Korostelev Andrey, IM

Lush case.
1. SWOT-analysis
Strengths
2. Products are made from fresh ingredients
3. No animal testing
4. 2% of the profits from Lush are donated
to charity
5. Lush has found alternatives to palm oil
6. Lush is listed in The Sunday Times 100
Best Companies To Work For
7. It has own website, online catalogue
8. Very limited use of packaging, you are
able to feel texture, without intervening
packaging
9. The colors of products are equally
arresting
10. Warm and inviting interior
11. Hand-written signs describing products
add to the sense of naturalness
12. Employees have a very strong sense of
solidarity and they are involved in
decision making
13. The company has extend its range into
spa products
14. Creating Lushs Supplier Specific
Boycott Policy
15. Price is lower than The Body Shop price
16. Lush aims to reduce waste in the
production process and from its retail
outlets to less than 5%
17. The company produces its own magazine
for staff and consumers
Opportunities
1. Online users discussion forum is a useful
source of ideas and input to the creative
process
2. Create a loyalty scheme
3. Parallel co-branding within the spa subbrand

Weaknesses
1. Strong smell of soap and other scents give
customers headaches and puts them off
browsing
2. Price is bigger than average

Threats
1. Falling sales per outlet and same-store
customer retention is an issue that needs
addressing
2. 32% stated that they would never
consider the brand, 37% stated that they
had never heard of it.
3. Some of customers recommend The Body
Shop organization

2. PESTEL-analysis
Political

Lush is a privately owned, UK based. Also it had around 600 stores across 46 countries,
including Russia, Japan, USA. The company must comply with the legislation of these
countries. The government taxation and trading policies in different countries are different
and can be changed.

Economical

The Lush group more than doubled its global operating profit in the year to June 2008 to
18.4 million. International expansion, especially in North America and Japan helped to
increase sales by 28% to 153.2 million. European operations, excluding the UK, are
relatively small, accounting for 12% of total revenue or 18.4 million (25.2 million).
However, higher costs, as a result of the rising price of raw materials coupled with rising
occupancy and staff costs, and higher overheads associated with new store openings, have
resulted in the UK business making an operating loss.

Environmental/Social

Its environmental policy is based on a desire to have a positive impact on the planet which
leads the company to seek innovative solutions.
As a part of its ethical cilture, 2% of the profits from Lush are donated to charity.

Technological

Natural technology. Company created its own Lush's Supplier Specific Boycott Policy. Lush
buys ingridients, which not involved in animal testing.
Connect with social media.

Legal

Lush relies on Fairtrade law.

3. SERVQUAL
Reliability
Lush beauty products are well known by its absolutely naturalness and no testing on animals.
Assurance
Knowledge of employees and their ability to transfer trust and confidence. Staff are encouraged to
give advice, provide demonstrations and be enthusiastic about the products. The personal
involvement staff feel in the company and its goods clearly makes this more likely. Customers
similarly feel connected personally through the rich and happy environment and the motivation of
staff.
Tangibles
Innocens has a good image by the customers. The displays are designed to intrigue and entice
passers-by inside. The walls are often brightly coloured and the interior warm and inviting. Products
are often laid out like food, on bare wooden benches, in baskets or on shelves, and many sold loose
by weight. Many of them even resemble food such as ice cream cones, slices of pie, cakes, lollipops,
fruit and vegetables. Some are wrapped in greaseproof paper. The colours of the products are equally
arresting. Overall, through the combination of smell, vivid colours and being able to feel the textures
of the products directly without intervening packaging, the Lush experience is a powerful and sensual
one.
Empathy
It is a complaint that the strong smells lingering within the store give customers headaches and puts
them off browsing. This is a difficult problem to address given that the smell of the products is part of
the brands USP.
Responsivness

The company produces its own magazine for staff and consumers. Also, the company has its own
website. Online users discussion forum is a useful source of ideas and input to the creative process.
4. BSG-matrix analysis
Market
growth

Stars

Question
marks

Liquid
soaps
Bath
cubes

Spa
products
Bar
Bath

Relative market
share
Body
Shower
products

Bath
salts
Bath

Cows
Dog
s
5. PLC-analysis

6. 5 Porters forces analysis

1. Threat of substitute products

2. Threat of new entrants

3. Bargaining power of buyers

Cosmetics market is extensive, so perhaps

there will be new substitute products.
There are many competitors in this area.
The most dangerous is The Body Shop
company.
Lush has a strong niche appeal. Forecasts
indicate that consumers will be scrutinizing
ethical claims and there will be more
activity in eco-friendly labels. Lush is
already ahead of the game in this area.
Bargaining power of customers in this
market niche is rather high as people may
prefer not to use natural products and buy
their regular beauty products or price of it
may not suit the budget of the buyers

4. Bargaining power of suppliers

Bargaining power of suppliers is medium

as there is not limited amount of fresh
vendors( fruits, vegetables) nowadays, but
also the price setting by suppliers may
influence markets pricing policy

5. Intensity of competitive rivalry

In general Lush does not compete on price.

The exception is with close competitors
such as The Body Shop. Lush tends to
price itself lower. Lush customers are
prepared to pay for what they regard as
superior products, together with a superior
customer experience, its ethical stance and
the natural raw materials that are used to
create the products.