Marketing Communication Plan

University of New York in Prague School of business

Bachelor of Business Administration program

FINAL PROJECT

Creation of a market entry plan for MANUFAKTURA to enter the Kazakh beauty market

Author: Anastassiya Goikolova 2018 Mentor: William Pattison Statement of Originality

I, Anastassiya Goikolova, declare that the paper entitled:

“Creation of a market entry plan for MANUFAKTURA to enter the Kazakh beauty market”,

was written by myself independently, using the sources and information listed in the list of references. I am aware that my work will be published in accordance with § 47b of

Act No. 111/1998 Coll., On Higher Education Institutions, as amended, and in accordance with the valid publication guidelines for university graduate theses.

Prohlašuji, že jsem tuto práci vypracoval/a samostatně s použitím uvedené literatury a zdrojů informací. Jsem vědom/a, že moje práce bude zveřejněna v souladu s § 47b zákona č. 111/1998 Sb., o vysokých školách ve znění pozdějších předpisů, a v souladu s platnou Směrnicí o zveřejňování vysokoškolských závěrečných prací.

In Prague, 7.12.2018 Anastassiya Goikolova

Acknowledgements

Writing the final project was one of the most meaningful and hard tasks during the whole university studies because it requires a lot of time, sources and attention to fulfill.

I would like to express my gratitude to all these people who were involved into the process and without whom I wouldn’t be able to successfully finish the work.

First of all, I would like to thank my thesis advisor, William Pattison, who was guiding me throughout the work, for his passion, support and professional advices.

I am also grateful to Dr. Harold Neal, the doors of whom were always open for students, for his help, support, and useful recommendations for the final project. I also wish to express my sincere thanks to Professor Dan Fiala who held engaging and instructive classes which taught me a lot.

Furthermore, I am grateful to my friends and parents who were always standing by me throughout my work. Especially, I would like to thank my mother for her patience, constant support, attention, faith in me and for the opportunity to study at

UNYP.

Abstract

MANUFAKTURA is the Czech cosmetic brand which produce original beauty products and accessories for home spa. Presently, MANUFAKTURA operates 50 shops only around the Czech Republic and Slovakia. However, it has a potential to expand internationally and enter the world cosmetics and personal care market. The purpose of this research is to create a market entry plan for Czech cosmetics brand

MANUFAKTURA to enter the Kazakh beauty market. In order to successfully enter a new foreign market the company should make an extensive market research.

The secondary research was focusing on the overall situation of personal care industry worldwide which has a positive tendency for growth. Further, the analysis of the Kazakh beauty market was done by examining the market value, competition, evaluation of total volume of cosmetic products and toiletries spending and tendency towards natural cosmetics. Also, the study about marketing of cosmetics products was conducted since it has some specifications that should be examined before the creation of a marketing plan.

The primary research includes the analysis of MANUFAKTURA competitors such as L’Occitane, Yves Rocher and Nature Republic. The aim of the evaluation of competitors was to understand their objectives, strength, weaknesses, and find the right positioning for MANUFAKTURA. Analysis of the competitor’s strategies also helped to make SWOT analysis for MANUFAKTURA which will be based on local needs. It was done in order to identify the opportunities and eliminate the possible threats. Also, for the primary research an online survey was created which was distributed among

Kazakh consumers in order to understand the target audience, its preferences, consumer behavior and their attitudes towards natural cosmetics and measure their brand awareness. Additionally, in order to explore the current situation of the Kazakh beauty

4 market from the prospective of professional view there were conducted a personal interview with Altynay Imanova, Group Brand Manager Make-up of L'Oréal

Kazakhstan.

After the primary and secondary research, as recommendation, the marketing entry plan was created which is based upon the 7 P's of the marketing mix: product, price, place, promotion, people, process and physical environment.

Key words: Kazakhstan, marketing, cosmetics, personal care industry,

MANUFAKTURA

Table of Contents

1. Introduction ...... 9 1.1 Background ...... 9 1.2. Personal motivation ...... 11 1.3. Research objectives and questions ...... 12 1.4. Research limitations ...... 12 2. Literature review ...... 14 2.2 Global personal care overview ...... 16 2.3 Analysis of the Kazakh beauty market ...... 20 2.4 Marketing of cosmetics ...... 27 3. Research ...... 31 3.1 Competitors analysis ...... 31 3.1.1 L'Occitane ...... 31 3.1.2 Yves Rocher ...... 38 3.1.3 Nature Republic ...... 44 2.2 SWOT Analysis for MANUFAKTURA ...... 50 2.3 Personal Interview ...... 51 2.4 Survey results analysis ...... 51 4. Recommendations: Marketing Communication Plan ...... 63 4.1 Product ...... 63 4.2 Price ...... 65 4.3 Place ...... 67 4.4 Promotion ...... 71 4.5 People ...... 81 4.6 Process ...... 83 4.7 Physical environment ...... 84 5. Conclusion ...... 87 Bibliography ...... 89

Table of Figures Figure 1: growth of the worldwide cosmetics market over ten years ...... 10 Figure 2: Most popular categories among MANUFAKTURA product range ...... 15 Figure 3: MANUFACTURA product range ...... 15 Figure 4: Different types of home spa treatment ...... 16 Figure 5: Global skincare market category segmentation: % share, by value, 2017 ...... 18 Figure 6: Global skincare market geography segmentation: % share, by value, 2017 ... 19 Figure 7: Global skincare market distribution: % share, by value, 2017 ...... 20 Figure 8: The volume of trade of cosmetic products and toiletries in Kazakhstan from 2012 to 2016 ...... 26 Figure 9: L'Occitane product range ...... 32 Figure 10: L'Occitane physical environment ...... 34 Figure 11: L'Occitane shop ...... 35 Figure 12: L'Occitane employee uniforms ...... 36 Figure 13: L'Occitane free packaging offering ...... 37 Figure 14: L'Occitane promotion in theater M. Lermontov ...... 38 Figure 15: Yves Rocher product range ...... 39 Figure 16: Yves Rocher shop ...... 41 Figure 17: Yves Rocher physical environment ...... 41 Figure 18: Yves Rocher promotional brochure ...... 42 Figure 19: Yves Rocher cumulative card ...... 43 Figure 20: Yves Rocher employees ...... 43 Figure 21: Nature Republic product range ...... 45 Figure 22: Nature Republic physical environment ...... 46 Figure 23: Nature Republic cash desk ...... 47 Figure 24: Nature Republic employee ...... 48 Figure 25: Nature Republic cardboard models of exo group member ...... 49 Figure 26: Respondents’ nationality ...... 52 Figure 27: Gender of respondents ...... 52 Figure 28: Age of respondents ...... 53 Figure 29: Monthly disposable income ...... 53 Figure 30: Occasions of buying cosmetics ...... 54 Figure 31: Frequency of cosmetics purchase ...... 54 Figure 32: Money spending per purchase ...... 55 Figure 33: Factors influencing purchase decision ...... 55 Figure 34: Type of cosmetics usage ...... 55 Figure 35: Impact of ingredients of cosmetics on purchase decision ...... 56 Figure 36: Influence of labeling of cosmetics ...... 56 Figure 37: Experience of usage of natural cosmetics products ...... 57 Figure 38: Preferred brand of natural cosmetics among Kazakh consumers ...... 58 Figure 39: Willingness to pay more for natural cosmetics ...... 58 Figure 40: Influence of product’s country of origin on purchase decision ...... 59 Figure 41: Awareness of MANUFAKTURA brand ...... 59 Figure 42: Evaluation of experience of use of MANUFAKTURA products ...... 60 Figure 43: Attitude towards Czech brands/production ...... 60

Figure 44: Frequency of arrangement of beauty treatments at home ...... 61 Figure 45: Channels of exploring of new cosmetics products ...... 61 Figure 46: Places of purchases ...... 62 Figure 47: MANUFAKTURA logo ...... 64 Figure 48: New packaging for beer line products ...... 65 Figure 49: MANUFAKTURA beer line packaging ...... 65 Figure 50: MEGA Alma-Ata shopping mall ...... 68 Figure 51: Dostyk Plaza shopping mall ...... 69 Figure 52: MEGA Park shopping mall ...... 69 Figure 53: KERUENCITY shopping mall...... 70 Figure 54: MEGA Silk Way shopping mall ...... 70 Figure 55: Khan Shatyr shopping mall ...... 71 Figure 56: MANUFAKTURA online advertisement #1 ...... 72 Figure 57: MANUFAKTURA online advertisement #2 ...... 72 Figure 58: MANUFAKTURA online advertisement on Instagram for Czech market ... 73 Figure 59: MANUFAKTURA outdoor advertisement #1 ...... 75 Figure 60: MANUFAKTURA outdoor advertisement #2 ...... 75 Figure 61: MANUFAKTURA outdoor advertisement #3 ...... 76 Figure 62: Celebrity endorser Dinara Rakhimbaeva ...... 77 Figure 63: Celebrity endorser Madina Mamadalieva ...... 78 Figure 64: Cosmopolitan Kazakhstan magazine ...... 80 Figure 65: Liza Kazakhstan magazine ...... 80 Figure 66: MANUFAKTURA employee's uniform ...... 82 Figure 67: process in the physical shop ...... 84 Figure 68: MANUFAKTURA physical environment ...... 86 Figure 69: MANUFAKTURA physical environment design details ...... 86

Table 1: Global skincare market value: $ million, 2013–17 ...... 17 Table 2: Global skincare market category segmentation: $ million, 2017 ...... 18 Table 3: Global skincare market share: % share, by value, 2017 ...... 19 Table 4: L'occitane product prices ...... 33 Table 5: Yves Rocher product prices ...... 40 Table 6: Nature Republic product prices ...... 45 Table 7: Comparison of competitors’ price and suggested prices for MANUFAKTURA products for Kazakh market ...... 67

1. Introduction

1.1 Background

The history of cosmetics began several hundred years ago and the secrets of beauty have excited humanity since time immemorial. In the modern world the skin care and decorative cosmetics are an integral part of people's lives, as it helps to create their own individual image, to maintain the hygiene of their body and improve skin condition, some cosmetic lines help to slow the aging process and to prevent negative influence of environment or severe climate and maintain healthy skin condition. At the moment, the market presents numerous cosmetic products and brands which are offered in all price categories and able to satisfy a various consumer needs. The cosmetics market is still developing, new participants are constantly emerging and both trends and consumer demand are changing. Ongoing researches and new technologies implementation result in innovations in the industry and new product development.

