LUSH

Lush Marketing Plan – Run Under the Sun Sunscreen 1

Lush Run Under the Sun Sunscreen Marketing Plan

Stephany Treadway Wei-Chen Wu Notre Dame de Namur University BUS 4400: Marketing Planning & Analysis Dr. Warren Brown April 29th, 2009

Copyright©Wei-Chen Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 2 Product Logo

Logo Modified by Miguel Zuleta

Copyright©Wei-Chen Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 3

Executive Summary

Lush Cosmetics was founded in 1994 and is an organic cosmetics and skin care company headquartered in Poole, England. The company prides itself on the core beliefs of making effective products from fresh, organic materials, essential oils and safe synthetics. With the increasing health concern regarding safe skin protection from harmful sun rays Lush is in a prime position to enter the fast growing organic sunscreen market. The introduction of a new product line named Run Under the Sun Sunscreen will allow Lush to compete in a developing market and increase their customer base within the United States as well as globally. Introducing a new product in a quickly advancing market will include a great deal of market research, a concentrated focus on Lush’s strengths, weaknesses, opportunities and threats, and clear marketing objectives. Positioning of the new product and marketing strategies will play an essential role in the success of this new organic sunscreen product. The initial roll out of the new product line will start in the United States to a mass target market; anyone who plans to spend time in the sun. Strategies deployed will include POP display promotions at retail stores as well as sporting events, celebrity endorsements, and print ad advertisements in fashion and fitness magazines. Utilizing a push strategy aimed at channel distributors and a pull strategy aimed at customer segments.

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 4 Incorporating necessary controls to monitor monthly and annual sales (by channels), monthly and annual revenue, customer satisfaction, and R&D of new product development will play a key role in keeping Lush’s competitive advantage. Having a contingency plan will allow Lush to continually grow in this emerging market. Situation Assessment and Analysis

In 1994, Mark and Mo Constantine started the Lush Cosmetics brand which offers all natural, organic skin care and make-up products. One issue with many cosmetic and skin care products is they are manufactured by companies utilizing animal testing in their product development process. Due to Lush’s core belief of promoting non-animal tested products has kept Lush out of the organic sunscreen market. As consumer demand for more organic and natural products has increased over the last decade more manufacturers are looking into alternatives to product testing other than the use of animals. This shift has opened a door for Lush to enter and compete in the quickly progressing organic market. In addition to the testing practices of many manufacturers, environmental factors play a role in the increased organic market demand. The slow depletion of the ozone layer has incited a spotlight on sun safety and skin protection. The increasing awareness has prompted the new product offering for Lush to gain a foothold in this rising market. In May 2009 Lush Cosmetics will introduce a new line of skin care products called Run Under the Sun Sunscreen targeted beyond their current loyal customer base.

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 5 The Run Under the Sun Sunscreen product offers a safe alternative to sun protection versus the traditional chemical sunscreen formulas. Much research has shown the potential harmful affects on human DNA of the chemical based sunscreens which is a driving factor in the consumer demand for organic sunscreen ingredients. The Centers for Disease Control (CDC) reported in 2007 that 72% of Americans do not reapply sunscreen after the initial application. Further, the CDC reported that a staggering 40% of  Americans do not apply sunscreen at all. These statistics as shown in figure 1 below shows a great opportunity for Lush to gain a greater market share in this industry. Figure 1 2007 American Sunscreen Use Statistics

40% Do not apply sunscreen

28% Reapply after  2 hrs

QuickTime™ and a TIFF (Uncompressed) decompressor are needed to see this picture. 60%  apply 72% Do sunscreen

not reapply at all

Source: Centers for Disease Control (CDC). May, 2007.

