Johanna Maria Kaleininkas Final Marketing Project Winchester School of Art University of Southampton Word Count: 7224 TRUE BEAUTY 4. 06. 2020 BUSINESS PLAN Tallinn, Estonia
1 EXECUTIVE TABLE OF CONTENTS SUMMARY
EXECUTIVE SUMMARY 3 The following project will discuss the current situation in the beauty industry and then go into a business proposal that is based on the wants and needs of today’s consumers. The industry is facing some difficulties due to the COVID-19 pandemic and there are new entrants coming in to the INTRODUCTION market almost every day. Makeup came in the picture thousands of years 3 ago, although it was used for body rituals at the time, but the need for expressing oneself through paint is still very relevant. In addition, beauty has now become a multibillion industry and it is still on the rise. METHODOLOGY 5 The project discusses in depth the new shifts that are disrupting the industry. The biggest trends are challenger brands, genderless beauty, intelligent beauty and clean beauty. The latter is the most recent yet the most powerful one. It rose from conscious consumerism and it is believed RESEARCH & ANALYSIS 9 that hyper conscious people will start looking into every aspect of their life and make it more sustainable than ever. This means that clean beauty is already on their radar. Clean beauty, however, has many different sides and aspects to it that make it unique. There are endless amount of ingredients, BUSINESS PROPOSAL laws, regulations and terms that all need to be taken into consideration 29 when starting a clean beauty brand.
The project will end with a business proposal for True Beauty. True Beauty CONCLUSION is a combination of mainstream and clean beauty, meaning that the 79 ingredients are clean, but the pigmentation is like of a mainstream one. The brand vision is to become a market leader in the beauty world, and the mission is to delivery high quality makeup that does not harm the body. The brand stands for diversity and equality and therefore, has an incredible REFERENCE LIST 80 shade range of 35 colours.
BIBLIOGRAPHY 89
2 3 This assignment will investigate, explore and analyse the beauty and cosmetics industry. The history of beauty goes back 60 000 years when T body painting was used for rituals (Watts, 2009, p. 63), however, today it is much more than painting your face or body. Now, it is about feeling great, not looking great. It is clear that there has been a shift towards wellness in beauty, which in turn has created a revolution – clean beauty.
Although “clean”, “non-toxic”, “natural” are loose terms, generally, clean beauty refers to products that include natural ingredients (ElBoghdady, 2020). With consumers keen to reduce their environmental impact (Davis, 2019), the clean beauty movement makes sense. Furthermore, inclusive beauty is also something that has been praised over the recent years. Whether it is gender-neutral, makeup for men or ageless beauty – it is clear that beauty for all ages and genders is something that consumers want and demand. However, what if clean and all- inclusive beauty were combined?
That is how True Beauty was born – putting clean cosmetics together with inclusive beauty. The second part of this report will go over the full business proposal for True Beauty and consider all of the aspects of starting a new cosmetics brand. The business plan includes the vision, market analysis, competitor and customer analysis, product mock-ups, marketing and finance. introduction SECTION 01
4 5 There are many studies and articles discussing the beauty industry, but the few key ones are “Globalizing Beauty: A Cultural History of the T Global Beauty Industry” by K. T. Frith, “Clean Beauty: Everything You Need To Know” by E. Burney and two Mintel reports “Global Beauty and Personal Care Trends 2030” and “Mintel Announces ‘sub-zero waste’ as 2019’s global beauty and personal care trend”. It is important to have a wide variety of research to have a holistic and comprehensive perspective on the topic. Thus, this assignment will have a broad literature review that will support the rationale of True Beauty’s business proposal.
The first step of the research was an analytical and methodical review of the literature. This report used a wide variety of resources such as academic journals, web articles and industry reports. Academic journals and reports were searched using University of Southampton database and usually included keywords such as “clean”, “non-toxic”, “organic” and “natural”. Those keywords were combined with following terms: “beauty”, “makeup”, “cosmetics”, “colour cosmetics”. Web articles were researched using same keywords, but chosen more carefully, because not all internet sources are reliable. In terms of all resources, not every report, article or journal addressed the issue of interest. All of the articles of research evaluated and more relevant, current and reputable were obtained and subjected for analysis.
The second step of the research was supposed to be primary research in the form of an interview with industry experts to gain insight and knowledge of the beauty industry. However, due to the worldwide COVID-19 outbreak the primary research had to be cancelled. Although it would have given this report an excellent perspective into the clean beauty industry, but on the other hand, this has given the author an opportunity to strengthen the secondary research and look even deeper into the industry. methodology SECTION 02
6 7 3.1 HISTORY OF BEAUTY 3.1 HISTORY OF BEAUTY 3.2 SHIFTS THAT ARE DISRUPTING THE INDUSTRY
T 3.3 CLEAN BEAUTY The beauty community has blown up to be a $532 billion industry (Biron, 2019). But what is happening in the industry and how is it reacting to current issues in the world today? First, to understand those questions, it is important to get an overview of its history.
Archaeological finds suggest that symbolic traditions were present in Africa around 80 000 to 60 000 years ago (Watts, 2009, p. 63), which means that cosmetics in the form of body paint was used for language and ritual purposes. Watts explains that ochre, especially red ochre was used as human social communication, but also as a form of art on sacred objects and on the bodies of ritual performers (Watts, 2009, p.65). In addition, in his analysis, he gives many examples of how the paint was used to make a statement, for instance menstruating or pregnant women would paint themselves to show that they are fertile (Watts, 2009, pp. 71-72). This indicates that colour cosmetics has been used to get a message across or make a statement.
In contrast, Jones believes that the origin of beauty lies in the scents and healing aspects of plants, flowers and herbs, which had strong religious and cultural backgrounds (Jones, 2010, p. 1). He suggests that the distinctive features of today’s beauty industry made their first appearance in fragrances and it turned ancient craft into a capitalist industry (Jones, 2010, p. 15). However, the rise of visual self-awareness soon took over since the trend of makeup from ancient times hadn’t still died out. Makeup had been used for centuries to enhance one’s appearance, for instance in Egypt men and women painted their eyes with black and green powder and women in the Roman Empire used lead to whiten their faces (Little, 2016). research & analysis research SECTION 03
8 9 Figure 1. Maybelline ad (Maybelline, no date).
Figure 2. Maybelline ad (Maybelline, 1951). Although beauty was mainly used to change one’s physical appearance, in the modern day the trend shifted into cleanliness and hygiene (Jones, 2010, p. 71). There was a massive transformation in the industry and a mass market for branded soaps emerged, with strong advertising which persuaded consumers that the use of soap was evidence of the superiority of Western civilisations (Jones, 2010, p. 71). Similar to Jones’ research, Frith’s & ANALYSISRESEARCH study supports the fact that hygiene, soap and cleanliness were the main advertising appeals to women in the 1900s and they were closely linked with personal beauty (Frith, 2014). She continues with a statement that ‘cleanup’ transitioned into ‘makeup’
RESEARCH & ANALYSIS around the 1920s, which is when the modern beauty industry really began to emerge (Frith, 2014).
The once humble industry’s transformation into a brand-driven powerhouse offering essential day-to-day products is a success story of the modern business history (Jones, 2010, p. 1). It is important to mention that the history of beauty has shaped the industry today and there is no denying that history repeats itself.
Figure 3. Max Factor Hi-Fi Lipstick Ad (Vogue, 1958).
Figure 4. Maybelline ad (Maybelline, 1942).
10 11 3.2 SHIFTS THAT ARE DISRUPTING THE INDUSTRY 3.2.1 CHALLENGER BRANDS
The beauty industry is very quick to adapt to change. According to Richard In the McKinsey & Company and Business of Fashion “The State of Fashion 2019” Kestenbaum, almost none of the industry leaders have ignored signs of change report, challenger brands were mentioned as newcomers, who disrupt a sector & ANALYSISRESEARCH in the market and create new ideas, products and collections at the speed of light where incumbents rest on their laurels (McKinsey & Company et al., 2019). To put (Kestenbaum, 2017). In another article, he further backs up his statement and says this in the context of makeup and beauty, this term can be used for brands such as that the industry has seen enormous innovation and entrepreneurship in the last Jeffree Star Cosmetics, Florence by Mills, Honest Beauty, Drunk Elephant and Foreo years (Kestenbaum, 2019). So, in another words, the industry is constantly changing. based on the % changes in Google searches 2018-2019 (Cosmetify, 2020). According Challenger brands are disrupting the market and new Instagram trends are arising to Cosmetify, those are the brands that broke the beauty stratosphere in 2019 and every day. But what exactly are the biggest trends that have shaped the industry therefore, are the most popular challenger brands. Usually, they gain their success during the recent years? RESEARCH & ANALYSIS by advancements in technology and social media, exiting branding and smart communication (McKinsey & Company et al., 2019). In addition, they are known for the use of influencers and it’s been highly effective – it’s predicted that the influencer the marketing industry will be worth $15 billion by 2022 (Rahal, 2020). On the other hand, sometimes the influencers themselves are the disruptors of the industry. Their beauty industry reviews on YouTube has created a massive “beauty community” and many of them is have created their own beauty brands. changing.
what happened?