New innovations and product development give the companies a great opportunity for growth and business expansion. The competition in the cosmetics market is quite high and cosmetic brands need a strong marketing strategy in order to enter the world market and stay competitive.

Beauty industry and cosmetics market are upcoming and have a stable growing trend over the years. As we can see from the Figure 1, according to L’Oréal annual report (2017) in 2017 the global cosmetics market grew up to 5% with estimated sales of €200 billion. L’Oréal (2017) suggested that such a growth of the worldwide cosmetics market is based on the several key factors like continuing growth of online sales, extension of networks, high demand on new products or worldwide urbanization.

Jean-Paul Agon, Chairman and Chief Executive Officer of L’Oréal, the leader of the global cosmetic market, states that “As people’s desires for beauty grow in multiple

9 ways worldwide, beauty has never looked this good. Market growth accelerated in

2017, stimulated by extremely favorable demographic and sociological developments”

(2017).

Figure 1: growth of the worldwide cosmetics market over ten years

Sourse: L’oreal annual report (2017)

6 % of the market share refers to Eastern Europe geographical region which includes Kazakhstan market (L’Oréal annual report, 2017). Beauty industry is a supply driven, new products are developed constantly and new formulas and ingredients are added into the products. One of the latest innovations and trends in this industry in recent years is the "naturalization" and "greening" of cosmetics. According to the

Natural Personal Care Global Series report by global consulting and research firm Kline&Company (2015) importance and demand on natural products also grows.

As Persistence market research states (2016) the global natural and organic personal care products market is likely to gain around US$ 21,776.9 million by the end of 2024.

1.2. Personal motivation

My personal motivation of choosing this topic is based on several factors. First of all, as a young woman I am interested in cosmetics, especially in skin care products.

Human skin is highly exposed to the environment. Sun, wind, change of temperatures and seasons, polluted air - all these factors could affect skin condition. That is why it is better to use special cosmetics which could help to maintain good skin condition. More and more consumers are willing to pay a higher amount of money for the premium beauty products that are natural or perceived to be natural. Consumers’ awareness of popular brands such as L'Occitane, Yves Rocher, Lush, The Body Shop etc., which occupy a niche of cosmetics with natural ingredients, only strengthens over the time.

Uncountable researches and publications are increasingly convincing woman that natural and organic cosmetics is healthier and more helpful for skin care rather than cosmetics which is based on chemicals. MANUFAKTURA states that “exploiting natural ingredients is characteristic of MANUFAKTURA – vast majority of our cosmetic products contain 97 – 99.5% of them. We definitely prefer natural ingredients for their high content of vitamins, antioxidants, minerals, hydrating and nourishing substances.” (MANUFAKTURA, 2018). Their philosophy and type of products is very close to my personal preference that is why I would like to promote their brand in my homeland Kazakhstan and introduce it to people who care about their skin health and quality of products and could gain both for affordable price by purchasing products of

MANUFAKTURA. Additionally, such a research will help me to deep and practice my knowledge in the field of marketing and become a real professional in career path that I chose and am interested in.

1.3. Research objectives and questions

The objective of the final project is to conduct a market research which is “the collection, processing, and analysis of information on topic related to marketing”

(Lehmann, Gupta, & Steckel, 1998) in order to create a market entry plan for Czech cosmetics company MANUFAKTURA to enter the Kazakh beauty market. The main research question is “How can the Czech cosmetics brand MANUFAKTURA expand their business and enter the Kazakh beauty market?”

In order to answer the research question, first of all, I have done the secondary research by an analysis of the Kazakh beauty market, its current situation, segmentation and trends by using academic sources. Also, I have identified current competitors of

MANUFAKTURA in Kazakhstan and evaluated their strategy in order to find their strengths and weaknesses. Further, I have created a SWOT analysis by focusing on external and internal factors. After that, I have made a primary market research by conducting an online survey for Kazakh consumers which helped to understand in-depth view of the customers towards our products and natural cosmetics, their preferences and needs. Finally, I have created a marketing entry plan which is based upon the 7 P's of marketing considering all specificity of the market.

1.4. Research limitations

One of project’s limitations is the size of the sample that was used in analysis of the survey results. Initially, 172 responds was collected during the survey that was spread out among Kazakh consumers which could be statistically not representative number. If there were more time for research study, the extensive survey will be conducted. MANUFAKTURA suggested to conduct further survey with the larger sample size which will take into account representative distribution of the population.

Furthermore, the budget for marketing entry plan for MANUFAKTURA to enter the Kazakh beauty market was not established. Subsequently, there was not effective allocation of the company’s budget towards marketing activities. Also,

MANUFAKTURA is not publicly traded company which means that there is no public access to financial statements of the firm. If there was a limit, the budget for marketing promotions could be distributed differently.

2. Literature review

2.1 Company description and background

Originally MANUFAKTURA was established in 1991 in Prague and initial idea was to create the store for tourists where they could buy a traditional Czech toys and craft product as souvenirs that expanded to the network of MANUFAKTURA Original

Czech Tradition stores. Later, they also started to produce fresh glycerin soap which was gaining popularity among customers. The production of soap gave impulse to the development and release of the further beauty products which contain natural ingredients such as wine, Czech beer, thermal salt from Karlovy Vary, fruits and so on.

Thus, in 2005 the number of MANUFAKTURA cosmetics products reaches such a level that the company decided to expand and establish a new network stores that is called MANUFAKTURA – Your Home Spa. The idea is based on globally well-known

Czech spa tradition and resorts. MANUFAKTURA states that their target is “to teach our clients how to relax and how to take care of themselves by means of our cosmetics, accessories and interesting home spa recipes” (MANUFAKTURA, 2018). Nowadays,

MANUFAKTURA has 50 chain stores around the Czech Republic and Slovakia.

MANUFAKTURA offers a range of products for home spa: skin care, cosmetics for bath and shower, soap, candles, cosmetics for man, baby cosmetics and perfumes.

Each of the product types are also refer to different types of treatment such as regenerative, romantic, refreshing, nourishing, moisturizing and anti-stress. There are also several cosmetics ranges such as beer, wine, rose, daisy, cucumber, apricot, lavender, mint, Dead Sea cosmetics and others. In addition, there are accessories such as massage tools and sponges, textile, home fragrances etc. as well as herbal and fruit syrups, tea, porcelain cookware in the product portfolio of MANUFAKTURA. Most of the products are also vegan friendly, except several products which contain animal-

14 derived ingredients, and the company is a holder of the international certificate of

Humane Cosmetics Standard since 2009 which confirms that the company does not test the products on animals

Figure 2: Most popular categories among MANUFAKTURA product range

Source: https://www.manufaktura.cz

Figure 3: MANUFACTURA product range

Source: https://www.manufaktura.cz

Figure 4: Different types of home spa treatment

Source: https://www.manufaktura.cz

Although the product range of MANUFACTURA is quite differentiated I would like to start from introducing only beauty products in the Kazakh market.

MANUFAKTURA is gaining popularity from year to year and is one of the few Czech brands that is recognizable even outside the Czech Republic. As MANUFAKTURA

(2018) points out “for more than 27 years, our company has been successfully operating thanks to the enthusiasm of the creators, honest quality and respect for the traditions, which we are proud of”. Since MANUFAKTURA successfully operates in the Czech

Republic, constantly introduces new products and opens new stores around the country it can be concluded that it has a promising perspective in entering the world market and spreading the brand name of the company worldwide.

2.2 Global personal care overview

According to Encyclopedia Britannica (2018) “cosmetic, any of several preparations (excluding soap) that are applied to the human body for beautifying, preserving, or altering the appearance or for cleansing, coloring, conditioning, or protecting the skin, hair, nails, lips, eyes, or teeth”. Nowadays the beauty industry has become one of the most dynamic. Increased competition forces companies to raise

16 budget for marketing expenses in order to stay competitive and stand out among numerous market players which offer almost the same products for consumers.

Marketing of diverse products and services differs since it is targeted to different consumers, markets and so on. Marketers constantly develop new strategies, eye- catching packaging and creative promotions in order to attract as much consumers as possible and reach their loyalty to the brand and products. Presently, women and increasing number of men, are concerned about their appearance and interested in trying new beauty products.

According to Market Line (2018) the global skincare market reached the revenue of $120.7 bln in 2017 with growth rate (CAGR) of 5.1% between 2013 and 2017.

Table 1: Global skincare market value: $ million, 2013–17

Year $ million € million % Growth 2013 98,762.6 87,246.2 2014 103,593.6 91,513.9 4.9%

2015 108,618.4 95,952.7 4.9%

2016 114,663.5 101,293.0 5.6% 2017 120,668.7 106,597.8 5.2%

CAGR: 2013–17 5.1% Source: Market Line, 2018

Therefore, in 2017 the highest value in the global skincare market belongs to facial care which was 80.7% of the market with total sales of $97,439.7 million (Market

Line, 2018). The second largest segment of the global skincare market is body care with the total sales of $15,628.5 million. The third place takes hand care segment which reached $3,088.8 million in 2017 respectively (Market Line, 2018).

Table 2: Global skincare market category segmentation: $ million, 2017

Category 2017 % Facial Care 97,439.7 80.7 Body Care 15,628.5 13.0

Hand Care 3,088.8 2.6

Make-Up Remover 2,256.4 1.9 Depilatories 2,255.1 1.9

Total 120,668.5 100% Source: Market Line, 2018

Figure 5: Global skincare market category segmentation: % share, by value, 2017

Source: Market Line, 2018

Asia-Pacific region is the biggest geographical segment of the global skincare market to which compounds of 53.9% of total market value. Europe accounts for 21.8% and United States amounts to 15.1% of the global market in 2017 (Market Line, 2018).

Figure 6: Global skincare market geography segmentation: % share, by value, 2017

Source: Market Line, 2018

In 2017, L`Oreal S.A. took the leading position among cosmetics companies and generated 10.3% of the total market value (Market Line, 2018).