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 6 Market Summary

This marketing plan is focused on targeting a mass market. Outlined below are the target markets, market demographics, market needs, market trend, market growth, SWOT analysis, product offering and keys to success. Target Markets 

Lush customers who usually wear sunscreen



Customers who search for ‘green’ products for their skin



Customers who are attracted by the features or functions of the product: convenient and intended for the whole family



Sunscreen users don’t reapply sunscreen two hours after first applying (72% of Americans, according to CDC, 2007)



People who don’t apply sunscreen (40% of Americans, according to CDC, 2007 ) Market Demographics

This marketing plan categorizes Lush’s customers into three categories: geographic, demographic, and behavior factors: Geographic

The initial product launch will be in the United States; the market size is approximately 306 million people. After the first year, we will introduce the product to other 500 retail stores in over 50 countries. Demographic 

In general, about 70% of Lush’s customers are female

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 7 

Female customers’ ages range from 18-50; the 35-50 year

age group is growing rapidly 

Metro sexual men account for approximately 25%; age

range is 25-45 years old Behavior Factors 

Lush’s customers tend to be sensitive to fashion such as

reading cosmetics magazines and looking up to fashion celebrities. 

Customers are willing to pay more on facial products



Customers like outside activities and/or are used to

wearing sunscreen Market Needs

The idea of the new product came from the sunny California climate. Because of the consistent sunshine and dryness in California people need to become aware of UV protection and healthy moisture options for their skin. The Run Under the Sun Sunscreen offers the following benefits:



Adequate SPF index and moisture benefit. The formula of Lush’s sunscreen not only provides the right natural essential oils and organic ingredients that protects users from UV ray sunburn but also moisturizes their skin at the same time.

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 8 

Available for adults, children, and the entire family. There are three different kinds of sunscreen one is designed for adults, one for children and a spray for the family. The strength of the sunscreen for adults is not suitable for children.



Convenient, not messy. Families who use Lush’s product don’t need to bring the different bottles of sunscreen on their trip. They can just put on the sunscreen (adults and children should put on the different kinds of sunscreen) before they leave the house. Whenever they need to reapply sunscreen while they are away from home, they can simply use the Run Under the Sun sunscreen spray. Easy, portable and convenient not to mention they will have the necessary sun protection immediately.



No animal testing. Lush is strongly committed to non-animal testing for all of its products. The actions to refuse purchasing ingredients from companies that perform animal testing practices gives you an idea about Lush’s integrity and care for the environment.



Natural scents. From organic fruits, all scents of the sunscreen are natural and unique; including strawberries, cherries, oranges, and green apples.

Market Trend

According to http://www.cancer.org, “[m]ost of the more than 1 million cases of non-melanoma skin cancer diagnosed yearly in the United States are

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 9 considered to be sun-related. Melanoma, the most serious type of skin cancer, will account for about 59,940 cases of skin cancer in 2007 and most (about 8,110) of the 10,850 deaths due to skin cancer each year.” Moreover, because of the climate change and the damage of the earth’s ozone layer, UV rays penetrate directly into people’s skin. Consistent penetration of UV rays causes extreme damage to people’s skin. There are people who still choose not to apply sunscreen before they go out into the sun, or they are unaware of the extreme impact from sunburns. Lush can educate consumers by introducing the advantages of their new Run Under the Sun sunscreen product offering. Market Growth

By 2010, the sunscreen market will be worth $1.25 billion. Additionally, we estimate there will be more people who will opt to use more organic products for themselves and their families. This is a great opportunity for Lush to introduce this innovative product nationwide. SWOT Analysis Strengths

This marketing plan focuses on the strength of the new product – Run Under the Sun Sunscreen. This product is different from other sunscreen brands currently on the market today as noted by the following points:

o

100% all organic. It is made from essential oils, natural minerals, and fruits.

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 10 o

It contains antioxidant ingredients and has a natural scent from fruits.

o

Contains the appropriate amount of sun protection factor (SPF) for customers’ skin.

o

The product protects both adults and children.

o

Less packaging and environmentally friendly bottle design.

Lush has loyal customers and a solid reputation for helping sustain the environment. Lush also has over 500 shops all over the world. Focusing the product in countries that emphasize the importance of UV protection (e.g. Asian countries) will definitely increase the organization’s sales. Weaknesses

o

Unable to attract customers who don’t care that much about purchasing environmentally friendly products.

o

Reaching consumers unaware of Lush skin care products.

o

Difficulty raising awareness of UV protection to customers.

o

High budget for promotion and R&D.

o

Minimal channels of distribution.

