Harvard Case - Native Deodorants: Sell or Swell?
"Native Deodorants: Sell or Swell?" Harvard business case study is written by June Cotte, Toshaan Harjai. It deals with the challenges in the field of Marketing. The case study is 9 page(s) long and it was first published on : Aug 27, 2020
At Fern Fort University, we recommend that Native Deodorants pursue a growth strategy focused on expanding its product line and increasing brand awareness through a multi-pronged approach. This includes leveraging digital marketing channels to reach a wider audience, expanding into new product categories, and implementing a strategic pricing strategy to maintain profitability while attracting new customers.
2. Background
This case study focuses on Native Deodorants, a start-up company founded in 2015 by a group of entrepreneurs with a vision to create a natural and effective deodorant alternative. The company's core values revolve around transparency, sustainability, and ethical sourcing. Native Deodorants quickly gained traction by offering a unique product proposition ' natural, aluminum-free deodorants with a wide range of scents ' and a strong focus on direct-to-consumer marketing.
The case study highlights the company's rapid growth and the challenges they face as they navigate the competitive landscape of the personal care industry. The main protagonists are the founders, who are grappling with the decision to either sell the company or continue growing organically.
3. Analysis of the Case Study
To analyze the case, we'll employ a SWOT analysis to understand Native Deodorants' internal strengths and weaknesses, and the external opportunities and threats they face.
Strengths:
- Strong brand identity: Native Deodorants has established a strong brand identity based on natural ingredients, ethical sourcing, and a commitment to sustainability.
- Loyal customer base: The company has built a loyal customer base through its direct-to-consumer marketing strategy, which has fostered strong relationships and positive word-of-mouth referrals.
- Product innovation: Native Deodorants has a strong track record of product innovation, consistently introducing new scents and product variations to cater to diverse customer preferences.
- Digital marketing expertise: The company has demonstrated proficiency in leveraging digital marketing channels, particularly social media, to reach and engage its target audience.
Weaknesses:
- Limited distribution channels: Native Deodorants primarily relies on direct-to-consumer sales, limiting its reach to potential customers who prefer traditional retail channels.
- Potential for price competition: The natural deodorant market is becoming increasingly competitive, with new entrants offering similar products at lower prices.
- Scaling production: As the company grows, it faces challenges in scaling production to meet increasing demand while maintaining its commitment to quality and ethical sourcing.
Opportunities:
- Expanding product line: Native Deodorants can expand its product line to include other personal care items, such as body wash, shampoo, and lotion, leveraging its existing brand identity and customer base.
- Entering new markets: The company can explore international expansion opportunities, tapping into the growing demand for natural and sustainable personal care products in emerging markets.
- Strategic partnerships: Native Deodorants can collaborate with other brands or retailers to expand its distribution network and reach a wider audience.
Threats:
- Increased competition: The natural deodorant market is becoming increasingly crowded, with established players and new entrants vying for market share.
- Economic downturn: An economic downturn could negatively impact consumer spending on non-essential items like personal care products, affecting Native Deodorants' sales.
- Supply chain disruptions: Global supply chain disruptions could impact the company's ability to source ingredients and manufacture its products.
4. Recommendations
Based on the SWOT analysis, we recommend that Native Deodorants pursue the following strategic initiatives:
1. Expand Product Line:
- Develop new product categories: Native Deodorants can leverage its brand identity and customer base to expand into other personal care categories like body wash, shampoo, and lotion. This will allow the company to capture a larger share of the market and offer a more comprehensive range of products to its existing customers.
- Introduce new scents and variations: The company can continue to innovate and introduce new scents and variations within its existing product lines to cater to diverse customer preferences and maintain a competitive edge.
2. Enhance Brand Awareness:
- Leverage digital marketing channels: Native Deodorants should continue to invest in digital marketing channels, particularly social media, to reach a wider audience and build brand awareness. This includes developing targeted advertising campaigns, engaging with influencers, and creating compelling content that resonates with its target market.
- Explore traditional marketing channels: While the company has focused on digital marketing, exploring traditional channels like print advertising and public relations can help reach a broader audience and build brand credibility.