Table 3: Global skincare market share: % share, by value, 2017

Company % Share L`Oreal S.A. 10.3%

Beiersdorf Ag 4.9%

Unilever 4.5%

Procter & Gamble 4.1%

Other 76.1% Total 100% Source: Market Line, 2018

According to Market Line (2018) hypermarkets and supermarkets were the main distribution channels for skin care market in 2017 with 23.2% of the total market value whereas health and beauty stores channel had 17.1% and direct sellers had only 14% of value.

Figure 7: Global skincare market distribution: % share, by value, 2017

Source: Market Line, 2018

As forecasted by Market Line (2018), by 2022 the global skincare market is going to have a value of $155,095.5 million which is increase of 28.5% since 2017.

The global natural and organic personal care industry also has a positive tendency to grow. Persistence Market Research (2018) states that by the year 2028 is going to be valued at US$ 29,507.5 million. The main drivers of the natural cosmetics market are increasing consumer demand for eco-friendly personal care products, increasing spending capacity and higher willingness to pay for the premium beauty products

(Persistence Market Research, 2018).

2.3 Analysis of the Kazakh beauty market

A rapid world globalization positively influences businesses today. Disappearing of geographical, cultural, and other barriers creates the more integrated world. Lowering the barriers gives an opportunity even for purely small domestic companies to become international ones and trade around the world thanks to new technologies development, easy access to knowledge, information transfer and various logistics options. According to Michael R. Czinkota, Ilkka A. Ronkainen and Gilbert Zvobgo (2011, p.5) international marketing is “the process of planning and conducting transactions across

20 national borders to create exchanges that satisfy the objectives of individuals and organizations.” Although entering the world market positively affects the company performance there are still challenges that a company can face. The marketing entry plan should be based on a deep market research and take into the account the micro environmental factors in order to maximize chances for success and integrate the original marketing concept into the new market. Adaptation to the new environment is the key objective while basic principles of marketing, which is satisfying the needs and wants of the target segment, apply everywhere.

Due to the advantageous location of the country in the heart of Central Asia

Kazakhstan is a link between two important strategic markets – Europe and East Asia.

Kazakhstan remains an attractive country for business expansion since the mid-1990s.

According to the World Bank (2018) in 2018 Kazakhstan is in top 30 economies in ease doing business. Francis Ato Brown (2018), World Bank Country Manager for

Kazakhstan, states that “Kazakhstan has come a long way in demonstrating a very strong commitment to improving conditions for doing business”. The improvements were made in terms of reduction of the time for value added tax registration, introduction of an electronic customs declaration system, public availability of performance measurement report (World Bank, 2018).

From the economic point of view, Kazakhstan is an attractive country for foreign investment, since the local economy is in a good shape, compared to other countries that are in other aspects similar to Kazakhstan. Data from World Bank from years 2010-

2017 are used in this whole section. Gross domestic product (GDP) serves as one of the most common measures while comparing shape of economy of different countries. To deal with different costs of living and inflation, GDP per capita PPP (purchasing power parity) is used as an indicator of the wealth of countries. It captures real production of

21 the country, taking into account different costs in respective countries. Compared to other post-Soviet countries, Kazakhstan is in the long run the 4th best out of 13 countries. In 2017, only all three Baltic countries reached on higher GDP per capita

PPP, all other countries were worse in this perspective, including Russia or Belarus.

Kazakhstan is exceeding the average of post-Soviet countries by 49%. Kazakhstan is doing well compared to other Asian countries as well, it is the 14th best in 2017. Its position is improving, it was 4% below average of Asian countries in 2010, steadily climbing to 5% above average in 2017. Kazakhstan is doing well even compared to some European countries. Concerning real GDP growth, Kazakhstan got out of recession in 2015 – 2016, where the real GDP was decreasing by 0.26% and 0.32% respectively, back to real GDP growth of 2.59% in 2017. This situation has been connected to recession in Russia, but it has been reverted back.

Kazakhstan is in a very good position concerning government debt, measured as a percentage to nominal GDP. Data for this measure are available up to 2016. Among six post-Soviet countries with available data, Kazakhstan has the 2nd lowest Debt to GDP,

16.18% versus average of post-soviet countries of 35.6%. Average of Asian countries

(with data) is 51.8%, in Europe it is 57.9%.

Two measures even closer to investing and beauty market in Kazakhstan are

Value added by manufacture measured as a percentage of GDP and foreign direct investments (FDI) measured as a net inflow to GDP. Concerning Value added by manufacture, it is 11.2% of GDP in 2017, which is comparable to 11.9% in Russia or

12.4% of Ukraine. As seen in data on foreign direct investment, Kazakhstan is quite prevalent country to be invested in. As the FDI to GDP is fluctuating, average of years

2010-2017 is used rather than level of 2017. Among post-soviet countries, Kazakhstan has the 5th highest FDI to GDP, exceeding the average by 9%. Similar situation is in

22 comparison with other Asian countries, Kazakhstan has 12th highest value, exceeding the average by 17%. In Europe, Kazakhstan is 12th as well with higher value than for example Czech Republic and Slovakia. Last but not least, compared to neighbours,

Kazakhstan has the 3rd highest FDI to GDP, exceeding the average by 7%.

Nowadays competition on Kazakh beauty market is high and market is full of diverse cosmetics products whereas around 30 years ago the situation was quite opposite. During the period when Kazakhstan was part of USSR and some years after

USSR collapse there was a shortage of cosmetic products and extremely limited options of the brands. At the same time there was low demand for cosmetics products because of very low purchasing power of consumers in the period of full economy rebuilding. In

2000’s the situation has drastically changed when the international companies have started to invest in mining and resource extracting industries like oil and gas (Bendini,

2013). Economic growth of the country has obviously positively influenced the development of other industries including cosmetics industries - different cosmetics companies have started their sales and marketing operations in Kazakhstan. A significant development began in the industry and women started to be more interested in beauty products. Currently, it is the golden era of beauty industry in Kazakhstan.

Women start to use cosmetic from teen age and men are start to be interested in cosmetics services and products as well.

Around 97% of Kazakh women in the age group of 16-55 years regularly use makeup products, whereas 76% do makeup on daily basis. Furthermore, 80% of population buy cosmetics with varying degrees of regularity (Albekova, 2018).

The cosmetics market consists of different types of products such as skincare, haircare, make-up, deodorants and oral cosmetics. All these types of products are represented on the market of Kazakhstan. Also, cosmetics industry can be classified by

23 the technology of production, price segment and quality of beauty products. Mass market is cosmetics which is inexpensive and produced in large quantities for diverse group of consumers. It is produced from petrochemical products or low-quality natural products and synthetic preservatives. Brand such Avon, Faberlic, Nivea, Lumene etc. could refer to mass market segment. Middle class categories refer to products that made of natural biologically active substances and natural preservatives. For example,

L'Oréal, Bourjois, Pupa and others. Luxury cosmetics is made of high quality natural biologically active substances and only natural preservatives. Such cosmetics are more expensive and usually producers develop new products in their research laboratories.

Chanel, Estee Lauder, Dior, Givenchy are representatives of luxury category. There is also salon or professional cosmetics segment which represent high quality products intended for professional use such as Biotherm, La Prairie, Payot and so on. The last segment is cosmeceutical which is combination of cosmetic and pharmaceuticals and work at the cellular level. For example, Vichy, Uriage, Avene, La Roche-Posay etc.

In 2017 the leading position of the beauty and personal care market of Kazakhstan belonged to international companies such as L’Oréal, Procter & Gamble, Kalina

Concern, Unilever and others (Euromonitor International, 2017). The success of international companies in Kazakhstan can be determined by historical awareness of world famous brands by consumers, high marketing budget and powerful production capacity. Also, Russian beauty and cosmetics brands are also gaining the popularity in

Kazakhstan. In contest, local cosmetics production is less developed compared with foreign competitors. In 2016 there were 27 local producers of perfumery and cosmetics in Kazakhstan. According to Energy Prom (2018) analytical data cosmetics, perfume and soaps locally produced covered only 5.1% of the demand for these products in

2017. Import of cosmetics increased in volumes by 3.9% in comparison with 2016. The

24 total volume of cosmetics sales in Kazakhstan raised by 4.4.% in 2017. The perfume and skin care market is completely at the mercy of imports. Local production provided only 5.1% of demand - this is 1.8 thousand tons of products in January-July 2018.

Kazakhstan is the country which heavily depends on imports, which has a share more than 90% of the foreign trade turnover of this category of goods. According to

DAMU Research Group (2016) the leading position in the volume of exports of cosmetic products is the category “Hair care products”, whose share in 2015 was 38.7% of all cosmetics exports of the Republic of Kazakhstan.

The overall Kazakh beauty and personal care industry improved performance in

2016 in terms of retail volume and current value growth. The improvement was due to

“population growth, greater economic stability and gradual increases in disposable incomes and purchasing power among consumers.” (Euromonitor International, 2017).

According to Committee on statistics of Ministry of national economy of the

Republic of Kazakhstan (2018) the volume of cosmetic products and toiletries was 160

995 million of tenge in 2016 which composed 2% of retail trade for selected commodity groups. As can be seen from the Figure 8 the spending on cosmetic products and toiletries has a growing tendency over the years. Accordingly, it increased by 8% in

2016 compared with 2015.

Figure 8: The volume of trade of cosmetic products and toiletries in Kazakhstan from 2012 to 2016

180000 160000 140000 120000 100000 80000 60000 40000 20000 0 2012 2013 2014 2015 2016

million of tenge Linear (million of tenge) Source: information is adopted from Committee on statistics of Ministry of national economy of the Republic of Kazakhstan

Also, in 2016 it could be observe a growing tendency towards natural and eco- friendly ingredients in Kazakh cosmetics industry. There is growing number of brands that print information about the percentage of natural ingredients in their products as well as “SLS-free” or “silicon-free”. As Euromonitor International (2017) states “such activity was mainly evident among mid-priced and premium brands.” As can be seen from the overview the Kazakh beauty market has the growing tendency, so

MANUFACTURA has a potential in expanding in Kazakhstan.

