Running head: SASA CASE

M620: Strategic Marketing

Juan Lopez de Porres
Case 1
October 28, 2015

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Sa Sa Questions
Q1. What were the reasons for Sa Sas early success? Why did customers like it and what
were the key operational success factors?
The joint venture with a leading cosmetics retailer in China, Ebeca, by the wholly owned Internet
subsionary of the company, Sasa.com. Through this step, Sa Sa expanded its business network
resulting in a wider audience.
The convenient retail locations joint to the companys politics in low prices and broad product
selection resulted in a earning of 25% to the company in market share on a cost-basis in the
distribution of branded cosmetics and toiletries in Hong Kong. In addition, Sa Sa gained a high
brand recognition all over Asia.
Q2. A number of changes have occurred since Sa Sa became successful. Some were the
natural consequences of expansion and some were the result of management decisions.
Identify five
or six of these changes and say whether each is a positive or negative change. For those that
you consider negative, suggest a correction.
1- One of the changes we can consider has taken Sa Sa to his current success, is the way the
company is training his employees:
All beauty consultants are professionals equipped either with beauty knowledges as well as sale
skills. According to this fact, each consultant receive at least three to six months of intensive
training. As a result of this specific formation, each consultant is allowed to provide the best
service possible to the costumers.
Furthermore, once that formation in ended, getting the consultant a certificate of completion, they
would be stamped with a seal of approval by all industry participant, what makes them being
valuable between all the statements and other companies inside the field.
All these previous facts, joint to the opening-hours policy, focusing on the peak traffic hours,
between 5 pm and 7 pm on week days and 2 pm to 5 pm on weekends, have made the company
reach the target of $3000 per square foot annually, which means one transaction prcessed every
minute.
2- Another successful change happened during the peak performance season in Sa Sa was the
creation of his flagship store. This step boosted the companys earnings, enhancing the brands
image.
The new shop was divided in two floors, keeping separated cosmetics and toiletries in the upper
one and fragrances on the ground floor.
22.000 SKUs that Sa Sa storage, were sold in this brand. This success was caused because of the
fact that the new design overjoyed the suppliers, what helped to improve Sa Sas image as a

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discounter. Because of that, the legitimacy of the goods was strengthened, making possible to
increase de amount of sales.
In the other hand, costumers also preferred the layout. This preference was cause according to the
improvement in space, what was better than in usual shops. Therefore, this shop could carry more
items providing to the costumers a pleasant environment for their shopping.
3- A negative step that could be highlined was the expansion towards Asia. Although it could have
been a great idea at the beginning in order to invest the capital gained from the IPO in 1997, the
Asian crisis arrived suddenly.
Instead of keeping a save policy due to the situation, Sa Sas management continued with the
expansion, miscalculating the prolonged negative impact of the crisis.
All those decisions ended up with the negotiations of leases and closing of some outlets to try to
refocus Sa Sas main markets, which were Taiwan and Hong Kong.
An alternative solution for this situation could have been having carried out a deeper study of the
economic situation of Asia in those moments, in order to predict a possible crisis and having
measured the risks and profits of the decision.
In the other hand, even though having brought about that investment, would have been a better
decision to keep a more responsible expansion in order to solve all the issues and lost occurred as
a result of the crisis.
4- A really good strategy, was developed by the company, around 1999, in order to fight against
the pressure from authorized agents, who were controlling the discounts that Sa Sa gave to its
customers. According to that decision, Sa Sa was able to offer deeper discounts to its customers.
Due to solve that situation, Sa Sa expanded its business vertically in to carrying house brands.
What this agreement gave to Sa Sa, was more control over its supplies as well as enable the
company to capture the attractive profits that, otherwise, would have been shared by wholesalers
and distributors.
Knowing that, house brands included both, private labels and brands for which Sa Sa had
exclusive distribution rights, reaching a gross margin of over 60% by mid-1999, the company had
600 international and 90 house brands. Thus, Sa Sa got a total amount of 35.000 UKUs.
Although the company wrote down an obsolete inventory in 31st March (1999), losing $11.3
million, finally the amount of sales of the 90 house brands contributed to the 27% of the company
s turnover in 2001, up from 9% in 1991.
5- To sum up, as a negative point, it can be noticeable that at the moment when the company was
expanded to China its needed to increase the price of its products in order in order to balance the
difference between the branches in China and on that moment, in Hong Kong. That happened
because there were not any kind of limits or pitfalls in Hong Kong, what placed the prices at the
same level as the competitor ones. However, Sa Sa lost points in the knowledge of the brand by

