Human Nature Final Paper

De La Salle University Graduate School of Business STRATEGIC MARKETING (MMC502M) Term 2 (AY 2016 - 2017)

STRATEGIC MARKETING PLAN FINAL PAPER FOR

Submitted by: Flores, Claudette Trixia Licuanan, Adrianne Joy Miranda, Melissa Kathryn Tagle, Allaiza Jasmin

Submitted to: Dr. Regina Dy

April 4, 2017 EXECUTIVE SUMMARY

TABLE OF CONTENTS (include pages)

Executive Summary Table of Contents I.

Market Analysis A. Industry Analysis 1. Macro Analysis (PESTEL) B. Micro Analysis 1. Competitors and competitor analysis 2. Porter’s 5 forces 3. Pricing, Products, distribution and other promotional campaigns vs. your company C. Company Profile 1. Company History 2. Include current market position/ Market Share D. SWOT

II.

Goals and Objectives A. Marketing Plan goal B. STP – Define segment, Target and Positioning Demographic, Psychographic, Behavioral C. Goals Timetable (Short Term Goals -1 Year (Gantt Chart; Monthly for a year) Long Term Goals – 5 years)

III.

Marketing Strategies A. Marketing Communication Programs (Include all type of Promotion) B. Media Plan and Schedule (Gantt Chart)

IV.

Investment Plans A. Budgets B. Estimates of Profitability (Mini FS)

V.

Evaluation of Results A. Control Measures and Metrics (Measures of Profitability)

CHAPTER 1 MARKET ANALYSIS

I. Market Analysis

A. Industry Analysis Figure 1: Beauty and Personal Care by Category (Euromonitor International, 2017)

1. Macro Analysis (PESTEL) ●

Political The outlook in the UK and US continues to be downgraded over 2015-2020, to 1.5% and 2% respectively. The unpredictability of Trump’s presidency, and the UK’s likely exit from the EU’s Single Market and Customs Union, pose challenges for FMCG,

not least the beauty industry, to continue operating hurdle-free. The UK’s Cosmetic, Toiletry and Perfumery Association also warned about disruptions along the supply chain that may result in higher costs and potentially higher prices, even in the mass segment. The UK outlook is also prone to unsustainable levels of consumer debt, which is currently driving growth, but may falter in the near future. The UK outlook, combined with the sheer product choice, means that consumers have room to be highly rational. Some of the relative strength of colour cosmetics over skin care (Quarterly Update of 4.4% and 0.8% Compound Annual Growth Rates (CAGRs) respectively, over 20152020), results from consumers on tight budgets choosing make-up with skin care benefits, such as moisturising, and concurrently reducing expenditure on facial moisturisers (-0.5% CAGR over the same period). The price of complements is also expected to impact prospects, as the Forecast Model shows. Complementary products, such as mass face masks and facial cleansers, are expected to increase in price, thus depressing some of the future demand for skin care in the UK. In parallel, high competition coupled with lower consumer confidence means that brands will have to battle for less overall spending, expected to dampen demand over the forecast period. ●

Economic The quarterly update as of February 2017 reveals a worsening downgrade, albeit marginal, to the beauty and personal care growth forecasts (loss of 0.2 percentage points), with the forecast CAGR over 2015-2020 now standing at 2.7%. The slight downgrade reflects global headwinds that are deteriorating in core markets that have a significant bearing on the global prospects for the beauty and personal care industry. However, in the Philippines, with its growing economy, reflects the healthy and vigorous private consumption of its population in 2015, which benefited beauty and personal care. The said industry despite being affected by the country’s significant issues in 2015, still posted a steady growth of 4% to reach Ps160.8 billion. Due to the steady growth of the economy and the abundant supply of jobs, consumers enjoyed considerable disposable incomes to spend on fewer dependents per family. Huge allowances are now expected to be spent on brands perceived as being of a higher quality within beauty and personal care.

