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TRUE BEAUTY BUSINESS PLAN

Final Marketing ProjectWinchester School of Art

University of SouthamptonWord Count: 7224

4. 06. 2020

Johanna Maria Kaleininkas

Tallinn, Estonia

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TABLE OF CONTENTS

INTRODUCTION

METHODOLOGY

RESEARCH & ANALYSIS

EXECUTIVE SUMMARY

BUSINESS PROPOSAL

CONCLUSION

REFERENCE LIST

BIBLIOGRAPHY

EXECUTIVE SUMMARY

The following project will discuss the current situation in the beauty industry and then go into a business proposal that is based on the wants and needs of today’s consumers. The industry is facing some difficulties due to the COVID-19 pandemic and there are new entrants coming in to the market almost every day. Makeup came in the picture thousands of years ago, although it was used for body rituals at the time, but the need for expressing oneself through paint is still very relevant. In addition, beauty has now become a multibillion industry and it is still on the rise.

The project discusses in depth the new shifts that are disrupting the industry. The biggest trends are challenger brands, genderless beauty, intelligent beauty and clean beauty. The latter is the most recent yet the most powerful one. It rose from conscious consumerism and it is believed that hyper conscious people will start looking into every aspect of their life and make it more sustainable than ever. This means that clean beauty is already on their radar. Clean beauty, however, has many different sides and aspects to it that make it unique. There are endless amount of ingredients, laws, regulations and terms that all need to be taken into consideration when starting a clean beauty brand.

The project will end with a business proposal for True Beauty. True Beauty is a combination of mainstream and clean beauty, meaning that the ingredients are clean, but the pigmentation is like of a mainstream one. The brand vision is to become a market leader in the beauty world, and the mission is to delivery high quality makeup that does not harm the body. The brand stands for diversity and equality and therefore, has an incredible shade range of 35 colours.

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This assignment will investigate, explore and analyse the beauty and cosmetics industry. The history of beauty goes back 60 000 years when body painting was used for rituals (Watts, 2009, p. 63), however, today it is much more than painting your face or body. Now, it is about feeling great, not looking great. It is clear that there has been a shift towards wellness in beauty, which in turn has created a revolution – clean beauty.

Although “clean”, “non-toxic”, “natural” are loose terms, generally, clean beauty refers to products that include natural ingredients (ElBoghdady, 2020). With consumers keen to reduce their environmental impact (Davis, 2019), the clean beauty movement makes sense. Furthermore, inclusive beauty is also something that has been praised over the recent years. Whether it is gender-neutral, makeup for men or ageless beauty – it is clear that beauty for all ages and genders is something that consumers want and demand. However, what if clean and all-inclusive beauty were combined?

That is how True Beauty was born – putting clean cosmetics together with inclusive beauty. The second part of this report will go over the full business proposal for True Beauty and consider all of the aspects of starting a new cosmetics brand. The business plan includes the vision, market analysis, competitor and customer analysis, product mock-ups, marketing and finance.

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There are many studies and articles discussing the beauty industry, but the few key ones are “Globalizing Beauty: A Cultural History of the Global Beauty Industry” by K. T. Frith, “Clean Beauty: Everything You Need To Know” by E. Burney and two Mintel reports “Global Beauty and Personal Care Trends 2030” and “Mintel Announces ‘sub-zero waste’ as 2019’s global beauty and personal care trend”. It is important to have a wide variety of research to have a holistic and comprehensive perspective on the topic. Thus, this assignment will have a broad literature review that will support the rationale of True Beauty’s business proposal.

The first step of the research was an analytical and methodical review of the literature. This report used a wide variety of resources such as academic journals, web articles and industry reports. Academic journals and reports were searched using University of Southampton database and usually included keywords such as “clean”, “non-toxic”, “organic” and “natural”. Those keywords were combined with following terms: “beauty”, “makeup”, “cosmetics”, “colour cosmetics”. Web articles were researched using same keywords, but chosen more carefully, because not all internet sources are reliable. In terms of all resources, not every report, article or journal addressed the issue of interest. All of the articles of research evaluated and more relevant, current and reputable were obtained and subjected for analysis.