Figure 5. Nature+ Beauty (Geltor, 2020).
12 13 Figure 6. Genderless makeup brand Jecca Blac (Travaglia, 2019). RESEARCH & ANALYSIS
3.2.2 BREAKING STEREOTYPES
The beauty industry is finally looking beyond of a revolution in the market (Par Vogue, stereotypical gender-based marketing, 2019). Nonetheless, it is clear that during the packaging and products (Chernikoff, 2020). recent years there’s been a rise in inclusive They’ve had to rethink their strategy, since beauty: whether that’s makeup that is about one-in-five of Gen-Z customers gender neutral, made for men or ageless have heard or know someone who prefers beauty. gender-neutral pronouns (Geiger et al., 2019). So this means that stereotypes are no However, inclusive beauty is nowhere we’re longer a thing. it’s supposed to be. Backlash with racial profiling and lack of diversity and inclusivity Many have said that this trend really took are still very current in the beauty world, off when the YouTuber James Charles was but that doesn’t mean that there’s been zero named the first “Coverboy” in 2016 (Salpini, progress (Salpini, 2019). 2019). Others think the launch of Rihanna’s Fenty Beauty line marked the beginning
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Figure 7. Genderless makeup brand Jecca Blac (Blackler, 2018). Nearly 40% of adults aged 18-22 have shown interest in gender-neutral beauty products, RESEARCH & ANALYSISRESEARCH according to NPD’s iGen Beauty Consumer report (Warfield, 2019).
RESEARCH & ANALYSIS abuse loser A way of breaking stereotypes in the industry is makeup for men. Men’s personal care depressed market has seen a massive rise – according to Allied Market Research the market is coward feminine expected to hit $166 million in 2022 (Warfield, 2019). While men’s beauty has usually alone sad hurt been described as grooming products or fragrances, then the growing trend has emotional given a platform to actual makeup for men. For instance, Chanel announced their first toxic line of makeup for men in 2019 (North, 2018) that includes a lightweight foundation, a conflict brow pencil and a lip balm (Chanel, no date). crybaby masculinity This has enabled men to break the outdated toxic masculinity, which is a mixture of gender angry fear values that are dangerous, destructive; ideas that promote violence and is something pain that is performed for other men for them to judge (Kimmel, 2018). Peter Maxwell has gay terrified said that “brands have a core role to play in helping men take the first crucial steps wimp on the road to becoming better allies” and then proceeds to bring out the fact that brands have been investing billions in constructing an image of a successful man who is powerful, dominating and strong (Maxwell, 2018). But now, however, brands have the power to turn that around and help detoxify toxic masculinity and one of those ways is to not make, label and market their makeup as ‘just for women’.
16 17 “In the future, algorithmic beauty will give rise not only to new technologies that will help the drive for flawless skin, but it will also lead to new conversations
about the face as a site for data-gathering and shifts & ANALYSISRESEARCH in self-perceived beauty ideals.”
Figure 8. Intelligent beauty (Author’s own, 2020). - Daniela Walker and Jessica Smith (2018) RESEARCH & ANALYSIS
3.2.3 INTELLIGENT BEAUTY
It is widely believed that beauty and technology have nothing in common and are two very different industries. Despite the everyday thought, they have actually become closer and integrated than ever.
It is no surprise than technology has been used to simplify customers’ purchase journeys both in-store and online (Goodsitt, 2019). For instance, a beauty retailer Sephora has been called a master at integrating digital into their physical presence (Barseghian, 2019). One of their greatest innovations is a partnership with Pantone, where they offer Colour iQ that scans a customer’s face and assigns them foundations that are exact matches to their unique skin tone (Barseghian, 2019).
However, while technology in-store has changed the way we shop, technology in beauty has changed what we shop. Mintel states that IOT (Internet of Things) will mainstream the 2030 beauty shelf by the ability to measure and monitor, and, Figure 9. Intelligent beauty (Author’s own, 2020). therefore, fit seamlessly into consumers’ lives (Mintel, no date).
18 19 IT’S NOT ABOUT IT’S ABOUT RESEARCH & ANALYSISRESEARCH LOOKING GREAT, FEELING GREAT.
Figure 10. Clean Beauty (Garten, 2019). RESEARCH & ANALYSIS
3.3 CLEAN BEAUTY
During recent years, sustainability in the cosmetics industry has seen a massive growth, due to the growing interest from consumers (Bom et al., 2019). Conscious Figure 11. Clean Beauty (Parish, 2017). consumerism has been a growing trend and evidently, the conscious consumer is behind the massive need for clean beauty. One can be conscious in many ways – socially; ecologically, politically; value; health; environmentally (Ramchandani, 2017). The latter two seem to be the most popular ones. It is important for brands to keep up with consumer expectations – Mintel suggests that over the next five years, the popularity of sustainability will reach new volumes and conscious consumers will look into every aspect of their lives to reduce waste, including beauty and personal care (Mintel Press Team, 2018).
Furthermore, in a trend forecast report by Mintel, they outline many trends that are going to disrupt the industry over the next years. In the report, they put a lot of emphasis on waste-free beauty, engineered natural ingredients and veganism (Mintel, no date). In addition, they state that clean beauty will evolve as consumers are doing more research than ever before making a purchase, and brand transparency plays a huge role in their purchasing behaviour (Mintel, no date).
20 21 TERMS USED IN CLEAN BEAUTY
3.3.1 CLEAN, NON-TOXIC OR ORGANIC? ORGANIC It means that the product’s ingredients and formula are produced without dangerous pesticides. Organic products are usually certified and government-regulated. Research shows that the hyper- There is not a clear definition According to Franzino and Aral (2019). & ANALYSISRESEARCH conscious consumers want for “clean beauty” but generally cosmetics that are free from it refers to products that do not toxins. But do they actually know contain certain ingredients, such what they are looking after? as parabens, sulfates, mineral GREEN Cosmetics come in many shapes oil or talc (Franzino et al., 2019). It implies that the products are developed with minmal present and future environmental impact. Covers everything from the
RESEARCH & ANALYSIS and sizes and carry different Moreover, “clean beauty” has products’ ingredients to how it’s made, packaged, distributed terms for different types of ‘clean’ started to use the help of bio- and disposed. makeup. technology to engineer even According to Franzino and Aral (2019). more natural products (Buchanan, The two most used buzzwords 2020). are “clean” and “natural” beauty and it is easy to think that those Although “clean” and “natural” NON-TOXIC two mean the same thing. Usually, are the most used terms in the It is a product that is not harmful to humans nor includes toxic ingredients. ‘natural’ used to describe products beauty industry, it is important to According to Franzino and Aral (2019). that have a pure and nature- not forget other sub-categories derived formula without lab-made in the clean beauty market. The chemicals or synthetics (Malacoff, infographic on the right explains 2020). In contrast, “clean” beauty the differences of each category. is often associated with clean CHEMICAL FREE eating or eating unprocessed Refers to a product that does not contain harmful chemicals. foods, but it actually has some Harmful chemicals are ingredients that can lead to long-term differences (Malacoff, 2020). health concerns. According to Franzino and Aral (2019) and Campaign for Safe Cosmetics (2020).
NATURALLY DERIVED Naturally derived products have natural ingredients that have undergone some chemical processing. It is similar to terms “natural origin” or “made with natural ingredients”. According to Franzino and Aral (2019).
Figure 12. Clean beauty sub-categories (Author’s own, 2020).
22 23 3.3.2 INGREDIENTS
It can be said that the science behind the trend is the most important part, as it is
the ingredients that make the makeup “clean”. According to doctors Wanner and & ANALYSISRESEARCH Nathan, the majority of the chemical used in beauty fall into one or more of three big categories: irritant/allergens; potential endocrine disruptors (ingredients that may imitate one’s body’s natural hormones); and potential carcinogens (cancer-causing agents) (Wanner et al., 2019).
THREE MAJOR CHEMICAL CATEGORIES
IRRITANTS AND ALLERGENS Avoided in clean cosmetics: Fragrance, methylisothiazolinone (MI), methylchloroisothiazolinone (MCI), phenoxyethanol, vitamin A derivatives, petroleum distillates, and formaldehydes.
Effects: Can cause contact dermatitis, which is a poison ivy-like rash that can become chronic with repeated exposure. According to Wanner and Nathan(2019).