Opportunities

o

Attract Lush’s loyal customers that are willing to try new products offered by Lush.

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 11 o

Attract customers that want environmental friendly and organic products.

o

Capture the media’s attention and emphasize promotions to broadcast Lush’s core beliefs.

o

Cooperate with other corporations who are working to sustainability and remedying the environmental crisis (e.g. Starbucks or Apple Store).

o

International growth potential

Threats

o

Many competitors range from high-end brands to generic brands. Most possible brands would be: Alliance Boots, The Body Shop, L'Occitane, Burt’s Bee, and Bath & Body Works. (Homogenous stores)

o

Competitors in other countries.

o

Duplicate or knock-off products in other countries.



Substitutes of sunscreen (umbrella, hats, long-sleeve shirts...etc)

Product Offering

The primary sunscreen products for adults, children, and a sunscreen spray for reapplication while on the go. Keys to Success

Run Under the Sun Sunscreen is a unique sunscreen product and exemplifies Lush’s mission statement and core beliefs. Lush will continue to provide a percentage of their profits to their charity partners such as

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 12 Opportunitas Aequa, Sea Shepherd, Clean Ocean Action to name a few. Giving back to the community demonstrates Lush’s corporate social responsibility. The moral actions for a better community and their strong core beliefs will lead Lush to success. Marketing Strategy

Lush consistently lives and breathes their mission and core beliefs: 

We Believe in making products from fresh organic fruit and vegetables, the finest essential oils and safe synthetics.



We believe in buying ingredients only from companies that do not commission test on animals and in testing products on humans.



We invent our own products and fragrances; we make them fresh by hand using little or no preservatives or packaging, using only vegetarian ingredients and tell you when they were made.



We believe in happy people making happy soap, putting our faces on our products and making mums proud.



We believe in long candlelit baths, sharing showers, massage, filling the world with perfume and in the right to make mistakes, lose everything and start again.



We believe our products are good value, that we should make a profit and that the customer is always right.



We also believe words like 'fresh' and 'organic' have an honest meaning beyond marketing.

Source: http://www.lushusa.com/about/ 

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 13 Marketing Objectives

The objectives of the Run under the Sun marketing plan will provide disseminate awareness of sun protection to the public and introduce them to use Lush’s sunscreen products. Further, Lush will provide education on how to use the new sunscreen products they are offering. It is important to propagate Lush’s mission to consumers through marketing activities. Attract potential new customers to all of Lush’s products. Financial Objectives

The financial outcomes this project plan hopes to bring for Lush are:  Increase  Reach

the product margin by 3% per quarter

13% growth from the first month of the launching year (May,

2009) to the end of 2010.  Maintain

R&D budget to introduce more sunscreen products, e.g. safe

sunscreen for infants Product Introduction

We will introduce Run Under the Sun Sunscreen in major cities across the United States initially. With the revenues from the initial sales we will supply other Lush retail stores located in other countries. We estimate approximate three billion potential customers in over 50 countries for Lush to reach. Positioning Run Under the Sun Sunscreen is positioned as a sunscreen product that is all

organic, safe for consumers, and environmentally friendly due to a reduction in the packaging and use of 100% recycled material for the bottles. The

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 14 product is also very functional and convenient. It is also important to raise awareness of sun protection and health/skin protection. Strategies

We will use different strategies in different countries. General strategies (to all countries): o

Celebrity endorsements of the new Lush product

o

Advertisement in local and national cosmetics magazines such as Vogue, Fitness Magazine, GQ, or Cosmopolitan

o

Have Lush sales associates to talk to customers about the features of their sunscreen product

o

Product placement marketing on popular TV shows and talk shows

o

Online advertising with online media, such as Facebook, Myspace...etc.

o

Sponsor sporting events, such as the volleyball or track events

o

Push-pull marketing strategy: Promote Lush’s product to retailers such as Macy’s, Target, Whole Foods, and Trader Joe’s to create a consumer demand for Lush’s sunscreen. Also, by utilizing pulling marketing strategy, Lush customers can be directed to major retailers to purchase Lush products or through online ordering.

