Bare Escentuals Inc. (NYSE: BARE) is a San Francisco based natural health and beauty company that develop and sells its own line of cosmetics (i.d. bareMinerals, RareMinerals, and Bare Escentuals brands). The company operates over 300 privately owned boutiques and holds retail contracts with department stores and home television networks. The product: bareMinerals generates most of the company's revenue. The company earned $557 million in revenue and $98 million in net income in 2009.
Differentiation and distribution channels are the keys to the company's success. Bare Escentuals produces cosmetics with 100% all natural minerals. In doing so, BARE maintains a brand image that feeds on the mainstream public's desire of having skincare and make up in one product. The company aims to cover all income levels of consumers through displaying different products at different price levels ranging from over a hundred to around twenty dollars.
Instead of going through department stores such as the conventional makeup product, BARE focuses its marketing plan through infomercials in an exclusive contract agreement with QVC-an internationalshopping channel that has evolved into one of the world's leading multimediaretailers with 50 million customers for over 21 years. From that angle, BARE began by selling directly to the customers and thus building a loyal customer base without using the middle retailer. It remains the number 1 cosmetic product sold on QVC.
The majority of demands from QVC is rooted in the lower level consumers who are more susceptible to Part of the reason is due to competiting boutiques and department stores. Secondly QVC mainly channels to the lower economic level consumers who are more susceptible to economic downturns.
Although QVC remains the primary distribution channel for BARE, it also sells its products through various distribution channels consisting of premium wholesale, company-owned boutiques, spas and salons, and online shopping.
Seeing this success, competitors have come forth with similar products, however, Bare Escentuals remain one of the most popular and well known of mineral based make ups. In the past five years, BARE has experienced more aggresive growth than its competitors despite the lapses in the economy.
Bare Escentuals Inc. was started in 1976 in Los Gatos, California. Until 2006, it was called STB Beauty before changing it to Bare Escentuals Inc. Starting in the 90s, the company began to sell its products through boutiques in the San Francisco Bay Area. The CEO, Leslie Blodgett advertised her company through QVC television marketing using real women testimonials. Currently, Bare Escentuals are sold in one of the company’ 300 private retail stores and boutiques and make up specialty stores (Sephora). Their most famous brand; bare Minerals has won numerous awards.
Because the key difference between the marketing strategy of BARE and its competitors is the distribution channel, BARE's relative performance can be broken into two segments. Either it is measured against the larger and more established cosmetics company such as the following:
Or it can be measured more specifically against natural mineral makeup industry by itself, where it appears much more competitive: