As 2001 comes to a close, Sa Sa contemplates what else can be done to improve profitability and keep on growing. 1. What were the reasons for Sa Sa’s early success? SA SA was creating value for its customers by providing them with quality products at a fair price. Sa Sa was first of its kind to pioneer the concept of discount store for the cosmetics (create and control). It . did is fast in the initial stages of the business (compete) by making the stores bigger and better from 40 sqft in 1978 to 750 sqft in 1985 to 10 stores in mid 1990s.
Sa Sa was able to provide value to its customer by keeping the purchase prices low by using “parallel importation” and passed saving to the customers. One of the other important factor was Sa Sa listened to its customer demand (which products to stock). Sa Sa allowed the customer to touch and feel the cosmetics products that drove the demand. We also see Sa Sa’s strategy to deter the new entrants by holding onto old location. They controlled the inventory depending on the sales rate and the shelf life of the products.
Sa Sa uniquely combined the combined the cosmetics product knowledge to advice the customer and provided the products at lower cost in comfortable environment, thus creating value for the customer for the first time that no one has done before. This is Resource Based View, outcome of which gave Sa Sa a competitive advantage. Sa Sa developed the Core competency: Rare: Sa Sa’s core compentancy was rare until it disclosed it in IPO Valuable –yes customers found it valuable and made Sa Sa an household name. The sales people were one of the best trained in the industry but were poached by the competition.
In early days the Sa Sa operated as a family-run culture, help retain them but afte the IPO, when Sa Sa changed strategy to be creating value for the Shareholders hard to imitate: it was not hard to imitate as evidenced by the whole slew of competitier copied once known. non-substitutable-yes, there were various product segments/tiers; Sa Sa focused top brand names Core Products Business Units End products Porters 5 forces: Industry Rivalry: Concentration: Diversity of the Competitors Product Differentiation Excess Capacity Exit Barriers Cost Conditions Supplier Power Threat Of Entry
Buyer Power Threat of substitute What changes have occurred in the stores since Sa Sa’s early success? (Not including the strategic issues outlined in Figure A. ) Sa Sa was able to offer the cosmetics at a cheaper prices than competitors combined with the sales team able to help the customers with personal needs and using customer insights to buy/stock the inventories, Sa Sa had built unique value for the customers. Since the IPO, many new competitors (bonjour and rainbow) have entered the market. They are able to copy the core competency that was first developed by Sa Sa.
Additionally very well known drugstores (Watson’s and Manning’s), have started offering the cosmetics! Both have used the existing infrastructure and corporate capital resource to position themselves as significant players with 13% annual growth rate. Many departmental stores have tried to differentiate themselves by providing all products from a brand and by offering free beauty advice in the stores. Some have tried to target the Who are Sa Sa’s key competitors? What implications does your assessment have for the decisions that Simon Kwok is facing about the future of Sa Sa?
What were the key success factors behind Sa Sa’s story? What do you see as the major challenges and structural threats faced by Sa Sa? Market research. Review the market research data contained in the case. What are the key insights that you can learn from the findings? Assess the strategic initiatives that Sa Sa undertook recently. What are the positives & negatives. How is Sa Sa perceived by consumers? What should Sa Sa do next? Whom to target? How should the company position itself against the likes of Bonjour? Other strategic moves?