International strategies:

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 15 o

POP (point of purchase) display promotion at beaches, tanning salons, gyms, and parks in North American and European countries

o

Nude campaign in metropolitan areas in European countries: a nude marketing campaign to publicize the awareness of minimal packaging and natural products

o

In Asian countries, marketing campaign to show consumers differences in wearing Lush’s and other brands’ sunscreen to emphasize the superiority of Lush’s sunscreen.

Marketing Mix  Product:  Price:

Run Under the Sun Sunscreen

(US)

o

For Adults: $25

o

For Children: $20

o

Sunscreen Spray: $25

o

Spray Refill: $20

 Place

(Channels of Distribution):

o

Online Store: to existing and potential customers

o

Retail Stores: to existing and potential customers

o

Mail Order: to existing customers

 Promotion:

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 16 o

Purchase three Run Under the Sun Sunscreen products for a discount price

o

Bundling discount (e.g. free shipping) to customers who buy the products online and through mail order.

o

Membership discount to our existing customers

o

Providing coupons to the supporters of our every charity partners

o

Distribute samples and product sheet in department stores and retail stores

Marketing Research

Lush has monthly sales figure in the United States. Since Lush hand-makes most products, they can stop making anything that doesn’t sell without a big financial loss for wasted inventory. Lush also receives instant sales feedback from retail shop managers. Sending mystery shoppers is also a marketing research strategy used by Lush. The secret shoppers are volunteers from Lush’s online customer forum. Financial Projections and Analysis

Product Yearly Sales Forecast & Yearly Revenue Forecast: Table 1 United States Lush Revenue Sales Forecast

Sales

Lush Yearly Sales Forecast (US, USD) 2008 2009 2010 2011 $12,824,000 $13,593,440 $14,680,915 $16,149,007 Sources: Hoovers, Wei-Chen Wu & Stephany Treadway

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 17 Through examining the revenue sales forecast, a projected forecast for Run Under the Sun sunscreen product yearly sales forecast covers three years (2009-2011) as shown below in table 2

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 18 Table 2 US Product Yearly Sales Forecast

Lush Run Under the Sun Sunscreen Sales Forecast (US, USD) Sales 2009 2010 2011 Sunscreen-for adults $500,000 $565,000 $666,700 Sunscreen-for children $300,000 $324,000 $362,880 Sunscreen spray $400,000 $432,000 $483,840 Spray Refill $250,000 $270,000 $302,400 Total Sales

$1,450,00 $1,591,00 0 0

$1,815,82 0

Direct Cost of Sales Sunscreen-for adults Sunscreen-for children Sunscreen spray Spray Refill

2009 $30,000 $20,000 $25,000 $10,000

2010 $31,200 $20,800 $26,000 $10,400

2011 $32,760 $21,840 $27,300 $10,920

Subtotal cost of Sales

$85,000

$88,400

$92,820

Sources: Wei-Chen Wu & Stephany Treadway

Expense Forecast

The expense forecast plans include monthly expense budget and milestones expense forecast, as shown in table 3 and 4. Marketing expense budget plan, as shown in table 3, will be used to control and monitor our marketing activities. It will also be the indicator when the correction is needed for the implementation of our marketing plan. Table 3 Marketing Expense Budget

Lush Run Under the Sun Sunscreen Marketing Expense Budget (US, USD) Budget 2009 2010 2011 Website Update $1,000 $1,050 $1,155 Advertisements $50,000 $52,500 $57,750 Mail Order Catalogue $35,000 $36,750 $40,425 In-store printed material $12,000 $12,600 $13,860 Total Sales and Marketing

$98,000

$102,90

$113,19

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 19 Expense Percent of Sales Contribution Margin Contribution Margin/Sales