Previously, in the early 2000s, there were not so diversified retail channels for sellers in the Kazakh beauty market. In the past, consumers were ought to buy cosmetics on markets or boutiques that were full of fake and poor quality cosmetics whereas now the situation has completely changed. Demand on high quality and branded perfumery and beauty products has increased significantly. Presently, there are several retail channels in Kazakhstan where companies could merchandise their products. One of the most popular retail channels among consumer is cosmetics retail

26 stores such as Mon Amie, Beautymania, Frantsuzskiy Dom and so on, where customers could purchase a various original cosmetics from famous global brands. Another retail channel type is direct selling such as Oriflame, Avon, Faberlic and Mary Kay which sell product through catalogs and representatives. Boutiques and markets are still popular among certain type of consumers that have lower purchasing power. Online shop are getting popularity since they can offer lower prices compared with big retail store competitors due to no rental and wage costs. Also, some of the consumers prefer to purchase from pharmacies that sell different cosmeceutical brands such as Avene,

Bioderma, Nux and so on. Kazakhstan in of the leaders in terms of franchising in the

Central Asia.

There are around 500 franchises operating in Kazakhstan. Most of the franchises in the country are sub-franchises with bases in Russia or Turkey. This sector is rapidly developing and has a promising potential for new entrants. It is estimated that the number of franchises operating in Kazakhstan will increase to 550 by 2020 (Export.gov,

2018).

2.4 Marketing of cosmetics

Nowadays, the beauty industry has become one of the most dynamic ones.

Increased competition forces companies to raise budget for marketing expenses in order to stay competitive and stand out among numerous competitors which offer almost the same products for consumers. Marketing of diverse products and services differs since it is forwarded to different targets. Marketers constantly develop new strategies, eye- catching packaging and promotions in order to attract as much as possible consumers and achieve their loyalty to the brand and products. Presently, women, and increasing number of men, are concerned about their appearance and interested in trying new beauty products. The American Marketing Association (2013) defines marketing as “the

27 activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large”. The distinction of beauty marketing is that it is image based. By coming to the store consumer satisfies the need of not only purchasing hygiene products but also the one of satisfying emotional needs. Even the cosmetics brands that are used become an integral part of the image and the way to show the status. Usually beauty products promotions are based on promises that usage of particular cosmetic products positively affect the appearance and subsequently will improve the overall image of consumer.

Visualization is one of the most important instruments in promotion cosmetics.

Marketing of beauty products are focused on problem solving and unique product value proposition. It is very important to focus on the right target since one product cannot satisfy needs and wants of all possible customers.

As Ruth Altman (2018) pointed out that businesses which operate in cosmetics industry “need to set their products apart with creative packaging, consistent branding and product positioning to make the most of their overall marketing strategy”. Catching and creative packaging will effectively communicate the brand story and let the customer feel the product. “Branding is the emotion behind your product - in essence, it’s the consumer’s perception and feeling toward your brand” states R.Altman (2018) which means that the brand should have a personality. For example, beauty brands that position themselves as trendy and fashion oriented are focused on colors and design which will be attractive for younger generation whereas luxury cosmetics brand will target older people and lean on fuller textures and rich fragrances. Product positioning is the next most important step in creating marketing plan. Understanding the right target helps to effectively communicate the marketing message to the audience by identifying core demographics and psychographics of the target (Altman, 2018).

According to the article “9 Tips for Marketing Beauty Products” (Launch Grow

Joy, n.d.) one of the most important factors in customer’s decision making process of buying bath and body care products is fragrance. For instance, the product may have permeable package or providing product testers. Another tip for marketing of beauty products is to create a unique brand which will outstand among numerous competitions.

For example, Racheal Kash, the president of Lulu Blossom beauty brand, stated that

“some of our products are vegan and all are vegetarian so we say that on every box, label, and catalog” (Launch Grow Joy, n.d.) which helps to point out the originality of the brand. Also, the Bath and body care is very competitive category, so the brand should find a niche where it can solve consumer’s problem since “problem/solution is the key to winning in this space” (Launch Grow Joy, n.d.). As an example, it could be ease of use, ingredients or better value.

Lin Grosman in her article “Beauty And Brains: Four Ways Cosmetics

Companies Are Mastering Digital Marketing” (2018) argues that cosmetics companies had to learn the art of online marketing since nowadays it could become the competitive edge and proposed four ways of how cosmetics brand can master digital marketing. The first way is effective operation of the company’s website. For example, it should be user-friendly and have the filter based on the customer’s preference. The second important way is digital marketing and market segmentation. Such tools as search engine optimization, customization and further analytical application could monitor the data. Lin Grosman (2018) pointed out that “influencer marketing is continuing to grow in popularity and, in my opinion, few industries offer greater proof than cosmetics”. The last way of developing the digital marketing is Mobile-Friendly Functionality which helps customers to simplify the buying process.

Lydia Gordon (2017) highlights an importance of generational segmentation in skin care market as “technology continues to advance, shifts in demographics such as higher life expectancy, urbanization and falling birth rates are reshaping lifestyles and purchasing decisions”. According to the article “The Generation Gap in Beauty and

Personal Care” (Gordon, 2017) the consumer who are under 30 years old are more tended to pay attention to environmental and ethical causes due to lifestyle changes as well as millennials who are digitally influenced. Lydia Gordon states (2017) that organic ingredients more important for 30-44-year-olds consumers whereas 15-29-year- olds more interested in cosmetics that do not tested on animals.

3. Research

3.1 Competitors analysis

According to Kotler and Armstrong (2017, p.542) “creating competitive advantage begins with a thorough understanding of competitors’ strategies”. We need to understand their objectives, strength and weaknesses. Foreign companies and brands continue to lead the beauty market in Kazakhstan. Their extensive marketing campaigns contribute to the success of international brands among Kazakhstani consumers. Such global companies such as L'Oréal, Procter & Gamble Co, Unilever and others have a strong position in the market and good reputation among customers. Also, there is increasing trend towards South Korean cosmetics among Kazakh women. There are also several competitors concerning beauty products with natural ingredients which are represented in Kazakhstan: L'Occitane, Yves Rocher, Nature Republic. These companies have quite the same brand story that reference to “naturalness” of the products they offer and occupy the niche of natural cosmetics in Kazakh market. In order to compare and contrast competitors’ marketing strategies that are based on 7 P’s of the marketing I decided to have a customer journey and personally investigate the differences. The picture of physical environment, people and some promotions are made by the author.

3.1.1 L'Occitane

L'Occitane en Provence, or L'Occitane, is international retail of cosmetics.

L'Occitane was founded in 1976 by Olivier Baussan. The company position itself as natural and organic ingredient-based cosmetics and refers to lux. (The L'occitane Group,

2018). The history begins from the production of essential oils and continues with production of traditional vegetable-based Marseille soap in Provence village. Later, the

31 portfolio of well-being products has expanded and currently L'Occitane operates in 63 countries around the world including Kazakhstan.

Product

According to their official website L'Occitane (2018) “strive to use high-quality, traceable ingredients of natural origin…and use over 200 plant-derived ingredients, a quarter of them organic certified”. The product categories are: skin care, fragrance, body and wash, haircare, gifts, home fragrances, travel and men. Each of the products also belongs to different collection such as Almond, Verbena, Immortelle Precious,

Rose and others. Skin care products are divided into concerns and products type’s categories. For example, product’s type like makeup remover, toner, eye care, facial masks aimed at concerns such as anti-aging, dry skin, hydration and so on.

Figure 9: L'Occitane product range

Source: https://kz.loccitane.com

The design and packaging is quite simple and minimalistic, natural colors are prevailing. Most of the packages are made of glass. The package is communicating the brand story of L'Occitane “show off the very best Provence” (L'Occitane, 2018).

Price

Products prices are higher than above average and L'Occitane can be included into the lux cosmetics category.

Table 4: L'occitane product prices Product categories Price range (min-max)

Skin care 2 700 – 74 250 KZT

Body and wash 9 900 – 22 050 KZT

Hair wash 2 700 – 13 950 KZT

Fragrancies 9 320 – 40 050 KZT

Source: information is adopted from https://kz.loccitane.com

Place

According to the official website of L'Occitane (2018) in Kazakhstan there are eight physical stores and online shop in the country. Shops are presented in cities Aktau,

Almaty, Pavlodar and Astana. Four out of eight stores are located in Almaty city since it is the most populated city of the country and the former capital of Kazakhstan

(historical and cultural center of the country). Most of the stores are placed in the biggest shopping malls of the cities such as Batyr mall, Globus, Esentai Mall etc. as well as independent boutiques and Duty Free of Almaty airport.

Physical environment

The design of the L'Occitane physical stores in Kazakhstan is made in unified corporate style. The overall physical environment intention is to remind customers the unique French Provence atmosphere and make them feel and smell it. The design of the shops is in yellow color since it is the color of the brand. Furniture and equipment are made from fake wood material in order to remind the nature. Indoor lighting is soft

33 in order to create a relaxing ambiance, the aroma of natural herbs plays the same role in the store. Also, there are posters on the walls that represent the nature of France and information about social responsibility of the company. Some goods are arranged in baskets which are made from natural materials. The overall physical environment creates a feeling and atmosphere of country house in the south of France. The company informs customers about Social Responsibility values – it is placed inside shop on the wall.

Figure 10: L'Occitane physical environment

Figure 11: L'Occitane shop

People

The uniform of the employees consists of black t-shirt, gray apron with yellow details and jeans. All the employees are middle-age women since it is the lux brand cosmetics. The seller was familiar with all the product range and ingredients and tried to help the customer and meet her/his needs.

Figure 12: L'Occitane employee uniforms

Promotion

L’Occitane had promotion of their products during the performance in Lermontov

Theater in Almaty city by organizing promotional display stand decorated in the brand’s style and also offering a buffet for the visitors. Audience was offered French sparkling wine and French style pastry. The consultants in uniforms offered samples of the cosmetics and explained the features and benefits of their products.

The other type of promotions is advertising in the local magazines targeted on women. Internet magazine offers a promo actions like in case of purchase amount is

10 000 KZT the client can choose one out of three types of mini hand cream.

L'Occitane offers limited small seasonal sets in colorful boxes for low than usual price mainly targeted on new customers to try products. The employees distribute

36 leaflets and brochures among shops visitors to inform about existing products composition and new products.

Also, salespersons offer free of charge packaging of the gifts like placing in the specially designed box (variety of box design), wood basket or gift paper.