The changes in consumers’ lifestyles are triggering the consumption of products that are not apparently necessary and can be considered indulgent or even luxury, resulting in the further growth of categories catering to more specific, beneficial, sophisticated facets of beauty and personal care. Despite some categories in the market becoming mature, the increase in Filipinos’ allowances provides room for further growth and the development of niche products as demand rises through changing lifestyles. ●

Social According to a study by Barbalova, who manages the research programme for the global Cosmetics and Toiletries industry at Euromonitor International, consumers are becoming more focused on experiences, particularly as time has become a luxury commodity, as well as mindful enjoyment of life. Increasingly, how consumers feel is directly tied to beauty and mindfulness, which is about a more enjoyable lifestyle, improvement of aging and overall health. A subset of consumers are focused on the “new glamour,” epitomized by social media luminaries, such as Kim Kardashian. Also, certain brands found out and identified the “pure” trend, in which consumers look for perfection and focus on what is best in life. These consumers seek out new textures and sophisticated and refined products. Furthermore, these brands as well explored the implications of the “new feminist,” who is true to herself, looking for challenges and who views beauty as a personal, individualistic statement of strength.

●

Technological Cosmetics have existed in some form for thousands of years. Some date the use of beauty products as early 10,000 BC. The earliest documented use of cosmetics occurred around 4000 BC in ancient Egypt. The earliest beauty products included kohl for use around the eyes, rouge for cheeks and lips, white face paint, and oil perfumes Taylor, M. L., Coates, T. L., Anyansi-Archibong, C., & Norihito, T. (2013). But as the world continuously enters technological advancements and consumers become more exposed to information, their demands and lifestyle changes. Beauty players become increasingly focused on stronger digital engagement to reinforce transparency and provide consumers with access to additional ingredient information. Brands have also seen the need for ingredient innovations by creating more efficient products, as well as materials that can be applied to multi-step beauty rituals. In addition,

new launches highlight the importance of increasing the sensory experience through texture, color and other product aspects, as well as boosting the sustainability of beauty and personal care. Even experts begun to discuss the leveraging of personal data to create product recommendations or boost machine learning. More and more brands are using digital platforms to build R&D and brand intimacy. Meanwhile, new beauty devices are being introduced to allow consumers to self-analyze the condition of their skin. In the Philippines, beauty and personal care grew steadily in 2015. Increasing incomes among consumers paved the way to bigger opportunities, even for niche categories. As young consumers harness the power of digital technology, knowledge about products, brands and the benefits of using them was readily available and helped in pushing further growth for the category in 2015. ●

Environmental Consumers globally show a growing awareness of naturally derived ingredients as well a desire that products are sustainably produced, these concerns are primarily evident in most Asian markets. As technological, environmental and economic changes are increasing, demands for more naturally derived ingredients in beauty products is also growing. This industry-defining trend is consumers’ growing interest in natural, organic and ethical products –a widening spectrum of green beauty. In order to cope up with this growing trend where consumers demand for more information and to get more engaged not just with the health aspects of ingredients but also with their origin, processing and environmental footprint. Beauty players became increasingly focused on stronger digital engagement to reinforce transparency and provide consumers with access to additional ingredient information. This also had a huge impact on beauty and personal care companies that are into animal testing. In a database created by PETA, 30 personal care and beauty brands were listed as companies that includes animal testing as part of their procedures, Out of these 30 brands, 9 are top cosmetics brands. The organization encouraged consumers to be a part of an advocacy to stop animal cruelty in any forms and convince them not to utilize beauty and personal care products that have undergone animal testing.

On the other hand the organic personal care industry, including cosmetics or green beauty, is forecast to grow at a rate of 9.6%, reaching $13.2 billion by 2018, according to Transparency Market Research. By 2020, the market is expected to reach $15.98 billion, according to Grand View Research. Despite the 17% growth from 2018 to 2020 it is expected that market downgrades will continue due to global uncertainty. Furthermore, the lack of a standardised, globally accepted definition of such beauty category creates challenges both for consumers and manufacturers making it a challenge in predicting the beauty industry outlook. In most Asian countries, especially in the Philippines, where consumers are preoccupied with emerging beauty threats, for instance air pollution and UV exposure, ingredient companies are stepping up to offer marketers a new range of ingredients and claims. More and more companies are making safer cosmetics and personal care products that work just as well if not better than products made with toxic chemicals. ●

