Environmental Analysis: Bath & Body Works

Bath & Body Works is a company that operates around 1,700 retail outlets across the United States selling health, beauty and personal care items. In 2002 the company was faced with a problem - how to transform their company from one offering a promotionally priced single brand into a company offering a variety of products with varying prices for all buyers (Born).

Bath & Body Works (BBW) enjoyed a successful decade after its inception in 1990. However, over time their limited offering of products was sending their customer base to other retail chains - either trading up to better brands or trading down to cheaper prices. As demand for their product seemed to dwindle, they needed a way to increase their customer base. An increase in similar products could decrease the company’s profit margin and stronger competition from other retailers could decrease their customer base. In order to continue to grow and increase their profits, BBW needed a strategy. An environmental analysis, in which three factors, remote, operating and industry environment, are explored, can provide information the company needs in order to optimize their marketing strategy .

The remote environment includes economic, social, political, ecological and technological factors. Bath & Body Works chief executive officer, Neil Fiske, saw an opportunity for the needed expansion in redefining the way that beauty is socially viewed and retailed in America. The industry environment factors in the competition a company faces in the form of new entrants, substitute products and rivalry among existing companies. BBW was offering a fabulous product, but so were other companies. While this competition might have been viewed as a weakness for the company by some, Fiske saw it as an opportunity - a competitive advantage to hone in on a philosophy of “inner beauty”, total well-being and a holistic approach to retail. By shifting the product emphasis to include spa treatments, yoga, and the idea of well-being, the value is increased and an entirely new realm of marketing possibilities opens up.

Bath & Body Works’ customer base has consisted largely of women. Even at Christmas, when sales have been, historically, the highest, their product was still being purchased for women. It makes sense for the company to continue to market to this customer base in a way that makes their product indispensable. If the product line includes a focus on “inner beauty”, stress reduction, and total well-being this could speak volumes to their customer base.

Dealing with a social view of beauty is not without risk, however, and Fiske and his team recognized this. They formed a partnership with Unilever