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Go-to-Market Go-to-Market StrategyStrategy
Presented by:Presented by:Kathleen CroninKathleen Cronin
16 September 200916 September 2009
Global Business Perspectives: Emerging Markets in BrazilGlobal Business Perspectives: Emerging Markets in Brazil
OverviewOverview
Objective: Determine feasibility of entering Brazilian market
Company & Product Overview Why Brazil Market & Environmental Analysis Customer Segmentation Recommendation Marketing Mix (4P’s) Implementation Plan Financials
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The Company: Bare Escentuals Inc.The Company: Bare Escentuals Inc.
Leading prestige cosmetic company in US
Innovator in mineral-based cosmetics
Develops, markets, and sells branded cosmetics and skincare products
Produces cosmetics with 100% all natural minerals
Appeals to public’s desire to have skincare and makeup in one product
International operations: United Kingdom, Ireland, Japan, and Germany
Retail contracts with department stores, home TV networks, spas & salons
Started: 1976 in Los Gatos, CA2008 Sales: $560M3,000 employees112 privately owned boutiques
Started: 1976 in Los Gatos, CA2008 Sales: $560M3,000 employees112 privately owned boutiques
3Worldwide Leader in Mineral Based Cosmetics
Bare Escentuals’ first product Most popular and profitable product line among consumers
bareMinerals was foundation that started Mineral Makeup Revolution
Top Selling Product sold on QVC
Bare Escentuals holds exclusive patent for extracting fine minerals used in bareMinerals
Complete line of loose, powder-like products that are 100% pure bareMinerals
The Product Line: bareMinerals®The Product Line: bareMinerals®
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Made with crushed minerals from the earth, 100% pure bareMinerals Ingredients include zinc oxide & titanium oxide – natural sunscreens, tints Ground into fine powder without preservatives, talc, fragrance Free of fillers and binders Weightless Provides adjustable coverable Improves the condition of skin over time Long Lasting - Stands up to heat and humidity
All skin types Especially those with skin sensitivities, allergies, scars, blemishes, rosacea and wrinkles
Foundation contains a natural SPF 15 sunscreen
Carries Skin Cancer Foundation Seal of Recommendation
The Product The Product
Pure Natural Make-up from Earth
Video: Customer TestimonialsVideo: Customer Testimonials
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Why Brazil? Why Now?Why Brazil? Why Now?
Ranks as the world’s third largest market for cosmetics– 18% growth from January to June 2009
– Color cosmetic sales expected to grow 19% over next 5 years
– Brazil to grow to be 2nd largest cosmetic market by 2011
Increase in niche cosmetic products to address consumer
demands
Very image conscious culture– Increase in life expectancy and the desire for elderly to look their best
Sustained strength of Brazilian economy
More women in the workforce
Fastest Growing Cosmetics Market Worldwide7
Market Potential ForecastMarket Potential Forecast
> 20% of total cosmetics market
Facial Make-Up Will Consist of 20% of Total Market8
External Analysis: Competitive MatrixExternal Analysis: Competitive Matrix
Avon Smooth MineralsBetter-than-bare beauty
The Company for women
NaturaBem estar bem
“Well being well”
O BoticárioSensitivity, Harmony & Beauty
%Mkt Share 34% Total Cosmetic Mkt Share 13% Total Mkt Share 8.3% Total Mkt Share
Strengths • High Brand recognition• Features: Sweat proof, skincare & makeup in 1 product• Strong infrastructure
• High Brazilian Brand recognition• Strong Distribution of Direct Sales method• Frequent release of new products
• Brazilian brand recognition• Most successful Franchise model in Brazil
Weaknesses • Broad product line; not focused on solely launching Smooth minerals in Brazil
• No dedicated product line to mineral cosmetic products
• Expensive• Not 100% pure mineral based
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Significant Opportunity for Mineral Based Products Due toHighly Saturated Market with Broad Range of Cosmetic Products