POTENTIAL ENDOCRINE Avoided in clean cosmetics: Triclosan and triclocarban, placenta DISRUPTORS extract, resorcinol, butylated hydroxyanisole (BHA), boric acid and sodium borate, phthalates, toluene, parabens, petroleum distillates and phenoxyethanol.
Effects: Can cause an increase in urinary and blood levels. According to Wanner and Nathan(2019).
POTENTIAL CARCINOGENS Avoided in clean cosmetics: 1,4-dioxane, petroleum distillates, coal tar ingredients, formaldehydes and placenta extract.
Effects: Formaldehydes has been linked to cancer formation in humans at high doses. It also ranks among the top 10 most common allergens. According to Wanner and Nathan(2019).
Figure 14. Three major chemical categories (Author’s own, 2020).
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Figure 13. Natural beauty ingredients (Turk Corner, 2019). But what qualifies as a toxic ingredient? Unfortunately, there aren’t clear worldwide Since there are hundreds of thousands of ingredients, it’s difficult to list all of guidelines to toxic ingredients in beauty or health products. them. As a shortcut, it’s clever to look at other “clean” beauty brands to see what ingredients they avoid or on the other hand, opt in. For instance, a skincare brand While the EU bans more than 1300 ingredients from cosmetics, Drunk Elephant cut out ingredients that they call the “suspicious six”: essential oils, then in the US they only ban around 30 (Burney, 2019). drying alcohols, silicones, chemical screens, fragrances/dyes and SLS or sodium & ANALYSISRESEARCH lauryl sulphates (Burney, 2019). However, a brand called Balance Me have opted for Based on this information, it can be assumed that people in Europe are much more essential oils because they believe the ingredient is tested enough (Burney, 2019). interested in their health and wellbeing, but Americans are still new to the topic of chemicals in beauty. Americans’ awareness to their health also correlates to other This table showcases the most common beauty ingredients that contrary to popular aspects of their lives – according to the Organization for Economic Cooperation belief, should be avoided. and Development, the obesity rate for American adults is at the top of the heaviest- RESEARCH & ANALYSIS nations-in-the-world rankings (Kollmeyer, 2017). This points to the fact that clean THE MOST HARMFUL INGREDIENTS IN BEAUTY cosmetics in the U.S. market might not be as successful as it would be in the European market, which is something upcoming brands should consider. PARABENS ETHOXYLATED AGENTS REFINED PETROLEUM A group of preservatives and antimicrobial They include polyethylene glycols (PEGs), Mineral oil is used as a moisturising agent and chemicals that prevent the growth of ceteareths, oleth and sulfates. The latter is is often found in lip balms and face creams. bacteria and mould in cosmetics. It mimics responsible for bubbles and lather in cleansers Besides the fact that it is very unsustainable estrogen in the human body, which can cause and shampoos. PEGs are used as thickeners, from an environmental standpoint, it carries reproductive organ harm, hormone-related softeners and moisturisers in hair products. health concerns as well. It was found to be cancer and obesity. Exposure to parabens from Sodium lauryl sulfate is a harsh cleanser the largest contaminant present in the human beauty products is also linked to early onset which will strip one’s hair. body due to its accumulation over time. puberty in girls.
FRAGRANCES AND FORMALDEHYDE HYDROQUINONE PHTHALATES A chemical used to make a product smell The most notorious preservative in history, A bleaching agent found in skin-lightening better. Often used with phthalates, which commonly found in keratin smoothing creams and serums and used for helps fragrances last longer, however, treatments that relies on the chemical to lock hyperpigmentation. Has been linked to certain phthalates have been linked to reproductive the broken hair into a straighter position. cancers, a skin condition called ochronosis and hormonal harm, obesity, type 2 diabetes, It is recognised as a human carcinogen, a and a decreased immune response. reduced sperm count, breast cancers and formation of cancer, and that’s why it has been infertility. Can also be a trigger for allergies. eliminated from many cosmetic products.
TRICLOSAN TALC SILICA
An antibacterial chemical found in sanitising A mineral made from magnesium, silicon, Known as silicon dioxide, used as an hand and body soaps and mascara. Linked oxygen and hydrogen and a common absorbent in everything from foundation to to liver fibrosis, hormone disruption and skin ingredient in face powders and eye shadows. oral care. In terms of health concerns, some cancer. And contrary to popular belief, not any If not purified then talc can be contaminated forms of silica can be a human carcinogen. Figure 15. Difference between the EU and the US market (Author’s own, 2020). more effective than soap and water. with asbestos, a human carcinogen. From an environmental viewpoint, the slippery silica found in face primer is not biodegradable.
Figure 16. List of harmful ingredients (Author’s own, 2020).
26 27 4.1 VISION AND BUSINESS DETAILS 4.1 VISION AND BUSINESS DETAILS 4.2 MARKET ANALYSIS T 4.3 COMPETITIVE ANALYSIS 4.1.1 WHAT IS THE IDEA? 4.4 CUSTOMER ANALYSIS
4.5 PRODUCT The business idea is to have a makeup brand that has non-toxic and clean 4.6 MARKETING, PROMOTION AND ADVERTISING ingredients, yet still delivers vibrant colours and is high in pigmentation. 4.7 FINANCE The research shows that the traditional colour cosmetics industry is a very profitable industry, however the clean beauty market is also becoming 4.8 OPERATIONS more popular on the daily. Therefore, a clever business idea would be to create a makeup brand that has the best of both worlds but puts extra attention on clean and non-toxic ingredients. In addition, True Beauty will be cruelty free and vegan. business plan SECTION 04
28 29 4.1.2 WHAT IS THE NAME? There are two variations for True alternative when the space is tight. Both Beauty’s logo. The main and preferred of the logos can be used together or on one is a full text one, where True Beauty their own. The primary colour is black A theory by Round et al. found that there is a direct link between the name of a brand is in written form. The second one is and the secondary colour is white. and the brand equity (Round et al., 2017), therefore it is important to have a strong a simple “T” that can be used as an PLAN BUSINESS name that will represent the brand in the best way possible.
Therefore, the name of the brand would be True Beauty. “True” as in the brand is honest about its ingredients, and the name “Beauty” would not label the brand as only a makeup brand, but leaves room for future launches also, such as skincare, haircare or fragrances. BUSINESS PLAN
4x
x TRUE BEAUTY TRUE BEAUTY 4x
Figure 17. True Beauty logo (Author’s own, 2020). Figure 20. True Beauty logo with white space (Author’s own, 2020). TRUE BEAUTY 2/x Figure 18. True Beauty logo (Author’s own, 2020). x T TRUE BEAUTY 2/x
Figure 19. True Beauty logo (Author’s own, 2020).
Figure 21. True Beauty logo variation with white space (Author’s own, 2020).
30 31 Furthermore, research shows that big brands often have a slogan or a tagline that represents what the brand stands for. For instance, the beauty giant L’Oréal has had the slogan “Because you’re worth it” for years (L’Oréal, 2020) and Nike is obviously famous for its “Just Do It” tagline. However, it seems like not many beauty brands have slogans anymore. That might be because marketing has moved from tradition TV advertising to social media, where taglines nor slogans are not very common. Nonetheless, True Beauty will have a tagline. Tagline “Beauty that is honest” will draw attention to the fact that the brand is honest about its ingredients and emphasise the fact that they are ‘clean’. BUSINESS PLAN
Figure 22. True Beauty logo with slogan (Author’s own, 2020). TRUE BEAUTY TRUE BEAUTY BEAUTY THAT IS HONEST. BEAUTY THAT IS HONEST.
4.1.3 VALUE PROPOSITION
The value proposition or the promise to be delivered is to create non-toxic products that combine quality, pigmentation and safety in every aspect. The promise is to be diverse, inclusive, safe, colourful and meant for all. To bring beauty that is honest to the mainstream at a reasonable price point.
