Table of Contents
The following presentation is focused on the new, all-natural skincare product – Ebonee’s Natural Skin Cleanser. It is distributed under the following motto: “Suggested by nature and you – created by Ebonee’s.”
Ebonee’s Natural Skin Cleanser is a water-based foaming facial cleanser that is made from the organic components. It contains seaweeds, such as kelp and sea lettuce, to nourish the skin, as well as green tea, coconut, rosehip, sea buckthorn, and lavender oils, which have a softening effect. It also contains the extracts of cinnamon, thyme, and oregano, which in combination with vitamins A and E, provide sufficient nutrition to the skin (Bertron, 2012). The product does not contain detergents, synthetic chemicals, chemical preservatives, artificial fragrances, or other non-organic or artificial components.
Ebonee’s Natural Skin Cleanser is primarily intended for those who have oily or sensitive skin. However, it can also be applied to the normal skin. To use the product, it is required to apply it on the wet face and massage it into the skin, thus removing dirt and oil buildup from it (Bertron, 2012).
Ebonee’s Natural Skin Cleanser is released in the plastic tubes, each containing 100 milliliters of the product.
Mission and Vision Statements
The mission of Ebonee’s is to establish and maintain partnership both with consumers and stakeholders, based on the mutual trust. Ebonee’s realizes the importance of the environmental responsibility, thus paying special attention to the preservation of the natural environment and constantly striving to improve the environmental aspects of its all-natural production. In particular, these measures involve the rational use of energy, raw materials, and the other natural resources. The name of Ebonee’s is synonymous to efficient, natural, environmentally friendly, and trustworthy consumer brand.
The vision of Ebonee’s is to constantly improve and produce high-quality, natural, innovative, and environmentally friendly cosmetic products. Ebonee’s strives to take a stable position in the segment of cosmetic care in the North American market, becoming a feasible choice both for casual and professional users.
The following business plan covers a wide array of aspects regarding the distribution of Ebonee’s Natural Skin Cleanser – a new skincare product. First of all, it defines the costs that are required for developing, manufacturing, and distributing the product. It should be noted that the strategy of contract manufacturing has been chosen to cut the company’s expenditures. As a result, together with the business and insurance costs, Ebonee’s will have to spend about 7,000 dollars to produce a 1,000-unit party of its skin cleanser.
The manufactured product will be sold across the markets of North America, with women of almost all age groups being its target audience. The primary competitors of Ebonee’s will be the companies that occupy the sane market niche, such as Carol’s Daughter, as well as the ones that utilize the same methods of distribution for their skincare products, namely Avon, Amway, Oriflame, Mary Kay, and Faberlic. Moreover, there is a possibility of competition from the side of drugstores and fast-moving consumer goods networks.
Additionally, the business plan provides the information on the shelf life of the product, the results of its testing, including the worksheet of the Preservative Efficacy Testing, material safety data sheet, and the labeling instructions.
The production expenses for manufacturing Ebonee’s Natural Skin Cleanser consist of the following components. First of all, these are the product development costs. In general, they include all the expenditures related to the creation of the product, namely the costs of the raw materials, as well as the packaging and labeling of the product. Moreover, they include the cost of such activities as mixing the ingredients and filling the packaging with them. Considering that currently, Ebonee’s has only one type of product, namely the skin cleanser, it is feasible for the company to establish an agreement with one of the companies offering services of contract manufacturing of cosmetics, namely CoValence Laboratories. Such measure saves production time and cost to about 30%. In this case, Ebonee’s is not burdened with issues related to technology, personnel, and equipment. Contract manufacturing has the following advantages (Singh, 2010):
- No need to create a production capacity;
- Time and costs of production are reduced;
- Individualized production for a particular customer;
- High-quality products.
Under such conditions, the price for cosmetic formulas may range from 10 cents to 3 dollars per pound of a product. In case of Ebonee’s Natural Skin Cleanser, the manufacturing of a product will cost about 3 dollars per pound. Its packaging and labeling will add one dollar per each unit (tube) of the product to the total costs. Together with the production and filling costs, the average cost per tube of Ebonee’s Natural Skin Cleanser will be about 5 dollars (Singh, 2010).
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At the same time, there is a need to define the volume of production. In case it is too low, the production expenses will be higher than usual, which will result in the price increase. To get the product development costs to 5 dollars per unit, it is required to produce a minimum of 1,000 units of the product. As a result, the mentioned part of the product development cycle will cost around 5,000 dollars.
Another important component of the production expenses is the hidden product development costs. In particular, cosmetic business requires testing the products to ensure they are safe and efficient. As a result, the Preservative Efficacy Testing must be conducted for Ebonee’s Natural Skin Cleanser. The one-time cost of such procedure is around 350 dollars for each product. Sensitivity testing is another necessity, considering that the product is meant to be applied to the face, including the area near the eyes. The price for such testing starts from 800 dollars (Singh, 2010). Thus, the hidden product development costs will increase the production expenses to about 6,150 dollars.
