The Honest Company: An Overview Of The Organization, Business Strategies, And Future Opportunities And Challenges

Background of The Honest Company

Question:

Discuss about the Markting Strategy of Honest Company.

The Honest Company is an American organization cofounded by Hollywood actress Jessica Alba, Brian Lee, Sean Jane and Christopher Gavigan in the year of 2011. The organization sells consumer goods which are better in quality than any of their rival organizations in the market of United States and Canada. After the birth of Jessica Alba’s first child she was enthusiastic in establishing an organization that would sell baby products of good quality and she thought in today’s market it would be beneficial for the babies. Her idea was materialized when she found that her baby child caught up a welt outbreak caused by a baby laundry. In the year of 2012 she launched seventeen products with the help of her business partners. Currently the organization have assets over 1.7 billion U.S dollars and earned a reputation in the markets of United States and Canada. The report deals with the background of the organization, various business strategies the organization have accepted, a S.W.O.T and P.E.S.T analysis of their business structure along with a full detailed discussion regarding how they operate their business in the market of United States and Canada. 

In a conference in San Francisco actress turned entrepreneur talked about various ways she and her cofounders follow to increase the reputation of their organization in the market of United States and Canada.

Alba, after giving birth to her first child back in 2008 realized that the majority of the baby products sold in the market are not free from harmful petrochemicals and synthetic fragrances, so to provide her child with safe products she had to order goods online or had to import them from other companies and thus realized the necessity of these products and decided to open a business in the market where the demand is pretty high. She said that she always wanted to create a brand where people would shop without hesitating bout the qualitative factors of the products and can get the best products for them and their newborns (Nikolaos, & Evangelia, 2012).

From the year of 2011, the organization opted for an online platform to sell their goods as they realized that e-commerce is the future and they should consider that factor.  By the year 2012 they made it sure that all the consumers can easily order goods online and get the delivery at home, this idea back in 2012 gained huge popularity   and that generated huge revenue for the organization.  They made a solid base on a digital platform and then opened many outlets in the market of United States initially and later they expanded their business in Canada (Zikmund, et al., 2013).

Business Strategies of The Honest Company

To leverage technology to build a reputation and a brand value Alba had to find suitable business partners and that took almost three years to materialize. They initially launched a monthly subscription model. Lee the cofounder of the organization initially launched a monthly subscription model and Alba stated that to create a subscription model for the organization she understood the necessity of the man whose brainchild is the model itself.  Alba said that if an organization faces more than twenty questions that the organization cannot answer then there must be a lot of work pending for the members of the organization. This is how it can be seen that there was a massive urge among the cofounders to make this organization stable in the market of United States and Canada (Helm, & Gritsch, 2014).

Cofounder of the organization Jessica Alba stated that, she was excited to see people using the products of their brand by ordering it online or by buying directly from the outlets and using them and giving positive reviews for the products. There came a satisfaction that cannot be compared with any other form of satisfaction.

According to the cofounders of the organization The Honest Company, they said that they always have a tendency towards retaining more technologically savvy women as it would be beneficial for the organization, as end of the day the organization operates thinking about the benefits of today’s women after all (Madu, 2013).

S.W.O.T analysis can be very helpful to determine an organization’s future success or the challenges the organization might have to face, so a detailed analysis is given below.

Strengths:

There are two main advantages of The Honest Company to operate their business in the market of Canada and United States and those are huge brand value and loyalty of the customers. It is a well known fact that as the organization is majorly backed up by Jessica Alba, a veteran Hollywood actress, so the brand value of the organization would touch the highest limit, and that is what happened in reality (Spender, 2014). The brand value of the organization reached a height within a few couple of years and that something to envy for the other business personals n today’s market with high competitions. Another plus point for the organization is they mostly sell products for babies and other cosmetic products and they ensure that their products are of higher quality, so they are blessed with an immense loyalty of the customers (Hitt, Ireland & Hoskisson, 2012).