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Figure 23. True Beauty campaign image (Author’s own, 2020). 4.2 MARKET ANALYSIS “The cosmetics market will undoubtedly suffer in 4.2.1 THE CURRENT SITUATION 2020 and in the years to come, but we expect it to recover within three to five years as it has in all past BUSINESS PLAN BUSINESS The research in section 3 explained thoroughly what is happening in the industry, recessions. Compared to other industries, the beauty what trends are dominating and how beauty as an industry was born. What the market is fairly recession-proof, and its products research didn’t discuss, was the current situation in the market. Although it is will continue to be desired by consumers – both for important to research the industry first, but to actually launch a brand it is vital meeting basic needs as well as an indulgence.” to understand what is happening in the industry now, whether it is growing or declining, what changes there are and how it is segmented. - Carrie Mellage (2020) BUSINESS PLAN There is no doubt that the COVID-19 crisis has shocked the global beauty industry (Gerstell et al., 2020). They have had to quickly respond to the crisis by switching their manufacturing to produce hand sanitisers, however, at the same time they have had Even though the economic that eye-cosmetics, skincare to think and act critically to ensure that their companies survive (Gerstell et al., 2020). magnitude of the pandemic and haircare will benefit is greater than any recession, from this self-care trend Figure 24 showcases the steady growth of the global beauty industry. The industry Gerstell et al. think that the (Gerstell et al., 2020). So, in survived the 2008 financial crisis and created generations of loyal customers (Gerstell beauty industry will once conclusion, this pandemic will et al., 2020), and in theory, it should overcome the 2020 crisis as well. But does the again stay resilient (Gerstell et have positive and negative beauty industry actually have what it takes to beat the economic emergency al., 2020). On the other hand, effects on the industry – this time? Poshly CEO Doreen Bloch said people are now caring about that beauty professionals their health more than ever GLOBAL BEAUTY-INDUSTRY RETAIL SALES, $ BILLION such as makeup artists and which means they will be hairstylists are facing the more likely to buy cosmetics FRAGRANCES most difficult challenges in with health benefits. This COLOUR COSMETICS the industry since salons means that brands need to have been closed and they make strategical decisions are left without work (Krause, and closely investigate SKINCARE 2020). Moreover, McKinsey & what today’s consumers are Company estimates that the wanting. beauty industry revenue could fall up to 30% in 2020, yet a lot PERSONAL CARE of people will be continuing to wear masks which means
NOTE: Figures may not sum up to listed totals, because of rounding. 34 Figure 24. Global beauty industry retail sales (Author’s own, 2020). 35 Responding to a crisis is as important as surviving the crisis. A brand can barely survive a crisis, but if it does not respond and make necessary changes, it can have terrible consequences that might lead the brand to failure.
Many beauty brands still rely on in-store experiences to drive sales but unfortunately, the absence of brick & mortar stores is bound to impact many brands (Gilliland, 2020). However, one of the ways brands can respond is through virtual and digital consultations. For instance, a skincare brand Kiehl’s is launching virtual consultations to guide their consumers, and Glossier has ramped up their online tutorials on IGTV to immerse clients in instructional content (Gilliland, 2020). These beauty moguls have realised the benefits of technology – it allows for greater BUSINESS PLAN interaction between brands and consumers (Gilliland, 2020), which in turn creates strong brand loyalty. “As consumers become increasingly aware of In terms of True Beauty, starting a new brand in this pandemic will be really general hygiene and safety practices, the need challenging. It is important to be extremely smart and critical of every choice and for transparency will intensify. Clean beauty step they make. In addition, as explained above, heavy use of technology would help the brand to get a bigger reach and socialise with its customers daily. What’s more, and natural have remained popular mentions the pricing has to be spot on. It’s predicted that there are almost 17 million job losses on Twitter and Instagram in the Americas and worldwide (Jones, 2020) which means people will be extra careful with their money. The pricing needs to be accessible, but realistic for the brand to have good quality around the globe over the last few months. In ingredients. fact, mentions of clean beauty and safety rose as COVID-19 worsened in March.”
- Meghan Ross (2020)
36 37 Figure 25. Glossier’sFigure beauty (Author’s tutorial 2020). own, 4.2.2 MARKET SEGMENTS 4.2.3 POSITIONING AND TARGETING
To understand the beauty industry better, it is good to divide the market into different In terms of age, True Beauty will position itself within Generation Z and Millennials. A survey customer segments that are buying and consuming cosmetics. In the beauty world, from Mintel shows that Generation Z actively seek out clean and organic makeup and in PLAN BUSINESS they are usually segmented by demographics, geographics and consumer types, addition, another survey from Alix Partners found that Millennials hold the biggest spending which can be related to psychographics. power and are leading the consumer demand for sustainability (Hunter, 2019). When it comes to gender, True Beauty will be positioned and targeted to both genders. The industry is still dominated by gender stereotypes: products are still labelled “made for women” or “made for men” and marketing tactics are targeted to one of True Beauty will not necessary position itself to appeal to only professionals – it is meant the two genders. Therefore, one of most common segments in the beauty industry for everyone and therefore, will rather be targeted to traditional consumers. On the other BUSINESS PLAN gender. Another common segment is categorised by location. The easiest way to hand, the products’ simplicity, clean ingredients and high pigmentation should appeal to all segment by geography is to locate the consumer within the 4 biggest location groups customers. in the world: North America, Europe, Asia-Pacific and LAMEA. And lastly, the last segment is consumer typologies. This macro-category is an easy way to distinguish In the beginning, True Beauty will be positioned in the European market. Chapter 3.3.2 in consumers, who do makeup for fun from those who take it more seriously. They also Research & Analysis showed that the people in Europe are much more educated on clean have different wallet sizes, spending power and budgets that they are willing to beauty. Therefore, it would be a logical choice to position and target True Beauty within spend on makeup. Europeans first, and in the future move to North America, for instance.
GLOBAL BEAUTY INDUSTRY CONSUMER SEGMENTS
DEMOGRAPHIC Age (generations). Gender.
CONSUMER TYPES Traditional consumer. New entrant. Beauty addicted. Beauty expert.
Figure 27. Natural cosmetics (100% PURE, 2018). GEOGRAPHIC North America. Europe. Asia-Pacific. LAMEA (Latin America, Middle East and Africa). Figure 28. Versed was launched in response to the rising popularity of skincare over makeup 38 (Versed, 2019). 39
Figure 26. Global beauty industry consumer segments (Author’s own, 2020). 4.3 COMPETITIVE ANALYSIS “But what's interesting, and relatively unknown 4.3.1 COMPETITORS IN THE MARKET to the average buyer, is that plastic pink-capped BUSINESS PLAN BUSINESS The multibillion market holds many competitors who all are a threat to new and bottle "save" from your local drugstore and the upcoming brands. There are many beauty companies on the market, but in reality, gold-plated designer lipstick are more similar they all fall under the massive umbrellas on huge manufacturers (Willett et al., 2017). than you'd think ... It is important to understand how interconnected brands truly are, because only then one can notice the similarities of the sub-brands. BUSINESS PLAN
Figure 30. World of beauty (Author’s own, 2020).
... because they're actually owned by the same company.” Figure 29. Top brand in the beauty sector (CB Insights, 2018). - Megan Decker (2019)
40 41 TOP 10 COMPETITORS: CLEAN AND MAINSTREAM MAKEUP BRANDS
4.3.2 DIRECT COMPETITORS Clean Cosmetics Pros Cons
LILY LOLO Wide product range; strong packaging. Small colour range. Although there are hundreds of brands who all pose a threat, it is crucial to filter and DR. HAUSCHKA Strong brand identity. Small colour range. categorise to find out the direct competitors. Since True Beauty is embracing both COULEUR CARAMEL Wide product range. Weak brand message. PLAN BUSINESS sides of the industry, the clean and the mainstream side, then it is important to look MADARA COSMETICS Strong brand identity and equity. Lack in product diversity. at competitors from both side of the industry. HONEST BEAUTY Strong packaging. Lack in product diversity.
RMS BEAUTY Extremely wide product range. Weak brand message.
Figure 31. Dr. Hauschka (K-Rauta, 2020). KJAER WEISS Unique packaging; strong message. Low brand awareness.
BUSINESS PLAN VAPOUR BEAUTY Interesting concept. Uninteresting packaging.
JUICE BEAUTY Strong brand message. Low brand awareness. W3LL PEOPLE Wide product range. Weak brand message; small colour range.
Mainstream Cosmetics Pros Cons
FENTY BEAUTY Strong brand message and concept. Undiverse product range.
ANASTASIA BEVERLY HILLS Wide product range. Weak brand message.
JEFFREE STAR COSMETICS Very pigmented colours. Bad ingredients.
HUDA BEAUTY Strong brand identity and equity. Bad ingredients.
TARTE COSMETICS Good storytelling. Lack in colour diversity.
NARS Strong brand awareness. Weak brand message.
BECCA Great packaging; strong products. Low brand awareness.
MORPHE BRUSHES Strong brand awareness. Low quality.
HOURGLASS Strong brand message. Lack in product diversity.
Figure 32. Madara Cosmetics (Madara, 2020). SMASHBOX Great brand image. Lack in product diversity.
Figure 34. Top competitors for True Beauty (Author’s own, 2020).
Here is a list of top 10 of both areas of the market. They all pose a threat for different reasons: packaging, marketing, concept, price range, same target customer. This table showcases the pros and cons of the competitors of True Beauty. This comes in handy because True Beauty can learn from the mistakes of its competitors and look Figure 33. Fenty Beauty (Sephora. no date). what they are doing good and do it better.