6.76% $1,267, 000 87.38%

0 6.47% $1,399, 700 87.98%

0 6.23% $1,609, 810 88.65%

Sources: Wei-Chen Wu &Stephany Treadway

Table 4 Milestones

Milestones Expense Budget Plan (US, USD) Start End Departm Milestones Date Date Budget ent Marketin Marketing Plan Completion 03/09/09 04/20/09 $0 g Marketin Website Update 04/30/09 05/05/09 $900 g Marketin Mail Order Catalogue Completion 03/10/09 03/30/09 $35,000 g $250,00 Marketin Ad Campaign 1– Print Ad in Magazines 05/05/09 06/30/09 0 g Ad Campaign 2– Product Placement $200,00 Marketin Campaign 07/01/09 08/31/09 0 g Ad Campaign 3– Sporting Event Marketin Campaign 09/01/09 11/01/09 $50,000 g $535,90 0

Total

Sources: Wei-Chen Wu & Stephany Treadway

Control and Evaluation of Effectiveness Controls

This marketing plan serves as a guide for the Lush Cosmetics. The following areas will be monitored and responded to immediately if any problems arise: 

Monthly and annual sales (by channels)



Monthly and annual revenue



Customer satisfaction Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 20 

R&D- new product development

Implementation

The milestone expense budget plan shows the strategic plan of key marketing programs that need to be implanted. They are required to be controlled within the indicating budget. Table 4 shows the start and end dates of each program. Marketing Organization

XYZ Marketing Agent will be in charge of the Run Under the Sun Sunscreen marketing activities. Contingency Plan

A contingency plan is developed to deal with the existing competitors and potential competitors. This may occur when a major competitor launches a low-pricing marketing strategy. Another possibility for the contingency plan to be implemented is when a potential competitor introduces a homogeneous product with low-cost technology. We will initiate a short-term low-cap bundling shipping discount for online and mail order customers. In addition to the discount promotions, a concentrated campaign focused on Lush retail stores will focus on educating customers of the importance of sunscreen protection. The campaign will provide consumers direct access to skin care experts or doctors for a question answer educational session in Lush retail stores around the country. Based on the outcome of these two promotions, we will revise the marketing plan as needed.

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 21

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 22 References

Lush Cosmetics, 2009. Lush’s Mission. Retrieved Mar 23rd , 2009 from http://www.lushusa.com/about/ ICMR Center of Management Research, 2009. Innovative Marketing Strategies of Lush Fresh Handmade Cosmetics. Retrieved Mar 23rd , 2009 from http://www.icmrindia.org/casestudies/catalogue/Marketing/Innovative %20Marketing%20Strategies-Lush%20Fresh%20Handmade %20Cosmetics-Case%20Studies.htm Ray Stern, 2008. Lush Cosmetics' Nude Promotion Draws Heat From Police In Boston Area, But (Fortunately) Not In Scottsdale. Retrieved Mar 23rd , 2009 from http://blogs.phoenixnewtimes.com/valleyfever/2008/08/lush_cosmetics _nude_promotion.php Lush Cosmetics. Retrieved Mar 23rd , 2009 from http://www.docstoc.com/docs/4992865/lush-cosmetics Karl A. Harris, 2005. SUNSCREENS. KAH Specialty Products, LLC. Retrieved from http://www.google.com/url? sa=t&source=web&ct=res&cd=1&url=http%3A%2F%2Fwww.stephenherman.com %2FKAH_01.ppt&ei=kJv0SdG9LaTyswPVxZzQCg&usg=AFQjCNHaFrMG nQ-rFVo427bx2PGXGHgUUQ&sig2=ugxsdRND3ZylBsm42EqEMw

Copyright©Wei-Chen Wu & Stephany Treadway 2009

Lush Marketing Plan – Run Under the Sun Sunscreen 23 J F. Nash, P.R. Tanner, T.L. Grosick, M. Zimnawoda, M. Ryan, 2004. Sunscreen Market Analysis: The Evolution and Use of UVA-1 Actives, The Procter & Gamble Company. Retrieved from http://sunburntgel.com/?q=node/6 American Cancer Society, 2007. Skin Cancer Facts. Retrieved from http://www.cancer.org/docroot/PED/content/ped_7_1_What_You_Need_  To_Know_About_Skin_Cancer.asp

Copyright©Wei-Chen Wu & Stephany Treadway 2009