Strategic Marketing Assignment Exploring Business Idea of “The Magic Box”
Individually, you will come up with an idea for a start-up business based on a subscription box, to be developed for the UK market.
According to Royal Mail’s recent UK Subscription Box Market report, the UK subscription box market is set to be worth £1.8 billion by 2025. The forecast comes as the subscription box market has seen its value more than double in size since Royal Mail’s last report on the industry, as its popularity soared during the Covid-19 pandemic amid a more general acceleration in online retail growth. And despite lockdown restrictions ending across much of the UK, new research from Barclaycard Payments has revealed that the nation’s demand for subscriptions has continued to grow, reaching a value of £395 million – up 23 per cent in the past year.
This is a good domain to apply your knowledge of strategic marketing, as subscription boxes tend to target very specific, niche groups, and a subscription box could be made for just about any target market. It also allows you to work on something that is relevant to your interests/hobbies.
If you are not sure what a subscription box is, these links do a good job of explaining them. These are also good resources in general, as they not only tell you what they are, but also how much they typically cost, etc. https://www.forbes.com/sites/richardkestenbaum/2018/05/30/the-subscription-boxbusiness-continues-to-grow-and-change/#32667f02c3e4 http://www.findsubscriptionboxes.com/subscription-boxes-101/
You will come up with your own subscription box. You will NOT do this assignment on an existing one. If you are struggling to come up with one, start with what your hobbies and interests are, and how a subscription box could be made around that. You can also do an internet search to help generate ideas. Keep in mind that yours will need to be UNIQUE and, if possible, NOVEL. If there are other subscription box services in the same/similar product category as yours, that is fine, but you’ll need to talk about that in your assignment (e.g., how yours will be unique, positioned differently, targeting a slightly different market, etc).
Just about anything can be a subscription box, so long as it lends itself well to shipping (a “construction materials” subscription box might be a bit pricey to ship). All the ones that I know of are for profit, but maybe you can have an idea for one that is sustainable as a non-profit?
“The Magic Box”, considered in this strategic marketing assignment, is a newly developed monthly subscription service providing company, which comes under the segment of make-up and hair-care subscription box segment. “The Magic Box” offers make-up and hair care products to the wealthy curly haired women. It is acceptable that curly-haired women of premium social-class and higher income background always show their concerns in maintaining curly hair. “The Magic Box” has identified this problem of millions of wealthy women and has decided to offer solutions to those target women through monthly subscription services. This particular subscription box will contain differentiated hair care and make-up products, which will allow the curly-haired women to take care their long curly hair. Most importantly, the products will be made of zero chemical. The products of “The Magic Box” will be made of 100 percent natural ingredients in order to make their skull and hair healthy. The products of “The Magic Box” will help those curly haired women to make their hair straight and maintain that straightness for a longer period of time. Use of natural ingredients in making of the products will help in maintaining uniqueness of the products of “The Magic Box”, which will definitely allow the company develop a healthy relationship with the target customers.
Name of the subscription box is “The Magic Box”. The products of this subscription box will fall in make-up, beauty care, and hair care segment through which the needs of the wealthy curly haired women can be met.
The popularity of subscription boxes was gradually growing from 2014 in the United Kingdom. The need of these subscription boxes was rapidly felt and explored during the pandemic COVID-19 situation in the United Kingdom when the people became concerned about social distancing and hygiene issues. In the year 2020, the subscription box market of beauty care products in UK worth of 78.9 Million Pounds. It is expected that beauty care subscription box market of the United Kingdom will worth 93.3 Million Pounds by 2025 (Noorda, 2019). Hair care products automatically come under beauty care and make-up product segment. Hence, it also can be predicted that the management of “The Magic Box” will experience positive business growth in the upcoming years because the positive trend of 2020 is indicating that. In addition, the general trend of this subscription box market is also indicating possible prosperous future for “The Magic Box”.