42 43 BRAND POSITIONING MAP 4.3.3 RISKS
It is critical to evaluate risks when starting a business. One of the main risks is
competitive risk, which is the chance that a competitor will prevent one from PLAN BUSINESS achieving a goal (Spacey, 2017). Furthermore, Michael Porter created a tool called Porter’s Five Forces (1979) which identifies five forces that make up a competitive environment and which can disrupt the profitability of a brand (Mind Tools, 2020). This framework will be used to analyse and examine factors that could impact True Beauty and its success.
BUSINESS PLAN PORTER’S FIVE FORCES: RISKS
Figure 35. Brand positioning map (Author’s own, 2020).
This brand positioning map locates True Beauty in the middle of both areas of the industry. The map was conducted by comparing every brand’s eyeshadow palette: its ingredients and price in euros. The map includes 4 clean beauty competitors and 4 mainstream beauty competitors. In conclusion, True Beauty is located on the upper side of the map, meaning that the price is on the lower side yet the products are still high quality and have good ingredients.
Figure 36. Porter’s Five Forces (Author’s own, 2020). 44 45 TRUE BEAUTY
46 47
Figure 37. True Beauty campaign image (Author’s own, 2020). KNOW YOUR LIKE THE BACK BUSINESS PLAN BUSINESS CUSTOMER OF YOUR HAND. BUSINESS PLAN
4.4 CUSTOMER ANALYSIS
Chapter 4.2.2 already discussed the different consumer segments of the beauty industry and chapter 4.2.3 talked about True Beauty’s positioning and targeting. The latter also explained that True Beauty will be positioned within Europe and target Millennials and Gen Z.
As a brand, it’s actually much more than just saying you target this age group at this location. One needs to know the customer inside and out, their characteristics, needs and wants. Steve Jobs was often quoted saying he didn’t listen to his customers, but later he admitted his mistake and that when his greatest success happened (Steuer, 2018). Despite the fact that it is very important to listen to your customers, a brand can skip that part if they already know beforehand what they want by doing their research. A brand should always be one step ahead of their customers. On the other hand, it is also important to listen to customers for their feedback, for instance. Figure 38. Beauty consumer (Beauloye, 2020).
48 49 4.4.1 CHARACTERISTICS 4.4.2 SATISFYING THE NEEDS
This graph showcases the most basic characteristics of the two generations who True Possibly the most important part is satisfying consumers’ needs, because that is
Beauty will target. when they will make purchase. It is clear from the research that both Gen Z and PLAN BUSINESS Millennials are highly conscious about their health, wellbeing and are interested in buying cosmetics, thus it should be quite easy to satisfy both consumer groups. To give an example, Gen Z are hungry for clean products – True Beauty will deliver clean CHARACTERISTICS OF GEN Z AND MILLENNIALS cosmetics. Millennials are financially conscious – True Beauty’s pricing strategy will give them their money’s worth.
BUSINESS PLAN Moreover, True Beauty will satisfy the two upper levels of the Maslow’s Hierarchy of Needs (1943), which is a motivational theory comprising a five-tier model of human needs (McLeod, 2020). The basis of the theory is that the needs lower down the hierarchy must be satisfied before one can move up a level (McLeod, 2020). If a consumer decides to buy True Beauty to feel accomplished for instance, then they would need to have the 3 lower ties satisfied beforehand.
GEN Z MILLENNIALS MASLOW’S HIERARCHY OF NEEDS – Generation born between 1990-2010 – Also known as generation Y, born (Business Insider, 2019). between 1981-1996 (Business Insider, 2019). – Raised on the internet and social media – Entered the workforce at the height of therefore very tech-savvy (Business the Great Recession so they are extra SELF-FULFILLMENT Insider, 2019). careful with money (Business Insider, SELF- NEEDS – Are interested in clean and organic 2019). ACTUALISATION makeup and personal care products that – The most willing to pay more for clean- Achieving one’s full potential, make them look like themselves (Hunter, label and ethically sourced products including creative activities 2019). (Hunter, 2019). – Experience focused (Hunter, 2019). – Experience led (Francis et al., 2018). ESTEEM NEEDS PSYCHOLOGICAL Prestige and feeling of accomplishment. – They are hungry for truth and – Technology based, optimistic, ethical NEEDS transparency (Francis et al., 2018). spending, educated (Cheng, 2019). BELONGINGNESS AND LOVE NEEDS – Interested in unique and ethical – Spiritually, financially, socially and health Intimate relationships, friends. products (Francis et al., 2018). conscious (Cheng, 2019). SAFETY NEEDS Figure 39. Characteristics of Gen Z and Millennials (Author’s own, 2020). Security, safety. BASIC NEEDS
PHYSIOLOGICAL NEEDS Food, water, warmth, rest.
Figure 40. Maslow’s Hierarchy of Needs (Author’s own, 2020). 50 51 4.5 PRODUCT TRUE BEAUTY THE FACE BASE COLLECTION.
The first launch of brand would be the Face Base Collection. It would include the 4 PLAN BUSINESS essential products that anyone can use to create a flawless base for their makeup, or just wear on its own for a “no makeup” makeup look. The reasoning behind brining out face products first is that foundations, concealers and setting powders are universal. Not only women wear “base” makeup – men have been wearing stage makeup to enhance, define and correct their features (Mode Dion, 2016), and even FOUNDATION Donald Trump, the president of France and actor Daniel Kaluuya are known to use Figure 42. True Beauty Foundation (Author’s own, 2020).
BUSINESS PLAN “base” makeup to cover uneven skin tone (Elan, 2020). For financial reasons, it is the best choice to come out with one collection first. Later the company can expand to other product groups such as eyes; brows; lips; cheek products and even skincare or haircare.
The Face Base Collection includes 4 items: a foundation, a concealer, a pressed face powder and a loose setting powder. This collection focuses on creating the perfect base with just 4 products that both men and women can use. CONCEALER Figure 43. True Beauty Concealer (Author’s own, 2020).
PRESSED FACE POWDER THE FACE BASE COLLECTION. Figure 44. True Beauty Pressed Face Powder (Author’s own, 2020. HONEST FOR ALL.
LOOSE SETTING POWDER Figure 45. True Beauty Loose Setting Powder (Author’s own, 2020).
Figure 41. True Beauty Face Base Collection campaign image (Author’s own, 2020).
52 53 4.5.1 COLOUR RANGE FOUNDATION AND CONCEALER SHADES
* The collection includes 35 unique #1 #13 #25
This highlights the issue that there are PLAN BUSINESS shades that will cater to every skin tone many consumer groups that feel like they and undertone, so no one is excluded. * are left out – and not only with the lack * Launching more than 30 shades of #2 #14 #26 of foundation shades, also with products foundation and concealer today is not meant for women only. Hence, True a rare sight. On the other hand, when Beauty has a wide variety of foundation * Fenty Beauty first launched its 40 shades, #3 #15 #27 shades that suit both men and women. there wasn’t a brand on the market that
BUSINESS PLAN The concealer shades are the same as truly reached every skin tone, from very foundation ones, so that people can * dark to very light (Saputo, 2019). Rihanna #4 #16 #28 easily find a concealer that matches their created to so called “Fenty effect” which foundation. Powders will have 10 shades, celebrates every skin tone and it has had plus one translucent shade, since they a massive effect on the beauty industry are more versatile and an exact shade #5 #17 #29 (Philips, 2018). It does not come as a is not necessary – for instance, a person surprise that her brand made $100 million with darker skin can use powder that is in sales in the first 40 days (Philips, 2018) much lighter to give more dimension and #6 #18 #30 – people, who have previously felt that highlight to the face. they have been left out or abandoned by beauty brands now had the opportunity to #7 #19 #31 * buy cosmetics that actually matched their skin tone. #8* #20* #32
#9 #21* #33
#10 #22 #34
#11 #23 #35*
#12 #24
54 NOTE: Swatches marked with * are the equivalent to the powder shades. 55 Figure 46. True Beauty shade range (Author’s own, 2020). 4.5.2 PACKAGING 4.5.3 UNIQUE SELLING POINT
The packaging of True Beauty will be simple to portray the simplicity of the brand.
The unique selling point or USP is definitely the factor that the brand would have PLAN BUSINESS Foundations and concealers will be in glass bottles, the pressed powder in a compact packaging and the loose powder in a glass jar. The packaging will be white non-toxic and clean ingredients. Although it is a and fade into the colour of the product. growing trend, there are not that many competitors yet and it is quite new on the market. Figure 47. True Beauty packaging (Author’s own, 2020).
The second USP of True Beauty is that it is genderless. The research
BUSINESS PLAN pointed out that makeup isn’t uncommon among men, and it is a toxic and outdated way of thinking that only women can wear makeup. Admittedly, many other brands have brought out makeup made “for men”, but this brand is “for everyone”. For the young, the old, for men, for women, for light skinned and for dark skinned.