The second step of the research was supposed to be primary research in the form of an interview with industry experts to gain insight and knowledge of the beauty industry. However, due to the worldwide COVID-19 outbreak the primary research had to be cancelled. Although it would have given this report an excellent perspective into the clean beauty industry, but on the other hand, this has given the author an opportunity to strengthen the secondary research and look even deeper into the industry.

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The beauty community has blown up to be a $532 billion industry (Biron, 2019). But what is happening in the industry and how is it reacting to current issues in the world today? First, to understand those questions, it is important to get an overview of its history.

Archaeological finds suggest that symbolic traditions were present in Africa around 80 000 to 60 000 years ago (Watts, 2009, p. 63), which means that cosmetics in the form of body paint was used for language and ritual purposes. Watts explains that ochre, especially red ochre was used as human social communication, but also as a form of art on sacred objects and on the bodies of ritual performers (Watts, 2009, p.65). In addition, in his analysis, he gives many examples of how the paint was used to make a statement, for instance menstruating or pregnant women would paint themselves to show that they are fertile (Watts, 2009, pp. 71-72). This indicates that colour cosmetics has been used to get a message across or make a statement.

In contrast, Jones believes that the origin of beauty lies in the scents and healing aspects of plants, flowers and herbs, which had strong religious and cultural backgrounds (Jones, 2010, p. 1). He suggests that the distinctive features of today’s beauty industry made their first appearance in fragrances and it turned ancient craft into a capitalist industry (Jones, 2010, p. 15). However, the rise of visual self-awareness soon took over since the trend of makeup from ancient times hadn’t still died out. Makeup had been used for centuries to enhance one’s appearance, for instance in Egypt men and women painted their eyes with black and green powder and women in the Roman Empire used lead to whiten their faces (Little, 2016).

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3.1 HISTORY OF BEAUTY

T3.1 HISTORY OF BEAUTY

3.2 SHIFTS THAT ARE DISRUPTING THE INDUSTRY

3.3 CLEAN BEAUTY

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Although beauty was mainly used to change one’s physical appearance, in the modern day the trend shifted into cleanliness and hygiene (Jones, 2010, p. 71). There was a massive transformation in the industry and a mass market for branded soaps emerged, with strong advertising which persuaded consumers that the use of soap was evidence of the superiority of Western civilisations (Jones, 2010, p. 71). Similar to Jones’ research, Frith’s study supports the fact that hygiene, soap and cleanliness were the main advertising appeals to women in the 1900s and they were closely linked with personal beauty (Frith, 2014). She continues with a statement that

‘cleanup’ transitioned into ‘makeup’ around the 1920s, which is when the modern beauty industry really began to emerge (Frith, 2014).

The once humble industry’s transformation into a brand-driven powerhouse offering essential day-to-day products is a success story of the modern business history (Jones, 2010, p. 1). It is important to mention that the history of beauty has shaped the industry today and there is no denying that history repeats itself.

Figure 1. Maybelline ad (Maybelline, no date).

Figure 2. Maybelline ad (Maybelline, 1951).

Figure 3. Max Factor Hi-Fi Lipstick Ad (Vogue, 1958).

Figure 4. Maybelline ad (Maybelline, 1942).

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The beauty industry is very quick to adapt to change. According to Richard Kestenbaum, almost none of the industry leaders have ignored signs of change in the market and create new ideas, products and collections at the speed of light (Kestenbaum, 2017). In another article, he further backs up his statement and says that the industry has seen enormous innovation and entrepreneurship in the last years (Kestenbaum, 2019). So, in another words, the industry is constantly changing. Challenger brands are disrupting the market and new Instagram trends are arising every day. But what exactly are the biggest trends that have shaped the industry during the recent years?