S.W.O.T analysis of The Honest Company

Weaknesses:

The main weak point of the organization is a weak cost structure. That means the liable costs of the organization is very high in comparison to the other rival organizations in the market. Apart from this issue recently some negative remarks about some products of the company are seen and those are mainly regarding qualitative issues (Alsmadi, & Alnawas, 2012). These issues must be resolved quickly to ensure the profitability of the organization must not be dropped.

Opportunities:

The main opportunities of the organization are the products they are offering are of higher quality than most of the available products in the market of United States and Canada. Apart from that, the organization operates in a new market where products of higher quality than their goods are not easy to find. So they are lucky enough to be able to operate in a market where they could be the possible giant organization (Goksoy, Ozsoy & Vayvay, 2012).

Threats:

The main threats of the organization are severe rivalries in the market and other substitute product’s availability in the market where The Honest Company operates. To deal with these companies the company needs to update their business policies and they should stress on innovating new ideas to make their products of higher quality to defeat the substitute products in the market. Not only that the organization should stress on various marketing strategies to outcast the rival organizations from the market (Eccles, Perkins & Serafeim, 2012).

To analyze the current situation of the organization in today’s market a P.E.S.T analysis in also given below.

Political: The Honest Company has no such political problems regarding their operations in United States and Canada as in both the nations; Jessica Alba is a well known name so no such political issues were seen (Verbeke, 2013).

Economic:  In recent times the organization is facing little challenges regarding cost management as the company liabilities of The Honest Company is much higher than any of their rival organizations operating in the market. It is a fact that, they should stress on the factors of cost management to annihilate the oddities they is facing currently (Child, & Hsieh, 2014).

Social: The Honest Company operates in the market of United States and Canada where people are mostly well to do so they would invest more for the benefits of their babies, but the organization needs to understand that there might be some people who lives in the rural areas with comparatively lower financial stability, so they should try to reach them in order to get a solid platform to earn a huge reputation (Connor, & Lande, 2012).

Technological: The organization operates in the market of Canada and United States where industry is technologically pretty sound so they are able to maintain the quality of their products than any other organizations in the same industry.

Conclusion

Thus to conclude, it can be said that the organization is a well reputed company in the market of United States as well as Canada and may be recently they are some minor issues regarding some negative reviews from some consumers and due to weak cost management system, but an organization with so higher reputation and so many strong attributes would easily overcome these oddities as any established company can thrive in challenges, rather they should.

References

Alsmadi, S. A., & Alnawas, I. (2012). Consumer Rights Today: Are They in Business or Out of Business?. International Journal of Marketing Studies, 4(1), 159.

Child, J., & Hsieh, L. H. (2014). Decision mode, information and network attachment in the internationalization of SMEs: A configurational and contingency analysis. Journal of world Business, 49(4), 598-610.

Connor, J. M., & Lande, R. H. (2012). Cartels as rational business strategy: crime pays.

Eccles, R. G., Perkins, K. M., & Serafeim, G. (2012). How to become a sustainable company. MIT Sloan Management Review, 53(4), 43.

Goksoy, A., Ozsoy, B., & Vayvay, O. (2012). Business process reengineering: strategic tool for managing organizational change an application in a multinational company. International Journal of Business and Management, 7(2), 89.

Helm, R., & Gritsch, S. (2014). Examining the influence of uncertainty on marketing mix strategy elements in emerging business to business export-markets. International Business Review, 23(2), 418-428.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.

Madu, B. C. (2013). Vision: The relationship between a firm's strategy and business model. Journal of behavioral studies in business, 6, 1.

Nikolaos, T., & Evangelia, F. (2012). Competitive intelligence: concept, context and a case of its application. Science Journal of Business Management, 2012.

Spender, J. C. (2014). Business strategy: Managing uncertainty, opportunity, and enterprise. OUP Oxford.

Verbeke, A. (2013). International business strategy. Cambridge University Press.

Zikmund, W. G., Babin, B. J., Carr, J. C., & Griffin, M. (2013). Business research methods. Cengage Learning.