Case Study

NATURA COSMETICS (http://www2.natura.net/NaturaMundi/src/index.asp)

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A Brief History

Natura was originally founded in 1969 as a small laboratory and cosmetics shop (store) in São Paulo, Brazil, by Luis Seabra. In 1974 the company decided to follow the example of the then world leader, the Avon company - by adopting a direct sales operation. This strategy allowed the company to continue expansion at low to moderate cost.

At the beginning of the 1990s, the company defined its beliefs and values, formalising them among its stakeholders. In 1994, Natura decided to pursue a new international business and opened an operation in Argentina. In 2000, it launched the Ekos line, a landmark product line made from raw material from Brazilian biodiversity[1] gathered through sustainable methods.

Product lines and Brand

Natura sells premium, high-margin cosmetics and personal-care products to middle - and upper class customer segments in Brazil. It is present in all main categories of the cosmetics market but most prominent in fragrances and perfumes, creams, lotions, and makeup. In 2005, its portfolio contained approximately 600 products aggregated into seven main product lines, with three of them – Chronos, Ekos and Mamae e Bebe (Mother & Baby) - considered to be ‘conceptual’ (ground-breaking, innovative).

Continuous reinvention and reformulation of its product portfolio has been crucial to Natura's marketing strategy. Between 2001 and 2005, the company launched or improved an average of 153 products per year, reinvesting approximately 2.9% (US$29 million) of its annual net revenues in the company, which was a fraction in absolute terms when compared with relevant investments by its larger competitors. In 2005, L 'Oréal spent US$587 million on research and development (R&D), while Shiseido invested approximately US$I56 million.

To innovate and develop products in-house on a continuous basis, Natura acquires patents and technology...