The (not-so-honest) Honest Company Jonatan Solve, Joanna Stawicka, Piotr Tamborowski 1 TABLE OF CONTENT 1. THE HONEST COMPANY OVERVIEW 4 1.1 JESSICA ALBA 4 1.2 THE HONEST COMPANY 5 1.2.1. The Company – When, Why, for Whom & Against Whom? 5 1.2.2. Product Range 6 1.2.3. Market Value & Performance 6 1.2.4. Future Expansion 7 2. THE SPF 30 SUNSCREEN LOTION 7 3. QUESTIONS FOR STUDENT CONSIDERATION 8 4. CASE SYNOPSIS 11 5. THEORETICAL BACKGROUND 11 5.1 CORPORATE BRAND IDENTITY & REPUTATION MATRIX 12 5.2 CORPORATE BRAND REPUTATION & BRAND CRISIS MANAGEMENT 13 6. CASE ANALYSIS 13 7. THE HONEST COMPANY RESPONSE 15 8. LEARNING OBJECTIVES 15 9. TEACHING OPPORTUNITIES & CHALLENGES 16 10. REFLECTIONS 16 11. APPENDIX 19 12. REFERENCE LIST 24 2 CASE 3 1. The Honest Company Overview 1.1. Jessica Alba Jessica Alba was born on the 28th of April 1981. She was a sick child who spent a lot of time at the hospital, she says she remembers how terrible it was (Youtube, 2015). Her acting career took off when she was 12 years old, with the movie camp nowhere. Her breakthrough came in the early 2000s with a lead role in the science fiction series Dark Angel, directed by James Cameron. The series only lasted for two seasons, but it earned Alba a golden globe nomination, the teen choice award, and the Saturn Award for best actress. Between 2000-2008, she went from her breakthrough to reaching the A-list celebrity status. During this time her most notable movie appearances were in Honey (2003), Sin City (2005), which gained her the MTV Movie Award for sexiest performance, Fantastic Four (2005) and The Eye (2008) (IMDb, 2012). Alba continues to act until this day with her latest movie appearance this year (2015) in Entourage (IMDb, 2015). Alba has won numerous awards for her beauty and was ranked no. 1 on Maxim’s Hot 100 list in 2001 (WatchMojo, 2015). Since then, she has continuously appeared on ratings of the most beautiful women in the world. She has become renowned for her beauty and has played many sexy roles over the years. According to Alba’s own market research, she is very popular in the 18-25-year-old male segment, where she has become a Hollywood sex symbol. However, in the 15-35 female segment she found that she was very popular in beauty (Youtube, 2015). When she made these findings she had already been the face of L'oreal in 2002-2003 and the face of Revlon several years later (Youtube, 2010; Youtube, 2014). Although Alba comes from a very conservative family, she describes herself as a feminist and a liberal, who takes an active stance for gay rights and supports many different charities. Some of the numerous charities Alba has chosen to support are, National Center for Missing and Exploited Children, SOS Children Villages, Step up, and Habitat for Humanity (looktothestars, 2015). In 2007, she also appeared in a video supporting international fund for animal welfare (Youtube, 2007). In May 2008, Jessica Alba got married to her boyfriend of many years, Cash Warren, who she had met on the set while filming the Fantastic Four. In June the same year, Alba gave birth to her first daughter the same year . In 2011, Alba gave birth to her second daughter (Biography.com, 2014). Alba emphasizes that she is a devoted mother whose priority is spending time with her family. She states that “being sick as a child has motivated me to do everything in my power for my own daughters to be healthy and happy” (Youtube, 2015). Alba has released a book called The Honest Life where she gives advice on how to create “the happiest and healthiest life for her and her family”. In the book, she shares her tips on how to stay organised “so you can spend less time trying to find things and more time with your family” (Youtube, 2013). 4 1.2. The Honest Company 1.2.1. The Company – When, Why & Against Whom? The Honest Company was co-founded in 2012 by Jessica Alba, Christopher Gavigan, Brian Lee and Sean Kane in order to respond to the set of uncovered market needs when it comes to the truly ecological and chemicals-free cosmetics for babies (The Honest Company, 2015a). Jessica Alba discovered the untapped market potential herself as she got an allergy from one of the popular washing powder brands when pre-washing the onesies gifted for her first child during the baby shower (Forbes.com, 2015). That unpleasant event has urged the actress to search for hazardous substance free baby-care products. As Alba herself has been a highly skin sensitive kid, she understood well how important it is to provide all the mothers with a range of reliable, safe, but still affordable baby-care products (Forbes.com, 2015). The “raison d’être” of the company can be easily drawn from the statement of