IntroductionIsabella is a 22 year old college student who is always looking for amazing products at an affordable price. She not only wants a bargain but also cares deeply about giving back. Isabella volunteers at the local animal shelters, after school programs, and charity marathon events. Birchbox was given to Isabella as a birthday gift for three months, but she never really connected to the company, so she did not sign up for a subscription on her own. However, Isabella loved the products she received. What can Birchbox do to connect with individuals on a more personal level?

Competitors

BIRCH BEAUTIES

Revolutionizing the online retail business was not a task for the ordinary person. Founders Hayley

Barna and Katia Beauchamp stepped out of their box when creating Birchbox. Birchbox initially started as an

online subscription business aimed towards every woman.

According to the founders, there is no one specific target

market. Once Birchbox became a success, Barna and

Beauchamp went even further out of the box when they

decided to create Birchbox Man. They were the first beauty

online subscription business to attempt to target the male

consumer. Birchbox is continuously ahead of its competitors

in terms of new ways it reaches new customers. Not only does Birchbox have quality products at an affordable

price point, but they also offer one of the most realistic loyalty programs.

Despite Birchbox’s forward thinking, it does

have areas of opportunities. Ipsy1 has a

stronger social media presence. Both Ipsy1 and

Birchbox customers receive points for posting

on social media about their monthly

subscription products. What makes Ipsy’s

social presence stronger is they allow their

customers to see what is inside their box

before it arrives if they share a specific Ipsy1

post on Facebook. Ipsy’s make-up segment is

also more profitable because of its

partnerships with major competitors within the

cosmetic industry such as Smashbox and

Urban Decay. MAC1 is also a major

competitor as Birchbox begins to open its brick and mortar stores. MAC1 has a well-established brick and

mortar business with loyal brand customers. MAC’s name alone is enough for customers to be assured the

product they are buying will work.In order for Birchbox to continue to be one of the leading subscription

businesses, it needs to have a stronger social media presence and continue to build its brand to speak for itself.

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1.

Skin care business Achieving point requirement is feasibleTarget all women & men “Upcycling” challenge

Not partnered with industry giantsFocus on male engagementWeak social media presence

Focus on major industry giantsContinue to target malesTry new marketing approaches

Niche make up companies Recycling not “Upcycling” encouraged Imitation

Customer Analysis

“Birchbox ladies cover all sides of the

spectrum.”2 From the beginning Birchbox never

targeted a specific type of female consumer. “53%

of Birchbox users selected more than one beauty

style”1. However, the heavy users are young women

1 To see a full SWOT analysis for Ipsy and MAC refer to the appendix

Birchbo

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#BirchBeautiesCreative Approach. In order to get Isabella and other

customers like her to commit to Birchbox long term, we have

created a social media contest called #BirchBeauties.

Subscribers who follow Birchbox on Instagram will have the

chance every two months to enter a social media contest. Two

winners will be selected and will win $5,000 to donate to a

charity under Pura Vida’s Charity Collection.

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“Birchbox ladies cover all sides of the

spectrum.”2 From the beginning Birchbox never

targeted a specific type of female consumer. “53%

of Birchbox users selected more than one beauty

style”1. However, the heavy users are young women

Contest Requirements1) Birchbox subscriber2) Upload a picture on

Instagram of themselves with favorite product/Birchbox

3) Reason why they love Birchbox & which charity touches them the most

4) Use the hashtag #BirchboxBeauties

2 Quotes from Co-Founder Haley Barna which can be found in the article “Behind the Box: Birthday Thoughts”

Wavy Hair Classic Medium-Dark Skin

Pura Vida’s Charity Collection. Pura Vida is a company who provides jobs for artisans in Costa Rica by

making unique, handmade bracelets. Pura Vida is a company who is already partnered with Birchbox. Pura

Vida aims to do more than provide jobs for artisans. They also own a non-profit company called Charity

Collection. Charity Collection is an umbrella non-profit organization that donates to charities all over the

world.4 Since each bracelet supports a different charity, sales from each bracelet are donated to the charity that

the bracelet supports.