The third and last USP is the fact that due to the unique formula it will still have strong pigmentation. Usually, natural or organic makeup have Figure 48. True own, Figure 2020). 48. (Author’s Concealer Beauty really light pigmentation on their products and have a “no-makeup” makeup feeling to them. If the laboratory finds a perfect formula then this brand could still have all of the non-toxic ingredients, yet still can create a full glam look or a light coverage one, if needed.
Figure 49. True Beauty packaging (Author’s own, 2020).
The outer packaging will be in white cardboard boxes. Considering that the brand stands for environmental issues as well, the packaging will be compostable and recyclable. This means that the outer packaging can simply be thrown into the recycling bin and its lifecycle will be infinite.
56 57 TRUE BEAUTY
58 59 Figure 50. True Beauty campaign image (Author’s own, 2020). 4.6 MARKETING & PROMOTION BUSINESS PLAN BUSINESS what is the vision? “It's not the best product that The vision is to become a market leader in the clean cosmetics industry. wins but the best-known one that wins.”
BUSINESS PLAN - Jaiden Vu (2019) what is the mission?
True Beauty is dedicated to delivering high quality, clean, non-toxic and colourful cosmetics to every beauty lover.
Marketing, advertising and promoting are remarkably crucial aspects of a brand. Wertz emphasises that nearly 8 out of 10 businesses fail within the 24 first months, often due to bad branding and an excessive emphasis on the product rather than what are the marketing objectives? marketing the product (Wertz, 2019). This means that marketing needs to be spot on in order for True Beauty to not fail its initial launch. To improve brand recognition amongst Millennials and Gen Z; to launch 4 new products; to meet the needs of the customers; to achieve strong sales; to increase Wertz has also said “content is king, and selling a vision is as important as selling the revenue growth; to gain an advantage over competition; to create a strong brand product itself” (Wertz, 2019). This implies that there needs to be a strong vision, and image amongst consumers; to increase brand equity; to successfully enter the for True Beauty it is to be a market leader in clean cosmetics. One very important beauty industry. factor that needs to be recognised is that the target customer was brought up submerged in technology and today’s digital era is hungry for smart, catchy and * The objectives were refined using the SMART criteria, which was created by G. T. Doran (1981) to help to guide goal setting experience-driven marketing. Considering that True Beauty will first be sold online (Mind Tools, 2020). The goals are specific, measurable, achievable, relevant and time bound (Mind Tools, 2020). and only with direct sales, experience needs to come to online where the majority of the marketing will happen. Thus, the marketing strategy is built around digital marketing.
60 61 MARKETING MIX
PRODUCT Clean and non-toxic makeup. Target customers, Gen Z and Millennials, have 4.6.1 MARKETING MIX showed great interest in cosmetics, especially in clean and natural makeup.
PROMOTION Advertising is extremely important to an upcoming brand. There are many ways to The 7Ps Marketing Mix model was created by E. J. McCarthy (1960) as an essential promote a brand, but True Beauty will use a mixture of online website, SEO (search strategy tool for small businesses (Hanlon, 2019). Although the marketing will be
engine optimisation), influencer marketing, paid social advertising and social PLAN BUSINESS focused online, this model will give an excellent overview of the marketing strategy media. The latter will possibly have the strongest effect and will be used most as a whole. There are many aspects that need be taken into consideration such as often, as they are free platforms and easy to use. Process, Place and even Physical Evidence. PRICE The price range will be located in the ‘masstige’ category. ‘Masstige’ is a middle ground in beauty, which mimics the look and feel of luxury products, however, the price point is above a drugstore brand, but below a Sephora one (Strugatz, 2019).
BUSINESS PLAN PLACE The distribution of True Beauty will initially be online through an online shop. Since the target consumers are exceptionally tech-savvy, it would be a logical choice to sell the products online. On the other hand, they are also noticeably experience-driven which indicates to a brick-and-mortar store, but a new brand does not have many resources and finances to start distributing from a physical store straight away. In addition, in the beginning True Beauty will only do direct sales to build brand equity.
PEOPLE The company will start off with 2-3 employees who will do everything from sending out packages to customer service to marketing. Freelancers will be used for design purposes and for technical support.
PROCESS The process begins with creating the formula which is usually done by a lab (See chapter 4.7.1). Then the products get packaged and sent to a warehouse or TRUE BEAUTY a storage where they await their shipping. After a customer places an order, the BEAUTY THAT IS HONEST. products get sent out for the customer to enjoy.
PHYSICAL EVIDENCE Since True Beauty will not have a physical store, the physical evidence will be based on the branding. The logo (See chapter 4.1.2) is straightforward, because simpler logos are instantly recognisable, crystal clear and versatile (Bowker, 2014). Furthermore, another aspect of physical evidence is the packaging of the products, which is very important in cosmetics. Packaging is directly related to sales and profit – Tiffany & Co. ‘s blue box is more recognisable than the jewellery itself and Apple’s minimalist packaging is known worldwide (Conran, 2014). The packaging of True Beauty will be simple and sustainable because the whole brand message is to be kind to your health and to the environment. More about packaging in chapter 4.5.2.
Figure 51. True Beauty campaign image (Author’s own, 2020). Figure 52. True Beauty marketing mix (Author’s own, 2020).
62 63 4.6.2 DIGITAL MARKETING MIX
This digital marketing represents the three areas of how the marketing will happen: BUSINESS PLAN BUSINESS with earned, owned and paid media. The majority of the focus will be put on owned media, because besides paid media, that is the main way that True Beauty can control how its perceived and what content to create. The whole True Beauty online store will be built around experience. Customers can use the Shade Finder to find their perfect DIGITAL MARKETING MIX shade and take a skin quiz as well, which will help to determine how they should approach the application process. What this means is that a customer will take a
BUSINESS PLAN quiz and determine whether their skin is dry, normal, combination or oily. If their skin is dry, for instance, the True Beauty Skin Quiz will suggest that they put on their foundation with a brush, since it absorbs less moisture from the skin than a sponge would, and then finish off with very little powder to avoid a dry and flaky finish. All of these tips and tricks will be portrayed on social media so that consumers can have the feeling of experience in every aspect of the brand.
With earned media it is more hit or miss. However, if the product is good then there should not be any worries that the customers will not like it. On the other hand, when True Beauty receives feedback, whether it’s positive or negative, it is important to take that feedback and use it to make the brand or the product better. Thus, it is important to also listen to earned media because they might have valuable insight of how to be more successful.
Figure 53. True Beauty Shade Finder (Author’s own, 2020).
TRUE BEAUTY SHADE FINDER Figure 54. True Beauty digital marketing mix (Author’s own, 2020).
Find your foundation shade so you can go about your day and not worry about those awkward foundation lines.
64 65 4.6.3 PROMOTION
Direct marketing for True Beauty is basically what they are doing with digital marketing. Since True Beauty will be doing direct sales, without any retailers, every
The promotional strategy consists of 5 sub-categories: advertising, sales promotion, marketing tactic is a direct one. Roesler says that email marketing is a perfect way to PLAN BUSINESS personal selling, public relations, direct marketing. Mishra explains that promotion reach mobile customers, it’s inexpensive and it’s an effective way to keep customers and marketing go hand in hand (Mishra, 2015) and one can’t be done without the informed (Roesler, 2014). This indicates that email marketing is a foolproof way to still other. It can be said that promotion is the voice of the company which sends out the reach large number of consumers for a small amount of money, which is perfect for a brand’s message for the consumers to hear (Mishra, 2015). new and upcoming brand.
PROMOTIONAL STRATEGY Figure 55. True Beauty promotional strategy (Author’s own, 2020). BUSINESS PLAN Advertising will mainly consist of advertisements on social media platforms such as Instagram and Facebook. However, there will be advertisements placed on the internet also, such as banners and Google ads. One important part of advertising on the internet is to bring the customer to the online store so that they will make a personal selling purchase. One way of doing that is with a Facebook Pixel that will be planted on every landing page of the online store. To give an example – if a customer visits the online store but does not buy anything, the Facebook Pixel will pick up on that and then a advertising public relations few days later place an ad on that persons Facebook feed.
Sales promotion such as discounts and coupons can be used to encourage customers to make a purchase. Although True Beauty does not condone overconsumption as the brand stands for people’s health as well as Earth’s “health”, promotional mix and discounts can often do just that, then as a starting brand discount codes can be a great way to gain new customers. Discount codes can also be used though sales promotion influencer marketing, via affiliate codes for example.
Personal selling is tricky when the brand only sells online. However, one way of direct marketing creating that personal feeling is introducing the employees and workers of True Beauty to the followers so they know exactly who is sending out their products or who is talking to them under an Instagram post.
Public relations come handy when True Beauty wants coverage from the media. Press releases will be sent to many different media outlets, magazines and newspapers when the brand launches, which will help to attract people who otherwise would have not even known about the launch.
