Please watch the video -https://www.youtube.com/watch?v=F5q9AVlxXlA, then read the attachments below please. Lastly answer the questions.I have included the following case materials:case...

Please watch the video -https://www.youtube.com/watch?v=F5q9AVlxXlA, then read the attachments below please. Lastly answer the questions.





Microsoft Word - BelezaNatural_TN_10-21-16 updated 020617.docx 1 Business Model Analysis -- By Dr. Alexander Chernev The business model analysis described below is adapted from Strategic Marketing Management.1 I find this approach to business model analysis particularly useful in case discussions. From a structural perspective, a company’s business model comprises two key components: strategy and tactics. • Strategy identifies the market in which the company operates, defines the value exchanges among the key market entities, and outlines the ways in which an offering will create value for the relevant participants in the market exchange. • Tactics define a set of activities—commonly referred to as the marketing mix—employed to execute a given strategy by designing, communicating, and delivering specific market offerings. Whereas strategy focuses on defining the target market and the value exchange among the relevant market entities, tactics describe the particular aspects of the offering that will ultimately create market value. The building blocks of the business model―the target market, the value proposition, and the market offering―are outlined below. MARKETING STRATEGY: THE TARGET MARKET The market in which a company’s offering competes is defined by five key factors: customers whose needs the company’s offering aims to fulfill; the company managing the offering; collaborators working with the company on this offering; competitors with offerings that target the same customers; and the context in which the company operates. • Target customers are the potential buyers, typically defined by the needs the company aims to fulfill with its offering(s). Target customers can be consumers (in the case of business-to- consumer markets) and/or businesses (in the case of business-to-business markets). • Company is the organization managing the offering. In the case of organizations with a diverse portfolio of offerings, the term company refers to the particular business unit of the organization, often referred to as the strategic business unit, managing the offering. A company’s ability to successfully compete in a given market is defined by its resources— core competencies and strategic assets—that enable the company to fulfill customer needs. • Collaborators are entities that work with the company to create value for target customers. Common collaborators include suppliers, manufacturers, distributors (dealers, wholesalers, and retailers), research-and-development entities, service providers, external sales force, advertising agencies, and marketing research companies. • Competitors are entities with offerings that target the same customers and aim to fulfill the same customer need. Competition is not limited to the industry in which the company operates. It also includes all entities that aim to fulfill the same customer need, regardless of whether they are in the same industry. Accordingly, a company’s offering competes not only with offerings from entities operating in the same industry, but also with offerings operating in different industries as long as they aim to fill the same customer need (often referred to as substitutes). 1 Chernev, Alexander (2014), Strategic Marketing Management (8th edition), Chicago, IL: Cerebellum Press. Chernev, Alexander (2017), The Business Model: How to Develop New Products, Create Market Value, and Make the Competition Irrelevant, Chicago, IL: Cerebellum Press. 2 • Context involves the relevant aspects of the environment in which the company operates. Six context factors are particularly relevant for the value-creation process: economic (e.g., economic growth, money supply, inflation, and interest rates); business (e.g., emergence of new business models, changes in the market structure, the balance of power, and information accessibility); technological (e.g., the diffusion of existing technologies and the development of new ones); sociocultural (e.g., demographic trends, value systems, and market-specific beliefs and behavior); regulatory (e.g., import/export tariffs, taxes, product specifications, pricing and advertising policies, and patent and trademark protection); and physical (e.g., natural resources, climate, and health conditions). The five factors that define the target market—customers, collaborators, competitors, company, and context—are also referred to as the Five Cs, and the resulting framework is referred to as the 5-C framework. The 5-C framework can be represented by a set of concentric circles (ellipses), with target customers in the center; collaborators, competitors, and the company in the middle; and the context on the outside. The central placement of target customers reflects the fact that they are the defining aspect of the target market, and the other three entities—the company, its collaborators, and its competitors—aim to create value for these customers. The context is the outer layer because it defines the environment in which the other four market entities operate. The Target Market (The 5-C Framework) MARKETING STRATEGY: THE VALUE PROPOSIT ION To succeed, an offering must create value for all entities involved in the market exchange— target customers, the company, and its collaborators. Accordingly, when developing market offerings, a company needs to consider three types of value: the value for target customers, the value for its collaborators, and the value for the company. Therefore, to evaluate the market potential of an offering a manager needs to answer three key questions: • Does the offering create superior value for target customers relative to the competitive offerings? • Does the offering create superior value for the company’s collaborators relative to the competitive offerings? • Does the offering create superior value for the company relative to the other options the company must forgo in order to pursue this offering? The development of a value proposition should follow the Market Value Principle: The company must create superior value for its target customers and collaborators in a way that enables it to achieve its goals. C om pa ny Competitors C ollaboratorsCustomers Context 3 Accordingly, a company must ensure that the value proposition of its offering is optimized across its customers, collaborators, and the company. The Market Value Principle MARKETING TACTICS: DESIGNING THE MARKETING OFFERING Unlike the strategy, which is an abstract depiction of the way in which an offering aims to create market value, the tactics define the attributes of the actual offering that creates the market value. Tactics refer to a set of specific activities employed to execute a given strategy. Tactics are defined by seven key elements, often referred to as the marketing mix: product, service, brand, price, incentives, communication, and