Casual Loyal. #BirchBeauties will convert casual users into loyal customers because people want to be

associated with a company who participates in philanthropic events. In a survey3 I conducted, 54% of

participants, ranging from 18-25, said it is very important to them that a company actively

participates in philanthropic events. The most important finding that came from the survey3 was that

90% of respondants said they would participate in a social media contest if they had the chance to

make an impact. Birchbox will be able to retain its young, trendy, and socially conscious customer if

they can relate to the customer in a personable manner. By requiring participants to be a Birchbox

subscriber, customers will begin to extend their subscription in hopes of entering the contest. Once

word about the contest starts to gain momentum more and more subscribers will begin to participate.

Millennials who have received a Birchbox gift subscription or who have subscribed for a certain time

period will begin to see the company is more than the products it sells. The company will begin to

break down its barriers showing its millennial customers who are becoming increasingly concerned about the

environment, animals, and their health that Birchbox understands. The social media contest will show its casual

customers that Birchbox is a company that wants to give back and be a part of their life. The casual socially

conscious, trendy millennial subscriber will become a loyal subscriber if it sees Birchbox is about changing and

inspiring the world because this generation was the generation that was stated would change the world.

From Implementation to Profit. In order to ensure profitability, contestants must be a Birchbox

subscriber. Despite having to donate $10,000 a month to a charity,

Birchbox will be retaining more subscribers which will balance out the

monthly donation in the long run. According to Deluxe.com, a brand

image can improve recognition, create trust, support advertising, build financial value, inspire employees, and

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3 Survey questions and results can be found in the Appendix. 4 A list of all the charities who Charity Collection donates to can be found in the Appendix

generate new customers. Therefore, Birchbox will not only increase their revenue, but also receive these

priceless benefits from actively participating in philanthropic events.

Barriers to Entry. Every two months, Birchbox would be donating $10,000. According to PrivCo,

Birchbox’s revenue for 2014 was $139 million dollars, so $10,000 every two months will not affect net profit

substainually. Birchbox will also be able to claim a tax deduction due to the amount of money donated to

charity. The tax dedcution will vary depending on which tax bracket Birchbox

falls in that year. There is no involvement from competitiors in philanthropic

social media contest. In order to successfully execute this creative approach to

convert casual subscribers to lifetime subscribers, Birchbox needs to promote

the contest consistently on Instgram and other social media accounts.

Brand PositionBirchbox is positioning itself to serve trendy, yet socially conscious 18-25

year olds who try to give back as much as they can. Birchbox will remain at

its current price point and continue to offer customers high quality products at

an affordable price. “Consumers around the world

are saying loud and clear that a brand’s social

purpose is among the factors that influence

purchase decisions” (Nielson, 2014). According to Erik Medina, Vice President of

The Future’s Company, meaningful is the name of the game

and companies need to make a statement that they have values

and care about the world.5 Birchbox will transform itself from an

impersonal company to a socially responsible company that wants to help customers

create magical moments in their life.

Birchbox&Beyond Expansion Strategy. While converting casual subscribers into

loyal subscribers and connecting to Birchbox’s current majority

customer is important to the company, the company also needs to

grow. The expansion plan has two major components that are aimed

at the same target market. The first component of the expansion plan

is called Forever Birch which is focused on a store-within-a-store

concept. A Birchbox store will be placed inside Forever 21. The

shop will be scaled back compared to the Birchbox’s 4,500 square

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5 Taken from Erik Medina’s speech at the 2015 Retail Summit

foot SoHo flagship store, but will replicate the three key interactive stations that make visiting Birchbox a

unique experience: the lip stick swatch station, Try Bar, and Build Your Own Birch (BYOB) (Birchbox, 2015).

The second component is called Birch for a Change which is a program geared towards providing high school

girls in poverty stricken neighborhoods with the opportunity to aid in the development and execution of

marketing events. Birchbox will partner with Girls for a Change to allow girls in the organization the

opportunity to see how marketing events are taken from planning to execution.

Target Market. This expansion strategy is

geared towards targeting centennials.

Centennials fall in the age group 0-18. The

portion of centennials this expansion strategy is

targeting is 13-18. Birchbox is personalizing

their connection with subscribers 18 and older

with their participation in social responsibility, but centennials are at a different stage in life. According to The

Future’s Company, centennials will drive many of the changes we see going forward in the new century, but

aren’t saddled with impossible dreams. Centennials are in the early stages of figuring out who they are, where

they what to go, and what is important to them. Birchbox needs to connect with their younger target market now

on a personalized level while they are still forming their brand preference and still in the discovery phase. 72%

of centennials agree that “having new stuff is overrated when what I have already is good enough” (The

Future’s Company, 2015).

