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Doing Personal Care Product Business in USA A Brief Overview Presented by Mike Nave President – PBD / BIR, Inc.

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Presentation on theme: "Doing Personal Care Product Business in USA A Brief Overview Presented by Mike Nave President – PBD / BIR, Inc."— Presentation transcript:

1 Doing Personal Care Product Business in USA A Brief Overview Presented by Mike Nave President – PBD / BIR, Inc.

2 Who is Mike Nave ? 50 year career in beauty products industry 50 year career in beauty products industry DistributorDistributor PublisherPublisher Dot com company VP CommunicationsDot com company VP Communications Free lance writer for industry trade pubs.Free lance writer for industry trade pubs. Sales and marketing consultantSales and marketing consultant

3 Size of U.S. Personal Care Markets Mass retail market segment sales excluding Wal Mart* Mass retail market segment sales excluding Wal Mart* Total Haircare sales $4.3 billion -1.5% Total Haircare sales $4.3 billion -1.5% Total Ethnic HABA sales $107 million -7.5%Total Ethnic HABA sales $107 million -7.5% Total Hair Coloring Products sales $1.09 billion +4.4%Total Hair Coloring Products sales $1.09 billion +4.4% Skin Care sales $2.79 billion +4.9%Skin Care sales $2.79 billion +4.9% Grooming aids sales $1.11 billion +.04%Grooming aids sales $1.11 billion +.04% Shaving needs sales $1.81 billion +4.9%Shaving needs sales $1.81 billion +4.9% Deodorants sales $1.26% +1.9%Deodorants sales $1.26% +1.9% *(52 week sales total through May 14, 2005 (Source AC Nielsen) PBD

4 Size of U.S. Personal Care Markets Annual revenues of salon services and product sales $60+ Billion.Annual revenues of salon services and product sales $60+ Billion. Total salon industry professionals 754,000Total salon industry professionals 754,000 Natural/Organic personal care sales $4.3 billion projected to reach $6.6 billion by 2010Natural/Organic personal care sales $4.3 billion projected to reach $6.6 billion by 2010 PBD

5 Mass Retail Market Department Stores (Federated, Nordstroms, Saks Fifth Avenue) Department Stores (Federated, Nordstroms, Saks Fifth Avenue) Masstige (Ulta, Sephora)Masstige (Ulta, Sephora) MVRs (Costco, Sams, Target, Wal Mart) MVRs (Costco, Sams, Target, Wal Mart) Grocery (Safeway, Albertsons) Grocery (Safeway, Albertsons) Chain Drug (Rite Aid, CVS, Walgreen) Chain Drug (Rite Aid, CVS, Walgreen) Specialty (Bed Bath & Beyond, Hot Topics, Bath & Body Works) Specialty (Bed Bath & Beyond, Hot Topics, Bath & Body Works) Electronic Retailing (QVC, HSC) Electronic Retailing (QVC, HSC) Market Segment (A brief description) Market Segment (A brief description)

6 Market Segments (A brief description) Market Segments (A brief description) Independent Salons (45,000) Independent Salons (45,000) Chain Salons (25,000) Chain Salons (25,000) Salon beauty stores (2,000) Salon beauty stores (2,000) Distributors professional- only beauty stores (1,800) Distributors professional- only beauty stores (1,800) OTC beauty stores general market (3,000) OTC beauty stores general market (3,000) OTC beauty stores Multi- Cultural market (9,000) OTC beauty stores Multi- Cultural market (9,000) Sally Beauty Supply (2,800 stores in U.S.) Sally Beauty Supply (2,800 stores in U.S.) Distributors (350 exclusive and open line) Distributors (350 exclusive and open line) Spa (5000 estimate) Spa (5000 estimate) Nail Salons (60,000) Nail Salons (60,000) Barber (85,000) Barber (85,000) Beauty Schools (1,500) Beauty Schools (1,500) Professional Beauty Market

7 Alternative Marketing Initiative Alternative Marketing Initiative Direct On-line Manufacturer Sales, a new marketing concept of manufacture selling on-line direct to consumers while at the same time establishing distributor/retail relationships.

8 Marketing to the US Mass Retail and Pro Beauty Markets a Good News/Bad News story!

9 First, The Good News (The Reward) Awesome opportunity selling to the worlds largest market in terms of buying power. Awesome opportunity selling to the worlds largest market in terms of buying power. U.S. consumers are major shoppers always looking for something new and innovative. U.S. consumers are major shoppers always looking for something new and innovative.