3.2 SHIFTS THAT ARE DISRUPTING THE INDUSTRY 3.2.1 CHALLENGER BRANDS

In the McKinsey & Company and Business of Fashion “The State of Fashion 2019” report, challenger brands were mentioned as newcomers, who disrupt a sector where incumbents rest on their laurels (McKinsey & Company et al., 2019). To put this in the context of makeup and beauty, this term can be used for brands such as Jeffree Star Cosmetics, Florence by Mills, Honest Beauty, Drunk Elephant and Foreo based on the % changes in Google searches 2018-2019 (Cosmetify, 2020). According to Cosmetify, those are the brands that broke the beauty stratosphere in 2019 and therefore, are the most popular challenger brands. Usually, they gain their success by advancements in technology and social media, exiting branding and smart communication (McKinsey & Company et al., 2019). In addition, they are known for the use of influencers and it’s been highly effective – it’s predicted that the influencer marketing industry will be worth $15 billion by 2022 (Rahal, 2020). On the other hand, sometimes the influencers themselves are the disruptors of the industry. Their beauty reviews on YouTube has created a massive “beauty community” and many of them have created their own beauty brands.

theindustryis changing.

what happened?

Figure 5. Nature+ Beauty (Geltor, 2020).

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3.2.2 BREAKING STEREOTYPES

The beauty industry is finally looking beyond stereotypical gender-based marketing, packaging and products (Chernikoff, 2020). They’ve had to rethink their strategy, since about one-in-five of Gen-Z customers have heard or know someone who prefers gender-neutral pronouns (Geiger et al., 2019). So this means that stereotypes are no longer a thing. Many have said that this trend really took off when the YouTuber James Charles was named the first “Coverboy” in 2016 (Salpini, 2019). Others think the launch of Rihanna’s Fenty Beauty line marked the beginning

of a revolution in the market (Par Vogue, 2019). Nonetheless, it is clear that during the recent years there’s been a rise in inclusive beauty: whether that’s makeup that is gender neutral, made for men or ageless beauty.

However, inclusive beauty is nowhere we’re it’s supposed to be. Backlash with racial profiling and lack of diversity and inclusivity are still very current in the beauty world, but that doesn’t mean that there’s been zero progress (Salpini, 2019).

Figure 6. Genderless makeup brand Jecca Blac (Travaglia, 2019).

Figure 7. Genderless makeup brand Jecca Blac (Blackler, 2018).

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Nearly 40% of adults aged 18-22 have shown interest in gender-neutral beauty products, according to NPD’s iGen Beauty Consumer

report (Warfield, 2019).

A way of breaking stereotypes in the industry is makeup for men. Men’s personal care market has seen a massive rise – according to Allied Market Research the market is expected to hit $166 million in 2022 (Warfield, 2019). While men’s beauty has usually been described as grooming products or fragrances, then the growing trend has given a platform to actual makeup for men. For instance, Chanel announced their first line of makeup for men in 2019 (North, 2018) that includes a lightweight foundation, a brow pencil and a lip balm (Chanel, no date).

This has enabled men to break the outdated toxic masculinity, which is a mixture of values that are dangerous, destructive; ideas that promote violence and is something that is performed for other men for them to judge (Kimmel, 2018). Peter Maxwell has said that “brands have a core role to play in helping men take the first crucial steps on the road to becoming better allies” and then proceeds to bring out the fact that brands have been investing billions in constructing an image of a successful man who is powerful, dominating and strong (Maxwell, 2018). But now, however, brands have the power to turn that around and help detoxify toxic masculinity and one of those ways is to not make, label and market their makeup as ‘just for women’.

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3.2.3 INTELLIGENT BEAUTY

It is widely believed that beauty and technology have nothing in common and are two very different industries. Despite the everyday thought, they have actually become closer and integrated than ever.