Therefore instead of marketing “stuff” to centennials we need to market personalization and experience to

these emerging customers. The number one rule when attempting to reach centennials is to place the experience

of shopping first.5 In order to reach centennials, Birchbox needs to be interactive, but also provide meaning to

the customer. Based on research done by the Future’s Company, 68% of centennials say they worry about not

being prepared for the future rather than saying they’re too young to worry about it. Retailers need to plan on

providing an experience for centennials, but also on how they can prepare them for the future. Retailers need to

figure out how they can use their resources to make a small impact that will last a lifetime. No matter if we are

targeting millennials or centennials, experience and social responsibility is what both generations are looking

for when choosing which retailers to remain loyal to.5 Centennials take it one step further and want a career

added value given to them.

Customer Lifetime Value & Market Size Analysis. According to the Social Librarian, Centennials have

an estimated population of 23 million, which continues to grow rapidly. They have a combined buying power of

$43 billion and influence an additional $600 billion of family spending (Dan Schawbel, 2013). There is

potential in this market because of the amount of influence they have. Centennials have barely entered or have

not yet entered the workforce. Not being financially established may scare some retailers off, but in order to

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5 Taken from Erik Medina’s speech at the 2015 Retail Summit

connect with centennials Birchbox needs to start planning on attracting them now. “We need to expect

emboldenment, anticipate empowerment, and invite them in in order to be successful” (The Future’s Company,

2015). No other subscription business is positioning itself to target centennials. They are still focusing on

millennials. The time of the millennials is now being overshadowed by centennials. Retailers need to get on

board with centennials or get left behind because these emerging customers are not as patient as the millennials

were (The Future’s Company).

Partnerships. Birchbox will partner with Forever 21 and Girls for a Change.

Marketing CampaignBuddy Marketing. Forever 21’s primary role is to promote its customers to

subscribe to Birchbox by offering discounts for every month customers show proof

of subscription. Forever 21 would also offer a 15% discount off an entire purchase

when a customer initially signs up for a Birchbox subscription. Every month Forever

21 will offer a $5 off an entire purchase if customers can provide a picture of the

items they received in their Birchbox for that month. Employees would also be

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Forever 21

Why Forever 21? Targets centennials

Affordable prices

Trendy

Established brand name

Forever 21’s Role Promote customers to

subscribe to Birchbox

Provide clothes for

fashion shows

Girls for a Change

Why Girls for a Change? Targets centennials

Charity Organization

Provide Birchbox with connections to girls in the program who need assistance

Birchbox’s Role Provide girls in the

program with an educational experience by using a hands on approach

Introduce girls to the retail and fashion industry

5 Taken from Erik Medina’s speech at the 2015 Retail Summit

required to place a Birchbox flyer in customer’s bags. In return for promoting Birchbox subscriptions, Birchbox

will exclusively use Forever 21 products in handouts and marketing efforts.

Rip the Runway. Birchbox will host 4

fashion shows a year: Spring, Summer,

Back to School, and Fall. All fashion

events will take high fashion trends and

translate them into everyday wear. All

products and clothes used will be from

Birchbox and Forever 21. The reason

behind choosing spring, summer, back to

school, and fall as the four foundation themes are because these are the major

fashion transitions that

are essential in a young girl’s life. Instead of being a trend follower, we want these girls to be the trend setters in

their high schools. The fashion shows provide young girls in the Girls for a Change program the opportunity to

gain insight on marketing strategies and execution. Girls would be able to sit in on the planning meetings and

even be models if they choose to be. The idea behind allowing the girls to be a part of the planning process is to

“invite young women to design, lead, fund and implement social change projects that tackle issues girls face in

their own neighborhoods” (Girls for a Change, 2011). Girls will be introduced to high fashion and quality

products they normally would not have the chance to experience or learn about.

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Girls in the program will form a strong personal connection to Birchbox which would make them want to

become a subscriber. These fashion shows will also attract new centennial customers because Birchbox’s

makeup and hair products will be used. After the fashion shows, Birchbox employees will have the opportunity

to interact one-on-one with customers to promote subscribing. Interacting one-on-one with the target market

will increase the likelihood they would sign up for a subscription.

