1
2
project declaration School of Art and Design: Fashion Marketing & Branding I confirm that this work has gained ethical approval and that I have faithfully observed the terms of the approval in the conduct of this project. Signed (student) ……………………………………………………………………… Date .....................................………………………………………………………………………
FMBR30001: strategic & creative solutions Project: Stage 2 realisation stage Hasina Hoque: N0589297 Word count: 8,000 Excluding quotes, tables, business models and references
3
4
Acknowledgments I would like to take the opportunity to thank my parents and sisters for their ongoing support and confidence in me achieving my potential. My dearest friends, thank you for your encouragement and lifting my spirits when it was needed. I would like to thank my first tutor Alex Hanford for her support during an incredibly diicult time prior to my leave of absence and my second tutor Sue Smedley Roberts for her guidance upon my return this year. A big thank you to Sarah Powell and NTU Mental Health Team for their on-going support throughout the last two challenging years and helping me reach the end of my degree. Last but not least thank you to all the women that devoted their time to contribute to my research and supporting my project.
5
contents chapter 1: introduction
chapter 5: concept development
1.1: project objectives - pg 10 1.2: introduction - pg11 1.3: project rationale - pg 11
5.1: the business opportunity - pg 39 5.2: initial concept testing & feedback - pg 39 chapter 6: the business concept
chapter 2: methodology
6.1: business objectives - pg 42 6.2: concept summary - pg 43 6.3: Revenue streams - pg 43 6.4: the business model - pg 43 6.5: manufacturing process - pg 44 6.6: product formulations - pg 44 6.7: concept testing & feedback - pg 45 6.8: competitor analysis - pg 46 6.9: brand positioning - pg 49 6.10: porter’s 5 forces - pg 52 6.11: swot analysis - pg 53 6.12: brand dna - pg 54 6.13: consumer segmentation - pg 58 6.14: branding guidelines - pg 62
2.1: aim & objectives - pg 14 2.2: research philosophy - pg 15 2.3: sample - pg 15 2.4: research design - pg 15 2.5: data collection methods - pg 16 2.6: advantages & limitations of methods - pg 17 2.6: data analysis - pg 17 2.7: data limitations - pg 17 chapter 3: reflection of stage 1 & future thinking 3.1: Future thinking & stage 1 insights - pg 20 3.2: the problem - pg 23
chapter 7: marketing strategy chapter 4: market analysis
7.1: marketing mix - pg 66 7.2: growth objectives - pg 77 7.3: growth strategy - pg 78
4.1: Defining natural & clean beauty - pg 26 4.2: macro fcators affecting natural beauty sector - pg 27 4.3: uk beauty market - pg 29 4.4: global & uk natural beauty market - pg 29 4.5: market drivers - pg 32 4.6: market trends - pg 33 4.7: market challenges - pg 34 4.8: key secondary players - pg 34 4.9: The female millennial consumer - pg 34
chapter 8: communication strategy 8.1: communication objectives - pg 82 8.2: aida & drip model - pg 83 8.3: offline channels - pg 87 8.4: online channels - pg 88
6
8.5: communication tactics - pg 91 8.6: brand launch - pg 94 8.7: year 1 communication tactical plan - pg 98 8.8: year 2 & 3 communication overview - pg 99
chapter 9: financial outlook 9.1: sourcing initial investment - pg 102 9.2: year 1-3 sales forecast - pg 104 9.3: year 1-3 profit & loss - pg 107 9.4: year 1 -3 sensitivity analysis - pg 108 9.5: year 1 cash flow projection - pg 108 9.6: Year 1-3 marketing budget - pg 109
chapter 10: business operations & logistics 10.1: implementation timeline - pg 112 10.2: key roles & responsabilities - pg 113 10.3: pop-up logistics - pg 113 10.4: risk assessment - pg 114 10.5: kpi’s - pg 116
chapter 11: conclusion conclusion - pg 120 chapter 12: references & bibliography references - pg 124 bibliography - pg 130 image references - pg 141
7
8
chapter 1: introduction
9
1.1: project Objectives 1. Present a strong link between existing research and insights to the proposed business concept, taking into consideration all previous recommendations. 2. Demonstrate a rigorous and in-depth analysis of global issues impacting the natural beauty market to critically evaluate the long term sustainability of the concept. 3. Highlight both positive and negative impacts of the proposed concept through careful analysis of both rewards and risks. 4. Construct a strategic business plan detailing an effective marketing strategy and engaging communication strategy with consideration to the financial implications of implementing the concept.
Fig 1
10
“In recent years, the cosmetic industry has seen a growth in demand for natural products as a result of consumer response to a healthier lifestyle.” - (Vesselina, 2009 as cited by Syazana and Hashim, 2015 as cited by Hoque, 2018)
1.2: Introduction Prior to development of this proposal, extensive research was undertaken in Stage 1 to gain a thorough understanding of the subject matter and to provide critical insights into female Millennials’ purchasing behaviour towards the natural beauty sector forming the basis of this proposal. Based on the original study of the macro trend “Health and Well-being” and how the penetration of the wellness movement has created a consumer desire for a holistically healthy and quality lifestyle, this report will aim to effectively propose a new concept for the natural beauty market as a result of increasing consumer demand for cleaner consumption of beauty products.
1.3: Project Rationale As concluded in Stage 1 the natural beauty market is an under-represented and underresearched area; very little has been published in response to consumers’ attitude and
11
purchasing towards natural cosmetics (Hoque, 2018). However Stage 1 research concluded that there is a strong interest and growing demand for more natural alternatives and thus a viable market for brands to innovate in. A professional rationale for undertaking this project is to produce a body of work that strongly reflects the interest and knowledge gained on the subject matter from pervious research which will aid towards career progression further in the future. The body of work produced will illustrate a feasible and commercial opportunity for the natural beauty market, capitalising on the growing consumer demand for cleaner beauty consumption and thus positively contributing towards the financial performance of this market sector.
12
chapter 2: methodology
13
2.1: Aim To investigate the feasibility and long-term sustainability of the proposed concept for the natural beauty market, targeting specifically the younger female Millennial consumer. Objectives 1. Observe the marketing and communication strategies of existing natural beauty brands and asses how they are affecting consumer buying behaviour. 2. Examine the desirability of the proposed concept amongst younger female Millennials to understand the likelihood of engaging with the brand, thereby informing the longevity of the concept. 3. Conduct a coherent and in-depth analysis of the natural beauty market, identifying a gap in the market which the proposed concept will fulfil. 4. Investigate the logistics and cost of implementing the concept over a proposed timeframe to inform financial projections.
14
Fig 2
2.2: Research philosophy
2.4: Research design
A pragmatic research philosophy has been chosen for this study which allows the flexibility of integrating mixed research methods e.g. quantitive and qualitative and both a deductive and inductive approach to ensure the most efficient research can be undertaken (Dudovskiy, 2019).
A combination of both exploratory and descriptive research provided both qualitative and quantitative data. Exploratory research allowed the discovery of consumer perceptions, behaviours and needs to develop a better understanding of the business opportunity (Hair and others, 2007). Descriptive research can help describe the
2.3: Sample
“characteristics of the topic of interest in the research” (Hair and others, 2007).
Self selection sampling was applied in which participants express their desire to voluntarily participate based on sample requirements (Saunders, Lewis & Thornhill, 2016). The intended sample consisted of young female millennials (18-25) including students, graduates, employed and unemployed from numerous ethnicities.
Within this project, it provided a ‘snapshot’ of specific elements at a given time to describe the characteristics of young female Millennials in the U.K mainly through sample surveys.
15
2.5: Data collection methods Fig 3 provides a concise overview of the data collection methods applied.
Fig 3: Overview of data collection methods
16
2.6: Advantages and limitations of
2.7: Data Analysis
methods
Qualitative data has been analysed using thematic analysis to categorise and code data into reoccurring themes, allowing a systemic approach which is flexible and accessible as oppose to more complex types of qualitative analysis (Braun & Clarke, 2006).
Methods were chosen by evaluating their advantages and the type of data they would produce. Focus groups were useful to test initial reactions to proposed concepts and guide further refinements (Hair and others, 2007) whilst surveys provided a quick, reliable and efficient way to collect data from a large sample within the same geographical location - appropriate for the timeframe of this project (Saunders, Lewis & Thornhill, 2016). Secondary research provided a cost and time efficient way to triangulate primary research findings thereby reducing the extent of primary research needed (Hair and others, 2007).
Quantitative data has been analysed via the software used to create surveys (SmartSurvey and Google Forms) presenting the data in bar charts, pie charts and tables generating statistics for comparison which allows examination of trends within the data (Saunders, Lewis & Thornhill, 2016).
2.8: Data Limitations Although careful planning was undertaken to minimise limitations, a few did occur. Whilst 3 brands were interviewed at a trade show, the information concluded only informed further research and didn’t provide specific insights therefore they have not been quoted in the report (Refer to appendix 16). Furthermore, these findings can only be generalised to female millennials aged 18-25 within the UK, thus the findings do not take into account gender, age or geographical differences.
It is important to acknowledge limitations which may affect validity and reliability of data. Decisions based solely on focus groups are not representative of the wider population (Hair and others, 2007), however a survey with the same sample size was undertaken to support decisions. It is possible to lose research control using surveys as it is unknown if the intended participant has answered the survey (Hair and others, 2007); however a lucid explanation was provided at the start outlining sample requirements (location, age, gender). Whilst secondary data can support primary findings, age of data and concerns regarding how the data was collected originally can affect reliability (Hair and others, 2007). To minimise this, research was obtained from credible sources (Mintel, Euromonitor, Statista etc). The biggest difficulty of professional interviews is gaining access to credible sources (Saunders, Lewis & Thornhill, 2016), a strategic approach of contacting relevant professionals with an interest in the subject matter was taken to gain credible insights.
17
18
chapter 3: Reflection of Stage 1 and Future thinking
19
Fig 4
3.1: Future Thinking and Stage 1 insights Future thinking identified wellness as a key priority in consumers’ lives; proactive consumers are adopting a holistically healthier lifestyle thereby driving demand for innovative solutions in new areas. Through extensive research undertaken in stage 1, the following were identified as key insights into female Millennials’ purchasing behaviour of natural beauty products (see Fig 5). The insights identified are crucial for brands to consider to provide more eicient strategies to motivate consumer purchasing and retain customer loyalty, ultimately increasing the financial benefits of the natural beauty sector (Hoque, 2018). These key insights will inform the basis of this proposal from research to concept generation to the communication strategy to ensure maximum success and appropriateness of the proposal towards the intended target consumer.
20
Fig 5: Stage 1 Key Insights (Hoque, 2018)
21
“In 3 words describe how you feel about the current skincare market?”
“Not enough awareness for products for my skin.”
“Overcrowded, unnatural, unethical”
“I feel there is a saturation of skincare in the market currently, but natural and organic brands still aren’t as widely used”
“Saturated, Expensive, Celebrityendorsed.”
“Lacking something new and exactly what I need.”
(Refer to appendix 1)
22
3.2: The Problem Stage 1 highlighted that whilst consumer interest and demand in natural products continues to increase, there is a significant gap in the intention to purchase and actually purchasing cleaner beauty products due to external factors. Consumers need help from brands to turn purchasing intentions into actions therefore it is important to acknowledge the external influencing factors and provide appropriate information to inform purchasing behaviour and acquire new customers. Factors such as price point, ambiguity around “natural�, lack of ingredient transparency, brand image, personalised solutions, product benefits, incentives, recommendations and accessibility were found to strongly influence consumers’ purchasing intentions. An integration of both emotional (e.g. brand image) and rational features (e.g. product benefits) will appeal the most to the Millennial female consumer in an overcrowded and competitive sector where there is a vast amount of choice.
23
24
chapter 4: market analysis
25
4.1: Defining natural and clean beauty As discussed in Stage 1, no repeated definition of “natural” was found amongst female Millennials corroborating with the literature around lack of universal legislation and ambiguity surrounding the definition of “natural”. Connotations of “raw materials, naturally sourced, free of synthetic and chemicals and not manmade” were generally associated with the word “natural” (Hoque, 2018). In response to the ambiguity and mistrust in the word “natural”, the universal term “clean beauty” has been adopted in this report which forms the basis of the proposed concept. Goop defines “clean beauty” as “a non-toxic product that is made without a long, ever-evolving list of ingredients linked to harmful health effects from hormone disruption, to cancer, to plainold skin irritation.” (Goop, 2019)
26
4.2: Macro factors affecting the natural beauty sector • Political: Brexit has caused uncertainty for businesses and is perceived as an obstacle to success.
social media is influencing purchasing thus appropriate digital content and accurate SEO will maximise digital presence.
As a member of the EU, natural beauty brands should continue to comply with current EU laws when introducing new cosmetic products to the market. However contingency plans should be agreed to tackle whatever sequence of events that arise from Brexit.
• Legal: Rigorous EU and UK legislations surrounding consumer law, employment law and cosmetic law. The recent implementation of GDPR outlines new data protection regulations when handling personal and sensitive data of consumers and employees; brands must adhere to the regulation to avoid breach of data. Specifically within cosmetics, brands must comply with the Cosmetic Regulation (EC) No 1223/2009 to ensure products are safe before they are sold to consumers. Failure to follow laws correctly will have serious implications for a business such as fines and closure of the organisation.
• Economical: Economic uncertainty due to Brexit affecting market growth rate. The Bank of England have issued to keep interest rates at 0.75% since August 2018 (BBC News: Business, 2019) due to the unpredictability of the economic outlook amid Brexit thus affecting businesses’ strategic plans for growth and expansion. Brands are hesitant to invest in new projects which could impact the overall growth of the natural beauty market within the UK.
• Environmental: Implications of environmental issues as a core component of Corporate Social Responsibility (CSR).
• Social: An increase in the number of consumers adopting holistically healthier lifestyle choices and engaging in personal well-being.
A key issue to discuss is plastic pollution caused by a combination of single-use plastic and recycling limitations of plastic. Packaging holds a significant role in the beauty sector; brands should work towards towards limiting single use packaging, encouraging recycling initiatives and using environmentally friendly packaging solutions to tackle plastic pollution.
Brands can maximise this opportunity by educating consumers about the benefits of consuming a more natural approach to their beauty routines thus increasing brand awareness and sales.
(Refer to appendix 2 for full PESTLE analysis)
• Technological: Consumer spending across all categories has shifted online due to the growing importance of constant connectivity. Only 14% of the top 20 cosmetics companies’ sales are through online channels (Nielsen, 2018), presenting an opportunity for new brands with disruptive business models to gain 86% of market share via online sales. As spending online continues to increase,
27
“The UK beauty market is forecasted to reach £6bn by 2022” - (Glotz, 2018).
28
Fig 6
4.3: UK Beauty market Despite a slowdown in high-street spending due to economic uncertainties in the U.K, the beauty sector continues to show solid growth and opportunities for market share. High end and niche beauty products are driving overall growth (Wray, 2018).
less risk to their health and the environment (Statista, 2018). The growth in this sector is a direct correlation to an increasing number of informed consumers who are summarised as
4.4: Global and UK natural beauty
The global natural cosmetics market is expected to rise to $21.8 billion by 2024 (Statista, 2018). More specifically in the U.K, sales of natural beauty products accumulated to £61.2m in 2017 (Statista, 2018). Whilst only a minority of beauty shoppers purely buy natural cosmetics, both the consistent growth of the market sector and increasing demand from consumers for cleaner beauty products presents this sector as a viable market to innovate in.
“those that are aware of the benefits of using a product and rational in their purchase decisions” (TechNavio, 2017).
market “Natural beauty has been outperforming “conventional” beauty for some time, taking market share in the process.” (Nielsen, 2018). Over recent years, consumers have become increasingly aware of harmful side effects from cosmetic products containing artificial chemicals, thus resulting in more consumers opting for “greener” beauty products posing
In 2017, skincare products accounted for 32.4% market share of the global natural beauty industry (Statista, 2017). More specifically, facial skincare generated the highest market
29
value of ÂŁ924.1 million in the U.K (Statista, 2017), providing further support for key insight 4 from Stage 1 highlighting skincare as the most viable product category for natural ingredients. In response to the growth of natural beauty, consumers are favouring smaller, niche brands with strong ethical and sustainability credentials as oppose to big-name brands, thus providing opportunities for market share for new disruptor brands (Glotz, 2018). Within the UK, 2017/2018 saw a launch of numerous minimalistic skincare brands that share a common focus on natural and/or high quality ingredients, limited ingredients lists and simple Instagram-worthy packaging. Such cult beauty brands include Glossier, CeraVe and Herbivore Botanicals (Mintel, 2018).
30
Fig 7
31
4.5: market drivers Increasing consumer concerns over the effects of “harsh” and “toxic” chemicals continues to drive the growth of the natural beauty market. As consumers seek cleaner, greener alternatives, brands are capitalising on this by increasing marketing efforts into promoting such products.
Growing consumer demand for cleaner ingredients
Increase in marketing initiatives
There is a strong consumer belief that natural products deliver safer, more gentle results and there is an increased enthusiasm amongst consumers about the benefits obtained from natural ingredients (Coast South West, 2018). As a result this provides opportunities for product innovation within the natural beauty market.
Key natural beauty players are heavily investing money and effort into marketing and promoting their products with the aim of creating a specific image in consumers’ minds associated to the brand or product to increase customer acquisition (TechNavio, 2017).
