Anita Roddick believed in word-of-mouth promotion to attract socially conscious customers to the Body Shop. While this form of promotion worked in Europe where people were more socially conscious it did not work in the US where business is characterized by aggressive promotion and brand differentiation. In view of the different market requirements of the United States, Anita Roddick was justified in advertising in the US markets.
Anita Roddick’s did not believe in advertising as she believed that business was not just about making profits. However, in view of lackluster sales in the US, and facing the threat of lawsuits from the franchisee owners, Body Shop had no alternative but to take measures to improve its sales figures. In the US markets, emphasis is greatly on brand recognition and the word-of-mouth promotion strategy was not good enough to help Body Shop build a brand name. Under the circumstances, Anita Roddick did what was best for the business, that is, compromise on her philosophy and start adverting in the US market. The decision to advertise was purely a business decision and had nothing to do with Anita Roddick’s ethical standing, where she remained faultless till the very end.
The Body Shop’s North American unit is not as successful as its operations in the United Kingdom and Europe. This is primarily because the consumers in the United States have completely different mindset than their global counterparts. Body Shop’s North American business is also facing the threat of lawsuits from several of its franchisee owners. Under the circumstances, it would not be advisable to invest in Body Shop’s North American Business.
Since 1995, Body Shop has not grown much and its business, especially in North America has remained stagnant. Additionally, it has faced a lot of criticism about its ethical standing. The lawsuits facing the company only compound the problem. Body Shop also ahs a large number of competitors in the US market and most of them are big names. In these environments, it is extremely difficult for Body Shop to continue to make profits even in the best of times. Faced with the compound problems listed herein, Body Shop seems to be an organization destined to fail. Hence, it would not be prudent for any investor to invest in Body Shop’s North American business.
In 1994, Body Shop had started a social audit program to examine its environmental, social and animal protection initiative. The aim of the program was to evaluate and report Body Shop’s progress in their stated goal of an environment friendly and sustainable business. However, the program has failed to make much of an impact on Body Shop’s detractors who continue to criticize the company and firm has not seen much improvement in its reputation.
In 1994, Jon Entine launched a campaign against Body Shop alleging that the company’s claims of being environmentally friendly were bogus and that the firm did not always use natural raw material in its products as was widely advertised. This campaign led to a fall in the company’s reputation and as a result in its sales. The social auditing program started by Body Shop was not able to reverse the damage and Body Shop’s reputation did not improve following the campaign led by Entine. Even after being sold to L’Oreal, the firm continues to face much criticism from various quarters who feel that by selling Body Shop, Anita Roddick has betrayed the company’s consumers.
When Body Shop was faced with poor sales, many of its franchisees wanted to exit the business. However, Body Shop offered a very low buy back rate causing many franchisees to file lawsuits. This low buyback rates did not reflect on the ethics of the company but were in fact the economic reality of a risky investment since in view of the low sales figure, Body Shop was not in a position to offer better buy back rates to its franchisees.
Since 1995, Body Shop’s profits have remained static at about $20 million. In recent years and especially after its sale to L’Oreal, this has risen but is still nowhere near what a company this size should have. Although, Body Shop is not making any loss, the slim profit margins go back into expanding the business and carrying out research. In view of the tight financial situation that Body Shop finds itself in, the company is not in a position to offer better deals to its franchisees who want to exit the business.
Body Shop has always promoted itself as an ethical and socially responsible firm. This reputation took some beating following the 1994 campaign by Jon Entine especially in the US, but in UK people continued to believe in the company’s ethical standards. However, following its sale to L’Oreal, it was feared by many consumers that the Body Shop would also soon adopt the low ethics of its new parent company. However, the latest ethical reputation index shows that the company has managed to retain its reputation as an ethical and socially responsible firm.
The Ethical Reputation Index 2007 published by Fraser consultancy on the site www.ethicalreputationindex.com shows that The Body Shop is still rated by consumers as the third most ethical company in the United Kingdom. This report shows that despite the negative published and the sale to L’Oreal, Body Shop continues to enjoy a good ethical reputation, at least in Europe.
Anita Roddick was a strong business woman who believed that business also had certain duties towards its customers and the aim of a business should not be to just make profit. Although she had extremely noble intentions, she was not a very good businesswoman, preferring to manage from heart rather than head which ultimately led to the sale of The Body Shop to the L’Oreal.
Anita Roddick was a woman with a strong ethical sense. She started a cosmetics company whose main focus was on being ethical and environmentally friendly. Despite her a good intentions, she was unable to properly market her products and was an easy target of people such Jon Entine who launched a smear campaign against The Body Shop and Anita Roddick.
Although a strong woman, Roddick’s biggest weakness was that she did not have much of a head for making tough business decisions. Instead of directly countering Entine’s allegations, she preferred to launch a social auditing program which did not gain as much publicity as Entine’s campaign and hurt The Body Shop’s business. Similarly, her reluctance to advertise and difficulty in handling the franchisees showed her lack of business acumen. The ultimate sale of The Body Shop to L’Oreal was more a failure of Anita Roddick, the business woman rather than a failure of her philosophies.
Since buying the Body Shop in 2006, L’Oreal has maintained Body Shop’s ethical heritage. However, it remains to be seen if L’Oreal can maintain this ethical reputation in the long run, although considering the increasing consumer awareness of environmental issues, it would be in the best interest of L’Oreal to maintain The Body Shop’s ethical image.
L’Oreal is a large company with Body Shop as one of its brand. L’Oreal would be better served if it allowed Body Shop to retain its reputation, with the help of some advertising, rather than allowing it to be merged into the mainstream, which would be detrimental to both L’Oreal and The Body Shop.
Works Cited
Bidlake, Suzanne. (2006). “Body Shop Brand Reputation is Battered by Sale to L’Oreal”, Brand Republic. Web.
“Ethical reputation Index 2007.” Fraser Consultancy. Available online. Web.