Fashion shows will be in a very upscale venue with exciting lighting. The atmosphere we are trying to

portray is a high end fashion show, but with colors that are in

season for that time period. The runway will be pure white, with

different colored lights directed on the runway. There will be a

circle platform at the end of the straight runway. Chairs will be

covered in silk coverings with the Birchbox logos on them. Under

each seat there will be a sample Birchbox with products from

Birhcbox and coupons to Forever 21. Along with products and

coupons, there will be a flyer with the top 5 easy tricks and tips for

the season.

Financial PlanMarketing Expenses. “Buddy” marketing is economical and efficient. Therefore, all Birchbox would need

to finance is the flyers that would be placed in each Forever 21 bag. An estimated amount for the flyers would

be approximately $1,500 a month. Creating the Birchbox store in Forever 21 will cost $20,000 to ensure the

essence of Birchbox is portrayed through every fine detail.

Fashion Show Budget Breakdown. We want to provide a “wow” effect when people walk in the

ballroom. The fashion shows would cost approximately $20,000. The $15,000 would cover venue and lighting.

The venue is the most expensive portion of the fashion show because we want to find a location that is elegant

and grand. Clothing will be donated by Forever 21, so there would be no additional cost for styling. All beauty

make up products used will be from Birchbox. Birchbox experts would be the makeup artist, but also be the hair

stylist. All hair and makeup will be simple because the idea is to make high fashion trends into easily replicated

everyday wear. $2,000 will be spent on creating the gift boxes that will be placed underneath our guests’ seats.

The remaining $3,000 will go towards decorations that reflect the elegant, fun fashion show themes. There is no

model expense because models would be volunteers from Girls for a Change.

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Six Month Sales Plan. The financial plan below reflects a total net profit of $8,173,840 based off of a sales

increase of 10%. August sales are 20% because there will be a fashion show for Back-to-School. The Back-to-

School shopping fashion show was placed in August because of the recent delay in when customers are

shopping for Back-to-School. September there will be a 7% decrease in sales because customers have spent

most of their discretionary money on back to school shopping. October sales will increase to 15% because there

will be a fall fashion show to introduce this year’s fall trends. Due to spending in October, November sales will

drop to 13%. The fashion show will be themed on fall trends for the upcoming season. December sales will

jump to 20% because of Christmas and other holiday shopping. We expect to see more gift subscriptions

purchased. January sales will only fall 1% because many people will be updating their personal style and image

for the New Year. To help customers with their transition of out with “old, in with the new”, there will be a

fashion show to feature the hottest new trends of the current season and spring trends. Forever 21 will also be

having their “End of the Season” sale in January which will bring in a lot of traffic in the store subsequently

increasing the number of potential customers for Birchbox. February sales are projected to be 20%. Other

expenses include a one-time cost of $20,000 to create the Birchbox shop in Forever 21. There will be three

Birchbox experts who will work specifically one-on-one with customers. Based on an average employee pay

rate from Glassdoor, the pay rate for employees will be $18 an hour. A Birchbox event coordinator will be head

of the shop and will be in charge of planning and executing fashion shows. The event coordinator will be paid

$25 an hour. All employees cannot go over 35 hours a week.

ConclusionUnderlying Theme. The underlying theme is connecting with customers on a personal level will lead them

to be loyal subscribers. Being a socially responsible company is simply not enough for customers. Therefore,

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Birchbox needs to incorporate its subscribers in its philanthropic events in order to increase its subscribers and

turn casual subscribers into lifelong customers.

Lifelong Customers & Profits. While wanting to attract new customers, Birchbox still needs to continue to

service and satisfy its current heavy users, millennials. #BirchBeauties is intended to provide millennials with

the opportunity to give back to any charity supported by the Pura Vida Charity Collection. This social media

contest will begin to show current millennial subscribers Birchbox is a personable company and convert casual

subscribers into loyal lifelong subscribers. Partnering with Forever 21 will allow Birchbox to target more

centennials. The store-within-a-store concept will allow Birchbox to be able to show centennials Birchbox is a

compassionate company who cares

about their customers’ needs from a

business and personal perspective. It

will also allow Birchbox to interact with

customers one-on-one to promote

subscription, familiarize customers with

product assortment, and create

relationships with its target market. Girls for a Change reconfirms

Birchbox does care about the issues centennials are facing today. Birch for a Change provides Birchbox the

opportunity to educate young women on retail and make a

difference in their life.