10 Now, The Bad News ( The Challenges!) Huge marketing challenges due to consolidations in all major market segments Huge marketing challenges due to consolidations in all major market segments Surviving Mass Market Retailers shelf- space is a premium. You want it you buy it! Or more accurately, you rent it! Surviving Mass Market Retailers shelf- space is a premium. You want it you buy it! Or more accurately, you rent it! In mass market payment terms can stretch out 6 months or more. (Being paid promptly – Forget It!) In mass market payment terms can stretch out 6 months or more. (Being paid promptly – Forget It!)

11 Now, The Bad News ( The Challenges!) In order to have credibility with large account retailers you must be represented by a high profile broker. In order to have credibility with large account retailers you must be represented by a high profile broker. Pro beauty field consists of multiple submarkets with overall limited sales potential requiring two step pricing accessed primarily by rep groups and distributors Pro beauty field consists of multiple submarkets with overall limited sales potential requiring two step pricing accessed primarily by rep groups and distributors Both segments require large margins to cover high cost of doing business. Both segments require large margins to cover high cost of doing business. Your product line must be unique and different, or address a untapped market niche. Your product line must be unique and different, or address a untapped market niche. There must be a compelling reason for your product lines existence. There must be a compelling reason for your product lines existence.

12 What Accounts Expect Need manufacturer to create product demand Need manufacturer to create product demand Need manufacturer to promote product Need manufacturer to promote product Need manufacturer to bring consumers into stores Need manufacturer to bring consumers into stores Need US distribution center for timely replenishment Need US distribution center for timely replenishment Need complete timely shipments Need complete timely shipments Need professional sales representation Need professional sales representation Want company decision maker on the key sales call Want company decision maker on the key sales call Require $5 million product liability insurance Require $5 million product liability insurance

13 Payment Terms Standard terms 2% 30, net 31 Standard terms 2% 30, net 31 Introductory first order 2% 60, net 61 Introductory first order 2% 60, net 61 Seasonal terms Seasonal terms Pay at end of season, return remaining productPay at end of season, return remaining product % payment in 60 days, balance end of season% payment in 60 days, balance end of season Major accounts: Major accounts: Pay on scanPay on scan Expect free goodsExpect free goods

14 Product Returns Guaranteed Sale Guaranteed Sale Return product if it does not sell Return product if it does not sell Failure Rate on New Products is 75%! Failure Rate on New Products is 75%! Product fails, company goes out of business, chain stuck with inventory Product fails, company goes out of business, chain stuck with inventory

15 What Brokers Expect Plenty of Samples Plenty of Samples Professional Sales Materials Professional Sales Materials Compelling Sales Story, reason for being: Compelling Sales Story, reason for being: Patent, previous success, strong advertisings, excellent packaging and displays, timely shippingPatent, previous success, strong advertisings, excellent packaging and displays, timely shipping 7-10% commission paid promptly 7-10% commission paid promptly Long Range growth opportunity Long Range growth opportunity Company responsiveness and professionalism Company responsiveness and professionalism Factory field key account sales support Factory field key account sales support

16 What Brokers Do Represents a large number of companies Represents a large number of companies Regular sales calls on food, drug & mass accounts Regular sales calls on food, drug & mass accounts Handles all paperwork Handles all paperwork Checks stores for distribution, pricing, location, Checks stores for distribution, pricing, location, Speaks to buyers frequently Speaks to buyers frequently Eyes, Ears, Feet extension of manufacturer Eyes, Ears, Feet extension of manufacturer Brokers respect what manufacturers inspect Brokers respect what manufacturers inspect

17 Barrier to Entry Lack of knowledge of the market Lack of knowledge of the market Major investment required Major investment required Need to have US point of distribution Need to have US point of distribution Public WarehousePublic Warehouse Joint VentureJoint Venture Company Owned OperationCompany Owned Operation Meeting US Customs import regulations Meeting US Customs import regulations

18 How to Market Gain adequate working knowledge of the U.S. marketplace by doing the preliminary investigative activities Gain adequate working knowledge of the U.S. marketplace by doing the preliminary investigative activities Attending trade showsAttending trade shows Contacting trade associationsContacting trade associations Hiring a marketing/sales consultantHiring a marketing/sales consultant Create strategic marketing plan Create strategic marketing plan Choosing right broker or rep organization Choosing right broker or rep organization Using public relations versus advertising to start Using public relations versus advertising to start