In terms of consumer behaviour, it can be accepted that taking care of curly hair has become one of the important concerns of ladies. Several curly-haired ladies try to buy quality products and make investment to take care of their hair. From early 2010s, demand for quality hair-care products for the purpose of taking care of curly hair has significantly increased. Now, the target customers are seeking for the consumption of quality hair care products made of natural ingredients. The wealthy curly-haired women are not thinking twice before investing money for the consumption of quality hair care products (Xu, 2020). On the other hand, the ongoing pandemic COVID-19 situation and lock-down scenario are influencing people of UK to buy products through e-commerce platforms. Hence, “The Magic Box” is addressing all the concerns of wealthy curly-haired women of the United Kingdom during this pandemic situation.
LookFantastic, Cohort, Birchbox, Glossybox, Look Incredible, Reposed, Lovelula, and Latest in Beauty can be considered as some potential competitors of “The Magic Box” in the United Kingdom during this point of time (Aminah et al., 2021).
In terms of macro-environmental context, it will be important to discuss some of the important macro-environmental factors that can have direct impact on business operation process of “The Magic Box”. First of all, it will be important to acknowledge that political environment is supportive for “The Magic Box” as strict pandemic regulations imposed by the government is allowing people to buy products through ecommerce platforms and subscription services. Therefore, “The Magic Box” will gain political support if the company maintains sustainability in the business. Secondly, the economic environment of the United Kingdom is slightly challenging for “The Magic Box” as the recent pandemic situation has affected purchasing power and disposable income of people. It might initially hamper the business growth of “The Magic Box” (Balmer and Burghausen, 2019). Thirdly, the social environment of the United Kingdom is supportive for “The Magic Box” as the wealthy curly-haired women are seeking for high quality hair-care products to maintain their products. The natural ingredients and high-quality aspect of “The Magic Box” will help in satisfying the social needs of target customers. Lastly, technological environment of the United Kingdom is supportive for “The Magic Box” as the country is technologically developed. Most importantly, the company will get the support of advanced technological resources to manufacture, market, and distribute the products through “The Magic Box”.
The wealthy curly-haired women of the United Kingdom can be considered as the major target customers of “The Magic Box”. Most importantly, the target market of the products of “The Magic Box” can be divided into four segments, such as demographic segment, psychographic segment, geographic segment, and behavioural segment. The customer profiles of different market segments are discussed below.
Wealthy women aged between 15 and 60 can be considered as the major target customers under the demographic market segmentation. The women of higher income background have that much disposable income to buy the products of “The Magic Box”. This group is considered as large group in the United Kingdom, which may become the potential target customers of “The Magic Box” (Patsiaouras, 2019). The recent trend during this pandemic time and predicted future trends are indicating that demographic segmentation will become profitable for “The Magic Box”.
People of urban areas, metro cities, semi-urban areas, and town areas can be considered as the major target customers under the demographic market segmentation. This group is also considered as a large group in the United Kingdom (Lahtinen et al., 2020).
Ladies, who are concerned about the quality of hair care products and proper caring of their curly hair; can be considered as the major target customers under the behavioural market segmentation. The number of these types of customers is significantly increasing in the United Kingdom and the upcoming trend is also favourable.
Ladies, who believe that maintaining a proper hair style symbolises social status; can be considered as the major target customers under the psychographic market segmentation. Currently, millions of wealthy women of UK try to maintain good hair style of their curly hair. Hence, the trend is favourable for “The Magic Box” in the United Kingdom (Von Swearingen, 2019).
The recommended target customers will be wealthy higher-income group ladies, who have curly hair. Most specifically female entrepreneurs or senior management executives of the reputed firms in the United Kingdom will be considered as the major target customers of “The Magic Box” (Erdogan et al., 2020). It is already discussed in the above section that the company is going to target four different market segments, such as demographic market segment, behavioural market segment, psychographic market segment, and geographic market segment.
Figure 1: Demographic Segmentation
The above picture is going to be an example of demographic segmentation for “The Magic Box” through which the skin care products can be promoted for women of higher income background of different ages.
Figure 2: Geographic Segmentation
This particular picture is showcasing that a curly-haired lady is enjoying the streets of London and views of Thames with a confident hair-style statement. Now, this particular picture can be an example of geographic segmentation for “The Magic Box”.