32
4.6: market trends
Personalisation
Mistrust in marketing claims
As the one size fits all strategy is no longer aligning with consumers’ needs brand must rethink their strategies to oer more personalised products that are suited to an individual’s skin needs. An approach to this is the increasing use of technology for more a personalised solution (Euromonitor, 2018).
The growth of products based solely on natural claims has started to decline; brands must authentically prove claims to be natural. A way of achieving this proof is the absence of undesirable ingredients such as parabens, phthalates, artificials and sulphates. When products are free of some/all of these ingredients paired with a natural claim, growth opportunities will increase (Nielsen, 2018).
Ingredient Transparency Demand for ingredient transparency continues to grow as an increasing number of consumers become better educated around this topic. As a result, industry players are expected to respond by vividly listing ingredients on product labelling (Euromonitor, 2018).
33
4.7: market challenges Whilst the natural beauty market is booming, it is important to note that low availability and a high cost of raw materials could prevent market growth. Products including naturallyderived chemicals are extracted from flowers and plants which can be costly and may not be readily available (TechNavio, 2017). However continuous developments in natural cosmetics are overcoming these issues and providing market opportunities.
4.8: Key secondary players in the natural beauty market A competitive analysis concluded Aveda, Burt’s Bees, Kiehl’s and Lush as key secondary competitors of the global natural beauty market. Although not a direct competitor to the concept proposed, these brands have significant market share primarily through their parent companies and are important to acknowledge due to their strong presence in the U.K market (refer to appendix 3 for competitive analysis).
4.9: the female millennial consumer Within the UK, Millennials are the largest demographic accounting for 26% of the total population therefore it is crucial to capture their spending power (Mintel, 2018). With fewer commitments younger Millennials have more disposable income than older Millennials and are more likely to spend money indulging in beauty products (Mintel, 2018). Younger millennials (18-25) are the strongest demographic to engage in natural beauty and women are generally more likely to purchase natural cosmetics as opposed to men (Hoque, 2018). From these findings, the proposed concept will be targeted towards a younger female Millennial consumer.
34
Fig 8
35
36
chapter 5: concept development
37
Fig 9: Insights for concept development, (refer to appendix 1)
38
Fig 10
5.1: the business opportunity an online subscription service where consumers would receive monthly packages containing the natural ingredients needed to create their own skincare products at home offering a new level of control and transparency.
Stage 1 insights and primary research highlighted a consumer desire for education and honesty about the natural beauty sector to inform purchasing decisions. This presents an opportunity for an honest, clean beauty brand that educates consumers about skincare, product ingredients, and the skincare benefits of natural ingredients to encourage a change in behaviour. As product loyalty was found to be more important than brand loyalty, offering solutions addressing individual skin type and concern will gain more attraction.
The key insight that emerged from the focus group was the merging of both concepts for an online/offline experience: “A pop-up is great because I think it brings in so much attention and people want to go and get an instagram pic but there’s no point in spending £30 if you can’t re-buy it.” — (refer to appendix 4)
5.2: Initial concepts testing and feedback Following on from Stage 1 recommendations two concepts were initially tested amongst the target audience of young female Millennials (refer to appendix 4).
“I’d happily go make my facial wash once and then just have it delivered to me.” — (refer to appendix 4) Whilst concept 1 received the most positive feedback, participants expressed a need for convenient and accessible re-purchasing after the initial experience. The final proposed concept will aim to merge aspects of both concepts to offer a personalised, engaging experience and accessibility online to encourage re-purchasing.
1. Experiential retail concept where consumers create their own natural skincare products guided by an industry expert offering a platform to educate consumers about product ingredients, the benefits and essentially raise awareness about the natural beauty market.
2. Clean beauty DIY kits 39
40
chapter 6: the business concept
41
6.1: Business objectives 1. To be the UK’s first personalised and educational clean beauty brand with an online and offline presence. 2. To develop a range of innovative, effective products and expand pop-up locations within the UK. 3. To maintain strong competitive advantage amongst the core target audience (18-25 females) through strategic and effective marketing initiatives.
42
6.2: concept summary Clean Beauty Lab is the UK’s first clean beauty brand offering a personalised skincare experience both online and offline. Aimed at young female millennials, the brand takes a playful and informative approach to clean beauty offering highly effective products personalised to an individual’s skin type and concerns. Co-creative workshops offers consumers a platform to learn about skin health, product ingredients and the benefits of natural ingredients as they create their own products.
6.3: revenue streams
6.4: The business model
Clean Beauty Lab will launch with two streams of revenue:
Clean Beauty Lab will operate as a Direct-toconsumer (DTC) business model which has continued to disrupt almost every industry sector including beauty (Trend Hunter, 2018). Successful DTC ventures such as cult beauty brand Glossier have revolutionised consumer expectations of a brand. The DTC model allows the opportunity to build unique consumer connections through both product offering and the user experience (Trend Hunter, 2018).
1. Facial skincare products via an e-commerce site: 100% naturally-derived personalised products offering young female Millennials effective clean beauty solutions in a convenient and accessible channel of distribution.
Global beauty analyst Karen Grant at NPD group explains the befits of a DTC model as
2. Workshops via a pop-up lab: Educational and co-creative workshops at a pop-up lab offering a personal and engaging interaction to the brand. Consumers will have the ability to create their own products with the guidance of a trained formulator whilst learning about skin health, product ingredients and their skincare benefits.
“It allows you to really get to know your consumer because you’re getting that direct feedback; you are able to cut down on inventory cost because you’re only building on demand; and you’re able to move really quickly and customize the line.” (Bazilian, 2016).
The combination of an e-commerce site and physical retail space offers consumers multiple brand touch-points allowing a more meaningful, personal relationship and an opportunity to build a community of like-minded Millennials both online and offline.
The brand will register as a limited company under Companies House thus the business director will not be personally liable for any financial losses (Companies House, 2018). A limited company has limited financial risk to investors, encouraging more investment from individuals.
Furthermore the idea to combine an online/ offline experience has been supported by primary research; 53% of young Millennials prefer to experience skincare purchases instore as opposed to online and 35% prefer both (refer to appendix 1).
43
6.5: manufacturing process “So the workshops would have to be fun and limiting with what they can take away and then have proper manufacturing processes for the rest of it.” — (refer to appendix 5)
An independent formulator will be outsourced to formulate products in accordance to a brief outlining product requirements prior to creating formulas. Outsourcing an independent formulator will ensure the formulas are advanced, highly effective and unique to Clean Beauty Lab and cannot be easily replicated by other brands.
“…you very smartly said you’re only going to make anhydrous products and that will make your life a lot easier because it’s much harder to make water based products, particularly when you’re dealing with preservations. There will be contamination issues when you’re working with water. There will still also be contamination issues when you’re working with anhydrous products but they’re easier to preserve and easier to make.”— (refer to appendix 5)
Products will be manufactured in bulk by UK based natural and organic manufacturer Inovia International who offer small batch production runs; ideal for a start-up to minimise the risk of overstock. They will oversee ingredient and packaging sourcing, product testing, manufacturing, filling and labelling to ensure products are ready for launch and comply with EU regulations.
Whilst the products offered in workshops will not be an exact replica of the products offered online, the main aim of workshops will be to offer a transparent, co-creative and educational experience surrounding skin health and natural ingredients. Whilst products online will provide consumers with highly effective solutions thus offering a both a tangible experience and product.
This process allows full control over the development of new product formulas which can then be manufactured reliably on a larger scale with consistent quality.
6.6: Product formulations Workshops: Mini-sized anhydrous (waterless) formats following basic DIY formulating methods incorporating the key natural ingredients that are recommended to the consumer addressing their skin type and concern.
Online: Full-sized advanced formulas based on the products created in workshops incorporating the recommended key natural ingredients for the consumer. After thorough primary research with industry professionals (refer to appendix 5) it was decided that offering two product formats was the most feasible way to merge product offering online and offline due stringent safety regulations surrounding the manufacturing of cosmetics and logistical issues such as shelf life:
44
6.7: Concept testing & feedback “Personalisation is an enormous growing trend, everyone wants personalisation in every range of every industry sector and beauty is no different. If there is a way of doing it, it will absolutely set your business apart from others.” — (refer to appendix 5) To validate the feasibility and attractiveness of Clean Beauty Lab, the concept was tested with both industry experts and the target audience. 68% of young Millennials answered “definitely” when asked if the concept interests them (refer to appendix 6) and all participants in a focus group agreed they like the concept (refer to appendix 7).
“Yes I think it’s cool to be able to customise my beauty products, it gives a personal touch which would make me interact with the brand more as it’s catering to my specific needs.” — (refer to appendix 7)
“It’s a good idea. It tailors to us individually and it’s a way to learn more about what’s actually good for our skin.” — (refer to appendix 7)
Furthermore, when discussed with industry professionals, the concept received positive feedback strongly validating the commercial viability of the concept.