19 How to Market (Exhibiting at Trade Shows) Pro Beauty Market Pro Beauty Market Major salon trade shows (4)Major salon trade shows (4) Rep association sponsored shows (2)Rep association sponsored shows (2) ISPA Spa Show plus additional smaller spa shows (6)ISPA Spa Show plus additional smaller spa shows (6) International Esthetics Cosmetics and Spa Conference (2) plus half a dozen other esthetics showsInternational Esthetics Cosmetics and Spa Conference (2) plus half a dozen other esthetics shows Professional nail shows (5)Professional nail shows (5)

20 How to Market (Exhibiting at Trade Shows) Mass Retail Market Mass Retail Market NACDS (chain drug)NACDS (chain drug) GMDC (grocery)GMDC (grocery) ASD/AMD (general merchandise 6)ASD/AMD (general merchandise 6) ECRM-EPPS (one-on-one apts. with major retail accounts 30+)ECRM-EPPS (one-on-one apts. with major retail accounts 30+)

21 ECRM-EPPS Guaranteed 20 minute meeting with buyer and/or category manager in a 4 or 5 star hotel room setting Guaranteed 20 minute meeting with buyer and/or category manager in a 4 or 5 star hotel room setting 60 retailers in attendance 60 retailers in attendance Food, Drug & Mass Food, Drug & Mass Perfect way to jump start distribution in mass market Perfect way to jump start distribution in mass market

22 How to Market Packaging Make sure it meets U.S. market requirements from both a regulatory and marketing effectiveness standpoint.

23 Important Information Key Trade Associations Key Trade Associations NACDS (National Chain Drug Store Association)NACDS (National Chain Drug Store Association) PBA (Professional Beauty Association)PBA (Professional Beauty Association) ISPA (International Spa Association)ISPA (International Spa Association)

24 Important Information (Mass Retail Market Publications) Chain Drug Review Chain Drug Review Drug Store News Drug Store News Mass Market Retailers Mass Market Retailers Supermarket News Supermarket News NACS Magazine NACS Magazine

25 Important Information (Pro Beauty Market Publications) American Salon American Salon Modern Salon Modern Salon Salon Today Salon Today Beauty Store Business Beauty Store Business OTC Beauty Magazine OTC Beauty Magazine Beauty Times Beauty Times Skin Inc Skin Inc Derma Scope Derma Scope Day Spa Day Spa American Spa American Spa Nails Nails Nailpro Nailpro Launchpad Launchpad

26 Important Information (Pro Beauty Market Publications) and last but not least, my newsletter the Beauty Industry Report. and last but not least, my newsletter the Beauty Industry Report.

27 The Beauty Industry Report was founded in 1997 to fill a need for sharing timely, interesting, entertaining information between all segments of the professional salon industry. Today, the BIR is the only executive newsletter serving the professional beauty industry, including manufacturers, reps, distributors, associations, chain salons, day spas and top independent salons, with behind-the-scenes information about the people, products and companies that are meaningful to our readers. With the landscape of the salon industry rapidly changing, BIR is the "score card" that lets you know who's on first, who's striking out and who's scoring big. I continue to serve as the editor and principal reporter of BIR. In addition, every month, I invite a guest columnist to present his or her views on a chosen topic. Our team strives to make BIR the place where the various segments of the professional salon industry can be heard. We value your input, and invite you to contact us anytime with your ideas and input. The BIR is published 12 times a year with each issue being 12 or more pages. The paid circulation is 1,500 and growing. In addition, the circulation may include up to 1,000 extra copies as part of promotional mailings or show distributions. The BIR is published in Travers, MI and mailed bulk third class, usually arriving in the middle of the issue month. Articles written by Mike Nave for BSB Magazine Hot New Product? This was sent by Mike Nave, Beauty Industry Report, Mulholland Hy. #403, Calabasas, United States to Unsubscribe Download Complete BIR About this eNewsletter Develop your eNewsletter Subscribe to BIR! Contact Us Mike Nave Download Complete BIR About this eNewsletter Develop your eNewsletter Subscribe to BIR! Contact Us Mike Nave News Articles Pravanas Super Shapes sales are sizzling Pravanas Super Shapes sales are sizzling Company has a Good Hair Day Jim Fisher returns to Jungle at Nexxus Lafayette Jones Multicultural Column Access Brands keeps salons phones ringing Expo Latino opens doors to new sales and marketing opportunities for beauty biz IESCS mirrors skin care categorys growth Bob Oppenheim: Manufacturers dont want to control diversion Mr. and Mrs. BIR make a quick escape to Santa Barbara to cover show Feature Sections Consultants' Corner Diversion Last Minute Blasts The Multicultural Report Obits People Rep Rap Show Biz Spa Biz Whats Hot Whats New Who's Looking for What Consultants' Corner Diversion Last Minute Blasts The Multicultural Report Obits People Rep Rap Show Biz Spa Biz Whats Hot Whats New Who's Looking for What by Mike Nave editor BIR is in rehab after spending five fast and furious days and nights in LV covering the third annual Cosmoprof North America Show and all the other happenings during the show weekend. Cosmoprof Bologna its not! But maybe given time, Cosmoprof NA will reach its potential. Read about the happenings in the September issue. In this issue, BIR covers the Santa Barbara Beauty Expo and Latino Expo. BIR also drove out to Malibu to interview Michael Apstein, president/CEO of Access Brands, to learn more about his THE SALON new client referral program for salons. Last month the salon industry lost a wonderfully creative hair stylist with John Sahags passing, and in this issue, Dwight Miller, a close friend of Johns who worked with him, wrote to share some nice thoughts with BIRs readers. Regards, Marketing lesson By Bob Salem Marketing represents the greatest opportunity for independent salons to fuel their future growth but not in its current state. Marketing is most successful when it results from a fully integrated strategy that is specific to the brand and importantly, when the immutable laws of marketing are respected. We experience the power of marketing every day through the choices we have in the products and services we consume. For each of those choices, the marketing intent is to create a memorable and motivating image. At the same time, marketers attach attributes to that image to elicit your trust in its performance. Everything leading to the creation of trust is specific to the brand, its image and its attributes. Trust is at the center of the emotion consumers feel when products and services live up to their expectations. Marketers of consumer products focus on creating demand for the goods and services of their brands. Rarely do they borrow interest from another brand to enhance their own. Great marketing thrives on having a single minded focus on everything specific to the brand. The brand is the destination and consumers place their trust in the brands intrinsic qualities that are carefully assigned to it through marketing. (click here for full article)