Figure 3: Behavioural Segmentation
This picture can be an example of behavioural segmentation for “The Magic Box” in which the company can easily convey the message that the concerned customers can use the products and become stress free regarding management of their curly hair.
Figure 4: Psychographic Segmentation
The above picture can be an example of psychographic segmentation for “The Magic Box” in which the company can significantly convey the message that the products of the subscription boxes will help in improving the self-esteem and self-actualisation level of the customers.
Figure 5: Overall Targeting and Segmentation
The above picture can be used an example of overall targeting and segmentation for “The Magic Box” in which list of offered products and their benefits will be displayed through a picture. Like these ways, “The Magic Box” will develop a potential target market and small market segments.
Before developing a positioning statement, it will be important here to decide some important variables for positioning of “The Magic Box”. In that case, it will be important for the management of “The Magic Box” to identify major needs of target customers as this particular aspect will help in identifying the important positioning variables. First of all, it will be important to consider the pricing option. Recent pandemic COVID-19 situation has affected the purchasing power of common people. Several people are suffering from low disposable income related issues. Therefore, pricing can be considered as an important positioning variable (Kim and Kim, 2020). Secondly, it will also be important here to discuss that differentiation option will be considered as an important variable for positioning. If “The Magic Box” manages to offer more differentiated products in limited price compared to target customers, then the positioning of the products of “The Magic Box” will be more competitive.
LookFantastic, Birchbox, and Look Incredible can be considered as the potential competitors of “The Magic Box”. All of these three competitors of “The Magic Box” sell the beauty products including skin care as well as hair care products to the target customers. However, “The Magic Box” is slightly unique and different from these three competitors because the products offered by “The Magic Box” are more unique because the product segments are more narrowed down compared to the products of the mentioned competitors. The products of “The Magic Box” are specifically made for the care of hair and skull of the curly-haired ladies. In order to gain competitive advantages and increase core competency, the consideration of price-differentiation positioning of “The Magic Box” will be highly justified (Paas, 2019). The mentioned competitors have positioned their products by keeping diversification in mind because different arrays of beauty care products offered by the competitors, but “The Magic Box” only focuses on pricing and differentiation of hair care products in its positioning. Hence, this might be considered as a competitive positioning stand of “The Magic Box” in global market.
6.0 Product Strategy
In terms of product strategy, it will be important for the management of “The Magic Box” to ensure that the products will be of highest quality compared to the competitors. The manufacturers have ensured that the hair care products will be made of natural ingredients. No chemicals will be used in manufacturing process. It will ensure healthy hair and healthy skull (Welch, 2020). “The Magic Box” will offer those products, which will allow the curly-haired women to maintain stylish hair. Hence, the company is going to target a niche market. Potential and renowned brands will be approached by “The Magic Box”. The management of “The Magic Box” will sell the products of different renowned branded companies (Syspsan, 2019). Apart from these, products of different herbal companies, Indian Ayurveda Brands, and Chinese Herbal brands will be offered by “The Magic Box” to ensure good care of hair and skull.
Apart from product strategy, packaging strategy will also be important for “The Magic Box”. Environment friendly paper packaging of the products will be done to ensure zero carbon emission. In addition, maintaining hygiene while packaging and distributing of the products will also be major criteria of the business of “The Magic Box” (Tao and Xu, 2020). In terms of logo, the management of “The Magic Box” should keep it simple but attractive. “The Magic Box” will be the logo itself and this will be written in green colour to convey the message that natural and green ingredients are used in the making of the products. Most importantly, it will be important to discuss the pictures of different customer segments will be used to offer a transparent message regarding target market of the products of “The Magic Box”. On the top of the logo, an image of a tree in green colour should be kept to indicate that the brand is environment friendly. These product strategies will be used by the management of “The Magic Box”.