Figure 13: L'Occitane free packaging offering

Figure 14: L'Occitane promotion in theater M. Lermontov

Source: http://bib.kz 3.1.2 Yves Rocher

The French cosmetic company Yves Rocher was founded in 1959 by Yves

Rocher. The company promotes naturalness and position itself as natural cosmetics brand and could be classified as middle market cosmetics. “Nature is the future of

Mankind” was the motto of Yves Rocher (2018). In 2016 The Yves Rocher

Foundation was founded with aim to protect the environment and act for biodiversity of the planet.

Product

As Yves Rocher (2018) claims use of 100% of component extracts are botanical and do not contain silicones, parabens, dyes and mineral oils. The product range of the company consists of makeup product, such as foundations, cosmetics for eyes, lipsticks, powders, nail polish and nail care, and products for skin, body and hair care which divided into the different categories by hair or skin type and need. Additionally, there are travel-size products, accessories and fragrances for men and women. The packaging is eco-friendly and made from recycles materials in order to lower environmental

38 pollution. Skin and body care and wash products packaging have bright colors, such as green, blue, yellow etc. with botanical pictures and product description. However, makeup products packaging is made in classical conservative colors like black, white or light pink color.

Figure 15: Yves Rocher product range

Source: https://www.yves-rocher-kz.com

Price

Yves Rocher products prices are lower compared with Nature Republic or

L'Occitane.

Table 5: Yves Rocher product prices Product categories Price range (min – max)

Skin care 790 –11 890 KZT

Body and wash 690 – 8 390 KZT

Hair wash 1 290 – 5 490 KZT

Fragrancies 2 590 – 15 490 KZT

Source: information is adopted from https://www.yves-rocher-kz.com

Place

According to information from the official website of Yves Rocher (2018) in

Kazakhstan there are 20 physical shops in 11 cities of the country besides an online shop with the possibility to get the product through postal or courier service. Most of the physical shops are located in the shopping malls.

Physical environment

All physical stores in Kazakhstan are made in unified design. Yves Rocher stores basic colors are green and beige. Shops are very bright and well designed. There are posters with information about eco-friendly actions of the company, such as recycled materials used in packaging, usage of paper that come from sustainable managed forests, planted trees, an absence of genetically modified organism in the products etc. on the walls. In the same way there are photos of plants and flowers around the shop.

The wall behind the cash register is green and have inscription “act beautiful”.

Figure 16: Yves Rocher shop

Figure 17: Yves Rocher physical environment

Promotion

Yves Rocher offers Clients’ сumulative and privilege club cards. Depending on the purchase amount the shop assistant puts the definite number of stamps on the card.

More stamps means more means more expensive products that can be chosen by a client to have free of charge. At the time of the purchase Yves Rocher was conducted a promotion which was free diagnosis of skin condition with special device, consultation and selection of appropriate skin care program.

Figure 18: Yves Rocher promotional brochure

Figure 19: Yves Rocher cumulative card

People

The uniform of Yves Rocher employees is white suit that consist of trousers, t- shirt and vest which is belted with a green belt. The uniform is similar to uniform of doctors or laboratory scientists which bring the emphasis that the employees are experts in natural cosmetics. Both employees are women and represent two age groups: young and middle-aged.

Figure 20: Yves Rocher employees

3.1.3 Nature Republic

Nature Republic is the youngest competitor which started to operate in Kazakh beauty market several years ago but gained the popularity very fast. The company was established in 2009 in South Korea. As explained by Nature Republic (2018) it is the brand that “finds and shares the energy of life from the pristine nature around the world”. Nowadays South Korean cosmetic is one of the most popular and innovative in the world beauty market.

Product

Nature Republic offers the range of products for men and women: skincare, cleansing, masks, makeup, hair and body care, perfumes and cosmetics tools. All products have various functions such as whitening, skin soothing, skin texture improvement, moisturizing etc., and intended for different skin types. For example, dry, combination, oily, dry or sensitive skin type. Cosmetics products contain raw natural ingredients that were derived from all around the world. For instance, aloe vera from

California, African shea butter, Marocco argan, Hawaii Kona deep seawater. Most of the packaging is made from plastic or glass and have different color and prints depending on product line which are based on the main ingredient. As an example, products which are based on Aloe vera have green color packaging.

Figure 21: Nature Republic product range

Source: http://naturerepublic.kz

Price

Despite the fact that Nature Republic (2018) states that it “provides reasonably- priced products to customers by finding the balance between quality and price in order for everybody to fully enjoy its products” the prices for Kazakh market are above the average and Nature Republic can be classified as middle market cosmetics.

Table 6: Nature Republic product prices Product categories Price range (min – max)

Skin care 490 – 59 990 KZT

Body and wash 3 990 – 9 990 KZT

Hair wash 2 290 – 6 990 KZT

Fragrancies 3 990 – 12 990 KZT

Source: information is adopted from http://naturerepublic.kz

Place

Nature Republic has seven physical shops and operates in six cities around

Kazakhstan at the moment (Nature Republic, 2018). All physical shops located in shopping malls. If the customers do have not an opportunity to visit the store they have a possibility to shop online.

Physical environment

The physical environment of Nature Republic clearly communicates the brand story - “journey to nature”. Shopfront is decorated with artificial turf, plants, flowers, tree which is made of wood, product display and banner that communicates information about the product. Design of the store combines urban motives, for example, brickwork on the walls, and nature. Shelves with products and back wall are made of wood, walls are decorated with pictures of nature as well as there are paper birds on the ceiling.

Additionally, there are live flowers under the cash desk. The overall ambience creates an experience immersion into the nature from the urban city.

Figure 22: Nature Republic physical environment

Figure 23: Nature Republic cash desk

People

The uniform of Nature Republic employees consist of black trousers, white blouse, dark green jumper and light green apron. Also, they have tied hair. All employees are women at the age of 23-30. The consultant was very polite and asked if the customer has an allergy for natural components. She was well informed about the products and was willing to meet the personal needs and preferences of the customer.

Figure 24: Nature Republic employee

Promotion

The main promotion of Nature Republic is celebrity endorsement. Exo, South

Korean–Chinese boy band, helps to promote Nature Republic products. As Jon

Matsumoto (2017) states “K-pop is also finding a growing international audience in places such as the United States, Europe, the Middle East, and South America”, including Kazakhstan. Such a celebrity endorser of the brand increase the brand awareness and attract younger customers. An illustration of celebrity endorsement in marketing strategy of Nature Republic is decoration of the stores. There are cardboard models of Exo group members around the shop. Another example is branding of limited edition of hand creams sets with images of the singers.

Figure 25: Nature Republic cardboard models of exo group member

2.2 SWOT Analysis for MANUFAKTURA STRENGTHS WEAKNESSES

 holder of HCS (Human Cosmetics  products are available only in own Standard) certificate retail stores  price (lower compared with  distribution is not developed competitors – see table below)  lack of experience in Kazakh market  awareness among Kazakh consumers (developing countries) (presence (according to my survey 31,6% of only in Czech Republic and respondents are familiar with Slovakia) MANUFAKTURA brand)  only WoM/ viral communication  Czech unique traditional ingredients are used (Czech beer, wine, thermal salt etc.)  European brand is associated with high quality (good knowledge about Czech products during existence of USSR, were perceived as high quality -> generalization)

OPPOTUNITIES THREATS

 growing of Kazakh natural beauty  natural cosmetics brand that have market (according to Euromonitor similar to MANUFAKTURA brand (2018) “in 2017, demand increased story (L’Occitane, Yves Rocher, for natural beauty and personal care Nature Republic) products” )  high competitive environment on the  brand expansion in Central Asia Kazakh cosmetics market (substitute  Czech products are perceived as products, consumers can switch to quality ones in Kazakhstan non-natural cosmetics brands) (according to the survey 35.7% of  counterfeit products from China respondents gave the maximum point  high level of corruption in to the question regarding attitude Kazakhstan towards Czech brands/production)  low purchasing power (purchasing  very low level of locally produced power decreased by 0.9% in 2018 cosmetics in Kazakhstan (27 local (Zakon.kz, 2018)) producers of perfumery and  unstable Kazakh national currency – cosmetics in Kazakhstan) significant fluctuations of currency rate (external demand from China and the Russian Federation, Kazakhstan’s main trading partners, as well as global oil demand and prices, will continue to be the key external factors impacting Kazakhstan’s economic performance (World Bank, 2018))

2.3 Personal Interview

In order to explore the current situation of the Kazakh beauty market from the prospective of professional view I decided to conduct a personal interview with Altynay

Imanova, Group Brand Manager Make-up of L'Oréal Kazakhstan. A. Imanova (2018) states that the beauty and cosmetics market in Kazakhstan is quite stable, sales of mass market brand such as Essence, Vivienne Sabo, and Korean cosmetic brand is growing, whereas direct sales of companies such as Oriflame, Mary Kay etc. are falling. The demand among Kazakh consumers on a category of skin care products is also increasing. A. Imanova (2018) pointed out that the market has fallen in units and prices went up by 40% due to devaluation of the national currency Tenge during the past several years. She also argues that the Kazakh beauty market is underdeveloped comparing with Western markets and Kazakh consumers, particularly in regions, are not used to skin care and daily routine of personal care as it is in cities such as Almaty or

Astana. As regards to natural cosmetics A. Imanova (2018) agreed that it is the niche products and Kazakh consumers are not ready to overpay for presence of natural ingredients in the beauty products.

2.4 Survey results analysis

For the primary research I have created an electronic survey which was distributed among Kazakh consumers in order to understand the target audience, its preferences, consumer behavior and particularly their attitudes towards “natural” cosmetics and measure their brand awareness. All the information helped to investigate competitive advantages of MANUFAKTURA and understand how the current strategy of the company should be improved and adjusted to Kazakh market in order to satisfy the needs and wants of the customers. The benefit of online surveys are speed and accuracy of the results. People were asked to answer 23 questions. The questioner is based on

51 several segmenting variables: demographic, geographic, socioeconomics, behavioral and psychographic. The survey was created through Google Forms. It was released on the 1st of June and was closed on the 31st of August. Kazakhstanis were asked to complete the survey through direct e-mails, social media, such as Facebook and

VKontakte, and the sutvey was spread through word of mouth. The answers were anonymous and based on respondents’ personal experience. The total number of respondents is 172.

96.5% of the respondents were from Kazakhstan. I decided to add the second variant “another nationality” in order to eliminate the possible accidental answer of other nationalities since the survey was on the Internet.

