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Go-to-MarketStrategy Presented by: Kathleen Cronin 16 September 2009 Global Business Perspectives: Emerging Markets in Brazil.

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Presentation on theme: "Go-to-MarketStrategy Presented by: Kathleen Cronin 16 September 2009 Global Business Perspectives: Emerging Markets in Brazil."— Presentation transcript:

1 Go-to-MarketStrategy Presented by: Kathleen Cronin 16 September 2009 Global Business Perspectives: Emerging Markets in Brazil

2 Overview Objective: Determine feasibility of entering Brazilian market  Company & Product Overview  Why Brazil  Market & Environmental Analysis  Customer Segmentation  Recommendation  Marketing Mix (4P’s)  Implementation Plan  Financials 2

3 The Company: Bare Escentuals Inc.  Leading prestige cosmetic company in US  Innovator in mineral-based cosmetics  Develops, markets, and sells branded cosmetics and skincare products  Produces cosmetics with 100% all natural minerals  Appeals to public’s desire to have skincare and makeup in one product  International operations: United Kingdom, Ireland, Japan, and Germany  Retail contracts with department stores, home TV networks, spas & salons Started: 1976 in Los Gatos, CA 2008 Sales: $560M 3,000 employees 112 privately owned boutiques Started: 1976 in Los Gatos, CA 2008 Sales: $560M 3,000 employees 112 privately owned boutiques 3 Worldwide Leader in Mineral Based Cosmetics

4  Bare Escentuals’ first product  Most popular and profitable product line among consumers  bareMinerals was foundation that started Mineral Makeup Revolution  Top Selling Product sold on QVC  Bare Escentuals holds exclusive patent for extracting fine minerals used in bareMinerals  Complete line of loose, powder-like products that are 100% pure bareMinerals The Product Line: bareMinerals® 4

5 5  Made with crushed minerals from the earth, 100% pure bareMinerals  Ingredients include zinc oxide & titanium oxide – natural sunscreens, tints  Ground into fine powder without preservatives, talc, fragrance  Free of fillers and binders  Weightless  Provides adjustable coverable  Improves the condition of skin over time  Long Lasting - Stands up to heat and humidity  All skin types  Especially those with skin sensitivities, allergies, scars, blemishes, rosacea and wrinkles  Foundation contains a natural SPF 15 sunscreen  Carries Skin Cancer Foundation Seal of Recommendation The Product Pure Natural Make-up from Earth

6 Video: Customer Testimonials 6

7 Why Brazil? Why Now? Ranks as the world’s third largest market for cosmetics –18% growth from January to June 2009 –Color cosmetic sales expected to grow 19% over next 5 years –Brazil to grow to be 2 nd largest cosmetic market by 2011 Increase in niche cosmetic products to address consumer demands Very image conscious culture –Increase in life expectancy and the desire for elderly to look their best Sustained strength of Brazilian economy More women in the workforce Fastest Growing Cosmetics Market Worldwide 7

8 Market Potential Forecast > 20% of total cosmetics market Facial Make-Up Will Consist of 20% of Total Market 8

9 External Analysis: Competitive Matrix Avon Smooth Minerals Better-than-bare beauty The Company for women Natura Bem estar bem “Well being well” O Boticário Sensitivity, Harmony & Beauty %Mkt Share34% Total Cosmetic Mkt Share13% Total Mkt Share8.3% Total Mkt Share Strengths High Brand recognition Features: Sweat proof, skincare & makeup in 1 product Strong infrastructure High Brazilian Brand recognition Strong Distribution of Direct Sales method Frequent release of new products Brazilian brand recognition Most successful Franchise model in Brazil Weaknesses Broad product line; not focused on solely launching Smooth minerals in Brazil No dedicated product line to mineral cosmetic products Expensive Not 100% pure mineral based 9 Significant Opportunity for Mineral Based Products Due to Highly Saturated Market with Broad Range of Cosmetic Products Significant Opportunity for Mineral Based Products Due to Highly Saturated Market with Broad Range of Cosmetic Products