7.0 Pricing Strategy
There are different kinds of pricing strategies available for “The Magic Box”. In this case, the management of “The Magic Box” should apply value-based pricing strategy. There are different reasons behind the application of value-based pricing. First of all, the products are made of quality and natural ingredients. On the other hand, no chemicals are used in the manufacturing of the products. Secondly, the management of “The Magic Box” is also ensuring that the company will use environment-friendly packaging option. These additional values will automatically increase the loyalty of the customers and the customers will definitely know the worth of the products (Fosker and Cheung, 2021). These products are unique and made for customers of niche market segment. Therefore, consideration of value-based pricing strategy will be justified for “The Magic Box”. In such case, the perceived value of the products will be high. Therefore, application of value-based pricing will be justified for “The Magic Box”.
The price of “The Magic Box” monthly subscription will be 12.99 Pounds. This pricing is economic compared to the pricing of other market competitors. In addition, “The Magic Box” will offer more number of products in a single monthly subscription compared to other market competitors. This pricing is justified because the economic situation of the United Kingdom is slightly challenging now due to pandemic. In addition, industry also has become slightly competitive (Kassirer et al., 2019). Therefore, such pricing can be considered as a justified approach for “The Magic Box”. Initially, the shipping cost will not be charged to attract the customers and improve the loyalty of the target customers.
8.0 Communication Strategy
“The Magic Box” will be promoted through both traditional and contemporary marketing communication strategies. In terms of traditional marketing communication strategy, the management of “The Magic Box” will use magazines, billboards, newspapers, FM stations, and highway hoarding to promote the subscription boxes (Klein, 2019). In terms of contemporary promotional activities, the company will mainly use digital media and social media platforms as the number of these digital media as well as social media users is increasing rapidly in UK. This digital media promotion will definitely help in attracting the target market. On the other hand, development of mobile applications also can be considered as a potential medium of promotion. Apart from all of these, sponsoring fashion shows and corporate events will also help creating brand awareness of the products of “The Magic Box” (Dost et al., 2019).
Word of Mouth Strategy will also be prioritised by the management of “The Magic Box” as the company will look forward to increase brand awareness of the products in minimum cost. Most importantly, a PR campaign will be run through the help of social media platforms to apply the Word of Mouth Strategy positively (Cluley et al., 2020). Demonstration of Unboxing on social media platforms like You Tube will be used to attract the millennial customers in a dynamic way.
9.0 Planning the Future
In terms of future strategic approaches, the management of “The Magic Box” will look for constant differentiation to maintain core competency of the business in the competitive UK market. It is also important here to discuss that several companies might enter in this niche market segment to challenge the business model of “The Magic Box”. In such case, “The Magic Box” will ensure that level of perceived value of customers towards the products as well as services of “The Magic Box” is high. In addition, different unique offers and promotions should be considered by the management of “The Magic Box”. Constant diversification is also required. The management should conduct the market research in a well-extensive manner that the product life-cycle of every product is analysed (Hammond et al., 2020). Whenever a product has reached to the maturity stage of the life-cycle, the company should make sure that the product is re-introduced in the market with more additional values. Apart from all of these, positive public relations are also important for the company to maintain core competency in the industry for a longer period of time.
“The Magic Box” will offer such hair care products, which will be made of 100 percent natural ingredients in order to make their skull and hair healthy. These products of “The Magic Box” will help target customers to make their hair and skull healthy. Use of natural ingredients in making of the products will help in maintaining exclusivity of the products of “The Magic Box”. These aspects will definitely allow the company develop a healthy relationship with the target customers (Mendez, 2019). In the year 2020, the subscription box market of beauty care and make-up products in the United Kingdom worth of 78.9 Million Pounds. It is predictable that beauty care subscription box market of the United Kingdom will worth 93.3 Million Pounds by the end of 2025. Hair care products usually come under beauty care and make-up product segment. Hence, it is forecasted that the management of “The Magic Box” will experience positive business growth in the upcoming business years because the socio-economic trend of the industry is positive.
LookFantastic, Cohort, Birchbox, Glossybox, Look Incredible, Reposed, Lovelula, and Latest in Beauty are some potential competitors of “The Magic Box” in the United Kingdom, which can create difficulties for “The Magic Box”. “The Magic Box” will divide its target customer group into four segments, such as demographic segment, psychographic segment, geographic segment, and behavioural segment. The products of “The Magic Box” are specifically made for the care of hair and skull of the curly-haired ladies across the United Kingdom. In order to enhance competitive advantages and increase core competencies, the application of price-differentiation positioning of “The Magic Box” will be highly justified. In this case, “The Magic Box” should apply value-based pricing strategy because the products are made of quality and natural ingredients.
