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BMP5005
UK
University of Bolton
Initiating a start-up requires a lot of research and strategic planning. Entrepreneurship represents the activity of creating and setting up a business while taking a financial risk for the objective of gaining profit and gain value that are usually economic ones. The purpose of the report is to introduce one of the innovative product and service to the market. The selected business idea for this report discussion is organic skincare products. The name of the business is SkinPray, depicting the goodness of skin with organic ingredients and self-care (Adam & Kotler, 2014).
The report will be focusing towards external and internal environment analysis to look out for the opportunity and identify the value of the opportunity to exploit and introduce a new product to the market.This business plan will be focusing towards strategizing production, financial and marketing strategy after analysing the factors that are responsible towards the opportunity identified and gained among the industry. For this some of the strategic managerial tools will be considered like swot analysis and porters five forces model to understand the business environment and plan the marketing and financial activities accordingly (Morris, 2005).
The problem identifies among the market and current market scenario is use of chemical products by some of the largest cosmetic brands. Moreover increase in pollution, busy lifestyle and excessive use of make-up products has led to damage or negatively impact the skin of individuals. In order to overcome skin issues that have been damaged due to pollution, increasing global warming, sunburn, busy lifestyle, outdoor activities and excessive use of make-up appropriate skin care regime is important. Moreover, the concern towards the natural skin is being increased and found among the trend, however the brands are offering chemical-based products, which eventually damages the skin further more in long run (Ahlin, 2014).
The opportunity that has been consider from the problem identification and analysis of the issue or customer demand. It has been identified that the consumers are more concerned towards their natural skincare rather than looking for chemical-based products. Moreover since the consumers are becoming more aware about the ingredients that may eventually harm or improve the condition of skin, it is important to focus towards ingredients rather than focusing towards the results. Therefore, the opportunity identify is to acknowledge offering skincare products that are not prepared with the help of chemicals rather use of organic ingredients like plant extracts, herbs and fruits. Moreover this opportunity also represents for the consumers to purchase a product that is premium in quality rather than only putting more chemicals in order to overcome the damage from existing chemical. The opportunity can also be justify by demand forecast of industry as per the market researchers, as presented below in United Kingdom. Moreover figure 2 depicts the increasing trend of organic skincare (Achinivu et al., 2017).
Looking out the opportunity, it can be said that it is important to identify the opportunity and threat that the company may face while working in skincare industry. The five forces that will be impacting the value of opportunity identify represents
The current skincare industry represents large number of companies working towards specific products that eventually increases the bargaining power of buyers. The reason being switching cost for the buyers are low that eventually impact them to try new skincare brand that increases the bargaining power of buyers. Therefore in order to reduce the bargaining power of buyers it is important to either consider cost leadership strategy or to consider product differentiation in order to offer such a unique and appropriate or suitable product to the consumers that they are not willing to switch even for the higher price (Bruns, 2013).
Suppliers could impact the profit margin of the company, specifically for a start-up. Since the company might not have major supplier relationships, supplier bargaining power could act as a major threat. However with the agile supply chain and operation strategy, the company could overcome this issue and reduce the threat. Therefore it can be said that bargaining power of suppliers reflects medium threat to the company (Asante & Affum, 2019).
The capital investment while entering into skincare and cosmetic industry is quite high. However, this is not too much for a company that is not able to enter into this industry. However, the restriction all the barriers for entering into this industry represents the legal restrictions due to safety and concern. Therefore it can be said that the threat of new entrants is medium. The company with new and innovative product might gain attention of the existing consumers and since the switching cost is low, threat of new entrants may possess some of the threat to the existing companies (Dewald & Osiyevskyy, 2015).
Substitute goods for SkinPray products are the natural products that could be used by the individuals at home. This may include using and preparing DIY, which is one of the trend in today’s scenario that might act as threat of substitute goods. However, due to busy lifestyle, and preparing DIY are not very convenient for most of the population, this may reduce the threat of substitute goods. Therefore it can be said that medium to lower threat is being possessed due to this force (Huggins & Thompson, 2015).
Skincare and cosmetic industry has been flooded since years. Some of the top companies in this industry are L’Oreal and Estee lauder. It can be said that the competitors for skin prick include one of the top companies like L’Oreal which has gained attention across the globe, and has been able to satisfy the consumers. However, more direct competitor to SkinPray is botanical‘s. This is one of the award-winning organic skin, Bath and body creations in United Kingdom. Botanicals beauty and wellness has all food products that are vegan friendly, organic and also cruelty free which acted as direct competitor for the company. In order to overcome the industry rivalry, the company needs to acknowledge product differentiation strategy and offer premium products that will gain competitive advantage over these close competitors (botanicals, 2021).