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Business Environment in BrazilBusiness Environment in Brazil Economic Forces
Strong economic growth GDP increasing at 5% Color cosmetics market increasing at 28% (YoY)
Rapid rise of middle class (Class C) From 36% of population in 2003 52% in 2009
Sales of personal beauty products increase during recession Exchange rate fluctuation risk
Legal & Political forces ANVISA (similar to FDA) approval required High import taxes (approx. 70%) Government bureaucracy Register trademark and patents with National Institute of Industrial Property
(INPI)
SWOT AnalysisSWOT Analysis
Strengths• #1 mineral cosmetic product in U.S.• U.S. Brand recognition• Unique product characteristics
– SPF– Mineral based– Weightless feel– Cosmetic & skin care combined– No preservatives
Opportunities• Ability to source raw materials &
manufacture in Brazil• 18% growth rate over next 5 years• Brazil-third largest cosmetic market• Growing spending power of women
Weaknesses• No Company Brand Recognition in
Brazil• Lack of knowledge of unique product
characteristics• High import taxes
Threats• Extremely saturated market• Customer mindset is high brand
loyalty to competitors• Complexity of ANVISA approval• Difficulty in forming relationships with
distributors
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Significant Market Potential for Mineral Cosmetics in Brazil
Market PenetrationMarket Penetration
Total Market (All Female)
Served Market
Share of Market
198.7MA/Bclass: 16%C: 52%D/E:32%
100.5M
45.2MAvg age 29 yrs
Female /A,B,C Classes/15-64 years of age
Female /B,C Classes/15-64 years of age/Interest in Mineral Facial Makeup
7M
Total Brazil Population (in Millions)
86% in Urban areas
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Customer Segmentation of Potential Buyers in Brazil Customer Segmentation of Potential Buyers in Brazil
SEGMENT DEMOGRAPHIC BENEFIT SOUGHT
1 Bio-DiversityEnvironmentally conscious
Age: 15-45University educatedLong-term thinkersMay already own other mineral based products
Ecological benefitsWant to show they are green, trendy, innovative, etc.Want to make a political statementContains vitamins & minerals
2 Trend Setters Age: 15-29InnovativeComfortable with new technologyLive in CitiesClears skin of acne
Embrace new technologyEducated about new cosmetic products, or become knowledgeable before purchase
3 Minimalist Age: 15+All-in-one makeup
Desire to save moneyLooking for one make-up that does all
4 Anti-Aging Age: 30+ Reduce wrinklesRemoves dead skinReduce Rosacea Breakouts
5 Sensitive Skin Age 15+ Hypo-allergenicClears skin of acne
13bareMinerals Addresses All Customer Segments
Target Segment & Value PropositionTarget Segment & Value Proposition
bareMinerals is superior to traditional cosmetic products because it provides the unique combination of cosmetics, skin care, and sun protection for women of all ages, using the highest quality minerals.
Target Segment: Urban females from 15-64 years of age in Class B & C income
levels
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Marketing Mix: The 4 PMarketing Mix: The 4 P’’ss
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Acquisition, Education, and RetentionAcquisition, Education, and Retention
Continued Consumer Education is Key to Growth16
Implementation TimelineImplementation Timeline
Customized Starter Kit with High Quality Accessories
Production in USA Promotion focus is on brand building
events: Makeup Sessions + Free Samples
Viral marketing through Orkut and other social media forums
Customized Starter Kit with High Quality Accessories
Production in USA Promotion focus is on brand building
events: Makeup Sessions + Free Samples
Viral marketing through Orkut and other social media forums
Reduce costs and taxes by using Contract Manufacturing
Online and Magazine Mass Advertisement
Possible introduction of new product lines and exploration of distribution channels through direct sales.
Reduce costs and taxes by using Contract Manufacturing
Online and Magazine Mass Advertisement
Possible introduction of new product lines and exploration of distribution channels through direct sales.