28 Get Your eBIR Free Trial Subscription Complete the Hand out form and submit to Mike Nave or Fax to: or Mike Nave with your request to Remember, if you aint reading the Blue Thing, you know NOTHING!

29 Important Information (Valuable Resources) Reshare Corporation, a provider of patented channel management software. (www.reshare.com)Reshare Corporation, a provider of patented channel management software. (www.reshare.com)www.reshare.com Katherine Frank Creative, a full service marketing and trade show management group. (www.katherinefrank.com)Katherine Frank Creative, a full service marketing and trade show management group. (www.katherinefrank.com)www.katherinefrank.com Kirschner Group USA (Sales rep organization covering the pro beauty market on national basis. (www.kirschnergroup.com)Kirschner Group USA (Sales rep organization covering the pro beauty market on national basis. (www.kirschnergroup.com)www.kirschnergroup.com John OMaley & Associates, Sales & Marketing Consultants covering mass retail market on national basis. (www.omaley.com)John OMaley & Associates, Sales & Marketing Consultants covering mass retail market on national basis. (www.omaley.com) Fred O'kasick Sales Inc. Sales rep organization that covers the U.S. Chain Drug Store market. (www.foksales.com)Fred O'kasick Sales Inc. Sales rep organization that covers the U.S. Chain Drug Store market. (www.foksales.com)www.foksales.com Joni Rae Russell/JRA Associates. Full service marketing organization specializing in product development and packaging design. Rae Russell/JRA Associates. Full service marketing organization specializing in product development and packaging design. ECRM-EPPS Efficient Collaborative Retail Marketing - Efficient Program Planning Sessions a business process that streamlines the consumer packaged goods sales and marketing supply chain (www.ecrm-epps.com)ECRM-EPPS Efficient Collaborative Retail Marketing - Efficient Program Planning Sessions a business process that streamlines the consumer packaged goods sales and marketing supply chain (www.ecrm-epps.com)

30 So where do you go from here? Use a knowledgeable consultant to gain sufficient information to make an intelligent decision, whether to market in the U.S. or not. Use a knowledgeable consultant to gain sufficient information to make an intelligent decision, whether to market in the U.S. or not. Do the necessary home work Do the necessary home work Visit trade shows Visit trade shows Do store checks Do store checks Contact trade associations, Contact trade associations,

31 Thank You for the Opportunity! PBD / BIR, Inc. Publisher of the Beauty Industry Report International Representive Master Broker Consulting Michael Nave President Mullholland Hwy. Suite 403 Phone: Calabasas, Ca. U.S.A Fax: Mobile:


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