“Okay wow! I think it’s a really exciting concept actually… I work with thousands of beauty entrepreneurs around the world and I have to say very few of them come up with the idea of using tech with beauty and algorithms with beauty so I’m excited to hear this because I think it has huge potential.” — (refer to appendix 5)
“To be able to touch and feel as though you are engaging in the process I think is what will have to happen in the high-street across all sectors, so I think that is very innovative and that is the way beauty needs to go in the high-street..” — (refer to appendix 5)
45
6.8: competitor analysis
Fig 11: Competitive Universe Analysis
A Competitive Universe Analysis (PaySimple, 2019) was used to asses the competitive landscape for clean skincare brands targeting younger female Millennials within the UK. Although the brand has no direct competitors, the model identifies first and second level competitors to provide a clear visualisation of where Clean Beauty Lab sits amongst the target audience. The model helps identify a USP by understanding the core focus of the brand against competitors.
online start-ups offering customised skincare solutions using natural ingredients.
Level 2 competitors: Identified as smaller, niche clean beauty startups operating within the same geographic market who have a strong appeal and loyalty amongst female Millennial consumers. Although these brands do not offer personalised solutions, a change in their product offering could pose a threat to Clean Beauty Lab. A communication strategy similar to these brands will be followed due to the success of strategies with female Millennials thus posing as a potential threat to the brand.
Level 1 competitors: Identified as brands who provide a similar service/product within the same geographic market and could adopt their strategy to offer an offline experience similar to Clean Beauty Lab. All level 1 competitors identified are
46
level 1 competitor analysis Brands
Price point approx.
Product range
emulsion
yours
y’our
Base = £16-40 Extract = £16 -28 Fragrance = £16 Exfoliant add -on = £17
Full skincare set with 4 products = £98.56
4 products = £137.53 one time buy or £49.66 per month subscription.
“Emulsion offers a blank canvas that can be used on its own or coloured with the different essential blends, fragrances and exfoliants”.
“Get skincare products personalised for you! Based on your skin, age, stress, lifestyle, weather, and everything that matters”.
Skin, body & hair care
Skincare
“At Y’OUR, we know each skin type is unique. That’s why we have a different approach. You tell us about your skin and we will formulate the best custom regimen for your specific needs.” Skincare
Services offered
Chatbot for assistance.
Skin assessment taking into consideration skin, lifestyle and environment — optional choice of uploading selfie for thorough analysis.
Algorithm to determine ideal mix.
Skin assessment also gives tips on how to improve lifestyle and environment.
47
Highly technical AI powered algorithm considering skin and environment for personalised solutions.
Strengths
Stocked on Beauty Bay — one of the leading online beauty retailers.
Good customer interaction on social media platforms.
Offers DIY style beauty at home without the need of buying raw ingredients or making products. Gender neutral brand. Flexibility in number of product purchases.
30 day money-back guarantee supports efficacy claims. Educational content on blog and social platforms.
Thorough skin analysis. Product reviews displayed throughout website engagement encouraging purchasing. Educational content on blog.
Ingredient transparency on website. Informative skin assessment. Referral code with purchases.
Weaknesses
Products need to be mixed each time they are used; not ideal for quick use or travelling. Very little customer interaction across social media platforms.
No flexibility in preference of product purchases once regimen is suggested by brand — becomes quite expensive. Low brand awareness in UK.
Table 1: Level 1 competitor analysis
Analysing Level 1 competitors provided rigorous understanding of the product and services offered. Competitors offer various aspects that Clean Beauty Lab aims to incorporate within the brand’s offering. Clean Beauty Lab will aim to offer more accessible price points, educational content across all channels, relevant consumer-centred communication and a reward and referral scheme encouraging peerto-peer recommendations and organic brand awareness. All competitors use an algorithm for a thorough skin assessment which is a key component to incorporate to ensure product and workshop recommendations are personalised to the consumer.
48
Very expensive price points and no option of purchasing single products. Packaging very minimal and not appealing. Low brand awareness in UK.
6.9: brand positioning
Fig 12: Brand positioning map
Assessing the market position of level 1 competitors helped identify a USP for Clean Beauty Lab by measuring competitor’s offering of online-offline experiences against price points. As the map illustrates, competitors rely heavily on an online experience to personalised clean beauty. No brand offers an integrated online-offline experience, thus providing Clean Beauty Lab with a strong point of differentiation and USP.
customisation of natural beauty products are also available, such a concept integrating both an online-offline experience has not been introduced in the natural beauty sector in the U.K. Although Clean Beauty Lab will not be operating in an oversaturated position (personalised clean beauty), it is important to acknowledge and monitor the rise of clean beauty start-ups — their price points, product and service offering as potential future competitors.
Whilst experiential retail concepts that allow customisation of beauty products have been offered before (e.g. Fragrance Labs, Lancôme Custom Made foundation, Lip Lab) and online
49
“For women who want to feel confident about what they’re putting on their skin, Clean Beauty Lab provides a personalised and educational skincare experience. Clean Beauty Lab’s products are effective and safe because of it’s commitment to personalised solutions and non-toxic ingredients.” - Brand positioning statement
Fig 13
50
51
6.10: porter’s 5 forces Porter’s identify how to success
five forces model has been used to the intensity level of competitors and address them to maximise financial and market share.
Table 2: Porter’s 5 forces
52
6.11: SWOT analysis A thorough SWOT analysis was undertaken to evaluate the internal environment of the business to gain a strong understanding of how to maximise the brand’s opportunities and minimise potential treats (refer to appendix 8). The table below highlights key internal and external factors.
SWOT ANALYSIS strengths
weaknesses
Market innovator - No direct competitors and
High product development costs - Product
a strong USP provides Clean Beauty Lab with the opportunity to establish itself as a innovative clean beauty brand.
Encouraging a positive change in behaviour -
Transparent and educational workshops and content online will help inform purchasing decisions and encourage a change towards cleaner beauty consumption, bridging the gap between the intention to purchase and actually purchasing.
opportunities
development costs are dependent on the natural ingredients used in formulas and each new product must undergo stringent safety tests increasing expenses due to the personalised formulas offered.
Low brand awareness - As a start-up brand,
there will be no previous brand awareness therefore it is crucial to implement a strong incubation period for promotion prior to launching and implement an effective launch campaign to generate awareness.
threats
Expand pop-up locations - Assuming that the first Direct competitors - The rise of clean beauty pop-up is successful, there is an opportunity to expand offline reach to different cities and grow the brand’s community base.
Collaborations with relevant influencers and Key Opinion Leaders - As the brand aims
to encourage a change in behaviour, collaborating with individuals with similar values and knowledge on natural beauty and skincare can help bring awareness to the industry sector and educate consumers.
could see new market entrants or existing clean beauty brands adopting a similar strategy and product offering threatening the unique positioning of the brand.
Low frequency of attending workshops -
Consumers may not find it beneficial to attend workshops multiple times. The growth strategy will focus on slowly penetrating the market using pop-up’s to test the success of workshop offering and make changes accordingly.
Table 3: SWOT analysis
53
6.12: brand dna
Mission “Clean Beauty Lab aims to encourage women to make a positive change in beauty consumption through a personalised and educational experience to clean beauty.�
Fig 14
54
vision “Our vision is to build and empower a community of beauty enthusiasts with a desire to explore and engage in a cleaner and more honest approach to beauty.�
55
brand values
educational
personalised
Natural can be a grey area with very few regulations, inconsistent definitions and complex ingredient labels. We are committed to decoding scientific jargon and providing easy, relatable and reliable information about skin health, product ingredients and the benefits of natural ingredients.
We believe you are unique and so is your skin. We take into account individual skin types, concerns and lifestyles to deliver products that are highly eective without toxic chemicals.
Community
Honesty
We believe in real recommendations from real people. We want to bring together a community of clean beauty enthusiasts so we take a consumercentred approach encouraging and nurturing conversations amongst our consumers.
We believe in transparency from the ingredients we use to the way we communicate our products. We are proud to be 100% natural, vegan and cruelty-free.
56
brand pyramid
Fig 15: Brand pyramid
57
6.13: consumer segmentation Precise segmentation will provide guidance for effective communication to maximise engagement amongst the core target consumer. Consumer segmentation identified two types of clean beauty buyers:
2. “Aspirational clean beauty consumer” Millennials who enjoy exploring and engaging in the latest beauty trends. Whilst the intention to consume cleaner beauty products is on their agenda they are often confused by the overwhelming amount of choice and information regarding natural ingredients.
1. “Active clean beauty consumer” Millennials who have a strong interest and knowledge in clean beauty and intentionally consume cleaner beauty products. These consumers can be categorised as ‘Early Adapters’ who are willing to take risks, invest in new products and experiences to enhance their awareness of the natural beauty market, and often have knowledge about new products (Mulder, 2012).
