Natura Overview A company that was established in 1969 in a small garage in the city of Sao Paulo has grown to become considered currently as the largest and most lucrative corporation in the cosmetics sector and one of the most successful in the whole of Brazil. The business model implemented promotes an economic growth compatible and in pace with the social development while responsibly utilizing the country’s natural resources and biodiversity. This socio-ecologically correct behavior has given the company status and recognition while allowing the building of a very particular and differentiated profile which turned out to be very much appreciated by its clients. Natura adopted a direct-selling model that has developed into the core of its DNA and that allows for consultants to act as ambassadors of the brand and product offer as they approach the end consumer in an individual and personal basis. This direct-selling allowed for geographical expansion without loss of the interpersonal relations that were vital for the valorization of the brand by enhancement of its attributes and product uniqueness. The brand has experienced exponential growth between 1979 and 1989 (US$ 5 million to US$ 170 million), which is a testimony to the assertiveness of this tactic. Additionally, Natura promotes the idea that beauty should be directly related to well being and harmony of body and soul rather than to the incessant search for resemblance to industry’s unachievable beauty stereotypes. As these principals not only attract but also retain their sales representatives, it is also transmitted to the target end user. What the company manages to establish here is the ‘world of Natura’ as they want it to be perceived, promoting a corporate culture that will speak to a group of individuals and establish a target – people in search of this lifestyle and somewhat committed to ‘a better world’. Since this philosophy is not exclusive to the likes of Brazil’s demographic, it makes sense that the Group would observe expansion opportunities in new markets as well. As Natura has implemented its business model in Latin America and is present today in major countries of the continent such as Argentina, Bolivia, Chile, Colombia, Mexico and Peru, it starts searching opportunities in yet unreached territories of the world where to put into operation new international platforms. With the opening of its first ever store in France in 2005, Natura established an important step towards the European market. The directly operated store was a point of reference and status, a strong symbol where the company’s vision and believes could be displayed in order to reach a higher level of brand awareness and put on show its appealing Brazilian roots.
Determination of Current Success Patterns Natura is a brand with a strong root in sustainability which has enabled it to flourish with not only a competitive differential but also an attitude towards life that is particular to them. The social responsibility compromises it assumed gave the them considerable visibility. The brand relies on an emotion-based approach to its clientele that enabled it to found a well-built relationship constructed primarily upon trust. It also realized in early years that its marketing efforts should invest not only in the end consumer but also, and not less important, in all the stakeholders. Understanding their consumers voice can be louder than any kind of media, the goal became to implement major transparency towards them. Direct-selling operations served well this purpose. For Natura, a product out of stock can significantly damage a brand’s image and this model will not allow for that. Initial growth was propagated based on regional expansion and a high-quality product portfolio. Lines such as ‘Ekos’ and ‘Mamae e bebe’ only reinforce the brands values. Respectable attitudes of maintaining low prices during economic crisis as done in 2001 in Argentina also reinforces issues of brand trust, creating a loyal consumer base.
Assessment of Potential Markets and Competitive Position For a company that regards the entire world as a marketplace, there are in fact many potential markets that have to be analyzed critically in terms of macro and operating environments in order to restrict the number of possible entrances to realistic opportunities. Assuming Latin America is already well penetrated by Natura, it would be interesting to speculate which would be the most likely subsequent market to be explored and why. As the three founders of Natura assess Russia as a prospect we wonder if it is a coherent choice and where else could they take the brand and spread their wings. Since 1999, Russia has experienced outstanding growth rates, constantly improving macroeconomic conditions, and a growing involvement in the global economy. Being the fastest growing economy in the G8 group of industrialized nations, as well as a politically and economically stable country (inflation running below 10%), Russia is bound to attract investments from key players of many different sectors. As western concepts of wellbeing and looking good are fastly copied and intensely impact the development in the country’s cosmetic industry, local consumers tend to be expected to invest increasingly in this kind of commodities, leading a company such as Natura to spot a real chance to enter the market. Even though the company might be keen on thinking it is the perfect scenario given the attractiveness of the market conditions, there are specificities to the brand that should be pondered upon, thinking on how would they work on a market like Russia. Industry analysts say the market is full of potential, but is Natura’s business model appropriate to that market or would they have to transform themselves? Are Russians drawn to this brand and would they even understand it? Leading players such as Avon and Procter and Gamble have not only began exporting to Russia but they also made investments in local production. This is clearly evidence to their belief in the market and to the reality that global players are focusing energy in the country. But Natura is not Avon or Procter and Gamble, and therefore the assertive move of one is not necessarily applicable to the other. The truth is, even though appearance is a high priority of the glamorous Russian women, if Natura was ever to endeavor into Russian market, major investments would probably have to be made into strengthening brand awareness and philosophy. It is a fact the consumers there are not acquainted with Brazilian universe and know very little about this emerging country. It would be also challenging to say the least to introduce a brand who’s major concern with sustainability is at the core of the brand’s essence into a country that is not at this point in time so concerned with matters such as environmental care and eco friendly products. And more importantly, a direct-selling business model might not be the ideal one given the ‘less open’ nature of the local population. As appealing as this market could look at a first glance, it would be possibly be safer to regard it as a long term plan rather than an immediate one. Although consumer spending on cosmetics in Russia is growing more rapidly than in Western Europe, we cannot disregard markets there as a whole. Portugal could, for example, be a very realistic opportunity for a brand with this Brazilian DNA. Apart the undeniable common history these two nations share, there is in fact a mutual respect and esteem from one towards the other. Portuguese people regard Brazilians in a very ‘brotherly’ manner and have a majorly positive image of them as being generous, joyful and pleasant people. Portuguese could feel, in this globalised world of ours, a little more ‘Brazilian’ using a product coming from their ex-colony land. Non-existent language barriers aside, the large flow of Brazilian immigrants that enter the country every year could most likely facilitate Natura to enter the market in a relatively effortless move, leveraging on the mouth-to-moth model they are already so comfortable with. In this context, the company would probably satisfy the most recent trend of search for friendship and intimacy introducing their already successful way of sales through enhanced social contact. Products with biological origin that present themselves as an ecological and healthy option to the synthetic ingredients have (like in other countries in Europe) gained important territory in the local cosmetics industry and shown annual growth of about 16%, as we can observe in the cases of players as Organii and Lush. This being the ‘playground’ where Natura is so at ease with, a potentially profitable market could in fact develop. And from there, why not, try to take other less travelled roads such as neighboring Spain? On the other side of the globe, the U.S.A. has been seen as a possibility for a new market for long time by Natura. Having explored possibilities in NY, it is actually the West Coast that seems more attractive given its more ‘green’ lifestyle which is in tone with the brand’s codes and values. The major problem here is the extreme competition a new player is faced with when entering such a market. Nonetheless, if the brand has enough character to differentiate itself from the others, it could possibly find itself a spot on the American shelves and consumers’ minds. Having the biggest cosmetic market in the world it is also a matter of status for a brand to penetrate this setting. The U.S.A. is not a predominantly bureaucratic country in terms of product registration and the entrance relies mainly in organization and competitiveness of price. With its exotic appeal and natural philosophy, Natura has large chances of succeeding in such a confront. In the U.S.A., Brazilian women are regarded as sexy beauty icons (especially supported and incarnated by the Victoria’s Secret Angels) and have a powerful image in the American women’s psychic. In addition to this, the West Coast is known for its beach culture as is Brazil – what could be a good connecting point for the brand to play with. The direct-selling operations could also come through as an added value to the whole package as American consumers tend to be extremely service oriented. Other emerging markets such as the ever-growing China, that relate well to the well-being and healthy philosophy could also become key targets in the long run for a brand like Natura.
Recommendations
As Brazil grows and becomes more and more interesting to external companies to invest in, local player Natura has to balance competitiveness in their home market, and at the same time, learn how to act globally by expanding its conquered territories to new international markets in order to be able to prosper from both ends in the near future. As it continues to use its French store as a window to the world and as an educational platform for customers and sales representatives, Natura needs to find its place under the sun in the global panorama. It has to assure it acquires a relevant presence and stage in which to act from, and in that way, establish itself as a relevant international performer. Latin America has been until now, a safe focal point for international expansion, where not only physical, but also ideological proximity to Brazil, have made it a sensible starting point. The business model Natura propagates have been proven to work well in these neighboring countries. It is however necessary to be daring if the ambitions are high. The brand cannot, for example, rely on the direct-selling business model for entering all other prospective markets. The premise that this model would be replicable in all other situations, underestimates the effect of cultural differences that vary from country to country. It could be that this system would apply well to some cultures, but in others, such as the French for example, it would most likely be a disaster. It would be necessary to evolve, the model has to be adaptable to the new frontiers.