11.0 Academic References
Balmer, J.M. and Burghausen, M., 2019. Marketing, the past and corporate heritage. Marketing Theory, 19(2), pp.217-227.
Cluley, R., Green, W. and Owen, R., 2020. The changing role of the marketing researcher in the age of digital technology: Practitioner perspectives on the digitization of marketing research. International Journal of Market Research, 62(1), pp.27-42.
Dost, F., Phieler, U., Haenlein, M. and Libai, B., 2019. Seeding as part of the marketing mix: word-of-mouth program interactions for fast-moving consumer goods. Journal of Marketing, 83(2), pp.62-81.
Fosker, N. and Cheung, B., 2021. Pricing and proposition testing in subscription economies. Applied Marketing Analytics, 6(3), pp.211-220.
Kassirer, J., Lefebvre, C., Morgan, W., Russell-Bennett, R., Gordon, R., French, J., Suggs, L.S., Lee, N. and Biroscak, B.J., 2019. Social marketing comes of age: A brief history of the community of practice, profession, and related associations, with recommendations for future growth. Social Marketing Quarterly, 25(3), pp.209-225.
Klein, T.A., 2019. Comments on “marketing systems and market failure”. Journal of Macromarketing, 39(1), pp.106-107.
Lahtinen, V., Dietrich, T. and Rundle-Thiele, S., 2020. Long live the marketing mix. Testing the effectiveness of the commercial marketing mix in a social marketing context. Strategic marketing assignment Journal of Social Marketing.
Paas, L., 2019. Marketing research education in the Big Data era. International Journal of Market Research, 61(3), pp.233-235.
Patsiaouras, G., 2019. Marketing concepts can have a life of their own: Representation and pluralism in marketing concept analysis. Marketing Theory, 19(4), pp.559-566.
Syapsan, S., 2019. The effect of service quality, innovation towards competitive advantages and sustainable economic growth: Marketing mix strategy as mediating variable. Benchmarking: An International Journal, 26(4), pp.1336-1356.
Welch, D., 2020. Consumption and teleoaffective formations: Consumer culture and commercial communications. Journal of Consumer Culture, 20(1), pp.61-82.
12.0 Professional References
Aminah, H., Wen Chuah, S.H., Kuan Lin, P., Moslehpour, M. and Firman, A., 2021, August. Unveiling the Factors Influencing Consumers' Continuance Intention to Use a Subscription Box. In 2021 5th International Conference on E-Society, E-Education and E-Technology (pp. 259-266).
Erdogan, S.A., Senturk, A.G. and Balasingham, J., 2020, December. Allocation Optimization for Subscription Box Services. In 2020 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM) (pp. 746-750). IEEE.
Hammond, D., Rynard, V.L. and Reid, J.L., 2020. Changes in prevalence of vaping among youths in the United States, Canada, and England from 2017 to 2019. JAMA pediatrics, 174(8), pp.797-800.
Kim, Y. and Kim, B., 2020. Selection attributes of innovative digital platform-based subscription services: A case of South Korea. Journal of Open Innovation: Technology, Market, and Complexity, 6(3), p.70.
Mendez, A., 2019. Latin America and the AIIB: interests and viewpoints. Global Policy, 10(4), pp.639-644.
Noorda, R., 2019. The element of surprise: a study of children’s book subscription boxes in the USA. Publishing Research Quarterly, 35(2), pp.223-235.
Tao, Q. and Xu, Y., 2020. Consumer adoption of fashion subscription retailing: antecedents and moderating factors. International Journal of Fashion Design, Technology and Education, 13(1), pp.78-88.
Von Swearingen, R.F., 2019. Music Ally. Notes, 76(2), pp.317-319.
Xu, X., 2020. Examining the role of emotion in online consumer reviews of various attributes in the surprise box shopping model. Decision Support Systems, 136, p.113344.