Legal The European Union, now 28 countries strong, has more stringent and protective laws for cosmetics than the United States. The hazard-based, precautionary approach of the EU acknowledges that chemicals linked to cancer and birth defects simply don’t belong in cosmetics – regardless of the concentration of the chemical being used. The EU Cosmetics Directive (76/768/EEC) was adopted in January 2003 and most recently revised in 2013. The EU law bans 1,328 chemicals from cosmetics that are known or suspected to cause cancer, genetic mutation, reproductive harm or birth defects. In comparison, the U.S. FDA has only banned or restricted 11 chemicals from cosmetics. Unlike the United States, EU law requires pre-market safety assessments of cosmetics, mandatory registration of cosmetic products, government authorization for the use of nanomaterials and prohibits animal testing for cosmetic purposes. Like UK, Canada also formed law in order to protect the safety of their people, which is known to be the Canadian cosmetics regulations. These regulations are said to be far more stricter than those in the United States. Health Canada, the federal department responsible for helping Canadians maintain and improve their health, regularly reviews the safety of cosmetic ingredients and prohibits or restricts the use of ingredients that present health risks, according to their website.

The Canadian

government regularly updates a Cosmetic Ingredient Hotlist that includes hundreds of

chemicals and contaminants prohibited and restricted from use in cosmetics such as formaldehyde, triclosan, selenium, nitrosamines and 1,4-dioxane — all of which are allowed in U.S. products. In addition, cosmetic manufacturers, by law, are prohibited from selling cosmetics that contain ingredients that present a hazard to the health of Canadians; must disclose all cosmetic ingredients to Health Canada; and are required to register their products. Labeling requirements that went into effect in 2006 require ingredient lists to appear on all cosmetic product labels. Increased disclosure is making choosing safe products easier for Canadian consumers. II. Micro Analysis A. Competitors and competitor analysis B. Porter’s 5 forces C. Pricing, Products, distribution and other promotional campaigns vs. your company III. Company Profile A. Company History Human Nature (Gandang Kalikasan, Inc.) was the brainchild of Gawad Kalinga volunteers Camille Meloto, Dylan Wilk, and Anna Meloto-Wilk who wanted to start a revolution of inclusive enterprises that promote caring and restore communities. Human Nature was the first cosmetics and personal care company in the Philippines to be awarded the distinction of being truly cruelty-free by the People for the Ethical Treatment of Animals (PETA), the largest animal rights organization in the world. Human Nature was also the first and is the only Filipino company to have signed PETA’s statement of assurance against animal testing. Human Nature is the first and only Philippine home and personal care brand that is a member of the Natural Products Association (NPA). NPA is the largest and oldest nonprofit organization in the US dedicated to the promotion of natural manufacturing and protecting of consumers' health and environmental safety. The NPA Seal certifies compliance with the NPA Standard for Personal Care Products on natural ingredients, safety, responsibility and sustainability. This seal is given to products that pass the following strict standards:

● ● ● ● ●

The product is made with at least 95% natural ingredients, excluding water Ingredients come or are made from a renewable resource found in nature, and processed without harm to the environment None of the ingredients pose human health risks as shown by peer-reviewed thirdparty scientific literature The product is not tested on animals The product must list all ingredients on the label

B. Company Mission/Vision MISSION Being faithful stewards of our God-given talents and natural resources, we will give the best of ourselves to urgently and sustainably build a global company which will showcase the best of the Philippines and uplift all our people, especially the poor through providing affordable, quality, natural products.