Birchbox Prevails. Birchbox will continue to lead the

subscription business in innovation with its

new social media contest and expansion strategy. From the creative approach with Pura

Vida to the innovative partnerships with Forever 21 and Girls for a Change, Birchbox is

demonstrating it is more than the products they sell. Birchbox is revolutionary and

will increase its number of subscriptions because they are putting customers first and

focusing on catering to customer needs and wants. By portraying that Birchbox is about

encouraging change and inspiring customers, millennials and centennials will become loyal

subscribers to Birchbox.

Change. Inspire. Subscribe. Birchbox.

Appendix

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A. SWOT Analysis of Competitors

B.

Survey Results

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Subscribers are constantly posting about receiving their Glam Bag in order to see what they received inside

Partnered with key competitors in the make-up industry

Receive a cute bag every month

Customers put on a waitlist for several weeks or months

Reaching the points requirement is challenging

Other competitors have a more efficient reward system

Specialized make up companies are constantly striving to perfect service

Birchbox focusing on skin products

Shorten the waitlist time

Improve Reward SystemTap into the male consumerTry to increase skin care

segment of business

High quality of product Strong competitor in the

beauty industry Well-trained beauty

consultants Brand loyal customers

High price point Unable to relate to the

average person Lack of innovation in

their marketing

Create a different brand extension at a lower price point Try to market to the average women not just to professionals

No subscription business Companies are trying to reach

outside their primary target market

Companies constantly changing their marketing strategies

MAC IPSY

C. List of charities in Pura Vida’s Charity Collection

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E. Image Citations

"9 Fall Outfits for Teen Girls - Page 4 of 9 - Women-outfits.com." Womenoutfitscom. N.p., 22 Sept. 2015. Web. 22 Oct. 2015.

"Back to School Outfit Ideas." Beautylish. N.p., n.d. Web. 22 Oct. 2015."Bing." Images. N.p., n.d. Web. 22 Oct. 2015."Corporate Social Responsibility." Levenfeld Pearlstein, LLC. N.p., 10 Nov. 2012. Web. 22 Oct. 2015."Fall 2014 Photo Shoot: HGC Street Smart Style Gives Back ‹ House of Gratia Et Cartias." House of Gratia Et

Cartias. N.p., n.d. Web. 22 Oct. 2015."@forever21 • Instagram Photos and Videos." @forever21 • Instagram Photos and Videos. N.p., n.d. Web. 22

Oct. 2015."Girls Winter Outfits December 2012 Trends." , Dresses, Latest Fashion Trends, Tattoos, Beauty, Fashion Tip

and Cosmetics. N.p., n.d. Web. 22 Oct. 2015."Giveaway: Essie's Spring 2014 Collection Just in Time for Easter." AOL.com. N.p., n.d. Web. 22 Oct. 2015."JOIN OUR 175+ CHARITY PARTNERS + FUNDRAISE TODAY!" Join Our 175+ Charity Partners +

Fundraise Today! N.p., n.d. Web. 22 Oct. 2015."Lead-Free Lipstick: Why You Should Nix Maybelline and L'Oreal, Plus Healthy Alternatives - Eco-Chick."

EcoChick. N.p., 16 Feb. 2012. Web. 22 Oct. 2015."My Vote on Marsala - Maskcara." Bloglovin' N.p., n.d. Web. 22 Oct. 2015."Pura Vida Bracelets® on Instagram:." Instagram. N.p., n.d. Web. 22 Oct. 2015.

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"Rejoice! A Birchbox Pop-Up Store Could Be Coming to a Gap Near You." Glamour. N.p., n.d. Web. 22 Oct. 2015.

"Une Décoration De Réception ADORABLE à Faire Soi-même Avec De La Tulle!" Trucs Et Bricolages. N.p., 08 Sept. 2015. Web. 22 Oct. 2015."Untitled #214." Polyvore. N.p., n.d. Web. 22 Oct. 2015.

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