These consumers need a great deal of education and guidance to encourage a change in behaviour. Identified as ‘Early Majority’, they are comfortable with progressive ideas but will seek proof of benefits (Robinson, 2009) such as reading reviews and recommendations from Early Adapters before purchasing (Hanlon, 2013). This identification of two types of consumers is further validated by an opinion obtained from a sales advisor at Content Health & Well-being (a specialist retailer for natural and organic beauty in London):
These buyers play a key role in word-ofmouth advertising (Mulder, 2012), presenting an opportunity to convert them into brand advocates. It is crucial to maintain strong relationships with these consumers to encourage customer acquisition and brand awareness.
“there’s those who know what they’re doing and they have to do it and there’s those who are admirable but at the moment are lacking education.” (refer to appendix 9)
58
Fig 16
59
consumer profiles Due to the complexity of consumer needs and demands a combination of demographic, psychographic and behavioural analysis has been applied to understand the target consumer.
Fig 17
60
Fig 18
61
6.14: branding guidelines
Fig 21
Fig 20 Fig 19
62
logo Clean Beauty Lab logo has been inspired by the periodic table due to the brand name and the educational value the brand aims to deliver through the brand’s communication channels. The brand logo and colour scheme was tested in a focus group with the target consumer. 7 out of 9 participants opted for the chosen colour scheme and all participants strongly preferred the logo shown (refer to appendix 7). “Number 2 ... very unique and nice take on the periodic table.” (refer to appendix 7)
colour palette A colour palette of red, pink and green has been chosen as the brand’s primary colours to represent a bold, modern and feminine approach to natural beauty. As identified in Stage 1 Key Insights, brand image is often prioritised when purchasing beauty products and in the UK natural beauty is perceived as targeting an environmental and health conscious consumer. Testing the colour palette was important to ensure the brand identity resonates with young female Millennials. Colour inspiration has come from level 2 competitors who have a strong brand appeal with female Millennials specifically for their use of “millennial pink” across their packaging and communication channels.
tone of voice It is important that the brand’s tone of voice is consistent across all touch-points both online and offline to effectively communicate the brand’s core values and personality. Clean Beauty Lab aims to encourage a change in consumption habits of young female Millennials, therefore communicating bold and inspiring messages and imagery is key to creating a community of like-minded individuals who are aspiring towards cleaner beauty consumption.
Bold, playful, conversational, feminine, inspiring, encouraging
63
64
chapter 7: marketing strategy
65
7.1: marketing mix product as each formula combination will require individual development. Continuous investment will be key for new product innovation and brand growth. This decision was further validated by the founder of Formula Botanica as a strategically smart decision:
The top 3 skincare products that the target audience would like to personalise and cocreate were identified as a Moisturiser, Cleanser and Face-mask (refer to appendix 6). Furthermore, there has been increase in penetration of moisturisers with 61% of young Millennials using moisturisers (Mintel, 2018).
“I also really like the idea of you starting with one product and the reason I say that is because it’s not cheap to start a beauty brand…Launching with one is very smart and launching with a capsule range of three is very smart.” (refer to appendix 5)
Based on these findings Clean Beauty Lab will launch with a moisturiser offering consumers 9 possible formula combinations (3 skin types x 3 skin concerns) in the first year. Product range will be expanded to 3 products over 3 years due to high product development costs
Fig 22
Example of personal formula combination Step 1 - product type: Moisturiser (universal base formulated with natural ingredients) Step 2 - Skin type: Dry skin (Avocado oil)
+
Step 3 - Skin concern: Blemishes and spots (Japanese green tea) 66
“87% of Millennials consider catering to skin type and concern as an important factor.” - (refer to appendix 1)
The top 3 skin concerns amongst young Millennials was identified as “pores & blackheads”, “blemishes & spots” and “scarring & uneven skin texture” (refer to appendix 6); products will target these concerns in combination with the top 3 skin types — “dry”, “oily” and “sensitive”.
Key natural ingredients dry
sensitive
Skin type
Fig 23
oily
Blemishes & spots
Scarring & uneven skin texture
Fig 24
Skin concern
Pores & blackheads
67
Committed to clean beauty, Clean beauty lab’s products will be formulated without:
- Parabens - Animal by-products - Sodium lauryl sulfate (SLs/ Sodium laureth sulfate (SLES) - Polyethylene/PEGs - Petroleum - Artificial Fragrance - Phthalates - Formaldehyde - Oxybenzone 68
“41% of young Millennials rate “cruelty -free” as an important factor when purchasing skincare.” - (refer to appendix 1)
certifications Products will be certified cruelty-free with Leaping Bunny and registered with the Vegan Society allowing these certifications to be included in product labelling. This further communicates the brand values to the consumer as an honest brand committed to clean skincare.
packaging Aligning with the brand’s commitment to clean beauty, product packaging will environmentally friendly using bio-plastic sugarcane tubes. Similar to traditional plastic tubes, sugarcane tubes are renewable raw materials with low carbon footprint emissions and 100% recyclable. Suitable for personal care and cosmetics packaging, they are currently used by level 2 competitor Bybi. Clean Beauty Lab will offer “Instagrammable” packaging incorporating the “Millennial pink” hue which has been successful amongst Level 2 competitors.
Fig 25
69
process
Fig 26
70
Fig 27
AI (Artificial Intelligence) feature Clean Beauty Lab will incorporate an algorithm within the website to match consumers to accurate products and workshops addressing their skin needs for a highly personalised experience. This is a key feature to maximise as both primary research and Stage 1 insight 5 showed the significant importance of providing eicacious products to gain loyalty.
71
price Revenue streams
Price points
Value to consumer
£20
Although a higher price point than conventional brands e.g. Nivea, consumers are receiving a product personalised to their skin needs with naturally derived ingredients at a cheaper price point than existing competitors. Future product launches will be priced at a similar price point of mid range to ensure price satisfaction amongst Millennials.
£40 per workshop
Consumers will benefit from educational insights regarding their skin and ingredient knowledge alongside a free mini-sized product they cocreate using materials and equipment supplied within the worksop.
Moisturiser
2 hour workshops
Table 4: Revenue streams and price points Clean Beauty Lab will operate within a price point similar to competitor Emulsion. Price satisfaction was validated through primary research with 58% of consumers willing to pay £10-£20* (Refer to appendix 1) for facial skincare and 95% would pay between £30£50** for a workshop experience (Refer to appendix 6). * based on percentages added together for top 2 preferred price ranges (options 2 & 3) and price points of Level 2 competitors who have been successful amongst Millennials. ** based on percentages added together for most preferred price ranges of £30-£40 and £40-£50.
72
place Clean Beauty Lab will operate both online and offline. A physical retail presence remains significantly important within the beauty sector as
The pop up will be based in Covent Garden due to the vast number of existing standalone beauty and skincare boutiques than any other place in London. Deemed as London’s Beauty Quarter, Forbes states that
“Female shoppers overwhelmingly want to see, touch and feel products before buying them.” (Wray, 2018).
“this is the place to come if you want to be at the forefront of the beauty industry.” (Clarke, 2017).
Furthermore supporting the merging of an online/offline experience, Mintel reports that many Millennials will browse online but will go into store to try products on, thus creating a sensory experience in-store will appeal to them the most (Mintel, 2018). Choosing a popup for an experiential retail concept is an
Convent Garden also has an established customer base for youthful brands (London & Partners, 2014), thus making it the most appropriate location for Clean Beauty Lab based on the brand’s target audience and product offering. As city centre living is popular with this demographic, Clean Beauty Lab will seek to expand in major UK cities over the 3 year growth strategy.
“ideal entry point for a young, small business – long-term commitment free, cheap and cheerful while retaining an exclusive and scarce feel for consumers.” - (Somerville, 2018).
Pop-up location justification Scoring second place in the top cities for Millennials to live in within the UK (Levine, 2019), the chosen city to launch the pop-up is London.
73
pop-up aesthetics & floor plan
Fig 33
Fig 28
Fig 30
Fig 29
Fig 31
Fig 32
Open workshop space encouraging conversation, cocreativeness and community
Lab aesthetics - pink lab coats, tiled floor and walls, glass beakers etc reinforcing educational element; consistent with brand logo
Use of brand’s primary colours to communicate a playful, bold, modern approach to natural beauty
Bold & graphic signage around the pop-up with empowering messages following brand’s tone of voice
74
Fig 34
Fig 37
Fig 38
Fig 35
Fig 39
Fig 36
Fig 43
Fig 40
Fig 42
Fig 41
75
promotion A combination of bought, owned and earned media will be used to build initial brand awareness and engagement, relying more heavily on earned media such as peer-topeer referrals and word-of-mouth marketing (WOM), which drives 4 times better results than paid media (Sproutsocial, 2019). Where bought/owned media is being used, it is important that the content is relatable to the target audience in order to gain competitive advantage, maximum exposure and acquire customer loyalty. Furthermore, 74% of consumers agree that “friends & family” would strongly influence their decision to try new skincare products (refer to appendix 6) and all participants in the initial focus group agree that an influencer of no relevance would put them off: “Yeah word of mouth more than anything. Maybe if you do find someone who does represent it, like a blogger who is into natural ingredients etc but not just anyone because I wouldn’t believe it.” (refer to appendix 4) Communication channels and promotional activity will be discussed further in the communication strategy.
