Agenda

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Agenda

• Company background
• Strategic Analysis
• Growth Options
• Recommendation

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Company Background

• Founded by Roxanne Quimby and Burt Shavitz in
  Maine
• Originally only sold honey, quickly moved onto
  various beeswax products
• First growth opportunity was within the gift shop
  business
• Focus turned to personal care products
• Vision was to become a big brand sold through
  mass-market distribution
• New management as of 2003, sold 80 of company to
  AEA private equity firm
• Hired a CFO and CMO from large consumer packaged
  goods companies

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Financial Health

• At the time of the case Burt's Bees was a
  privately held company, therefore no market
  capitalization

case references 30 annual growth over 40 MM
2002 baseline
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Natural Personal Care Category

• Estimated at 3 billion in 2004 with annual
  growth of 15
• Rapidly becoming a strategic growth opportunity
  for large CPGs and small niche brands
• Currently no guidelines from the Food and Drug
  Administration
• Category includes
• Natural and/or Organic
• Pseudo Natural
• Mass products with natural claims

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Natural Personal Care Category Competitive
Landscape
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Current Dilemma

• Should Burts Bees leave the Hive? What is
  their best possible strategic option for growth?

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Strategic Analysis
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Strategic FrameworkInternal Analysis
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Strategic FrameworkThe Strategic Shift
Strategy for Competitive Advantage
Past
Future
Focus Differentiation
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Brand LadderInternal Analysis
For earth-friendly consumers who prefer the
natural lifestyle, Burt's Bees is the product
harvested from Mother Nature that delivers truly
unique and effective personal care products
because only Burt's Bees is made with natural
ingredients that are very rich and not watered
down.
Positioning Statement
Sense of ownership
Self recognition
Flexible
VALUES
I am making a difference
I am important
I am at ease
Environmentally Safe
Product use experience
Attainable specialties
BENEFITS
(I feel responsible)
(I feel good)
(I can easily have it)
All Natural and/or Organic
Available
Recycled Materials
Affordable price points
ATTRIBUTES
Reusable Containers
Works great
Organic
Smells delicious
some skus
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Scenario AnalysisExternal Analysis
Strategic Uncertainty Is the natural / organic
personal care market here to stay?
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Competitive AnalysisCompetitive Grid
3-point scale 1 Less than average 2 Average 3
Above average
Source Case Study, Exhibit 1, Exhibit 4
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Strategic AnalysisIn Summary

• Strong set of assets and competencies
• Market is expected to grow as a subset of the
  whole natural / organic category
• When compared to competitors
• Lack of portfolio management
• Possible low brand perception
• Need to increase brand awareness

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Growth Options
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Strategic Options for Growth
Market Expansion
Leave the Hive
Market Penetration
Stay in the Hive
Market Expansion
Expanding the Hive
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Growth Options1. Leave the Hive

• Risks
• Mixed signals that confuse customers and
  distributors
• Lack of infrastructure to go mass market
• Marketing information system not yet optimized
• Lose bargaining power over buyers/retailers
  must fight over shelf space
• Compete head-to-head with all mass-marketed
  packaged goods
• Rewards
• Increase market share
• Expand brand awareness
• Consistent with original vision "natural and
  earth-friendly products ultimately reaching
  everyone, everywhere."

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Growth Options2. Stay in the Hive

• Risks
• Current business model does not support growth,
  must limit product portfolio
• Niche equates to small market share
• Marketing information system not yet optimized
• Rewards
• Stay true to core business
• Focus and growth amongst target segment (i.e.
  loyals)
• Avoiding head-on competition
• Supports differentiation strategy

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Growth Options3. Expanding the Hive

• Risks
• Mixed signals
• Lack the assets and competencies to go mainstream
• Lose the bargaining power over buyers/retailers
• Marketing information system not yet optimized
• Rewards
• Increase market share
• Expand brand awareness
• Consistent with core business
• Guarantee long-term sustainable growth
• Avoiding head-on competition
• Supports differentiation strategy

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Growth Options
Marketing Information System Optimization
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Recommendation
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RecommendationExpanding the Hive

• Market Expansion leveraging marketing research to
  strategically manage portfolio, identifying 2-3
  product lines for expanding the hive
• Keep the mother hive
• Expand to 2-3 other aisles with their own hives
• Support niche and seasonal products on website
• Additional benefits
• Contextual relevance expected to drive higher
  sales
• Hives reinforce brand
• Promotes cross-selling

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RecommendationExpanding the Hive

• Identified Baby Care as prime prospect the
  Baby Hive
• Higher margins
• Compliments consumer in-store buying habits
• Support impulse purchases with counter-top risers
• Lower priced products work well for bringing new
  users into franchise (trial)
• Works as an awareness driver due to high profile
  placements (advertising impression)
• Hives will be modular and flexible, informed by
  transactional data

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RecommendationAction Plan

• Gain and or improve the assets and competencies
  needed to support growth
• Inventory management
• Bargaining power over retailers
• Optimizing marketing information system
• Pricing strategy
• Consumer research to help inform product
  decisions new products, refinements,
  innovations
• Offer seasonal or extremely niche products on
  website

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RecommendationAction Plan

• Tightly managed brand Keep the hive, bees and
  Burt!
• Company-wide brand emersion including agency
  partners
• Activate a CRM program

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RecommendationInnovation

• Applying the learnings from Democratizing
  Innovation we will tap into our loyalists /
  advocates for new products and product
  modifications
• Facilitate continuous dialogues with lead-users
• Utilize innovation communities to create more
  innovation opportunities
• Allows Burts to become more market-orientated

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