distribution. The seven marketing mix factors, which represent the key marketing decisions that embody an offering’s marketing strategy, can be summarized as follows: • The product aspect of the offering reflects its key functional characteristics. Products typically change ownership during purchase; once created, they can be physically separated from the manufacturer and distributed to buyers via multiple channels. • The service aspect of the offering also reflects its functional characteristics but, unlike products, services typically do not imply a change in ownership; instead, customers obtain the right to use the service for a period of time. • The brand involves a set of unique marks and associations that identify the offering and create value beyond the product and service aspects of the offering. • The price refers to the amount of money the company charges its customers and collaborators for the benefits provided by the offering. • Incentives are tools used to selectively enhance the value of the offering for its customers, collaborators, and/or employees. Incentives may be monetary—such as volume discounts, price reductions, coupons, and rebates—and nonmonetary―such as premiums, contests, and rewards. • Communication refers to the process of informing current and potential buyers about the specifics of the offering. • Distribution defines the channel(s) through which the offering is delivered to customers. The above seven factors are the means that managers have at their disposal to execute a company’s strategy and create value for target customers, the company, and collaborators. Customer value Collaborator value Company value OVP The Optimal Value Proposition 4 The Market Offering as a Means of Creating Market Value BUSINESS MODEL ANALYSIS : THE B IG P ICTURE The key aspects of the business model—the target market, the value proposition, and the market offering—comprise the market value business model framework. The Business Model Framework Customer value Collaborator value Company value OVP Unobserved by customersStrategy Observed by customers Tactics Product Service Brand Communication Distribution Price Incentives Market Offering What are the key features of the company’s product? What are the key features of the company’s service? What are the key features of the offering’s brand? What is the offering’s price? What incentives does the offering provide? How will target customers and collaborators become aware of the company’s offering? How will the offering be delivered to target customers and collaborators? Market Offering Strategy Tactics Product Service Brand Price Incentives Communication Distribution What customer need does the company aim to fulfill? Who are the customers with this need? What other entities will work with the company to fulfill the identified customer need? What are the company’s resources that will enable it to fulfill the identified customer need? What other offerings aim to fulfill the same need of the same target customers? What are the sociocultural, technological, regulatory, economic, and physical aspects of the environment? Target Market Collaborators Customers Company Competitors Context What value does the offering create for target customers? What value does the offering create for the company’s collaborators? What value does the offering create for the company? Value Proposition Collaborator Value Customer Value Company Value 5 The key question when analyzing a company’s business model is whether the market offering, defined by the seven market tactics, can create greater value for its target customers, collaborators, and the company relative to the competitive options. Business model analysis can be facilitated by using the worksheet shown below: The Market Value Worksheet Market Offering Strategy Tactics Product Service Brand Price Incentives Communication Distribution Target Market Collaborators Customers Company Competitors Context Value Proposition Collaborator Value Customer Value Company Value Microsoft Word - BelezaNatural_Final_20161017_updated 04022017.docx ©2016 by the Kellogg School of Management at Northwestern University. This case was prepared by Professor Alexander Chernev and Vasilia Kilibarda. Cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. To order copies or request permission to reproduce materials, call 847.491.5400 or e-mail [email protected]. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Kellogg Case Publishing. Revised 5/1/2017 Case 5-116-002 ALEXANDER CHERNEV AND VASILIA KILIBARDA Beleza Natural: Marketing Strategies for Empowering Social Change On a Saturday morning in January 2015, Leila Velez looked out the front door of her flagship salon. Women from villages that surrounded the city of Rio de Janeiro poured out of charter buses and into the winding line that led to the salon’s front door, where women from local favelas (urban slums) had already filled the waiting room. Excited mothers, daughters, and friends waited for multiple hours to begin Beleza Natural’s famous Super-Relaxante hair treatment. The treatment had achieved a word-of-mouth reputation by delivering its promise to turn frizzy afro- Brazilian hair into shiny, well-defined curls. The overwhelming demand made Velez both happy and anxious. Beleza Natural had just doubled its number of hair salons, called institutos, from thirteen to twenty-six in 2014. Velez and her co-founders had created an expansion plan that targeted 120 institutes and over R$1 billion1 in sales by 2018, which excited her key investors. The question of how to catalyze accelerated growth weighed on her mind, and she hoped to spend some focused time assessing her ideas on her flight to São Paulo, where she was headed that afternoon to check on her newest salon. Her teenage years of working double shifts at McDonald’s and tinkering with her own afro seemed a distant memory. Now a successful CEO, she was determined to empower other women like herself while taking her company to new heights. Brazil’s Beauty Industry Brazilians spent an estimated R$57 billion on beauty products in 2013, up from R$31 billion in 2009. Brazil’s beauty products, personal hygiene, and cosmetics sector was expected to continue growing and to reach R$83 billion in sales by 2018.2 Driving the sector’s growth was the country’s new middle class. In the early 2000s, Brazil’s economy saw higher levels of family income and well-being than ever before as the government increased the minimum wage, implemented policies that gave all socioeconomic classes access to credit, and controlled inflation. As a result, the country experienced an expanding domestic market for consumer goods and services, and many families in Brazil’s lowest socioeconomic classes ascended into what became known as the new Brazilian middle class. With changing sociodemographics came changing purchasing habits, as Brazilians reduced their savings to augment their spending. Families of the new Brazilian middle class were spending increasing portions of their household income on makeup, hygiene, and personal services.3 Historically, going