It is no surprise than technology has been used to simplify customers’ purchase journeys both in-store and online (Goodsitt, 2019). For instance, a beauty retailer Sephora has been called a master at integrating digital into their physical presence (Barseghian, 2019). One of their greatest innovations is a partnership with Pantone, where they offer Colour iQ that scans a customer’s face and assigns them foundations that are exact matches to their unique skin tone (Barseghian, 2019).

However, while technology in-store has changed the way we shop, technology in beauty has changed what we shop. Mintel states that IOT (Internet of Things) will mainstream the 2030 beauty shelf by the ability to measure and monitor, and, therefore, fit seamlessly into consumers’ lives (Mintel, no date).

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“In the future, algorithmic beauty will give rise not only to new technologies that will help the drive for flawless skin, but it will also lead to new conversations about the face as a site for data-gathering and shifts in self-perceived beauty ideals.”

- Daniela Walker and Jessica Smith (2018)Figure 8. Intelligent beauty (Author’s own, 2020).

Figure 9. Intelligent beauty (Author’s own, 2020).

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3.3 CLEAN BEAUTY

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IT’S NOT ABOUT LOOKING GREAT,

IT’S ABOUT FEELING GREAT.

During recent years, sustainability in the cosmetics industry has seen a massive growth, due to the growing interest from consumers (Bom et al., 2019). Conscious consumerism has been a growing trend and evidently, the conscious consumer is behind the massive need for clean beauty. One can be conscious in many ways – socially; ecologically, politically; value; health; environmentally (Ramchandani, 2017). The latter two seem to be the most popular ones. It is important for brands to keep up with consumer expectations – Mintel suggests that over the next five years, the popularity of sustainability will reach new volumes and conscious consumers will look into every aspect of their lives to reduce waste, including beauty and personal care (Mintel Press Team, 2018).

Furthermore, in a trend forecast report by Mintel, they outline many trends that are going to disrupt the industry over the next years. In the report, they put a lot of emphasis on waste-free beauty, engineered natural ingredients and veganism (Mintel, no date). In addition, they state that clean beauty will evolve as consumers are doing more research than ever before making a purchase, and brand transparency plays a huge role in their purchasing behaviour (Mintel, no date).

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Figure 10. Clean Beauty (Garten, 2019).

Figure 11. Clean Beauty (Parish, 2017).

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Research shows that the hyper-conscious consumers want cosmetics that are free from toxins. But do they actually know what they are looking after? Cosmetics come in many shapes and sizes and carry different terms for different types of ‘clean’ makeup.

The two most used buzzwords are “clean” and “natural” beauty and it is easy to think that those two mean the same thing. Usually, ‘natural’ used to describe products that have a pure and nature-derived formula without lab-made chemicals or synthetics (Malacoff, 2020). In contrast, “clean” beauty is often associated with clean eating or eating unprocessed foods, but it actually has some differences (Malacoff, 2020).

3.3.1 CLEAN, NON-TOXIC OR ORGANIC?

There is not a clear definition for “clean beauty” but generally it refers to products that do not contain certain ingredients, such as parabens, sulfates, mineral oil or talc (Franzino et al., 2019). Moreover, “clean beauty” has started to use the help of bio-technology to engineer even more natural products (Buchanan, 2020).

Although “clean” and “natural” are the most used terms in the beauty industry, it is important to not forget other sub-categories in the clean beauty market. The infographic on the right explains the differences of each category.

GREENIt implies that the products are developed with minmal present and future environmental impact. Covers everything from the products’ ingredients to how it’s made, packaged, distributed and disposed.

ORGANICIt means that the product’s ingredients and formula are produced without dangerous pesticides. Organic products are usually certified and government-regulated.

NON-TOXICIt is a product that is not harmful to humans nor includes toxic ingredients.

CHEMICAL FREERefers to a product that does not contain harmful chemicals. Harmful chemicals are ingredients that can lead to long-term health concerns.

NATURALLY DERIVEDNaturally derived products have natural ingredients that have undergone some chemical processing. It is similar to terms “natural origin” or “made with natural ingredients”.