Figure 26: Respondents’ nationality

94.8% of respondents were female and 5.2% were male.

Figure 27: Gender of respondents

The third question was about an age and the most of people answered that they are

18-24 years old.

Figure 28: Age of respondents

The next question is about how much disposable income people have per month.

The biggest group of respondent answered that they have 101 000 -150 000 KZT per month as disposable income. The second largest group has 50 000-100 000 KZT as disposable income per month. The third group said that their disposable income is more than 300 000 KZT. This question was created in order to identify the purchasing power of the target and establish right pricing for MANUFAKTURA’s products.

Figure 29: Monthly disposable income

The next question helps to understand on what occasion consumers buy cosmetics. 94.7% of people said that the need is the most usual occasion to buy new beauty products.

Figure 30: Occasions of buying cosmetics

The sixth question is aim to identify a frequency of purchasing new cosmetic among consumers. 46.2% answered that they buy cosmetics once in every two or three month .

Figure 31: Frequency of cosmetics purchase

The next question is intended to analyze how much money the target usually spend on cosmetic per purchase. 40.4% of respondents spend 10 000 – 15 000 KZT per every purchase of new beauty products.

Figure 32: Money spending per purchase

According to the results the price of product is the most important factor for choice of beauty products among Kazakh consumers. The second most important factor is composition and the third one is the brand.

Figure 33: Factors influencing purchase decision

74.3% of people buy personal care cosmetics more often than decorative.

Figure 34: Type of cosmetics usage

The tenth question helps to understand if the ingredients of cosmetics consumers buy affect their purchase behavior. For this question respondents should choose from

55 the scale from one to five, where one is “do not affect” and five is “affects a lot”. 33.9% said that the ingredients of cosmetics they buy affect purchase a lot (5 out of 5).

Figure 35: Impact of ingredients of cosmetics on purchase decision

The question “Do you pay attention on “SLS-free”, “silicon-free”, “natural”,

“organic” labels on cosmetics products?” analyses if it is necessary to label

MANUFAKTURA’s products. 45% answered that they always pay attention to labeling, 36.8% said that they sometimes pay attention, whereas only 18.1% have never pay attention to labeling.

Figure 36: Influence of labeling of cosmetics

71.9% respondents claimed that shampoo, body wash gel and soap are the most popular natural cosmetics product categories that they have ever tried.

Figure 37: Experience of usage of natural cosmetics products

The question “Do you miss any natural product on the market? If yes, which one?” was open and people were free to type the answer. The answers were:

 Shower gels, shampoos

 Skin care creams

 High quality shampoos

 Cosmetics that is not tested on animals and in which there are no animal

enzymes

 I think that natural cosmetic market in Kazakhstan is not developed yet and sales

of natural products presented in a retails stores as a small shops

 Sulfate-Free shampoos

 Care cosmetics with a natural composition

The 14th question is aimed to identify the most popular brand among competitors which are Yves Rocher, L'Occitane and Nature Republic. There was also a possibility to type in other brand options. The most popular competitor is L'Occitane (35.7%). The second two most popular competitor are Yves Rocher and Nature Republic which both had 28.1% of responds.

Figure 38: Preferred brand of natural cosmetics among Kazakh consumers

60.2% of people claimed that they are ready to pay more for cosmetics with natural ingredients. 32.7% said that they are ready, but not always. Only 7% answered that they totally not ready to pay more.

Figure 39: Willingness to pay more for natural cosmetics

60.2% of consumers said that the country of origin of cosmetics brand affects their choice. On the contrary, 39.8% answered that it does not affect the choice.

Figure 40: Influence of product’s country of origin on purchase decision

In order to understand the level of brand awareness of the Czech cosmetics brand

MANUFAKTURA respondents were asked if they are familiar with it. 31.6% said that they had previous experience with MANUFAKTURA products whereas 68.4% said that they have never tried it.

Figure 41: Awareness of MANUFAKTURA brand

Those who answered that they are familiar with MANUFAKTURA were asked to measure their experience by scale where one had negative experience and five had positive experience. Most of respondents chose three out of five (35.2%). However,

27.3% gave the maximum point.

Figure 42: Evaluation of experience of use of MANUFAKTURA products

The question nineteen is aimed to understand attitude of Kazakh consumers towards Czech brands or production since MANUFAKTURA is original Czech brand.

The question is based on scale where one is negative and five is positive attitude. Most of people choose three out of five (44.4%). On the other hand, 35.7% gave the maximum point.

Figure 43: Attitude towards Czech brands/production

In order to understand how often do Kazakh people arrange beauty treatments at home (body scrub, moisturizing the skin, taking a bath with salts, massage etc.) they were asked to choose from several options where answer “every day” was the most frequent (52%).

Figure 44: Frequency of arrangement of beauty treatments at home

The question “How do you usually find out about new cosmetics brands?” helps to find the most suitable promotion channels for MANUFAKTURA marketing strategy.

Respondents were able to choose from several options or add more. The top three answers were social media advertisement, through word of mouth and during the purchase.

Figure 45: Channels of exploring of new cosmetics products

The next question “Where do you buy cosmetics?” is aimed to help to identify the best distribution channel for MANUFAKTURA. 52.6% of people claimed that they usually buy cosmetics at the official brand stores.

Figure 46: Places of purchases

In addition, respondents were asked if they have any suggestions or ideas for improvement of the natural cosmetics market in Kazakhstan. Answers are:

 Increase the number of brands represented

 There is need for natural products at weighted prices; range expansion;

attraction of new brands, incl. Czech cosmetics companies

 More natural and high-quality cosmetic products for Kazakh market

 There is a time for everything. Consumers in Kazakhstan are mainly

focused on very well-known brands rather than on product composition.

At the first instance, natural cosmetic brands should work with the mindset

of the people by means of advertisement, organising some Consumer days

where they can speak about their products etc.

 Affordable prices

 Improved products, affordable price, division into categories (skin type,

age, etc.). Many cosmetics brand make universal products, and this do not

suit everyone.

 Import more foreign cosmetics brands

 Do not overcharge after importing

 Hold frequent product presentations in public places

4. Recommendations: Marketing Communication Plan

Based on the secondary research and analysis of conducted survey in can be concluded that the target of MANUFAKTURA in Kazakhstan are women, both young and older (18-65). The younger target are more concern about natural composition of the products they use and willing to pay more for them. However, older target is also interested in MANUFAKTURA products since they are familiar with Czech brands and product as well as with Czech spa traditions. Further will be provided a recommended marketing communication plan for MANUFAKTURA to enter the Kazakh beauty market.

4.1 Product

The brand story of Czech cosmetics company MANUFAKTURA in the

Kazakhstan will be “natural but attainable beauty”. The brand story means that despite the fact that MANUFAKTURA has high contamination of natural ingredients, around

97 – 99.5% (www.manufaktura.cz, 2018) they are still affordable for consumers.

According to the results of conducted survey for 29.8% of respondents the price is the most important factor during the process of purchasing beauty products. In the same way 27.5% of respondents claim that the second important factor is the composition and ingredients that are used in cosmetics product. Consequently, MANUFAKTURA can satisfy both needs of the customer and provide them with natural cosmetics at more affordable price compared with competitors.

The logo and slogan of MANUFAKTURA, which is Original Home Spa, will stay the same for the Kazakh market because it is supports the brand story of “natural but attainable beauty” since purchasing MANUFAKTURA products and experiencing

“home spa” is less costly than visiting the spa or going to traditional spa of the Czech

Republic.

Figure 47: MANUFAKTURA logo

Source: manufaktura.cz

The packaging of MANUFAKTURA products is simple and communicates the natural basis of the cosmetics products. The packaging of all product lines has the same shape and size while labeling differs and corresponds to collections. For example, the package of beer line cosmetics consists of transparent plastic bottle for shower gel and shampoo, plastic tube for hair balm and hand cream, and paper box for soap. There are picture of hop on all packages as well as a logo and information about the product.

According to the conducted survey 35.7% of correspondents gave the highest points from the scale of one to five for the question about an attitude towards Czech brands or production. Also, 60.2% of the survey respondents answered that the country of origin of cosmetics brand affects their choice. Since Czech beer is well known product beyond the Czech Republic the beer line product could be changed. In order to support a positive attitude and awareness of Kazakh consumers towards Czech products which are considered high quality, the packaging can be changed. For example, I have changed the shape of bottle for shower gel and shampoo of beer line cosmetics can look like a bottle of beer. According to the survey results 45% of respondents said that they sometimes pay attention on “SLS-free”, “silicon-free”, “natural”, “organic” labels on cosmetics products while 36.8% of people claimed that they always pay attention to such labeling on cosmetics. As a result, MANUFAKTURA cosmetic products should be labeled with information about natural composition of products, vegan friendliness and animal-free testing.

Figure 48: New packaging for beer line products

Figure 49: MANUFAKTURA beer line packaging

Source: manufaktura.cz

According to Central Intelligence Agency (2018) 74% of the Kazakh population speaks Kazakh language which is the official language and 94.4% of total population speaks Russian that is the language of interethnic communication. Hence, the instructions and labeling of the products will be both in Kazakh and Russian language.

4.2 Price

According to SWOT analysis one of the strength of MANUFAKTURA is price since it is lower compared with competitors. In order to choose the right price strategy

65 for the cosmetic products MANUFAKTURA should take into account an average annual income and disposable income of Kazakh consumers. According to the

Committee of statistics of the Ministry of national economy of the Republic of

Kazakhstan (2018) an average monthly wage of Kazakhstani is 164 552 KZT (443

USD) which is annually 1 974 624 KZT (5 322 USD). The results of the conducted survey showed that 19.2% of respondents have a disposable income of 101 000 –

150 000 KZT (272 – 404 USD) per month. Consequently, an annual disposable income of Kazakh consumer is 1 212 000 – 1 800 000 KZT (3 267 – 4 852 USD). Considering the statistical data regarding an average annual salary and disposable income it can be concluded that MANUFAKTURA cosmetics prices are affordable for Kazakh consumers. Moreover, 60.2% of respondents said that they are ready to pay more for cosmetics with natural ingredients, but not always, whereas 32.7% claimed that they are ready to pay more. It shows that people are ready to pay more for natural beauty products since it is niche cosmetics with higher prices compared with mass-market cosmetics that are based on chemical and synthetic ingredients. In addition, 40.4% of people claimed that spend 10 000 -15 000 (KZT on cosmetics per purchase. The table below shows the competitors’ prices and current and suggested prices for Kazakh market on selected products of MANUFAKTURA. According to National Bank of

Kazakhstan (2018) the official exchanged rate of Czech koruna to Kazakh tenge on the

17th of October 2018 is 16.01.