76
7.2: growth objectives 1. Successfully penetrate the UK natural beauty market within 3 years and increase market share by a minimum of 10% year on year. 2. Create strong brand saliency over 3 years amongst the core target audience by continually differentiating product offering through new product development.
77
7.3: growth strategy ansoff matrix Assuming Clean Beauty Lab is successful within the first year of launching, an Ansoff Matrix has been used to determine the brand’s growth strategy, focusing on ‘Market Penetration’ and ‘Product Development’.
Existing markets
Existing Products
New products
Market Penetration:
Product Development:
selling existing products into existing markets.
introduce new products into existing markets.
A low risk strategy aiming to increase the brand’s market share within the natural beauty sector through marketing activities and popup’s to drive an increase in volume of sales.
Considered slightly risker due to the dependency of internal capabilities to drive new innovative products and insights into customer needs to appeal to the existing market.
Market Development
Diversification
New markets Table 5: ANSOFF Matrix
Product development
Market penetration
A suitable strategy to adopt in order to differentiate the brand from competitors and remain relevant to consumers. Furthermore primary research and stage 1 highlighted the need for continuous product development within the beauty sector to build brand loyalty.
As the brand is entering a growing market, market penetration will support Clean Beauty Lab to secure dominance within the market.
78
Year 1: Launch and growing brand awareness The first year will focus on the brand launch and growing brand awareness within the market and amongst the target audience. The brand will launch online alongside an initial 3 month pop-up in Covent Garden offering workshops. Offering a pop-up for a short period of time allows the brand to test the success with the target audience, monitor attendance and collect consumer feedback regarding engagement and brand performance to inform development of further pop-ups.
To maximise awareness and success of the new product and pop-ups, a marketing campaign and event similar to Year 1 incorporating influencers will be implemented. The brand will aim to grow internally by hiring a marketing assistant to deliver effective campaigns and two store assistants; one each pop up to improve pop-up experiences.
Future growth (Year 4 onwards): Continued expansion and improve business operations and logistics
After the pop-up the rest of the year will focus on driving online sales and building a strong, community base. Continuous engagement across online channels will offer informative content and nurture conversations amongst users and the brand. A referral and reward program will be introduced to encourage new customer acquisitions and customer loyalty.
Once the brand has secured market share and established a strong financial position, Clean Beauty Lab can focus on improving business operations and logistics alongside continued expansion. More management roles can be implemented to delegate business operations and maximise employee productivity. Investing in Customer Relationship Management (CRM) will help optimise customer relations to improve loyalty and new acquisitions. Efficiency of deliveries and stock can be improved by investing in a bigger warehouse and employing more staff.
Year 2: New product development and building loyalty Product range will be expanded by introducing a cleanser. Another 3 month pop-up in London will run alongside the new product giving consumers a tangible and educational experience surrounding the new product. Financially, the business will seek to invest into product development therefore year 2 will rely more heavily on organic growth of brand awareness to develop meaningful relationships with customers and potential brand advocates. Content from Key Opinion Leaders (KOL’s) will be incorporated across online channels to provide educational and relatable content to the target audience.
The brand can continue to expand product range by offering more skincare products and introducing workshops/events discussing topics surrounding the natural beauty sector, and wider topics such as the environmental and ethical impact of beauty consumption resonating with the brand’s vision: “to build and empower a community of beauty enthusiasts with a desire to explore and engage in a cleaner and more honest approach to beauty.”
Year 3: New product development and UK expansion Year 3 will focus on the expansion of Clean Beauty Lab’s pop-up to Manchester and the introduction of a third product (face mask). Scaling a brand physically has more financial implications as oppose to online; expanding in the third year will minimise these implications as the brand will aim to have an established awareness and strong brand loyalty. Pop-up’s in both London and Manchester will increase consumers’ accessibility to workshops over a 6 month period.
79
80
chapter 8: communication strategy
81
8.1: communication objectives 1.
Generate strong brand awareness of Clean Beauty Lab amongst the target audience by achieving 20,000 followers on Instagram by the end of year 1.
2. Build a loyal community following of the brand by achieving a social media engagement rate of 4%+ consistently throughout the first 12 months. 3. Continuously drive traffic to the website by encouraging a change in consumption behaviour of young female Millennials through educational and appealing content throughout the first 12 months and thereafter.
Fig 44
82
8.2: AIDA & DRIP Model As highlighted within Stage 1 insights, brand image is often prioritised when purchasing beauty products. Creating a relatable brand image is key to dierentiating against competitors and creating positive brand perceptions amongst the target audience. The AIDA & DRIP model have been used to identify the cognitive stages a consumer will go through during the buying process thus informing communication activities to gain maximum exposure, engagement and encourage purchasing.
Fig 45: AIDA model
83
Fig 46: DRIP model
84
Fig 47
85
Fig 48
86
8.3: offline channels pop-ups Although a stream of revenue and mainly incorporated within the strategic planning of the business, pop up’s will also aim to drive traffic and engagement to the website and further transactions.
packaging “Instagrammable” branded packaging has given a rise to “unboxing experiences”, creating fully branded post purchase experiences encouraging millennial consumers to share online thus creating organic awareness and UGC for the brand.
Fig 49
Fig 50
Fig 51
87
“72% of millennials take product recommendations through content on Instagram.” - (Sonsev, 2018).
8.4: online channels Instagram Instagram will be leading platform for communication as primary research revealed that 93% of young female Millennials use Instagram to engage with beauty (refer to appendix 6). When asked what platform they are most likely to share the brand experience on, 86% answered Instagram (refer to appendix 6) reiterating the significant importance of this platform amongst the target audience.
(UGC): UGC will take a consumer-centric approach to build an active community and create an authentic brand image aligning with consumer needs for honest and transparent communication (Stage 1 key insight 6). Brand users will be encouraged to share their brand experience of products and workshops using the #Cleanbeautylab to create UGC which will be reposted by the brand.
Following the brand’s tone of voice a combination of created and UGC will be used on Instagram to communicate educational and inspirational content to inform, encourage peer-to-peer conversations and drive traffic to the website. Secondary data from a study conducted by Comscore states that: “brand engagement rises by 28% when consumers are exposed to a mixture of professional marketing content and UGC.” (Cahill, 2018).
Created content: Will provide consumers with knowledge and education about skin health, ingredients and raise awareness about the natural beauty sector, thus informing purchasing decisions and encouraging a change in purchasing behaviour towards clean beauty.
88
Fig 52
89
“17% of young Millennials use e-mails to engage with beauty� - (refer to appendix 6)
90
e-mails E-mail marketing will support online communication to engage customers and potential customers with the brand. Email marketing is considered “the most effective channel to attract, engage, and connect with an audience to drive sales and revenue for your business.” (Campaign Monitor, 2019). E-mails will aim to drive online sales and workshop bookings which can be monitored by measuring click-through rates. Using customer data will create highly personalised and hypertargeted communication for significant ROI. Following an Integrated Communication Mix (ICM), Clean Beauty Lab will ensure email content is consistent with content across all communication tools.
8.5: Communication tactics Referral & Reward scheme “People are twice as likely to pay attention to referrals from a friend.” (Veerasamy, 2019). Stage 1 insights highlighted the importance of rewarding incentives to gain loyalty in an oversaturated market. 54% of consumers agreed they would share this brand with friends and family (refer to appendix 6) providing an opportunity to introduce an engaging referral and reward scheme for authentic and effective WOM marketing and new customer acquisitions. Furthermore, the second focus group concluded a referral/ reward scheme would increase the frequency of attending workshops and sharing the brand experience (refer to appendix 7).
Referral scheme: Refer a friend and give them 10% off their first workshop or product and to say thanks we’ll give you 10% off too!
Reviews To further encourage WOM marketing, Clean Beauty Lab will incorporate customer reviews across online channels providing relatable information to prospective customers, encouraging purchasing decisions.
91
Fig 53
92
“69% of young female millennials agree that influencers addressing similar issues to themselves influence their purchasing decisions for skincare.” - (refer to appendix 6)
Sk-Influencers microinfluencers
KOL’s
Micro-influencers
Brand advocates
Micro influencers are defined as individuals curating content around a specific niche or market with a following between 1,00050,000. The benefits of incorporating micrinfluencers include higher engagement rates (average rate = 3.5%), cost efficiency and higher conversion rates (Anderson, 2019). With a smaller audience, a more personal interaction can be developed between the consumer and influencer thus resulting in more trustworthy and relatable recommendations for the consumer.
to provide collaborative credible educational content across online channels. E.g. Q&A sessions on Instagram stories. KOL ’s are defined as subject experts with credible knowledge who may or may not have a social following (Influencer Marketing Hub, 2019).