10 10 Business Environment in Brazil  Economic Forces  Strong economic growth  GDP increasing at 5%  Color cosmetics market increasing at 28% (YoY)  Rapid rise of middle class (Class C)  From 36% of population in 2003  52% in 2009  Sales of personal beauty products increase during recession  Exchange rate fluctuation risk  Legal & Political forces  ANVISA (similar to FDA) approval required  High import taxes (approx. 70%)  Government bureaucracy  Register trademark and patents with National Institute of Industrial Property (INPI)

11 SWOT Analysis Strengths #1 mineral cosmetic product in U.S. U.S. Brand recognition Unique product characteristics –SPF –Mineral based –Weightless feel –Cosmetic & skin care combined –No preservatives Opportunities Ability to source raw materials & manufacture in Brazil 18% growth rate over next 5 years Brazil-third largest cosmetic market Growing spending power of women Weaknesses No Company Brand Recognition in Brazil Lack of knowledge of unique product characteristics High import taxes Threats Extremely saturated market Customer mindset is high brand loyalty to competitors Complexity of ANVISA approval Difficulty in forming relationships with distributors 11 Significant Market Potential for Mineral Cosmetics in Brazil

12 Market Penetration Total Market (All Female) Served Market Share of Market 198.7M A/Bclass: 16% C: 52% D/E:32% 100.5M 45.2M Avg age 29 yrs Female / A,B,C Classes/ years of age Female / B,C Classes/ years of age/ Interest in Mineral Facial Makeup 7M Total Brazil Population (in Millions) 86% in Urban areas 12

13 Customer Segmentation of Potential Buyers in Brazil SEGMENTDEMOGRAPHICBENEFIT SOUGHT 1Bio-Diversity Environmentally conscious Age:  University educated  Long-term thinkers  May already own other mineral based products  Ecological benefits  Want to show they are green, trendy, innovative, etc.  Want to make a political statement  Contains vitamins & minerals 2Trend Setters Age:  Innovative  Comfortable with new technology  Live in Cities  Clears skin of acne  Embrace new technology  Educated about new cosmetic products, or become knowledgeable before purchase 3Minimalist Age: 15+  All-in-one makeup  Desire to save money  Looking for one make-up that does all 4Anti-Aging Age: 30+  Reduce wrinkles  Removes dead skin  Reduce Rosacea Breakouts 5Sensitive Skin Age 15+  Hypo-allergenic  Clears skin of acne 13 bareMinerals Addresses All Customer Segments

14 Target Segment & Value Proposition bareMinerals is superior to traditional cosmetic products because it provides the unique combination of cosmetics, skin care, and sun protection for women of all ages, using the highest quality minerals. Target Segment: Urban females from years of age in Class B & C income levels 14

15 Marketing Mix: The 4 P’s Free Samples Orkut Advertising Social Network Peer Marketing MakeOver Events Magazine Ads R$99 3 x payments of 40 Affordable for B/C Classes Retail through distributors Boutiques (SP, BH, RIO) Online Sales All in one make up solution High Quality Accessories ProductPlace PromotionPricing 15

16 Acquisition, Education, and Retention Continued Consumer Education is Key to Growth 16

17 Implementation Timeline Short Term months Long Term 2-5 years  Customized Starter Kit with High Quality Accessories  Production in USA  Promotion focus is on brand building events: Makeup Sessions + Free Samples  Viral marketing through Orkut and other social media forums  Customized Starter Kit with High Quality Accessories  Production in USA  Promotion focus is on brand building events: Makeup Sessions + Free Samples  Viral marketing through Orkut and other social media forums  Reduce costs and taxes by using Contract Manufacturing  Online and Magazine Mass Advertisement  Possible introduction of new product lines and exploration of distribution channels through direct sales.  Reduce costs and taxes by using Contract Manufacturing  Online and Magazine Mass Advertisement  Possible introduction of new product lines and exploration of distribution channels through direct sales. 17