the co- founders placed on the Honest’s webpage. Namely: “We both [the co-founders] wanted an ideal: not only effective, but unquestionably safe, eco-friendly, beautiful, convenient, and affordable – everyone should have it. We believed every baby deserved the best we can create for them. We are dreamers.”1 As a matter of fact, the company aims to position itself as an eco-friendly, sustainable, and perhaps the most importantly, responsible business. The Honest Company does not allow for any compromise or oversights when it comes to the baby care products. Both of the founders speak as parents to parents, highlighting their own need for a development of the products, as the market failed to fulfill their expectations. Moreover, the company wants to make a change; its products are supposed to revolutionize and bring relief to all the parents whose bathrooms were filled in with mainstream brands of cosmetics consisting of harmful ingredients. “Together we can make it better” as the company’s tagline says. In addition, the Honest wants to be an inclusive brand and allow all the parents to shape the company. Thus, it can be inferred that the name “Honest” has been selected in order to convey the message of sincerity and trustworthiness of the products offered by the company. Moreover, its simplicity contributes to the overall approach of the business towards full transparency, “easiness to understand” and simply being different from all the competitors in a form of the big MNCs. It is important to mention that the great degree of the success can be ascribed to the lifestyle features of the Honest brand and its complementary product line. For this reason, the brand communication is native to social media such as Facebook, Instagram, Twitter and Pinterest. It not only allows for direct communication with the parents but also allows to 1 https://www.honest.com/about-us/our-story 5 build a solid base of brand ambassadors providing the product reviews on the Honest’s social media profiles. 1.2.2. Product Range The company offers a wide selection of baby care products from diapering through personal care, cleaning, vitamins, food up to gears and accessories. The principle behind all of the products is to provide toxic free cosmetics that are in line with the assumptions of sustainability concerning all the dimensions of business activity (The Honest Company, 2015a). It includes eco-conscious product development, re-usable packaging, protection of the environment and natural resources, toxics reduction, energy efficiency, mitigating the carbon footprint, supporting solidarity and peace, human rights protection as well as seeking suppliers who act in a similar manner. In other words, the offering is fully in accordance with “honest” principles equally as with the modern parenting trends. The latter is understood as parents who want their children to be brought up in the most natural way, free of chemicals and clean environment. The products are also anti-allergic, and the origin of its components can be easily traced on the company’s webpage. At this point, the company is also operating on the international market. The Honest products can be purchased with delivery directly on the company’s webpage as well as found in the traditional retailers, pharmacists, and obliviously, online stores (The Honest Company, 2015c). The prices for the most representative “baby goods” purchased from The Honest equal USD 13.95 for a 44 pieces box of diapers, size one, and USD 11.95 for organic baby powder. In comparison, the prices of leading brands in the category are correspondingly USD 8.97 for a 44 pieces box of diapers, size one, and USD 4.50 for baby powder. A customer ordering a box of diapers from the Honest is additionally given a choice of 26 different prints that decorate the product. Currently, the company expanded the existing offering to more than 80 products (Foundation, 2015) and does not allow to sell them on Amazon since that channel lacks conveyance of appropriate customer experience and maintaining the relationship (Boorstin, 2015). On the top of that, the company provides an innovative solution for all the parents who are tired with buying diapers in the traditionals stores. The Honest offers the USD 79.95 “diapers and wipes bundle” of six jumbo packs of the Honest diapers and four packages of the wipes delivered directly to the parent’s door during six month period (The Honest Company, 2015b). The bundle can be ordered only at the company’s online store. 1.2.3. Market Value & Performance During the first year of selling the diapers, the business has managed to earn USD 10 million of revenue, while in 2014 it was at the level of USD 150 million.