KOl’s
Brand advocates
Initially there will be no monetary exchange between the brand and KOL’s with the hope to acquire these opinions due to the mutual interest of educating consumers with reputable information on skincare and ingredients.
As the brand relies heavily on earned media, brand advocates will be identified as loyal customers once initial brand awareness has been established. Acknowledging their support for Clean Beauty Lab, brand advocates will be incorporated within communication strategies (e.g. using feedback for further product development) to act as influential peers towards potential customers encouraging engagement, sales and expansion of a community base.
Whilst influencers are important with Millennials, many look to those in authority for professional advice and credible claims (Mintel, 2018). Supporting this insight primary research found that 60% of consumers seek advice from industry professionals (refer to appendix 6). Clean Beauty Lab will aim to build strategic relationships with KOL’s such as dermatologists, chemists and formulators
93
8.6: brand Launch Based on the brand’s commitment to clean beauty, the brand will launch in April which is officially known as Earth Month. A strategic launch campaign incorporating influencer and social media marketing will aim to generate maximum brand awareness. The brand launch will be managed externally by influencer marketing agency, SEEN Connects who will oversee event and campaign planning, liaising with third parties, outreaching to relevant influencers and journalists to encourage organic press coverage and monitoring campaign success which has been validated in an interview with their senior account manger (refer to appendix 10).
with influencers through a personal, tangible and social interaction with the aim of securing 4 influencers (see launch campaign) to work with for the launch campaign. Influencers will be encouraged to share the event and their experience of the brand online with the aim of attracting potential customers and raising initial brand awareness amongst the target audience prior to the official launch of the website and pop-up.
Launch campaign
After the event a social media campaign incorporating influencers will aim to increase awareness and drive engagement around the official launch. The campaign will focus on sharing the skin benefits of the natural ingredients in brand’s products through educational and aspirational messages. This will aim to encourage and empower consumers to make a change towards clean skincare by purchasing brand products and workshops and further sharing this experience online with the campaign hashtag.
Pre-launch event
A brand activation event inviting 10 relevant influencers to a free workshop at the pop-up lab where influencers will be introduced to the brand, brand values, mission, vision, USP and core product offering. The event will aim to actively communicate the brand and create genuine connections
94
Launch campaign overview Campaign name:
You Glow Girl
Hashtag:
#youglowgirl
PLatforms:
predominately influencers’ and brand’s instagram.
Frequency of posts:
2 posts per influencer each month of campaign (8 per month)
KPI’S:
Number of times hashtag is used, number of followers gained, engagement levels, brand mentions, workshops/product sales.
Activity:
4 micro influencers will be contracted to share their experience of products and workshops and why they prefer natural ingredients in their beauty routines. They will create a discussion around the ingredients in their personalised products and how it benefits their skin type and concern creating relatable content for followers. A competition will run alongside the campaign for one consumer to win a free workshop for themselves and a friend each month of the campaign to encourage engagement and referrals.
Table 6: Launch campaign overview
95
influencers The following micro-influencers have been chosen to secure for the campaign based on their demographics, high engagement rates and similarity of content as the brand’s values enabling consumers to relate to the influencer and create an authentic brand image. (Refer to appendix 11 for influencers’ engagement rates)
Bambidoesbeauty
Fig 54
Fig 55
Engagement rate: 4.47%
Fig 56
Readyzenglow
Fig 57
Fig 58
Engagement rate: 11.40%
Fig 59
96
Roadtoglow
Fig 60
Fig 61
Engagement rate: 3.31%
Fig 62
Onebeautifuljunkie
Fig 63
Fig 64 Fig 65
Engagement rate: 6.88% 97
Fig 66
8.7: year 1 Communication tactical plan
98
8.8: year 2 & 3 communication overview Communication activities in year 2 and 3 will be dependent on the performance in year 1 and following years’ objectives. Marketing campaigns will align with product launches and pop-up expansions following a similar strategy of incorporating micro-influencers. The brand will predominately focus on strengthening brand advocacy, building relationships with KOL’s and pushing the reward and referral scheme to encourage loyalty, acquisition of new customers and growing organic awareness.
Fig 67
99
100
chapter 9: financial outlook
101
9.1: Sourcing initial investment Start-up costs
An initial investment of £100,000 is needed to cover start-up costs and oversee the implementation of the concept (refer to appendix 11 for cost breakdown). The most significant costs include product development, website development and marketing due to the high start-up costs of the pop-up. As fundamental elements of Clean Beauty Lab’s USP and core offering, it is important these elements are developed to a highly effective standard.
Clean Beauty Lab seeks to raise investment from 3 sources including: • • •
The Virgin Start-up Loan Crowdcube crowdfunding Friends and Family
Taking a combined approach from a variety of reputable sources allows the overall cost to be split into smaller achievable goals.
102
Virgin Start-up Loan Specifically designed for businesses two years old or less, the loan offers between £500£25,000 which is repayable over 5 years with a fixed interest rate of 6% and 12 months of business advice, support and discounts to help launch and scale the business through peer-topeer mentoring. This method was chosen based on the success of Level 2 competitor Bybi who successfully acquired £50,000 (£25,000 per co-founder) during the early stages of their brand (Cox, 2017).
investment required: £25,000
Crowdcube crowdfunding Crowdcube is an equity based crowdfunding platform for UK based limited start-ups that is data driven resulting in high success rates with the average pitch reaching their full target in 22 days. The average amount raised by start-ups is £670,000; due to the small raise required, Clean Beauty Lab will offer investors 5% in equity. The platform offers appropriate resources and guidance for pitch creation and promotion to maximise funding success.
investment required: £70,000
Friends and Family (AKA Love Money) A further small investment will be raised from friends and family to help fund the business with no fixed repayment terms.
investment required: £5,000
103
9.2: Year 1-3 sales forecast A 3 year sales and revenue forecast has been strategically calculated using a top-down approach to project potential growth and profit of Clean Beauty Lab’s product range online. Sales have been forecasted based on website traffic rate (visitors per month) and conversion rates* to calculate the monthly number of units sold. Initial traffic rate is based on level 2 competitor, Herbivore Botanicals’ visitors per month (21,712) (SimilarWeb, 2019), with the assumption of driving 10% of this figure in the launch month (April) as Herbivore Botanical has higher brand awareness and engagement
amongst the target audience. Traffic growth rate** has been calculated between in accordance with the brand’s marketing activities and product launches. Aligning with the growth strategy of introducing 3 products over 3 years, the sales forecast has calculated the potential number of units and revenue for each product. *average conversion rate of beauty sites = 12.5% (Saleh, 2018) **average traffic growth rate per month = 1020% (Geckoboard, 2019)
Year 1: Moisturiser (RRP £20)
•
May - June: 20% increase each month due to launch campaign and awareness from pop-up.
•
September - October: 15% increase both months when referral and reward program launches in September encouraging repeat and new visitors.
•
November - December: 20% increase over seasonal period which is considered a peak selling time for the beauty category.
104
Year 2: Moisturiser (RRP £20) & Cleanser (RRP £15)
•
January - May: Steady 15% increase in traffic per month pushed by reward and referral program, KOL’s and maximum brand interaction with consumers across online channels to grow organic awareness.
London from October to December. Steady 20% till end of the year due to continued marketing activities, awareness from popups and the seasonal period.
•
June - August: 20% increase from June due to social media marketing (competition giveaway) to drive traffic and new customers.
•
September - December: 20% increase due to email and social media marketing activities in September to raise awareness of new product launch and second pop-up in
The second product launch (cleanser) units are based on the number of units sold in first year for the first product. The launch figure is almost double for the cleanser as there is already brand awareness and engagement in second year.
Year 3: Moisturiser (RRP £20), Cleanser (RRP £15) & Face Mask (RRP £18)
105
•
January - May: Maintain a steady increase in traffic of 15% mainly due to repeat visitors from established awareness.
•
June - December: 20% increase in June due to marketing campaign and event similar to brand launch to promote new product launch and a 6 month pop-up in both London and expansion to Manchester. Steady 20% increase till end of the year due to awareness from both pop-ups, online marketing campaign and seasonal period.
It has been assumed that all 10 spaces at all pop-ups will be booked based on high consumer interest in the concept as identified in Chapter 6. This assumption provided clear projections of both the cost and revenue from pop-ups. Conversion of footfall wasn’t calculated as pop-ups do not sell products directly to the consumer. Any workshops booked during visits will drive traffic to the website which has been reflected in the sales forecast during the months that pop-ups operate over 3 years.