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Success MetricsSuccess Metrics
Short-Term: Repeat buyers Conversion rate from other brands Percentage of positive consumer feedback regarding the brand Feedback from partners and distributors Extent of viral marketing through Orkut and other online mediums
Long-Term: Reduction in Production Cost ROI on Advertising blitz Market Share (>6%)
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Projected Financials Projected Financials
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Healthy Profit Margins by 3rd Year
Break-Even AnalysisBreak-Even Analysis
Break-even point reached at 207,000 units sold and 2.88% market share 20
SummarySummary
Focused product satisfying multiple customer needs
Target segment: Urban females from 15-64 years of age in
Class B and C income levels
Fuse rapidly growing internet usage with social culture
through online distribution and marketing
Transition to domestic production to reduce costs and
increase profit margin
Provide Customer Experience is key to sales
Revolutionize the Brazilian Cosmetic Market Industry21
Obrigado! BackupObrigado! Backup
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Independent Clinical Results for bareMinerals®Independent Clinical Results for bareMinerals®
In clinical studies of women between the ages of 18 and 65 with various skin conditions who used bareMinerals for two weeks:
76% reported that bareMinerals has corrected and improved the appearance of their skin condition and:
Skin dehydration was improved by 75% Overall condition of the skin, smoothness, elasticity and texture was improved by 49% Redness was reduced by 31%
Over 80% of the women felt that bareMinerals is ideal for sensitive skin and noticed a reduction in the appearance of flaws and imperfections.
Over 75% of the women noticed an improvement in the appearance of their skin and saw a reduction in redness and irritation.
Over 70% of the women agreed that bareMinerals smoothes the appearance of fine lines and wrinkles and that with continued use, their skin was less irritated and they had fewer rosacea flare-ups.
Over 60% of the women agreed that with continued use, the appearance of their skin was improved and that they had fewer acne breakouts.
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Break-Even AnalysisBreak-Even Analysis
Fixed Costs (R$) 10,000,000Manufacturing Costs 30Promotional Costs 10Import Taxes (75%) 23Total Variable Costs 62ASP 99 Total Brasil Facial Makeup Market (2008 in R$) 700,486,000
Units Sold Total Revenue Fixed Costs Variable Costs Total Costs Total Profit Market Share0 0 10,000,000 0 10,000,000 (10,000,000) 0.00%
50,000 4,950,000 10,000,000 3,105,000 13,105,000 (8,155,000) 0.71%100,000 9,900,000 10,000,000 6,210,000 16,210,000 (6,310,000) 1.41%150,000 14,850,000 10,000,000 8,185,000 18,185,000 (3,335,000) 2.12%200,000 19,800,000 10,000,000 10,160,000 20,160,000 (360,000) 2.83%250,000 24,750,000 10,000,000 12,135,000 22,135,000 2,615,000 3.53%300,000 29,700,000 10,000,000 14,110,000 24,110,000 5,590,000 4.24%350,000 34,650,000 10,000,000 16,085,000 26,085,000 8,565,000 4.95%400,000 39,600,000 10,000,000 18,060,000 28,060,000 11,540,000 5.65%450,000 44,550,000 10,000,000 20,035,000 30,035,000 14,515,000 6.36%500,000 49,500,000 10,000,000 22,010,000 32,010,000 17,490,000 7.07%550,000 54,450,000 10,000,000 23,985,000 33,985,000 20,465,000 7.77%600,000 59,400,000 10,000,000 25,960,000 35,960,000 23,440,000 8.48%650,000 64,350,000 10,000,000 27,935,000 37,935,000 26,415,000 9.19%700,000 69,300,000 10,000,000 29,910,000 39,910,000 29,390,000 9.89%750,000 74,250,000 10,000,000 31,885,000 41,885,000 32,365,000 10.60%800,000 79,200,000 10,000,000 33,860,000 43,860,000 35,340,000 11.31%
Break-even point reached at 207,000 units sold and 2.88% market share
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2013 Market Size Forecast2013 Market Size Forecast
Facial Makeup consists of 20% of Total Market25
External Analysis: PorterExternal Analysis: Porter’’s 5 Forcess 5 Forces
Bargaining powerof suppliers
Low- Raw materials available through many
commodity suppliers
Bargaining powerof buyers
Medium- Price is set but Consumers have many
brands from which to choose
Threat of substitutesHigh-
Lack of educated market to understand benefits of
mineral makeup
Threat of new Entrants
High- Mineral makeup is the new growth area in
today’s cosmetics industry
Competitive Rivalry
High- there are multiple competitors that are large multi-national companies and high numbers of local
competitors
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