66 67 4.6.4 SOCIAL MEDIA CHANNELS why facebook? There any many benefits to using Facebook such as it’s popularity, large reach and More people are using social media than ever before – 3.48 billion in 2019 (Sherman,
highly targeted ads (Metserve Media, 2018), but also the fact that 77% of 18-34-year- PLAN BUSINESS 2019) and therefore, is a massive platform to share True Beauty’s message and olds still use Facebook on a daily basis (Pickard-Whitehead, 2020), who are True showcase the products. In the beginning, True Beauty will be using two social media Beauty’s target consumers. This shows that Facebook is the perfect platform to platforms: Instagram and Facebook. promote the business.
Figure 56. True Beauty Instagram (Author’s own, 2020). Figure 57. True Beauty Facebook (Author’s own, 2020).
BUSINESS PLAN truebeauty
T True Beauty T TRUE BEAUTY Estonian clean makeup brand championing non-toxic, responsible beauty www.truebeauty.com True Beauty
why instagram? Instagram’s age-demographic breakdown shows that 75% of their users are aged The type of content that will be posted on True Beauty’s social media must be 18-24, 57% are 25-29 and 47% are 30-49 (Tran, 2020). This implies that it’s mostly engaging, unique and interesting, because the attention span of a Millennial is Millennials and Gen Z who explore the depths of Instagram the most, who by chance, 12 seconds – and for Gen Zers its 8 seconds (Patel, 2017). The content for social are the target customers of True Beauty. media will be a mixture of product photos, interactive Q&A’s, campaign shoots and influencer reposts. The ongoing message, however, will always be the brands mission: to deliver high-quality, yet clean makeup.
68 69 4.7 OPERATIONS 4.7.2 FACTORIES
4.7.1 LABORATORIES Altough some laboratories offer to manufacture the packaging as well, it is recommended to work with a qualified factory who specialise in product packaging. PLAN BUSINESS The first step to creating your own makeup is perfecting the formula, which is usually Thomas Smale puts emphasis on the fact that the design of your brand is a key done by a laboratory. They usually have their own army of innovators, formulators and element of building trust with your customer (Smale, 2017) and similarly, an article in scientists who help to choose the best ingredients, make the cosmetics and lastly Business Partner Magazine states that an attractive packaging is likely to increase help to create the packaging (McIntyre, 2017). Therefore, the key resource is a lab. the sales of your brand (Business Partner Magazine, 2018). Therefore, another key resource is a factory who will produce the packaging for True Beauty. There are labs all over the world – anywhere from the USA to China to Europe. BUSINESS PLAN However, there are some factors that need to be kept in mind when choosing a lab to partner with. For instance, labs in China are notorious for unsafe working POTENTIAL FACTORY PARTNERS environments, unfair wages, hazardous packaging and toxic ingredients (Uhapi
Beauty, 2018). On top of that, the E.U Cosmetics Directive list of banned ingredients ALBEA www.albea-group.com are not restricted in that area. Moreover, the US’ ingredient guidelines are much less strict that those of the EU (Debra, 2020). Although they must meet and follow the FDA
regulations, there is still a long list of harmful ingredients banned in the EU that are HCP www.hcpackaging.com legally allowed in the US (Milman, 2019). For these reasons, it would be a logical move to have a lab inside the EU, since the core and the foundation of the brand is that the ingredients are safe and non-toxic. It is important to note that producing in the EU will BERRY GLOBAL www.berryglobal.com be much more expensive that elsewhere in the world, but in terms of brand equity it would be a mistake to produce elsewhere, where harmful ingredients are not banned. Figure 59. True Beauty potential factory partners (Author’s own, 2020).
POTENTIAL LAB PARTNERS
MADE BY NATURE www.madebynaturelabs.com
GI PICCO www.gipiccos.it
PHB ETHICAL BEAUTY www.phbethicalbeauty.co.uk
Figure 58. True Beauty potential lab partners (Author’s own, 2020).
70 71 4.7.3 HUMAN RESOURCES
Having or making a company wouldn’t be possible without the people behind it. They are a key element because they employees are like small screws that make the machine move.
Nonetheless, in the beginning there will only be a handful of workers and they will probably have a variety of tasks, due to the lack of financial stability. However, it should not be a problem as the company will sell small quantities, and if the sales increase and the workload as well, the company at that point should have the funds BUSINESS PLAN to employ more workers. Realistically speaking, the company will start of with 2-3 workers who will do everything, from marketing to sales, customer service to design.
On the other hand, working with freelancers would be a great opportunity to get a fresh perspective and not hassle with contracts and full-time employment. Lilia Stoyanov says that hiring freelancers is a sound business decision because they have rare skill sets, require no training, bring diversity of thought to the table and TRUE BEAUTY usually have flexible capacities (Stoyanov, 2019). In this context, freelancers could BEAUTY THAT IS HONEST. help the brand with logos, typography or anything design related.
72 73
Figure 60. True Beauty campaign image (Author’s own, 2020). 4.7.4 LOCATION
The headquarters of the brand would initially be located in Tallinn in Estonia, an PLAN BUSINESS Eastern European country. It is often considered as the best country in the world for start-up companies, because the government provides a decent base for supporting new businesses both in the initiation phase and later on (Tallinn, 2020). Also, the good location and the logistical abilities makes it easy to manufacture the formula and produce the packaging abroad, and then ship to Estonia for distribution.
“In recent years, Tallinn has become Europe’s one of the most hyped startup cities. Individuals with entrepreneurial mindset and business angels are flooding the city. Maybe that is the reason why experts are calling Estonian capital the “Silicon Valley of Europe”. If you want to start your wonderful journey in the Startup world, then Tallinn is a perfect place for you to do so.”
- Ucha Vekua (2018)
74 75
Figure 61. Natural beauty (Shevtsova, 2018). 4.8 FINANCE 5-YEAR FINANCE PLAN
EUR FY1 Forecast FY2 Forecast FY3 Forecast FY4 Forecast FY5 Forecast Revenue Foundation 13458 16150 19380 24225 30281
This table showcases a realistic and achievable 5-year finance plan for True Beauty. PLAN BUSINESS PCS 950 1140 1368 1710 2138 The goals for each year were outlined using the SMART criteria by G. T. Doran (1981) to Concealer 5000 6000 7200 9000 11250 help set feasible goals (Mind Tools, 2020). The numbers are calculated in euros (€). PCS 600 720 864 1080 1350 Presssed powder 5000 6000 7200 9000 11250 The table demonstrates many important financial factors that need to be considered. PCS 375 450 540 675 844 Loose powder 5000 6000 7200 9000 11250 The first and most important one is net profit, which will be on constant rise PCS 375 450 540 675 844 throughout the 5 years, unless there is a change in the business proposal. According Eye shadow 0 20000 40000 50000 62500 PCS 0 1000 2000 2500 3125 BUSINESS PLAN to the plan, the biggest rise in revenue will be in second year due to an eyeshadow palette and it is predicted that it will sell more units than other products. Shipping 11500 18800 26560 33200 41500 Total revenue 39958 72950 107540 134425 168031 Total orders 2300 3760 5312 6640 8300 In terms of the products, according to Patton, an average per bottle cost is around Direct expenses 2,5€ per unit (Patton, 2018). Since True Beauty is a new brand and the quantity sizes Production 9583 15667 22133 27667 34583 Shipping costs 10542 17233 24347 30433 38042 are small, the cost per bottle will be higher than usual. In addition, considering the Gross profit 19833 40050 61060 76325 95406 fact that the formula and ingredients of True Beauty will be clean and non-toxic, the Gross profit margin 49,6% 54,9% 56,8% 56,8% 56,8% cost per bottle will be even more expensive. Consequently, the own price for the for Operating costs products is 5€. In terms of retail price, the prices are as follows: foundation is 17€; Marketing 4269 5123 6147 7684 9605 Website 150 150 150 150 150 concealer is 10€; pressed powder is 16€; loose powder is 16€. The eyeshadow palette Office and storage 0 2796 4200 4200 4200 which will be released in year 2, will be priced at 24€. Testing 5667 2833 2833 2833 2833 Other expenses 1000 2000 3000 3500 4000 Salary 0 15000 25000 35000 40000 Taxes 0 5070 8450 11830 13520 Employees 1 1,5 2 2 Average net salary 1250 1389 1458 1667 Net profit 8748 7078 11280 11128 21098
NOTE: Numbers are approximate. Figure 62. True Beauty finance (Author’s own, 2020).
76 77 The beauty industry is currently facing many difficulties. Constant change of trends, new competitors entering the market nearly every T day the COVID-19 pandemic. They are really shaking up the multibillion industry and the situation is critical. However, research shows that the industry will stand strong and will survive the crisis.
In spite of the current circumstances, the is one positive outcome that has risen. People are more concerned about their health and wellbeing than ever, which has created a gap for the clean makeup market. And that is where True Beauty will position itself.