Another component of production expenses is the cosmetic business costs, which are connected with the process of incorporation. Such option is more feasible than conducting business under a sole proprietorship. The reason for that is the fact that in this case, the company bears full responsibility for any negative effects caused by its products. Incorporation is the means of protection from such liability, which adds about 500 dollars to the production expenses (Singh, 2010).
One more component of production expenses is business insurance. In general, it is necessary to consider the property insurance and general liability insurance. The first option is especially useful for the skincare company, such as Ebonee’s, as it will provide it with reimbursement in the case of failure. In addition, general liability insurance is absolutely necessary for the companies engaged in cosmetic business. It is required to address the issues concerning the customers experiencing the adverse reaction to the company’s products. The cost of this insurance depends on the company’s annual volume of sales. Of course, the work with the contract manufacturer means Ebonee’s will be covered by its insurance policy, i.e. Ebonee’s Natural Skin Cleanser will be included in the insurance. However, in this case, Ebonee’s will not be insured as a cosmetic company. At the same time, it will be ultimately responsible for the safety of its products. Finally, the majority of retailing companies and networks require a proof of insurance prior to selling such products as cosmetics. Thus, business insurance is also necessary for Ebonee’s. The insurance costs may vary greatly, but in the case of Ebonee’s, they will be about 100 dollars per month for each million dollars of insurance (Singh, 2010).
The final major component of the production expenses is the marketing and sales costs, which represent the amount of money required for developing and selling the product. In case of the online business (the initial stage of the company’s development), these costs will be rather low. In particular, running a website for selling cosmetics requires about 500 dollars a year (Singh, 2010). Moreover, the online promotion is mostly free, usually requiring only the investment of time.
Thus, the overall production expenses for Ebonee’s Natural Skin Cleanser will be about 7,000 dollars.
Target Markets and Demographics
Ebonee’s Natural Skin Cleanser is meant to be sold in the North American market, which accounts for about 27% of the world sales of cosmetics. Since 2001, the pace of development of the middle (the one Ebonee’s Natural Skin Cleanser belongs to) and luxury segments of the cosmetics market were above average. However, after the boom observed in the market of cosmetics during the recent years, its growth has become minimal. It is expected that the skin care products, the use of which provides additional opportunities to customers, will have the greatest potential for growth. Moreover, the production of all-natural cosmetics has become one of the strongest trends (Willett, 2010).
During the previous years, the market of skin care cosmetics has shown a decline in profit despite the improvement in the quality of products. The reason for this lies in the pressure from price factors, which was a prerequisite for strengthening the position of brands on the market and the advent of disposable products. It turns out that on the one hand, there is a tendency towards strengthening of the brands’ positions that specialize in cheap products. On the other hand, the position of selective brands has also strengthened. At the same time, the situation in the middle segment of the market remains unchanged. Moreover, the new ingredients and trends that originate from the selective brands are becoming common for the mass products. This trend applies primarily to the major markets of the Western Europe and North America, where there is an increasing competition among the companies in terms of acquisition, merging and joint branding (Willett, 2010). As a result, it is possible to say that the current conditions are rather favorable for the promotion and sales of Ebonee’s Natural Skin Cleanser.
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The primary target audience of Ebonee’s involves women of different age groups. Over the past few years, the women’ willingness to spend money on cosmetics has grown along with their increased interest in such products. As for the means to care for the skin, the demand for them differs for each woman, primarily depending on her age, which ultimately determines her choice in favor of a product. In particular, skincare products, such as Ebonee’s Natural Skin Cleanser, are very popular among young women (aged between 18 and 40 years). Moreover, among the active users of such cosmetics, there are many people with high levels of education and income, who work and prefer to live in large cities. However, in most cases, they are quite conservative in their buying habits. The statistics show that only about 30% of potential buyers are willing to try something new. Moreover, only 10% of the consumers that have tried the new skincare product express a desire to change their preferences. At the same time, women aged from 40 to 59 years are becoming an increasingly important target group for the cosmetics industry (Willett, 2010). They possess high purchasing power, being quite demanding and preferring high-quality and natural cosmetic products, such as Ebonee’s Natural Skin Cleanser.
Another important category of the target audience that has high purchasing power and propensity to costs are the young girls. Given the fact that they start using makeup and perfumes rather early, and, most importantly, suffer from oily skin due to the process of reaching puberty, they also require skincare products that are suitable for their young skin. It is important to attract their attention as they develop the preferences for certain products and brands rather quickly (Willett, 2010).
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The recent years were not easy for the sellers of cosmetics and perfumes. Many specialized networks have slowed the pace of development and revised their price and assortment policy. Constant discounts and special promotions have become the main driving force behind the distribution of cosmetics. However, the desire to retain customers by such a bribe has led to the fact that the networks become almost indistinguishable. Nowadays, when the demand for cosmetics and perfumes has increased, and competition has intensified, it will be much harder for the new players, such as Ebonee’s, to gain customer loyalty (Willett, 2010).