According to Franzino and Aral (2019).

According to Franzino and Aral (2019).

According to Franzino and Aral (2019).

According to Franzino and Aral (2019) and Campaign for Safe Cosmetics (2020).

According to Franzino and Aral (2019).

Figure 12. Clean beauty sub-categories (Author’s own, 2020).

TERMS USED IN CLEAN BEAUTY

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It can be said that the science behind the trend is the most important part, as it is the ingredients that make the makeup “clean”. According to doctors Wanner and Nathan, the majority of the chemical used in beauty fall into one or more of three big categories: irritant/allergens; potential endocrine disruptors (ingredients that may imitate one’s body’s natural hormones); and potential carcinogens (cancer-causing agents) (Wanner et al., 2019).

3.3.2 INGREDIENTS

THREE MAJOR CHEMICAL CATEGORIES

IRRITANTS AND ALLERGENS

POTENTIAL ENDOCRINE DISRUPTORS

POTENTIAL CARCINOGENS

Avoided in clean cosmetics: Fragrance, methylisothiazolinone (MI), methylchloroisothiazolinone (MCI), phenoxyethanol, vitamin A derivatives, petroleum distillates, and formaldehydes.

Effects: Can cause contact dermatitis, which is a poison ivy-like rash that can become chronic with repeated exposure.

Avoided in clean cosmetics: Triclosan and triclocarban, placenta extract, resorcinol, butylated hydroxyanisole (BHA), boric acid and sodium borate, phthalates, toluene, parabens, petroleum distillates and phenoxyethanol.

Effects: Can cause an increase in urinary and blood levels.

Avoided in clean cosmetics: 1,4-dioxane, petroleum distillates, coal tar ingredients, formaldehydes and placenta extract.

Effects: Formaldehydes has been linked to cancer formation in humans at high doses. It also ranks among the top 10 most common allergens.

According to Wanner and Nathan(2019).

According to Wanner and Nathan(2019).

According to Wanner and Nathan(2019).

Figure 13. Natural beauty ingredients (Turk Corner, 2019).

Figure 14. Three major chemical categories (Author’s own, 2020).

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But what qualifies as a toxic ingredient? Unfortunately, there aren’t clear worldwide guidelines to toxic ingredients in beauty or health products.

While the EU bans more than 1300 ingredients from cosmetics, then in the US they only ban around 30 (Burney, 2019).

Based on this information, it can be assumed that people in Europe are much more interested in their health and wellbeing, but Americans are still new to the topic of chemicals in beauty. Americans’ awareness to their health also correlates to other aspects of their lives – according to the Organization for Economic Cooperation and Development, the obesity rate for American adults is at the top of the heaviest-nations-in-the-world rankings (Kollmeyer, 2017). This points to the fact that clean cosmetics in the U.S. market might not be as successful as it would be in the European market, which is something upcoming brands should consider.

Since there are hundreds of thousands of ingredients, it’s difficult to list all of them. As a shortcut, it’s clever to look at other “clean” beauty brands to see what ingredients they avoid or on the other hand, opt in. For instance, a skincare brand Drunk Elephant cut out ingredients that they call the “suspicious six”: essential oils, drying alcohols, silicones, chemical screens, fragrances/dyes and SLS or sodium lauryl sulphates (Burney, 2019). However, a brand called Balance Me have opted for essential oils because they believe the ingredient is tested enough (Burney, 2019).

This table showcases the most common beauty ingredients that contrary to popular belief, should be avoided.

PARABENS

FRAGRANCES AND PHTHALATES

TRICLOSAN TALC SILICA

HYDROQUINONEFORMALDEHYDE

ETHOXYLATED AGENTS REFINED PETROLEUM

A group of preservatives and antimicrobial chemicals that prevent the growth of bacteria and mould in cosmetics. It mimics estrogen in the human body, which can cause reproductive organ harm, hormone-related cancer and obesity. Exposure to parabens from beauty products is also linked to early onset puberty in girls.