True Beauty is a mixture of mainstream and clean makeup – the mission is to deliver makeup with clean ingredients that has the same pigmentation that mainstream makeup has. The brand is genderless and stands for equality and diversity – the colour range is 35 shades, which is impressive for a new cosmetics brand.
The consumers have shown a need and a want for clean beauty. True Beauty will deliver. No one knows what the industry or the consumers want next, but this is what they want now. True Beauty must follow the trends to stay afloat, therefore, the future might hold a different route for the brand. conclusion SECTION 05
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Figure 22. Author’s own (2020) True Beauty logo with slogan. Figure 38. Beauloye, F. E. (2020) Beauty consumer. Available at: https://luxe.digital/business/digital-luxury-reports/luxury- wellness-beauty/ (Accessed: 2 May 2020). Figure 23. Author’s own (2020) True Beauty campaign image. Available at: https://imginn.com/p/By7AYBKgXbn/ (Accessed: 2 May 2020). Figure 39. Author’s own (2020) Characteristics of Gen Z and Millennials. Available at: https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.marketing91. Figure 24. Author’s own (2020) Global beauty industry retail sales. Available at: https://www.mckinsey.com/industries/ com%2Fcustomer-analysis%2F&psig=AOvVaw1CJSbcs6wXIslXN_ consumer-packaged-goods/our-insights/how-covid-19-is-changing-the-world-of-beauty (Accessed: 2 May 2020). C0HF3Q&ust=1591270066384000&source=images&cd=vfe&ved=0CA0QjhxqFwoTCOj82YvF5ekCFQAAAAAdAAAAABAD (Accessed: 2 May 2020). Figure 25. Author’s own (2020) Glossier’s beauty tutorials. Available at: https://pngio.com/images/png-a1137630.html https://www.instagram.com/tv/B_5mbRrJgaR/ Figure 40. Author’s own (2020) Maslow’s Hierarchy of Needs. (Accessed: 2 May 2020). Figure 41. Author’s own (2020) True Beauty Face Base Collection campaign image. Available at: https://www. Figure 26. Author’s own (2020) Global beauty industry consumer segments. thinkwithgoogle.com/marketing-resources/-fenty-beauty-inclusive-advertising/ (Accessed: 2 May 2020).
Figure 27. 100% PURE (2018) Natural cosmetics. Available at: https://www.100percentpure.com/blogs/feed/greenwashing- Figure 42. Author’s own (2020) True Beauty foundation. Available at: https://www.cultbeauty.com/cn/en/nars-all-day- in-cosmetics-who-are-you-trusting (Accessed: 2 May 2020). luminous-weightless-foundation.html (Accessed: 2 May 2020).
Figure 28. Versed (2019) Versed was launched in response to the rising popularity of skincare over makeup. Available at: Figure 43. Author’s own (2020) True Beauty concealer. Available at: https://www.harveynichols.com/int/brand/ https://www.voguebusiness.com/beauty/is-us-beauty-boom-over-estee-lauder-loreal (Accessed: 2 May 2020). fenty-beauty/727840-pro-filtr-instant-retouch-concealer-210/p3382830/?fbclid=IwAR0qIWtYeBiKL4M6Bic_ JAnTP1sSeIfaEPT4nfn0oDgz-qg3xbiI-AhmqRw (Accessed: 2 May 2020). Figure 29. CB Insights (2018) Top brands in the beauty sector. Available at: https://www.cbinsights.com/research/top- beauty-brands/ (Accessed: 2 May 2020). Figure 44. Author’s own (2020) True Beauty pressed face powder. Available at: https://www.lumene.com/face-makeup/ nordicchic/soft-matte-pressed-powder-86442.html (Accessed: 3 May 2020). Figure 30. Author’s own (2020) World of beauty. Available at: https://jingdaily.com/beauty-luxury-consumers/ https://www.pngkit.com/bigpic/u2q8a9o0w7e6w7e6/ Figure 45. Author’s own (2020) True Beauty loose setting powder. Available at: https://farabeauty.com/loose-powder.html (Accessed: 2 May 2020). (Accessed: 3 May 2020).
Figure 31. K-Rauta (2020) Dr. Hauschka. Available at: https://www.k-rauta.ee/p/dr-hauschka-hydrating-hand-cream- Figure 46. Author’s own (2020) True Beauty shade range. 50ml/88kf (Accessed: 2 May 2020). Figure 47. Author’s own (2020) True Beauty packaging. Available at: https://www.polishedpolyglot.com/2016/09/review-lily- Figure 32. Madara (2020) Madara cosmetics. Available at: https://www.madaracosmetics.com/en/blog/best-organic- lolo-vegan-nail-polish.html (Accessed: 3 May 2020). 86 87 Figure 48. Author’s own (2020) True Beauty concealer. Available at: https://www.harveynichols.com/int/brand/ BIBLIOGRAPHY fenty-beauty/727840-pro-filtr-instant-retouch-concealer-210/p3382830/?fbclid=IwAR0qIWtYeBiKL4M6Bic_ JAnTP1sSeIfaEPT4nfn0oDgz-qg3xbiI-AhmqRw (Accessed: 2 May 2020). Adams, B. (1998) Complete Business Plan. Adams Streetwise. Figure 49. Author’s own (2020) True Beauty packaging. Available at: https://sinulooduskosmeetika.ee/en/pood/mineraalne- blush-clementine/ (Accessed: 3 May 2020). Bendoni, K. W. (2017) Social Media for Fashion Marketing. Bloomsbury.
Figure 50. Author’s own (2020) True Beauty campaign image. Available at: Danziger, P. N. (2019) ‘6 Trends Shaping the Future of the $532B Beauty Business’ Forbes. Available at: https://www.forbes. https://coveteur.com/2019/02/21/men-wearing-makeup-2019-beauty-trend/ (Accessed: 3 May 2020). com/sites/pamdanziger/2019/09/01/6-trends-shaping-the-future-of-the-532b-beauty-business/#3e512017588d (Accessed: 3 April 2020). Figure 51. Author’s own (2020) True Beauty campaign image. Available at: https://www.pexels.com/photo/woman-s- face-3373716/ (Accessed: 3 May 2020). Harris, C. (2017) Fundamentals of Digital Fashion Marketing. Bloomsbury.
Figure 52. Author’s own (2020) True Beauty marketing mix. Hudson, S., Kim, A. and Moulton, J. (2018) ‘What beauty players can teach the consumer sector about digital disruption’ McKinsey & Company. Available at: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/what- Figure 53. Author’s own (2020) True Beauty Shade Finder. Available at: beauty-players-can-teach-the-consumer-sector-about-digital-disruption (Accessed: 1 May 2020). https://www.pngkit.com/bigpic/u2q8a9o0w7e6w7e6/ https://www.fentybeauty.com/fenty-face-shade-finder Keller, K. L. (2012) Strategic Brand Management. Building, Measuring and Managing Brand Equity. Fourth Edition. Pearson. (Accessed: 3 May 2020). Kotler, P. and Armstrong, G. (2018) Principles of Marketing. Seventeeth Edition. Pearson. Figure 54. Author’s own (2020) True Beauty digital marketing mix. Kotler, P., Keller, K. L., Brady, M., Goodman, M. and Hansen, T. Marketing Management. Third Edition. Pearson. Figure 55. Author’s own (2020) True Beauty promotional strategy. Moore, G. A. (2014) Crossing the chasm: marketing and selling disruptive products to mainstream customers. Third edition. Figure 56. Author’s own (2020) True Beauty Instagram. Available at: https://en.wikipedia.org/wiki/IPad_Air New York: Harper Business. https://www.instagram.com/lilylolouk/ (Accessed: 3 May 2020). Posner, H. (2015) Marketing Fashion. Second Edition. Laurence King Publishing.
Figure 57. Author’s own (2020) True Beauty Facebook. Stylight Insights (no date) ‘Best of Beauty Report’ Available at: https://insights.stylight.com/reports/beauty-report-2019/ Available at: (Accessed: 10 April 2020). https://en.wikipedia.org/wiki/IPad_Air https://www.facebook.com/lilylolo/ (Accessed: 3 May 2020).
Figure 58. Author’s own (2020) True Beauty potential lab partners.
Figure 59. Author’s own (2020) True Beauty potential factory partners.
Figure 60. Author’s own (2020) True Beauty campaign image. Available at: https://www.ahlens.se/Skonhet/makeup/ogon/ linser-938253/swati-cosmetic-lenses-linser-sapphire-90845996/ (Accessed: 3 May 2020).
Figure 61. Shevtsova, D. (2018) Natural beauty. Available at: https://www.pexels.com/photo/black-and-brown-brush-on- saucer-1619488/ (Accessed: 3 May 2020).
Figure 62. Author’s own (2020) True Beauty finance.
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