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the costumers what means, the less the brand is known, the less the sold are. Therefore, the step
that should have been improved was the knowledge and noun of the products in
China, in order to put them at the same level of the competitor companies in terms of quality.
Q3. Suppose you are an executive with the market research firm that performed the study:
what are the most important three insights Sa Sa management should understand from the
data?
According to the Exhibit 12, what shows the relation between the importance of specific factors to
the costumers and the satisfaction of them for the company, the three most important insights that
Sa Sas management should take care about are:
1.Full range: This would be considered one of the most important factors considering that it is
situated in a high level of importance to the customers, and at the same time, an a high-average
level of satisfaction for Sa Sa.
Indeed, having a full range of products makes the costumers having a wider range of choices and
options, what could suit and fill better their necessities. At the same time, a bigger and full range of
products makes the company having a wider range of customers, what will end up in an increasing
of the sales of the brand.
2. Many outlets: This insight could be considered the most important and suitable for both parts.
According to the table, may outlets is placed in the highest level of importance to the customers
as well as in a very strong level of satisfaction for the company.
In this case, the fact of having that many outlets could make the company sell the excess result
from the overproduction as well as the speared products from previous seasons. This specific
strategy will make the company gain some earnings from items almost obsolete.
On the other side, with these outlets, customers are allowed to get the products at a lower price as
normal taking advantage of discounts applied by the company to all of these out-of-season item,
making them to save some money.
3. Convenient position: in this case, the last of the three most important factors showed in the
exhibit 12, is the convenient position of the brand. This insight is located in the top of the
medium level of importance to the customers as well as in a strong statement of satisfaction for the
brand.
For this insight, the importance to the customers of a convenient location is based on the fact that
the better the position of the shop, the better the access for the customers which means they could
go into it easily, any time they need.
At the same point, the better the location the more the number of customers that will enter in to the
shop. Therefore, the company will have more earnings.

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Q4. Consider the strategic initiatives summarized in Figure A. For each of these four
factors [brand equity, customer base, operational efficiency, management expertise]
discuss whether you believe it will or will not enhance the prospects of success for the
initiative. As a board member of Sa Sa do you approve of the initiatives?
In 2000 Sa Sa joint the 58% of Phillip Wain. With the combination of both companies, both their
products production and their names were also combined and related. Phillip Wain had a big
impact and recognition between the customers as a result of the idea of its healthy products.
Because of that, Sa Sa improved its position between the Chinese customers.
Related with La Collina, Sa Sa provide it with its products, improving the recognition of the first
company as a result of the quality of the products. In the other side, Sa Sa increased it profit
because of a raising in its annual earnings.
In the case of the joint with the SPAS lines, Sa Sa got a better and more complete position in the
mass market. This occurs because the position in the market was improved all over China
resulting in an improvement on its recognition as a quality products brand.
To sum up, since my point of view the whole idea is smart and adequate considering that Sa Sa
got one it best goals, getting recognition and a noted position in the Chinese market. Knowing
that the company was conditioned because of the laws and limits on that country, Sa Sa looked
for improving it recognition getting deals with another companies, offering both products or
services. With all this joints, Sa Sa improved it position in different markets, getting three
important steps for the brand: improving its annual earnings, improving it recognition between
the customers but, the most high lined step was, getting space in that markets nich. To all of
those factors, should be added the natural difficulty that the cosmetics market shows.

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References
www.sasa.com
A Campbell; K Sommers Luchs, Sinergia estratgica como identificar oportunidades, Deusto
s.a. ediciones, 1995
www.forbes.com
J.L. Munuera, A.I. Rodriguez, Estrategias de Marketing, Esic ed, 2 edicion.