This represents strength, weakness, opportunity and threat of the company while analysing the factors that will be responsible towards gaining these opportunities.
Made of natural ingredients
One of the important strength for the company is that skincare products are made of the Natural ingredients. These ingredients will not be including use of herbicides, genetically modified organisms, synthetic fertilisers, any additives or chemicals and any pesticides.
The products prepared and market it will be organic skincare products which are not including harsh chemicals that may cause to allergic reactions, irritation or inflammation is. It can be said that use of organic product will lead to reduced issue of any allergic reactions.
The organic skincare product range will also be acted as environmental preserve wins. Organic products are usually grown naturally and use of Natural ingredients and do not leave a harmful footprint of environmental pollution particularly air, water and soil. Organic farming will also be responsible towards lower pollution from fertilisers and pesticides spray (Elfring & Hulsink, 2019).
Slow acting products
It has been identified that synthetic ingredients that are being part of cosmetic industry or non-organic products are responsible for fast acting and quick results. This could be one of the drawback For organic skincare product, as they are naturally acting on the skin and the results may not be visible immediately (Okpara, 2017).
In cosmetic industries there has been a company who has gained brand recognition and brand image across global market. Creating brand awareness for SkinPray could be one of the challenge and weaknesses.
COVID-19 pandemic has increased the consumer perception towards online market. Therefore considering service innovation and use of online channel strategy might act as one of the opportunity for the company (Morris et al., 2010).
Use of most suitable ingredients across the world like turmeric from Asian market, or aloe Vera from Indian market might act as appropriate ingredients, best suited for the skin care products.
Introducing innovative and new product with the use of organic ingredient, and come up with large number and variety of products that acted as a skincare regime will be considered. This new product development will also be Introduce new products with time by changing the key ingredients and focusing towards different skincare issues (Koryak, 2015).
With extensive service innovation strategy, the company could consider customised product range for the potential customer. This may include understanding the concern of the customer, and suggest right set of products that could healthier skincare issue. This offer creating a bundle for a particular customer after understanding their skin care issue or concern.
The changing consumer demand and perception towards globally recognised brand, or looking for fast acting Products may reduce the demand for SkinPray products acted as one of the threat.
There have been various companies like the body shop which has been working towards natural ingredients usage for manufacturing and marketing the products, eventually increases the competition to SkinPray (Coulson-Thomas, 2017).
Marketing strategy is most important for this company, as without brand awareness the company could not be able to increase customer attention or gain customer trust in order to offer premium products. Therefore the marketing strategy reflect marketing mix strategies as following
The product strategy will be focus towards product differentiation strategy and new product development strategy. The company will be considered five important ingredients in order to offer product range. The products will be bifurcated among these five ingredients that is orange representing the vitamin see goodness, turmeric, aloe Vera, lemon and Calendula. These five ingredients will act as the key ingredient for bundling a particular product range. This represent that five product ranges will be introduced, and products that will be provided to the consumers include bathing bar, face wash, face mist, face serum, face emulsion, face cream and face mask. All the ingredients will be focusing towards different concern of skincare for every individual, and by bundling particular increment among all these products lead to perfect skin care regime for the potential consumers. These ingredients will organic and naturally produced so as to increase the goodness and what is being observed among the skin is real and natural (Bruns, 2017).
Other than focusing towards product, the service strategy will also be considered. Here the service strategy will be creating customer relationship management while working with dermatologist and skincare experts to be advising and communicating with the potential consumers by offering them right set of products that they require for the skincare issue. 24 seven assistance by the skincare exports and advice to the potential consumers acted as the service innovation, that will eventually increases the differentiation strategy of the company and gain competitive advantage (Amabile & Rigolizzo, 2015).
As the company is been focusing towards premium products to offer the customer, however since the company‘s brand awareness is low. Market penetration strategy will be acknowledged. This represents that the company will introduce the product with comparatively low price in the market, however eventually Increases the price as the consumers loyalty towards the brand increases and the brand awareness is being increased.
This place most important role in the marketing strategy in today’s scenario, the reason being increase in pandemic across the world of Covid 19 has led to increasing demand towards online purchase. Therefore it is being considered that Business model of SkinPray will completely be depending on e-commerce platform. The company will not be considered brick and mortar business model, and rather completely be focusing towards online business model. The company will be using official website, application for iOS and android, and use of third-party online platform like Cosmopolitan in United Kingdom for reaching out the end users (Amabile & Rigolizzo, 2015).