A chemical used to make a product smell better. Often used with phthalates, which helps fragrances last longer, however, phthalates have been linked to reproductive and hormonal harm, obesity, type 2 diabetes, reduced sperm count, breast cancers and infertility. Can also be a trigger for allergies.

An antibacterial chemical found in sanitising hand and body soaps and mascara. Linked to liver fibrosis, hormone disruption and skin cancer. And contrary to popular belief, not any more effective than soap and water.

A mineral made from magnesium, silicon, oxygen and hydrogen and a common ingredient in face powders and eye shadows. If not purified then talc can be contaminated with asbestos, a human carcinogen.

Known as silicon dioxide, used as an absorbent in everything from foundation to oral care. In terms of health concerns, some forms of silica can be a human carcinogen. From an environmental viewpoint, the slippery silica found in face primer is not biodegradable.

A bleaching agent found in skin-lightening creams and serums and used for hyperpigmentation. Has been linked to certain cancers, a skin condition called ochronosis and a decreased immune response.

The most notorious preservative in history, commonly found in keratin smoothing treatments that relies on the chemical to lock the broken hair into a straighter position. It is recognised as a human carcinogen, a formation of cancer, and that’s why it has been eliminated from many cosmetic products.

They include polyethylene glycols (PEGs), ceteareths, oleth and sulfates. The latter is responsible for bubbles and lather in cleansers and shampoos. PEGs are used as thickeners, softeners and moisturisers in hair products. Sodium lauryl sulfate is a harsh cleanser which will strip one’s hair.

Mineral oil is used as a moisturising agent and is often found in lip balms and face creams. Besides the fact that it is very unsustainable from an environmental standpoint, it carries health concerns as well. It was found to be the largest contaminant present in the human body due to its accumulation over time.

Figure 15. Difference between the EU and the US market (Author’s own, 2020).

Figure 16. List of harmful ingredients (Author’s own, 2020).

THE MOST HARMFUL INGREDIENTS IN BEAUTY

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T4.1 VISION AND BUSINESS DETAILS

4.2 MARKET ANALYSIS

4.3 COMPETITIVE ANALYSIS

4.4 CUSTOMER ANALYSIS

4.5 PRODUCT

4.6 MARKETING, PROMOTION AND ADVERTISING

4.7 FINANCE

4.8 OPERATIONS

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4.1 VISION AND BUSINESS DETAILS

4.1.1 WHAT IS THE IDEA?

The business idea is to have a makeup brand that has non-toxic and clean ingredients, yet still delivers vibrant colours and is high in pigmentation. The research shows that the traditional colour cosmetics industry is a very profitable industry, however the clean beauty market is also becoming more popular on the daily. Therefore, a clever business idea would be to create a makeup brand that has the best of both worlds but puts extra attention on clean and non-toxic ingredients. In addition, True Beauty will be cruelty free and vegan.

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A theory by Round et al. found that there is a direct link between the name of a brand and the brand equity (Round et al., 2017), therefore it is important to have a strong name that will represent the brand in the best way possible.

Therefore, the name of the brand would be True Beauty. “True” as in the brand is honest about its ingredients, and the name “Beauty” would not label the brand as only a makeup brand, but leaves room for future launches also, such as skincare, haircare or fragrances.

4.1.2 WHAT IS THE NAME?

TRUE BEAUTY

TRUE BEAUTY

TRUE BEAUTY

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TRUE BEAUTY

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There are two variations for True Beauty’s logo. The main and preferred one is a full text one, where True Beauty is in written form. The second one is a simple “T” that can be used as an

alternative when the space is tight. Both of the logos can be used together or on their own. The primary colour is black and the secondary colour is white.

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Figure 17. True Beauty logo (Author’s own, 2020).

Figure 18. True Beauty logo (Author’s own, 2020).

