
company to advertise their products on.
As the number of two-income family’s increase,
women have found shopping through HSN’s very convenient. Women between the ages of 2554 with household incomes of about $60,000 make up 75 - 80 percent of the core
demographics. This is a great opportunity for Ms. Pearl to demonstrate her products to more
people, than just through the traditional routes. With her celebrity endorsements, Ms. Peal
and her products would find themselves in good company on ShopNBC.
Ms. Pearl can use her time on ShopNBC to not only market her products but also
endorse her boutique location. This would also be a good time for Ms. Pearl to revamp her web
site by making it more user friendly and adding an auto ship function which could help increase
her sales margin.
She can also create season appropriate makeup collections; i.e. summer, fall, winter,
etc. And if she creates a diffusion line, she can diffienteriate between her higher end products
and the ones sold thru ShopNBC. This would help with her concerns about image while still
getting her name out there.
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While women may be the majority of shoppers on HSN’s, the sale of men’s skin care
products have increased over the years. Ms. Pearl could use ShopNBC as a launching pad for a
new line of men’s skin care products.
Threats
Eve Pearl faces severe competition in the cosmetic industry. However her HD products
are a good comparison to Bare Esentuals’ brush on makeup line. Estee Lauder, Lancôme,
Clinique, L’Oreal and Bare Esentuals currently sell product similar to Eve Pearl lines. If she
creates a diffusion line product (like foundation, concealer in one) that would compete against
Revlon, Avon and Elizabeth Arden, it may give her an upper hand financially.
Smaller beauty companies, unable to challenge their rivals financially, find themselves trying to
out-innovate the larger companies by marketing a new category of products. They combine
cosmetics and non-prescription drugs called "cosmaceuticals".
Growth in the industry is being led by the aging baby-boomers and the increase of
middle classes in the developing countries. China, Russia and South Korea are quickly turning
into increasingly popular markets. Although the industry's customers are predominantly
women, there has been an increasing shift to market to men as well. If Eve Pearl continues to
innovate products specific to the industry’s customer base, she will increase her success.
Younger brands are being bought out by the giants. Estée Lauder owns many smaller
brands such as Prescriptives, Origins, MAC, Bobbi Brown, Darphin, La Mer, and Tom Ford.
When making purchasing decisions, Brand identity is the most important factor that consumers
consider when purchasing. 92% reported their focus on brand. Pricing is the second most
important factor that affects consumer buying decisions which reflects the complexity of the
hair care and skin care cosmetic shoppers decision process.
The recent economic downturn has affected the beauty industry in distinctly different
ways than any other CPG (Consumer Packaged Goods) market segments. Activity in the hair
care, skin care and cosmetic beauty markets has been uneven. To deflect unit declines,
especially in the hair and skin care segments, pricing action has been taken.
As consumers plan and budget for hair, cosmetic, and skin care purchases they
implement the “Trade off” strategy. Some shoppers are remaining loyal to their favorite beauty
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brands, purchasing less. Others are shifting to value brands.
Nearly one fourth of consumers that were surveyed stated that they are trading in their
usual products or lower-priced brands as well as shopping at different stores. This has increased
the amount of consumers at supercenters and mass outlets for beauty products.
Course of Action
After reviewing the SWOT portion of company Eve Pearl, several new business
opportunities have been identified to increase cash flow, revive boutique business, utilize
company assets, realize growth through new initiatives and continue to be a high end retailer of
makeup products. This portion of the analysis will provide courses of action that will need
implementation to achieve success in future business. These courses of actions are directly
related to our findings in regards to company Eve Pearl through SWOT analysis.
Eve Pearl Company will increase cash flow and sales by partnering with ShopNBC to
advertise and help sell company products. Each area of the analysis provided useful results to
determine this business move. ShopNBC will provide the company with similar publicity
success Eve Pearl has received through social media and internet business. Because 90% of the
company’s revenue was generated by online sales last year, this proves that many of her
customers buy the image she sells, and this fresh partnership will target new customers.
Eve Pearl’s celebrity make-up artist status is one of her strongest strengths for the
company. The Manhattan cachet image has helped to strengthen her product as expensive and
desirable. Promotional and instructional videos provide information for the customer to
further their interest with Eve Pearl products. Each of these strengths will have a positive effect
for company by Eve Pearl’s appearance on ShopNBC.
Many of the company’s weaknesses surfaced in our analysis because of unsuccessful
store advertising and supply chain problems. ShopNBC will have the option to film onsite at the
boutique and help sell the culture of Eve Pearl. They will be able to show the customer what
happens in the store and create an excitement about these products. ShopNBC may also be
able to open doors for the company to better understand their supply chain needs and selling
profiles.
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New opportunities are possible with the help of ShopNBC and a detailed review of
current employees. Some of the opportunities discovered during the analysis include certain
management teams assigned to help with international business, diffusion lines, supply chain
solutions, marketing and e-commerce. By integrating more of a matrix structure, the company
will be able to develop these new opportunities.
Recruitment of certain professionals
overseeing product departmentalization, Eve Pearl will be able to increase cash flow and
structure a working operating system, largely in relation to supply chain, volume buying with
manufactures and suppliers. ShopNBC is the main reason this opportunity will be possible
because of the increase in sales that they are capable of creating.
External threat of other retailers is always a concern. With more companies competing
for consumer business, we realized through analysis, that Eve Pearl has many internal strengths
and new opportunities that will keep this company successful and desirable. Most of these
other retailers have concentrated their business in department stores and work with retailers
to sell their image. Eve Pearl has independent strength that is unique to her image and product
that will allow her company to have an edge on competitors.
Planning for future success of company is necessary to realize growth and remain a high
end retailer of make-up. Doing business with ShopNBC is a short-range plan, which we believe
will result in a flourishing long term piece of core business. The other forms of operations
planning mentioned, should help to avoid contingency plans. Through strategic management
processes, we have formulated phases that need to be carried into implementation.
Our business strategies are currently centered in growth strategies.
Through
concentration, Eve Pearl will focus on quality products that are currently available online, now
also available through ShopNBC. Diversification into diffusion lines and new products will help
increase business growth. The company will also continue to develop and produce new
instructional videos to use online as well as on the ShopNBC broadcasts. These have proven
very effective for gaining recognition in the market place as well as setting a standard for
service. Eve Pearl will begin to develop a men’s line of products that will take advantage of the
emerging demand. New manufacturers must be located to reduce inventory turn around and
increase company cash flows.
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Works Cited
1. Interview: Eve Pearl President and Owner; Claudia Chan.com; February 7, 2012
http://www.claudiachan.com/interviews/eve-pearl/
2. Luxury Cosmetics Maker Weighs the Benefits of Selling Items on TV; by Grossmann, John; New
York Times.com; September 26, 2012
http://www.nytimes.com/2012/09/27/business/smallbusiness/evepearl-a-cosmetics-companyweighs-risks-of-appearing-on-shopnbc-case-study.html?pagewanted=all&_r=0
3. Eve Pearl Bio; The Huffington Post; (n.d.)
http://www.huffingtonpost.com/eve/
4. Growth Potential for Beauty; Cosmetics Business.com; April 12, 2012
http://www.cosmeticsbusiness.com/news/article_page/Growth_potential_for_beauty/77424
5. Eve Pearl official website and blog; Eve Pearl.com; cited November 28, 2012
http://www.evepearl.com/blog/
6. Big Break; By Sara Wilson; May 1, 2008
http://www.entrepreneur.com/article/192754
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