18 Success Metrics  Short-Term:  Repeat buyers  Conversion rate from other brands  Percentage of positive consumer feedback regarding the brand  Feedback from partners and distributors  Extent of viral marketing through Orkut and other online mediums  Long-Term:  Reduction in Production Cost  ROI on Advertising blitz  Market Share (>6%) 18

19 Projected Financials 19 Healthy Profit Margins by 3 rd Year

20 Break-Even Analysis Break-even point reached at 207,000 units sold and 2.88% market share 20

21 Summary  Focused product satisfying multiple customer needs  Target segment: Urban females from years of age in Class B and C income levels  Fuse rapidly growing internet usage with social culture through online distribution and marketing  Transition to domestic production to reduce costs and increase profit margin  Provide Customer Experience is key to sales Revolutionize the Brazilian Cosmetic Market Industry 21

22 Obrigado! Backup 22

23 Independent Clinical Results for bareMinerals® In clinical studies of women between the ages of 18 and 65 with various skin conditions who used bareMinerals for two weeks:  76% reported that bareMinerals has corrected and improved the appearance of their skin condition and:  Skin dehydration was improved by 75%  Overall condition of the skin, smoothness, elasticity and texture was improved by 49%  Redness was reduced by 31%  Over 80% of the women felt that bareMinerals is ideal for sensitive skin and noticed a reduction in the appearance of flaws and imperfections.  Over 75% of the women noticed an improvement in the appearance of their skin and saw a reduction in redness and irritation.  Over 70% of the women agreed that bareMinerals smoothes the appearance of fine lines and wrinkles and that with continued use, their skin was less irritated and they had fewer rosacea flare-ups.  Over 60% of the women agreed that with continued use, the appearance of their skin was improved and that they had fewer acne breakouts. 23

24 Break-Even Analysis Fixed Costs (R$)10,000,000 Manufacturing Costs30 Promotional Costs10 Import Taxes (75%)23 Total Variable Costs62 ASP99Total Brasil Facial Makeup Market (2008 in R$)700,486,000 Units SoldTotal RevenueFixed CostsVariable CostsTotal CostsTotal ProfitMarket Share 0010,000,0000 (10,000,000)0.00% 50,0004,950,00010,000,0003,105,00013,105,000(8,155,000)0.71% 100,0009,900,00010,000,0006,210,00016,210,000(6,310,000)1.41% 150,00014,850,00010,000,0008,185,00018,185,000(3,335,000)2.12% 200,00019,800,00010,000,00010,160,00020,160,000(360,000)2.83% 250,00024,750,00010,000,00012,135,00022,135,0002,615, % 300,00029,700,00010,000,00014,110,00024,110,0005,590, % 350,00034,650,00010,000,00016,085,00026,085,0008,565, % 400,00039,600,00010,000,00018,060,00028,060,00011,540, % 450,00044,550,00010,000,00020,035,00030,035,00014,515, % 500,00049,500,00010,000,00022,010,00032,010,00017,490, % 550,00054,450,00010,000,00023,985,00033,985,00020,465, % 600,00059,400,00010,000,00025,960,00035,960,00023,440, % 650,00064,350,00010,000,00027,935,00037,935,00026,415, % 700,00069,300,00010,000,00029,910,00039,910,00029,390, % 750,00074,250,00010,000,00031,885,00041,885,00032,365, % 800,00079,200,00010,000,00033,860,00043,860,00035,340, % Break-even point reached at 207,000 units sold and 2.88% market share 24

25 2013 Market Size Forecast Facial Makeup consists of 20% of Total Market 25

26 External Analysis: Porter’s 5 Forces Bargaining power of suppliers Low- Raw materials available through many commodity suppliers Bargaining power of buyers Medium- Price is set but Consumers have many brands from which to choose Threat of substitutes High- Lack of educated market to understand benefits of mineral makeup Threat of new Entrants High- Mineral makeup is the new growth area in today’s cosmetics industry Competitive Rivalry High- there are multiple competitors that are large multi-national companies and high numbers of local competitors 26


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