This marketing strategy is also important in order to increase brand awareness, reaching out the potential audience with the appropriate communication strategy. The promotion for the company will be based on emotional message strategy. The message creation plays important role as this will focus towards gaining attention of the consumer. With environment friendly, organic and naturally processed products it is important to reach out the potential audience with emotional message strategy. Moreover the promotional tools used in order to communicate and advertise the brand and products include firstly, social media marketing. Social media marketing will be focusing towards optimising social media platform pages like Twitter account, Facebook, LinkedIn, Instagram and YouTube. Other than this social media influencing strategy will also be considered as part of communication strategy. The reason being in today’s scenario most of the people are looking for bloggers, listening to them and even trusting them on their opinion. Therefore the organic social media influencing other than per social media influencing strategy will be acknowledged by the company (Petersen & Kumar, 2015).
Secondly, search engine optimisation strategy will be considered by the brand in order to reach out the consumer. It has been identified that the people are directly looking for a product on search engines like Google search, and they are only interested in the pages that appears on the top 10 list of the search. Therefore it is important for the company to be in that top list of search engine in order to gain attention of the potential audience. This includes working with organic keyword SEO strategy, other than paid strategy. This includes pay per click tool in order to gain attention of the potential consumers. This eventually is responsible towards increasing the website visit and website traffic.
Content marketing strategy will be used. The content will include not only the blogs, the information about products, the reviews about products, additional purpose of using the product. It is important to reach out the consumer by making them understand why the organic ingredients are being used what skincare concerns that will be focusing and how it will be helpful for them in long run. With appropriate content introduced on website to make the website optimise, third-party influence that is introducing the content from third-party will be considered as part of this strategy (Ottman, 2017).
Email marketing strategy will also be used. This strategy will largely be focusing towards personalise and customise messages. The consumers will be introduced with the system of 24 seven assistance, with the assistance of dermatologist and skincare experts offering them right set of products to be purchased for their personal skincare by understanding their skin type and skin concern (Kannan, 2017).
The operational strategy will be focusing towards customer driven approaches for this business plan. It is important to identify the needs and desire of the target market in order to work with the development strategies of the company. The changing environment will continuously being identified in order to enhance the core competencies of the products. This represent that the additional ingredients will be research as per this strategy and innovation and new product development will be considered. Other than this supplier relationship strategy will be acknowledge. It is important to work on the agile supply chain management. The supply chain needs to be working with large number of suppliers in order to make sure that the suppliers do not have negotiating power and do not impact the profit margin of The Company. The development of products and services will be focusing towards innovation, creativity and designing while adding value for the consumers. Supply chain optimisation is one of the important strategies as part of production strategy. This will include push value adds services that will be focusing towards packaging and quality inception among the supply chain. It is important to reduce cost and however minimise the delay of the production in order to get product eventually to the customers (Kotler & Keller, 2015).
Financial strategy also plays most important role, as it is important to offer budget for the respective plans and activities to perform in order to introduce the brand. The budget that is being considered as the starter budget is £100000. This financial strategy represents the funding strategy as well. It has been identified that the company is working in small to medium scale working in United Kingdom. For this financing the project by taking small business loan from banks and family will be consider as part of financing strategy. However, The investor will basically be lending money to the entrepreneur for a given period, against a specific rate of interest and with the companies as it as part of the security. This financing strategy has its pros and cons, for instance some of the advantages while considering debt financing strategy is high-growth business. This is less expensive and therefore the interest payment of the business is also tax deductible, eventually offering high growth opportunity for the business. Moreover this has less management control. In equity financing the management control could be diluted, whereas in debt financing this is not being diluted. However some of the disadvantages might also include collateral that is certifying some of the assets of the company as security. Depending on debt financing might impact the lower cash flow because of interest payment and principal payment made on date. Other than this repayment is one of the disadvantage as the debt financing represent repay the money, whether or not the company is being successful or shutters, the debt still need to be paid (Greg, 2014).
From the report it can be concluded that the business opportunity in skin care and cosmetic industry has been identified. Considering the changing consumer trend and consumer demand towards natural products and increasing interest in skincare leads to the business idea. SkinPray comes up with organic skincare products using five important ingredients that we present five product ranges offered by the brand. The company will be using e-commerce platform in order to distribute the products and reach out the final audience. Moreover the company initial investment amount as per the financial plan included £100000. The company will be focusing towards premium quality production strategy, while considering customer driven approaches. The quality assurance will be part of production and operations strategy along with agile supply chain management strategy.
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