The primary competitor of Ebonee’s Natural Skin Cleanser is the production of Carol’s Daughter – a well-known American brand of cosmetics. The company positions itself as the one specializing in the manufacturing of cosmetics for hair and body consisting entirely of natural ingredients, meaning that Ebonee’s will have to compete with it within the same market niche (Willett, 2010).
At the same time, a significant proportion of retail sales on the market of cosmetics (more than 25%) is carried out through the alternative channels, the largest of which are direct sales. The leaders of the segment of direct sales are Avon, Amway, Oriflame, Mary Kay, and Faberlic (Willett, 2010). As a result, these companies can also be viewed as competitors, considering that Ebonee’s primarily relies on the direct sales via the Internet for the distribution of Ebonee’s Natural Skin Cleanser.
Moreover, according to experts, drugstore chains are becoming an increasingly important channel for the distribution of perfumes and cosmetics, including skincare products. Significant amounts of perfumes and cosmetic products are also being sold through the fast-moving consumer goods (FMCG) networks, especially hypermarkets. In this regard, this product category is provided within significant trading areas, including the ones arranged in the shop-in-shop format (Willett, 2010).
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It is obvious that in the current conditions, retailers must search for the new ways of development as the simple increase of the number of stores will not help. One of the options for the development for Ebonee’s is the differentiated assortment, i.e. the sale of niche products. In addition, it may try to win customers’ trust by selling environmental-friendly and all-natural products related to beauty and health, such as its Ebonee’s Natural Skin Cleanser. In this case, the company may have a chance to gain a foothold in the market.
In general, the shelf life of cosmetics is defined by the time period, during which it retains all of its claimed properties and is safe and efficient. If being stored properly, it does not matter when it was made, given that the date lies within the designated period of use. There are two different indicators for the shelf life of cosmetics: the shelf life of packed products and the possible time storage of cosmetics after opening the package. In particular, the recommended period of use is often indicated on the packaging in the form of a jar with the lid open (Singh, 2010).
As a packed product, Ebonee’s Natural Skin Cleanser can be stored for six months. Of course, as an all-natural skincare product, it contains several perishable components, such as seaweeds. Thus, its shelf life is expected to be quite short. However, it should be noted that Ebonee’s Natural Skin Cleanser is an all-natural product with self-preservative characteristics due to the presence of the rosehip oil, as well as other natural preservatives. As a result, it does not spoil as quickly as the majority of other organic skincare products. Thus, it can be stored for the extended periods of time, provided its packaging remains intact (Singh, 2010).
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After opening the package, the shelf life of the product is greatly reduced and strongly depends on the conditions, in which it is stored. Considering that Ebonee’s Natural Skin Cleanser is packed in the plastic tube, it is clear that the product is not shielded from the impact of air, microbes, and other external factors that lead to its deterioration (Singh, 2010). As a result, after the package has been opened, Ebonee’s Natural Skin Cleanser must be consumed in several weeks.
As was mentioned before, Ebonee’s Natural Skin Cleanser has undergone several tests, including Preservative Efficacy Testing and sensitivity testing. The former one has been conducted with the use of the two following tests (Barel, Paye, & Maibach, 2005).
- Open test – a skincare product was applied to the skin of the patient to define whether there is an immediate allergic reaction to some of its components;
- Use test – the product was used under normal conditions.
All of the tests have shown that Ebonee’s Natural Skin Cleanser does not cause either immediate or delayed allergic reaction, making it suitable for application even to the sensitive skin.
The description and results of the Preservative Efficacy Testing, which has been conducted at the CoValence Laboratories, is presented below.
The five100-gram doses of a sample were put in the five suitable glass containers and labeled appropriately. Ebonee’s Natural Skin Cleanser is a water-based skincare product, so the sample was prepared by diluting it with the same amount of chloride buffer. The solution was warmed to the temperature of 40-45˚C and then mixed (Barel et al., 2005).
The prepared samples were verified for the absence of growth of microorganisms, including bacteria, yeast, and fungi. After that, each of the sample containers was inoculated with the suspension of several test organisms (Pseudomonas aeruginosa, Enterobacter aerogenes, and Staphylococcus aureus). The volume of this suspension did not exceed 1% of the volume of each sample. The samples were mixed again. One of the samples was left as it was to be used as a control one. The other four samples were used for the test. All samples were kept at ambient temperature (20-25˚C). Since the first day of testing, and then on a weekly basis, portions of liquid were removed from the containers to define whether the microorganisms in them have started to grow. In case the growth was confirmed, it was necessary to define how many of them would survive in the next five days. In other words, it is required to find out whether Ebonee’s Natural Skin Cleanser provides favorable conditions for the growth of potentially hazardous microorganisms, such as bacteria, fungi, and yeast (Barel et al., 2005).