VISION We will be the gold standard of a globally successful enterprise with a heart that will embolden all businesses to better serve society. C. Company products, price list, distribution and promotional campaign (Concentrate only on what you plan to study. Many Human Nature products have already been awarded the Natural Seal:

ORAL CARE

BEAUTY OILS

Natural Toothpaste Natural Kids Toothpaste

Pure Rosehip Oil Pure Jojoba Oil

HAND & FOOT CARE

BABY CARE

Natural Liquid Hand Soap All Natural Spray Sanitizer Deodorizing Foot Spray

Natural Nappy Cream Natural Baby Wash Baby Bottle & Utensil Cleanser

HOME CARE

BODY CARE

Natural Dishwashing Liquid Natural Liquid Detergent Natural Powder Detergent Peppermint Oil

INSECT REPELLENT Bug Shield Lotion

MEN'S CARE Human Nature for Men Natural Cleansing Bar Human Nature for Men Natural Deodorant Human Nature for Men Natural Oil-Fighting Face Wash Human Nature for Men Natural Shower Gel Human Nature for Men Deodorizing Foot Spray

WELLNESS Massage Oil Citronella Oil Eucalyptus Oil Lavender Oil Orange Oil Rosemary Oil Tea Tree Oil

Cooling Leg & Body Cream

BODY CLEANSING Exfoliating Bar Fragrance-Free Gentle Cleansing Bar Natural Body Scrub Natural Body Wash Scented Cleansing Bars

FACE CARE Acne Defense Facial Wash Acne Defense Solution Gel Detoxifying Mask + Scrub RoseDew Mist Purifying Facial Scrub Radiant Grace Night Cream

KIDS CARE Natural Kids Bath Soap Natural Kids Sanitizer in Cosmic Clean

HAIR CARE Clarifying Shampoo Conditioning Hair Mist

D. Include current market position/ Market Share IV. SWOT

Weaknesses (Internal Analysis)

Strengths (Internal Analysis)

1. Laiza - Product distribution 2.

1. Laiza - Produced by local farmers in the Philippines 2. Laiza - Manufactured effective, safe and environmentally sustainable products 3. Laiza - Provided job security for Filipinos 4. Laiza - Very active in their corporate social responsibility as it started with Gawad Kalinga 5. Laiza - Affordable products

Threats (External Analysis)

Opportunities (External Analysis)

1. Laiza - Intense market competition (Social) 2. Laiza - Global warming (Environmental)

1. Laiza - Increase of purchasing power among millennials (Economical) 2. Laiza - Health consciousness among consumers (Social)

CHAPTER 2 GOALS AND OBJECTIVES LAIZA***A goal tells where a business wants to go and is a broad statement of what to achieve. Objectives on the other hand are more specific and quantitative indicating sales volume (units or peso), market share, profit among others

I. Marketing Plan / Goal Statement of the Problem How can Human Nature be the top of mind local, organic makeup brand? Statement of the goals 1. To promote Human Nature and the benefits of using organic make up product. 2. To support local make up products.

II. STP A. Segmentation B. Targeting (Demographic, Psychographic, Behavioral) Demographics For ages 16 to 50 years old, female, students and working professionals from SEC B and C Psychographics Conscious about the harmful chemicals and effects of cosmetics in the long run Checks the ingredients before buying the product to be consumed Behavioral Wants to purchase affordable yet effective products Would not settle for low quality cosmetics C. Positioning

III. Goals Timetable (Short Term Goals -1 Year (Gantt Chart; Monthly for a year) Long Term Goals – 5 years) SHORT TERM GOALS 1. LONG TERM GOALS 1.

CHAPTER 3 (KATH) MARKETING STRATEGIES A. Marketing Communication Programs (Include all type of Promotion) 1. Advertising Program a. Objectives i. To promote awareness of the Human Nature brand b. Target audience c. Creative approach d. Media plan 2. PR Program a. Objectives i. To promote awareness about the benefits of using organic make-up b. Strategies

i.

Blogger conferences - fashion bloggers are invited to have a feel of the organic make-up Human Nature is offering and to see for themselves how it’s different from the non-organic make-ups c. PR Materials d. Schedule B. Media Plan and Schedule (Gantt Chart)

CHAPTER 4 INVESTMENT PLANS A. Budgets B. Estimates of Profitability (Mini FS)

CHAPTER 5 EVALUATION OF RESULTS

A. Control Measures and Metrics (Measures of Profitability)

References Euromonitor