Figure 19. True Beauty logo (Author’s own, 2020).

Figure 20. True Beauty logo with white space (Author’s own, 2020).

Figure 21. True Beauty logo variation with white space (Author’s own, 2020).

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Furthermore, research shows that big brands often have a slogan or a tagline that represents what the brand stands for. For instance, the beauty giant L’Oréal has had the slogan “Because you’re worth it” for years (L’Oréal, 2020) and Nike is obviously famous for its “Just Do It” tagline. However, it seems like not many beauty brands have slogans anymore. That might be because marketing has moved from tradition TV advertising to social media, where taglines nor slogans are not very common. Nonetheless, True Beauty will have a tagline. Tagline “Beauty that is honest” will draw attention to the fact that the brand is honest about its ingredients and emphasise the fact that they are ‘clean’.

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TRUE BEAUTYTRUE BEAUTYBEAUTY THAT IS HONEST.BEAUTY THAT IS HONEST.

The value proposition or the promise to be delivered is to create non-toxic products that combine quality, pigmentation and safety in every aspect. The promise is to be diverse, inclusive, safe, colourful and meant for all. To bring beauty that is honest to the mainstream at a reasonable price point.

4.1.3 VALUE PROPOSITION

Figure 22. True Beauty logo with slogan (Author’s own, 2020).

Figure 23. True Beauty campaign image (Author’s own, 2020).

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4.2 MARKET ANALYSIS

The research in section 3 explained thoroughly what is happening in the industry, what trends are dominating and how beauty as an industry was born. What the research didn’t discuss, was the current situation in the market. Although it is important to research the industry first, but to actually launch a brand it is vital to understand what is happening in the industry now, whether it is growing or declining, what changes there are and how it is segmented.

There is no doubt that the COVID-19 crisis has shocked the global beauty industry (Gerstell et al., 2020). They have had to quickly respond to the crisis by switching their manufacturing to produce hand sanitisers, however, at the same time they have had to think and act critically to ensure that their companies survive (Gerstell et al., 2020).

Figure 24 showcases the steady growth of the global beauty industry. The industry survived the 2008 financial crisis and created generations of loyal customers (Gerstell et al., 2020), and in theory, it should overcome the 2020 crisis as well. But does the beauty industry actually have what it takes to beat the economic emergency this time?

Even though the economic magnitude of the pandemic is greater than any recession, Gerstell et al. think that the beauty industry will once again stay resilient (Gerstell et al., 2020). On the other hand, Poshly CEO Doreen Bloch said that beauty professionals such as makeup artists and hairstylists are facing the most difficult challenges in the industry since salons have been closed and they are left without work (Krause, 2020). Moreover, McKinsey & Company estimates that the beauty industry revenue could fall up to 30% in 2020, yet a lot of people will be continuing to wear masks which means

FRAGRANCES

COLOUR COSMETICS

SKINCARE

PERSONAL CARE

NOTE: Figures may not sum up to listed totals, because of rounding.

GLOBAL BEAUTY-INDUSTRY RETAIL SALES, $ BILLION

“The cosmetics market will undoubtedly suffer in 2020 and in the years to come, but we expect it to recover within three to five years as it has in all past recessions. Compared to other industries, the beauty market is fairly recession-proof, and its products will continue to be desired by consumers – both for meeting basic needs as well as an indulgence.”

that eye-cosmetics, skincare and haircare will benefit from this self-care trend (Gerstell et al., 2020). So, in conclusion, this pandemic will have positive and negative effects on the industry – people are now caring about their health more than ever which means they will be more likely to buy cosmetics with health benefits. This means that brands need to make strategical decisions and closely investigate what today’s consumers are wanting.

4.2.1 THE CURRENT SITUATION

Figure 24. Global beauty industry retail sales (Author’s own, 2020).

- Carrie Mellage (2020)

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Responding to a crisis is as important as surviving the crisis. A brand can barely survive a crisis, but if it does not respond and make necessary changes, it can have terrible consequences that might lead the brand to failure.