3. Optimize Pricing Strategy:
- Maintain premium pricing: Native Deodorants should maintain its premium pricing strategy, emphasizing the high quality and natural ingredients of its products. This will help the company maintain profitability and differentiate itself from competitors offering lower-priced options.
- Offer value-added promotions: The company can implement strategic promotions and discounts to attract new customers and encourage repeat purchases. This could include limited-time offers, bundled packages, or loyalty programs.
4. Expand Distribution Channels:
- Partner with retailers: Native Deodorants can explore partnerships with retailers, both online and offline, to expand its distribution network and reach a broader audience. This could include collaborations with natural food stores, beauty retailers, and online marketplaces.
- Develop a wholesale strategy: The company can develop a wholesale strategy to sell its products to other businesses, such as salons, spas, and gyms. This will allow Native Deodorants to reach a new customer base and increase its overall sales volume.
5. Embrace Technology and Analytics:
- Invest in data analytics: Native Deodorants should invest in data analytics tools to gain deeper insights into customer behavior, market trends, and competitor activity. This data can inform strategic decision-making and optimize marketing campaigns.
- Implement CRM systems: The company can implement customer relationship management (CRM) systems to manage customer interactions, track purchase history, and personalize marketing communications.
5. Basis of Recommendations
These recommendations are based on a comprehensive analysis of the case study, taking into account the following factors:
- Core competencies and consistency with mission: The recommendations align with Native Deodorants' core values of sustainability, transparency, and ethical sourcing. Expanding the product line and leveraging digital marketing channels will allow the company to maintain its commitment to these values while reaching a wider audience.
- External customers and internal clients: The recommendations are designed to cater to the needs of both external customers and internal clients. Expanding the product line and optimizing pricing strategies will attract new customers and enhance customer satisfaction.
- Competitors: The recommendations address the competitive landscape of the natural deodorant market by focusing on product innovation, brand awareness, and expanding distribution channels.
- Attractiveness ' quantitative measures if applicable: The recommendations are expected to contribute to Native Deodorants' profitability by increasing sales volume, expanding market share, and enhancing brand equity.
6. Conclusion
By implementing these recommendations, Native Deodorants can achieve sustainable growth, strengthen its market position, and achieve its long-term goals. The company has a strong foundation and a loyal customer base, and by embracing a strategic growth approach, it can continue to thrive in the competitive personal care industry.
7. Discussion
Other alternatives not selected include:
- Selling the company: While this option would provide immediate financial benefits, it would also mean relinquishing control over the company's future and potentially compromising its core values.
- Maintaining the status quo: Continuing with the current strategy would limit the company's growth potential and expose it to increasing competition.
The key risks associated with the recommended strategy include:
- Increased competition: The natural deodorant market is becoming increasingly competitive, and Native Deodorants needs to proactively address this challenge through continuous product innovation and marketing efforts.
- Economic downturn: An economic downturn could negatively impact consumer spending, affecting Native Deodorants' sales. The company should develop contingency plans to mitigate this risk.
8. Next Steps
To implement the recommended strategy, Native Deodorants should:
- Develop a detailed implementation plan: This plan should outline specific actions, timelines, and resource allocation for each recommendation.
- Establish key performance indicators (KPIs): The company should define measurable KPIs to track the progress of its strategic initiatives and assess their effectiveness.
- Monitor and evaluate results: Native Deodorants should regularly monitor and evaluate the results of its strategic initiatives and make adjustments as needed to ensure success.
By taking these steps, Native Deodorants can successfully navigate the challenges and opportunities of the personal care industry and achieve its long-term growth objectives.
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Case Description
The founder and chief executive officer (CEO) of the direct-to-consumer deodorant startup Native Deodorant (Native) had grown the brand to one million active users in about two years. The company was founded in 2015 in San Francisco and had disrupted the deodorant industry by offering all-natural deodorants direct to consumers through its website. By cutting off retailers from the value chain, the CEO had created a feedback loop that helped him have an agile and iterative approach to his business. In 2017, he received an offer from the Procter and Gamble Company to buy his one-and-a-half-year-old startup for US$100 million. He faced a tough predicament: he could continue to leverage the business model of Native and grow to the next million customers, or he could sell to P&G for a nine-figure payday. What should he do?
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