BURT'S BEES: CASE STUDY
Burt's Bees was all set for tremendous success in 1997 when it was making around $6-$8 million in revenues each. The product line had been efficiently pruned in 1994 to keep only the skincare products in order to be able to compete in one niche market. The company had already made an entry into foreign markets of Europe and Japan. The company had been making sales through direct sales. For examples in 1996, one show on QVC helped Burt's Bees make $30,000 in short 30 minutes. With 70 earth friendly products, which were all natural, Burt's Bees had found success in the niche market of natural personal care products.
PROBLEM IDENTIFICATION:
Despite its tremendous success with only 20 employees in 1997, Burt's Bees had one big dilemma to resolve. Should it enter the retail market? And if not, how can it bridge the gap to reach $25 million so the business could be sold to a serious buyer some time in future?
SUPPORTING FACTS/ASSUMPTIONS/ANALYSIS
The retail experiment had not looked very promising to Roxanne Quimby, the president of Burt's Bees. She had tried to open a store in North Carolina only to find that a whole day's work had resulted in only $400 in sales. The company had made $30,000 in 30 minutes through QVC. Quimby believed that retail experiment could allow the company to stay in closer touch with the end users of the products. But if retail did not allow room for another entrant in natural personal care products. Burt's Bees could face major problems.
Quimby knew that retail market was already well saturated in personal care sector. There was no serious dearth of natural personal care manufacturers including such big names as the Body shop, origins, Bath and Body works etc. All these companies had been working hard to win greater market share and they all claimed to be "all natural." This left Burt's Bees with very limited choices.
If it chose to stay in manufacturing alone without retail experience, Burt's Bees still had very tough competition to face from very big names in personal care manufacturing namely Jergens. Johnson and Johnson,...
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