The brand should most definitely aim in first instances at markets that share and admire its vision and what it stands for. If the brand’s values speak to a certain demographic, it is already a major asset to facilitate penetration. Countries like Portugal, U.S.A., China or even India could most definitely be potential targets.

As Natura attempts to make the most asserted decisions regarding its appointed subsequent goals, the most rational thing to do is probably use ecommerce supports in order to sustain brand building in potential markets and identify where they should focus on. Furthermore, a ‘virtual shop’ allows brand and products to enter markets without major operational expenses.

The Brazilianity that is so important to the brand has to be treasured and enhanced. This is the most intrinsic advantage the brand carries in relation to the others. As success grows and acquisition by global players presents as a real possibility, Natura should almost certainly be faithful to its roots of a family owned, socially engaged and politically correct company. A merger of the kind could definitely potentially damage the brand’s image that was created with so much effort. Furthermore, it really seems that the Brazilian affection can disseminate, slowly but surely, standing on its own feet.

Bibliography:

Hans Mühlbacher, Helmuth Leihs and Lee Dahringer, International Marketing A Global Prospective, THOMSON 3rd Edition

Geoffrrey Jones and Ricardo Reinsen de Pinho, Natura: Global Beauty Made in Brazil, Harvard Business School

Natura website www.natura.net