Table 7: Comparison of competitors’ price and suggested prices for MANUFAKTURA products for Kazakh market

L'Occitane Yves Rocher Nature MANUFAKTURA MANUFAKTURA

Republic (suggested)

Shower gel 6 810 KZT 1 190 KZT 5 990 KZT 2 481 KZT 2 729 KZT

Hair 8 550 KZT 1 290 KZT 6 990 KZT 2 705 KZT 2 975 KZT shampoo

Moisturizing 12 600 KZT 4 090 KZT 6 990 KZT 3 986 KZT 4 284 KZT face cream

Body lotion 10 800 KZT 1 900 KZT 6 990 KZT 2 705 KZT 2 975 KZT

Soap 4 260 KZT 1 190 KZT 2 290 KZT 2 065 KZT 2 271 KZT

4.3 Place

Besides an online store which will operate around Kazakhstan and supply consumers there will be several physical stores. For the beginning MANUFAKTURA will have two physical stores in the country. 36.3% of the survey respondents answered that more often they buy cosmetics in the official store of the brand. The first store will be located in Almaty which is the city with the highest number of population.

According to the Committee of statistics of the Ministry of national economy of the

Republic of Kazakhstan (2018) in 2017 the population of Almaty was 1 801 993 of people. The second city will be the capital of Kazakhstan – Astana. In 2017 the population of the city was 1 030 577 of people (Committee of statistics of the Ministry of national economy of the Republic of Kazakhstan, 2018).

The physical stores of MANUFAKTURA will be located in the biggest shopping centers of the. Shopping malls offer various possibilities of entertainment such as shopping, cinema, food courts, restaurants, beauty salons, entertainment for children etc. According to Forbes Kazakhstan (2015) the most popular shopping mall in Almaty is MEGA Alma-Ata. MEGA Alma-Ata has more than one million visitors per month and the total area of 175 300 m² (mega.kz, 2018). The address of the mall is

Rozybakiev Street 289.

Figure 50: MEGA Alma-Ata shopping mall

Source: http://mega.kz

The second most popular shopping mall among Almaty citizens is Dostyk Plaza

(Forbes Kazakhstan, 2015). The total area of the mall is 134 000 m² (dostykplaza.kz,

2018). In 2017 attendance of Dostyk Plaza increased by 30% (dostykplaza.kz, 2018).

The address is Samal-2, 111.

Figure 51: Dostyk Plaza shopping mall

Source: https://dostykplaza.kz

The next place in Almaty where the physical store of MANUFAKTURA will be located is MEGA Park shopping mall. It has the area of 106 200 m² and 800 000 visitors per month (mega.kz, 2018). The address of the shopping center is Makatayev Street

127.

Figure 52: MEGA Park shopping mall

Source: http://mega.kz

The first place for the store in Astana will be KERUENCITY shopping mall. It has an area 34 500 m² and 30 000 visitors in weekdays and 40 000 visitors on weekends

(keruencity.kz, 2018). The address is Kurgaldzhinskoe highway 1.

Figure 53: KERUENCITY shopping mall

Source: http://keruencity.kz

The second store in Astana will be located in MEGA Silk Way mall. MEGA Silk

Way mall has an area of 140 400 m² and 900 000 visitors per month. The address is

Kabanbay Batyr Avenue, 62.

Figure 54: MEGA Silk Way shopping mall

Source: http://mega.kz

The third physical store of MANUFAKTURA will be located in Khan Shatyr.

The total area is 127 00 m². The address is Prospect Turan 37.

Figure 55: Khan Shatyr shopping mall

Source: https://www.khanshatyr.com

4.4 Promotion

Effective usage of marketing communication tools is the key for appropriate communication of organization’s message which creates awareness and desire of the product or service among consumer. Promotion includes marketing activities such as advertising, PR, direct marketing, sales tactics, sponsorships, celebrity endorsement, word of mouth, guerilla and viral marketing and so on. The budget for promotion activities should be efficiently allocated since it requires the large amounts of investments. Thus, the company should research consumer behavior of the target and its level media usage.

Online advertising

The first promotion for MANUFAKTURA in Kazakhstan will be online advertising which will include search engine marketing, social media marketing and web banners. According to the conducted survey 62.2% of respondents said that usually they find out about new cosmetics brands through social media. According to

Euromonitor International in 2017 there were 12 248 800 million of internet users in

Kazakhstan which is around 67% of the total population of the country. The most

71 popular social media among Kazakhstanis is VKontakte – 43% of population use it

(ACT Kazakhstan, 2017). Further the most popular social media are Odnoklassniki –

34%, and Instagram – 31% (ACT Kazakhstan, 2017). An advertising content should communicate an idea of brand story, be eye-catching and create an interest and desire click on it. The advertisement will be focusing on the idea of home spa treatment. The picture shows a woman who is relaxing and having a bath with MANUFAKTURA products, such as shower gel, bath foam, bath bombs and so on. The inscription states

“MANUFAKTURA. Your home spa”. All advertisements were created by the author.

Figure 56: MANUFAKTURA online advertisement #1

Figure 57: MANUFAKTURA online advertisement #2

MANUFAKTURA will create an official accounts in social networks such as

VKontakte, Odnoklassniki and Instagram with aim to promote the brand in Kazakhstan and increase an awareness among narrow target and reach the high amount of people in short time. Creation of accounts in social networks will allow the company to interact with consumers and build strong long-term relationships. At the same time it gives an opportunity for customers to ask questions, express their needs, wants and desires, communicate with each other, which will create the word of mouth among target. By running social network pages MANUFAKTURA could share the information about products, announce release of new cosmetics, promote them and create promotional content.

Further online advertising will be web banners on the websites. The content will be the same as for online advertisement. Also, MANUFAKTURA will have an advertisement in Instagram as it previously had in the Czech Republic.

Figure 58: MANUFAKTURA online advertisement on Instagram for Czech market

Source: instagram.com

Also, MANUFAKTURA will use a search engine optimization. Search engine optimization helps to raise the position of the company’s website in the results of search engines on specific user requests which increases a network traffic. The key words for

MANUFAKTURA will be “natural”, “organic”, “cosmetics”, “Czech”, “spa” etc.

Outdoor (billboards, stops, transport)

Outdoor advertising is one of the most popular promotion channels for marketing activities. It includes billboards, posters, transport, highway etc. By using of outdoor advertisement MANUFAKTURA can reach the high number of people in particular geographical area. In order to be affective outdoor advertisement should be placed on the right location. The billboards will be placed in the most crowded places and busiest roads of Astana and Almaty cities where the physical stores of MANUFAKTURA will be located. For Almaty, it will be roads which are near physical stores of

MANUFAKTURA, such as Dostyk Avenue, Seifullin Avenue, Al-Farabi Avenue etc.

In Astana billboards will be located in Kabanbay Batyr Avenue, Kurgaldzhinskoe highway, Prospect Avenue etc.

The next type of outdoor advertisement will be advertisement at public transport stops and in public transport since a large amount of citizen use it on a daily basis. For instance, 49% of Almaty citizens prefer to go by bus or trolley bus whereas 9% use the metro (ACT Kazakhstan, 2017).

The advertisements show women who are enjoying the nature depending. For example, young woman enjoying the lavender smell in the field. The second advertisement images a woman who is smelling fragrant apricot. The inscriptions states

“MANUFAKTURA. Feel the scents of nature” and “Fell the harmony of nature.

MANUFAKTURA. Your home spa”. Advertisements communicate the natural

74 composition of products and introduces different cosmetics lines, such as lavender, apricot etc.

Figure 59: MANUFAKTURA outdoor advertisement #1

Figure 60: MANUFAKTURA outdoor advertisement #2

Figure 61: MANUFAKTURA outdoor advertisement #3

Celebrity endorsement

Celebrity endorsement is one of the effective marketing strategies. Celebrity endorsement will help to promote MANUFAKTURA brand in Kazakhstan and increase awareness among the target audience. Cosmetics brands more often use fashion bloggers and celebrities as endorsers since presently social media allow following people and publicly sharing up-to-date information. Fashion and beauty bloggers usually announce launching of new beauty products, share their personal experience of using different brands and give advices for women. As opinion leaders and ambassadors

MANUFAKTURA will use popular fashion and lifestyle Kazakh bloggers who have social account in Instagram since it belongs under the top three social media in

Kazakhstan (ACT Kazakhstan, 2017). By using them MANUFAKTURA could reach the target audience and promote its products.

First celebrity endorser for MANUFAKTURA will be Dinara Rakhimbaeva

(dinara_rkh), fashion and beauty blogger and youtuber, who have 495 000 followers.

The second endorser will be Madina Mamadalieva (_m_a_d_l_e_n), the blogger and model. She has 565 000 of followers on Instagram. The third celebrity endorser for

MANUFAKTURA will be Adina Topasheva (topasheva), beauty and lifestyle blogger, youtuber, who has 626 000 of followers. The forth celebrity will be Leila Raimbek

(leilafoxx), beauty and fashion blogger. Leila has 182 000 of followers. The next endorser of the brand is Aissaule Bakytbek, blogger and journalist. She has 1.1 million of followers on Instagram. The last celebrity endorser will be Karina Oksukpayeva, lifestyle blogger, who is followed by 1.1 million of people.

Figure 62: Celebrity endorser Dinara Rakhimbaeva

Source: instagram.com

Figure 63: Celebrity endorser Madina Mamadalieva

Source: instagram.com

MANUFAKTURA will have a promotional mailing of beauty box with different beauty products and gifts which bloggers will show on their Instagram stories and make a post about MANUFAKTURA.

Event - «CENTRAL ASIA BEAUTY EXPO»

In order to promote MANUFAKTURA brand and introduce it in to Kazakh beauty and natural products market the company will participate in two international exhibitions. The first exhibition is «CENTRAL ASIA BEAUTY EXPO» which will be held in Almaty on 26-27 of September 2019 which is going to be visited by 5 000 of visitors (NS EXPO, 2018). It is one of the biggest exhibitions of beauty and cosmetics industry in Central Asia. The second exhibition where MANUFAKTURA will participate is "NATURAL PRODUCTS & HEALTHY LIFESTYLE-HLS" international exhibition that will be held in Almaty on 27-29 of September 2019 where natural products including cosmetics will be presented (NS EXPO, 2018).