The cleanser continues to grow in units based on growth rate of the first product launch. Third product launch (face mask) starts at 545 units due to established brand awareness and brand advocacy in third year. However a slower pace of growth is predicted as a face mask is not generally bought as frequently as the first two products.
106
9.3: Year 1-3 Profit and Loss
Aligning with the first three years of the growth strategy, a thorough three year profit and loss has been calculated based on the projected sales forecast (refer to appendix 12 for a month by month breakdown of year 1-3). Despite a significant loss in first year, Clean Beauty Lab is projected to be profitable within it’s second year of trading with the ability to repay outstanding payments on loans from first year. Assuming the business performs accordingly, Clean Beauty Lab will breakeven within the second year placing the business
in a strong financial position to reinvest profit to fund product development and pop-up expansion in second and third year supporting the brand’s objective: “To develop a range of innovative products and expand pop-up locations within the UK.” The third year profit and loss reflects a healthy projected net profit of £3,500,039 from combined revenue streams, putting the brand in a promising position for any further investment required for further growth and expansion.
107
9.4: Year 1-3 sensitivity analysis
To understand financial sensitivity of the business, a sensitivity analysis test incurring a 20% increase and decrease in the number of units sold per year was calculated (refer to appendix 13). Understanding the impact this has on sales and net profit will allow
the business to prepare contingency plans accordingly. Due to high start-up costs the business operates at a loss in year 1 despite a 20% increase in revenue, however the business is still profitable by the second year with either a 20% increase or decrease.
9.5: Year 1 cash flow projection
A detailed cash flow for year 1 projects cash inflow and outflow each month. Initially, the cash flow projection highlighted a negative closing balance from September to November with the initial investment of £100,000 (refer to appendix 14 for cashflow forecast with one injection of £100k). Based on the projected net profit of year two and three, Clean Beauty
Lab will seek a small bank loan from HSBC of £6,000 in September to maintain a positive cash flow. HSBC offers Small Business Loans between £1,000-£25,000 with fixed interest rates lower than other banks and a repayment term up to 10 years with the option to defer the first payment for 3 months.
108
9.6: Year 1-3 marketing budget
Although a significant amount is spent on marketing activities in year 1, the start-up and running costs of the pop-up are included in the budget. Pop-ups are a core part of the brand’s product offering and the Year 1 profit and loss highlights the monthly cost of running a pop-up as £11,742 with a monthly revenue of £22,440 therefore a positive ROI is gained (refer to appendix 12).
and using owned and earned media for organic growth. Furthermore, year 3 shows an increase in marketing expenses in accordance to an increase in the budget which will be used for a campaign and event similar to Year 1 to maximise promotion and expansion of Clean Beauty Lab to Manchester.
Year 2 is predicted to have the lowest marketing expenses as the business will focus heavily on investing profit into new product development
109
110
chapter 10: Business operations and logistics
111
10.1: Business Implementation timeline A critical path informed by industry professionals (refer to appendix 5 & 15) outlines the activities to be undertaken prior to launching Clean Beauty Lab with an estimation of 18 months to implement the business from concept development to launch. Eective launch date: April 2021.
112
10.2: Key roles and responsibilities role
Responsibilities Oversee all business decisions and management of business.
Business director
Warehouse management
1 manager to oversee warehouse operations to ensure stock and delivery is managed efficiently. 3 assistants to support warehouse operations 7 days a week.
Warehouse assistants
Marketing & social media interns
Store manager
Trained formulators
2 interns every six months after launch to support the business director in planning and creating content and campaigns for online channels. Oversee the day-to-day running of pop-ups and provide effective customer service and brand knowledge. Deliver engaging, educational workshops and monitor product creation to ensure all health and safety regulations are met to eliminate risks and ensure products are safe to use. Two formulators will be trained in basic natural skincare formulations through School of Natural Skincare - a UK based accredited online school prior to launch.
Table 7: Outline of key roles and responsibilities All staff hours and wages have been included in the financial projections (refer to appendix 11 for cost breakdown).
10.3: Pop-up logistics •
2 pre-booked workshops each day with 10 spaces per workshop; open to the wider public to explore and engage with the brand.
•
Visitors can book in for workshops whist in-store browsing via an iPad; as spaces are limited workshops must be booked a minimum 1 week in advance providing the brand with adequate time to organise appropriate ingredients and supplies if needed.
•
113
Open 7 days a week between 10am - 4pm and will require approximately 700 sq ft with an area designated for workshops, storage space for equipment and ingredients and room to browse.
10.4: risk assessment
A risk assessment has been undertaken to understand the internal and external factors that may aect the business allowing contingency tactics to be planned to prevent risk.
114
risk factor
Projected revenue may not be reached
Initial investment may be not secured
Reactions/injury to products consumed
External formulator may share product formulas
Pop-up and product development delays
Level of risk
Prevention
Medium
A top-down approach was undertaken to predict a sales forecast aligning with average growth rates and justified periods of growth. A sensitivity analysis test was used to project revenue should the business incur a 20% increase or decrease in sales.
Medium
Various reputable sources have been identified with justification. Should the business fail to obtain £25K from Virgin Startup Loans, this can be raised in crowdfunding as the current amount required is well below the average amount.
Low
Rigorous product testing has been accounted for within the implementation timeline and product development costs prior to launching to ensure all EU health and safety legislations are met. Workshop spaces will follow Good Manufacturing Practice (GMP).
Low
A Non-Disclosure Agreement (NDA) will be required from the formulator prior to product formulating protecting the brand’s formulas.
High
Unforeseen circumstances can be expected, however a realistic critical path of 18 months has been outlined with the guidance of an industry professional.
Medium
Due to experiential nature of popups and limited product range in year 1, repeat visits may not be likely. This has been considered with a short operating period for pop-ups which does not expand till the third year with more product offering. A referral and reward program will be introduced to encourage repeat visits which has been validated in primary research.
Lack of repeat visits to pop-ups
Table 8: Risk Assessment
115
10.5: KPI’s
“A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives” (Klipfolio, 2019). The overall business objectives will be met through successful implementation of the strategic and communication objectives. The following KPI’s will used to measure the effectiveness of the business’ strategies which will inform strategic direction going forward.
116
Objectives
KPI’S
Growth •
Successfully penetrate the UK natural beauty market within 3 years and increase market share by 10% year on year.
Percentage of market share can be assessed by measuring and comparing the number of sales generated from products online and pop-up locations each year to determine if market share has increased or decreased.
•
Create strong brand saliency over 3 years amongst the core target audience by continually differentiating product offering through new product development.
Brand saliency can be monitored through brand interaction and perception tracking metrics (e.g. product reviews) of product offering over 3 years to provide strategic direction for further product development.
Communication •
Generate strong brand Regularly measuring the growth of followers in accordance awareness of Clean with communication initiatives. Also measuring the reach and Beauty Lab amongst the impression of posts to understand the number of people the core target consumer by content is reaching and how many times and whether this achieving 20,000 followers aligns positively with the number of followers. on Instagram by the end of year 1.
•
Build a loyal community following of the brand by achieving a social media engagement rate of 4%+ consistently throughout the first 12 months.
Measuring the number of likes, comments, mentions and shares of posts and hashtags as will provide an indication of engagement rates amongst consumers informing the content and direction of future marketing activities.
•
Continuously drive traffic to the website by encouraging a change in consumption behaviour of young female Millennials through educational and appealing content throughout the first 12 months and thereafter.
Measuring the click through rate from online channels to understand how effectively marketing activities are driving traffic to the website and conversion rates and ultimately impacting the volume of sales.
Table 9: Measures of success
117
118
chapter 11: conclusion
119
conclusion To conclude, the proposal has eectively realised an innovative, commercially viable concept for the natural beauty market based on critical insights from previous bodies of research. An in-depth analysis of the internal and external environment has been undertaken with consideration of both potential rewards and risks of implementing Clean Beauty Lab to critically evaluate the longevity and financial prospect of the proposed concept within the U.K market. A strategic growth strategy has been proposed based on justified financial projections for the first 3 years of operating supported with an engaging communication strategy highlighting marketing initiatives appropriate for the target audience to maximise brand engagement, awareness and market penetration. The main limitation of the proposal is financial projections; whilst a strategic approach has been applied, knowledge in this subject area is limited. Should this proposal be taken further, it is advised that this section is revised by an individual with financial expertise. Overall, Clean Beauty Lab is an innovative and engaging concept oering young female millennials a solution to bridge the gap between their intention to purchase clean skincare and actually purchasing through an educational, immersive and personal experience.
120
Fig 68
121
122
chapter 12: References and Bibliography
123
References
124
125
126
127
128
129
Bibliography
130
131
132
133
134
135
136
137
138
139
140
Image references
141
142
143
144
145
146
147
148