Event – grand opening of stores

A successful grand opening of MANUFAKTURA stores in Almaty and Astana will attract new customers, awoke curiosity and create word-of-mouth as well as create positive experience. Two grand openings will be held in MEGA Alma-Ata mall in

Almaty city and Khan Shatyr mall in Astana. The date of event will be announced on official social media pages of MANUFAKTURA and in advertisement. Bloggers, celebrity endorsers and press will be invited.

Stores will be decorated with balloons and natural flowers. Guests will be offered snacks and drinks. As a guest speaker a professional cosmetologist be invited in order to hold a lecture about personal care and conduct tests to determine skin type of customers which help to find the right personal care products. Also, there will be lottery for people who will purchase MANUFAKTURA products. They will fill the form where they will need to share personal contacts and will be given the number. At appointed time the winners will be randomly selected. The first place will win trip to Karlovy Vary for two.

The second place will have a spa session for two people. The third place will get a gift box with MANUFAKTURA cosmetic products.

Magazines advertising

One of the types of marketing communication channels is print media, for example, magazines advertisement. Such advertisement has several benefits: reach of the specific target audience, long-lasting shelf life, brand recognition and credibility.

According to Statista (2014) the most popular consumer magazines in Kazakhstan are

Lisa (80 000 copies in circulation) and Cosmopolitan (40 000 copies in circulation).

MANUFACKTURA advertisement will be placed in consumer magazines that target mostly women who are interested in fashion, cosmetics and lifestyle. The advertisement

79 will be published in magazines such as Lisa, Cosmopolitan Kazakhstan, Harper's Bazaar

Kazakhstan, Elle Kazakhstan, online magazine Buro 24/7 Kazakhstan, L'Officiel

Kazakhstan etc. Besides the print advertising in magazines MANUFAKTURA will have custom article about new brand emerging in the Kazakh beauty market and feature its product in the section of beauty.

The content of advertisement will be the same as was used in outdoor and online advertisement.

Figure 64: Cosmopolitan Kazakhstan magazine

Source: https://cosmo.kz

Figure 65: Liza Kazakhstan magazine

Source: https://liza4u.kz

4.5 People

Employees who directly interact with the customers should be carefully recruited since they represent company’s ideas and the brand story. The sales people are important for marketing and should be properly trained and have right qualities and skills in order to be helpful for customers since cosmetics industry has some specifications. Cosmetics differs by skin type, age and product types. Thus, the shop assistant should be well informed about the product in order to customer’s personal needs. The superior customer service will attract more customers and could become a competitive advantage.

In order to recruit right employees HR should focus on demographics and psychographics indicators of potential workers. For the position of shop assistants

MANUFAKTURA will recruit local females, who are 25-35 years old since our main target are women who are 24-34 years old. Some of the employees should be married and have children because their personal experience could be helpful for customers who will purchase products for children or men. Women should be good looking with good skin condition because they are going to present skin care products for customers and are ambassadors of MANUFAKTURA brand. New employees should at least have secondary education and have literate skills of Russian and Kazakh languages. An advantage for employee could be the past experience in sales or beauty industry.

It is equally important to take into account psychographics during the process of recruitment. One of the most important skills for sales person is good communication skills because it is essential for sale people to be able to keep the conversation going and to interest the client, be polite and friendly. Also, employees should be hardworking and interested in cosmetics products. Shop assistant should be attentive to customer

81 need and be ready to answer the questions as well as be well informed about products.

In addition, employees should have team work and customer service skills.

The uniform of employee should communicate the brand story. The new uniform will consist of white stylish cotton blouse and green trousers. The blouse will have the name tag and logo. The overall uniform should remind customer a uniform of doctors or medical workers. MANUFAKTURA concept is that everyone can have their personal home spa by purchasing their products which are based on natural ingredients such as thermal spring salt from Karlovy Vary resort. Such a uniform will remind customers

Karlovy Vary resorts and give an impression of professionalism of employees and effectiveness of the products.

Figure 66: MANUFAKTURA employee's uniform

4.6 Process

The satisfactory delivery of the service is important part of customer experience.

The process could affect the decision making process of the buyer and should not be too complicated. The process begins from the response of the customer to an advertisement or promotion. Since the customer is interested in MANUFAKTURA he or she could make further research about the company through the internet where people could find the official website with contact information and addresses of stores. After searching the information about the product through the internet the customer physically gets to the store. When the customer enters the store he or she will be welcomed and greeted by the shop assistants. The customer feels the ambience of the store. After some time the consultant should offer a help. The sales person should ask the customer right questions.

Specifically, the consultant should ask the customer about the age, determine skin condition and which problem a person wants to solve. After examining the customer’s current situation and needs sales person should propose suitable products, give a recommendation and information about the products and offer to try them. If the customer likes the product, he or she will be asked to go to the cash desk in order to close the sale. At the cash desk the customer will be given samples of the products and offered to start a membership card. If the customer agrees to have a membership card the sales person should explain its principle. After, that customer will be asked to choose a payment method. The last step is gratitude for the purchase and leaving of the customer. The total process from seeing a promotion to close of the sale takes twelve steps.

Figure 67: process in the physical shop

In the same way there is the process of purchasing online via the official website of MANUFAKTURA in Kazakhstan. Firstly, the customer reacts to the marketing activity and search online for the website. Secondly, the customer choose products he wants to purchase. Thirdly, after selection of desirable products he or she should go to a shopping cart. At the shipping cart the customer should confirm selected products. After confirmation the buyer should select shipping and payment methods. Then the customer should feel the contact information or register. After the client are able to see the summary information about the purchase. The last step is when the customer receives an order. An online purchase will take nine steps for the customer.

4.7 Physical environment

The smell, exterior and interior design, music, decorations of the physical store should communicate the brand story of MANUFAKTURA and create an emotional connection with the customer.

The shopfront of the store will be made from glass which allows passerbies to see the Physical environment of the store. The overall concept of the design of

MANUFAKTURA stores will be kept the same which is aimed to create the feeling of

Czech authentic traditions. Since the slogan of MANUFAKTURA is “original home spa” the mail motive of the new design will be based on Czech spa traditions such as

Karlovy Vary spa. After experiencing an ambience of the physical store the customer should get an impression that by purchasing MANUFAKTURA products they will be able to have their personal home spa in their bathrooms. At the time of entering the store the customer will smell of flowers, herbs and soap as well as will hear relaxing music. The floor will be covered with patterned tile as it is usually used in spa. One side of the store will be imitated as a bathroom that will look like it is from the 20th century.

There will be antique bath, mirror, sink and dressing table with our products on it.

Another side of the shop will be white wooden shelves with products. Walls will be painted in dark green color and covered with pictures of Karlovy Vary and further spa towns of the Czech Republic and drawings of herbs and flowers. The back side will have the MANUFAKTURA logo and slogan. There will be herbs and flowers in pots such as lavender, chamomile, verbena, mint etc. throughout the store in order to emphasize natural ingredients used in MANUFAKTURA cosmetics. The lighting of the store will be soft and warm.

Figure 68: MANUFAKTURA physical environment

Figure 69: MANUFAKTURA physical environment design details

5. Conclusion

As MANUFAKTURA states it is “an exceptional 100% Czech concept of brand name stores with its own original cosmetic products and accessories for unique home spa” (manufaktura.cz, 2018). MANUFAKTURA is the first Czech beauty brand which occupies a niche of natural cosmetics which is getting popularity among consumers around the world. Since MANUFAKTURA has achieved credibility and favor among

Czech consumers and tourists who are visiting the Czech Republic it has a great potential to expand and enter the international beauty market.

The aim of the secondary research was to investigate the new business opportunities for MANUFAKTURA for sales volume and revenue increase by expanding internationally by entering Kazakhstan market. As I am originally from

Kazakhstan I was interested in considering the Kazakh market as the first market to invest in because I am a loyal customer of MANUFAKTURA brand and I want to introduce their products to Kazakh consumers. The research question was “How can the

Czech cosmetics brand MANUFAKTURA expand their business and enter the Kazakh beauty market?” The first step was to have an overview of the global beauty market, further analysis of the Kazakh beauty and personal care market and current competitors of MANUFAKTURA such as Yves Rocher, Nature Republic and L'Occitane. Kazakh market is considered as a good market to expand the business which is focused on beauty products since “beauty and personal care posted a stable performance in volume terms in 2017” (Euromonitor International, 2018). Moreover, demand on natural products among Kazakh consumer is also growing while international companies lead sales (Euromonitor International, 2018). It has been shown that this particular market is growing and the niche of natural beauty product is still attractive for new participants.

The next step of secondary research was understanding of specifics of cosmetics and

87 beauty products marketing. The collected data was essential for creation of marketing entry plan for MANUFAKTURA.

The primary research, which was designed as online survey, was focused on study and analysis of Kazakh consumers, their preferences, needs and wants, attitude towards natural cosmetics, awareness of MANUFAKTURA brand, consumer behavior and what influence their purchase decision. Also, the SWOT analysis as a strategic tool helped to understand strengths, weaknesses, opportunities, and threats of MANUFAKTURA and was focused on Kazakh market.

The main purpose of the final paper was the creation of a market entry plan for

MANUFAKTURA to enter the Kazakh beauty market. Collected information from the primary and secondary research was the basis for creation of an effective marketing communication that is based upon the 7 P's of the marketing mix. The plan includes detailed recommendations towards each part of the marketing mix included product, place, price, promotion, people, process and physical environment.

However, the marketing communication plan is only recommendation and suggested strategy for MANUFAKTURA to enter the Kazakh market. In order to complete the strategy MANUFAKTURA has to continue and deep the research about the market and investigate further information about competitors, since the study has some limitations.

The final project gave me an opportunity to exercise the adaptation of marketing mix to international markets, ability to make an extensive market research in order to satisfy organization’s objectives. From MANUFAKTURA prospective this work may be the framework for possible expansion into other international beauty and personal care markets including Kazakhstan.

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