Many beauty brands still rely on in-store experiences to drive sales but unfortunately, the absence of brick & mortar stores is bound to impact many brands (Gilliland, 2020). However, one of the ways brands can respond is through virtual and digital consultations. For instance, a skincare brand Kiehl’s is launching virtual consultations to guide their consumers, and Glossier has ramped up their online tutorials on IGTV to immerse clients in instructional content (Gilliland, 2020). These beauty moguls have realised the benefits of technology – it allows for greater interaction between brands and consumers (Gilliland, 2020), which in turn creates strong brand loyalty.

In terms of True Beauty, starting a new brand in this pandemic will be really challenging. It is important to be extremely smart and critical of every choice and step they make. In addition, as explained above, heavy use of technology would help the brand to get a bigger reach and socialise with its customers daily. What’s more, the pricing has to be spot on. It’s predicted that there are almost 17 million job losses worldwide (Jones, 2020) which means people will be extra careful with their money. The pricing needs to be accessible, but realistic for the brand to have good quality ingredients.

“As consumers become increasingly aware of general hygiene and safety practices, the need for transparency will intensify. Clean beauty

and natural have remained popular mentions on Twitter and Instagram in the Americas and around the globe over the last few months. In

fact, mentions of clean beauty and safety rose as COVID-19 worsened in March.”

Figur

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20).

- Meghan Ross (2020)

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4.2.2 MARKET SEGMENTS

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GLOBAL BEAUTY INDUSTRY CONSUMER SEGMENTS

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DEMOGRAPHIC

CONSUMER TYPES

GEOGRAPHIC

Age (generations).

Gender.

Traditional consumer.

New entrant.

Beauty addicted.

Beauty expert.

North America.

Europe.

Asia-Pacific.

LAMEA (Latin America, Middle East and Africa).

To understand the beauty industry better, it is good to divide the market into different customer segments that are buying and consuming cosmetics. In the beauty world, they are usually segmented by demographics, geographics and consumer types, which can be related to psychographics.

The industry is still dominated by gender stereotypes: products are still labelled “made for women” or “made for men” and marketing tactics are targeted to one of the two genders. Therefore, one of most common segments in the beauty industry gender. Another common segment is categorised by location. The easiest way to segment by geography is to locate the consumer within the 4 biggest location groups in the world: North America, Europe, Asia-Pacific and LAMEA. And lastly, the last segment is consumer typologies. This macro-category is an easy way to distinguish consumers, who do makeup for fun from those who take it more seriously. They also have different wallet sizes, spending power and budgets that they are willing to spend on makeup.

In terms of age, True Beauty will position itself within Generation Z and Millennials. A survey from Mintel shows that Generation Z actively seek out clean and organic makeup and in addition, another survey from Alix Partners found that Millennials hold the biggest spending power and are leading the consumer demand for sustainability (Hunter, 2019). When it comes to gender, True Beauty will be positioned and targeted to both genders.

True Beauty will not necessary position itself to appeal to only professionals – it is meant for everyone and therefore, will rather be targeted to traditional consumers. On the other hand, the products’ simplicity, clean ingredients and high pigmentation should appeal to all customers.

In the beginning, True Beauty will be positioned in the European market. Chapter 3.3.2 in Research & Analysis showed that the people in Europe are much more educated on clean beauty. Therefore, it would be a logical choice to position and target True Beauty within Europeans first, and in the future move to North America, for instance.

4.2.3 POSITIONING AND TARGETING

Figure 26. Global beauty industry consumer segments (Author’s own, 2020).

Figure 27. Natural cosmetics (100% PURE, 2018).

Figure 28. Versed was launched in response to the rising popularity of skincare over makeup

(Versed, 2019).

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4.3 COMPETITIVE ANALYSIS

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The multibillion market holds many competitors who all are a threat to new and upcoming brands. There are many beauty companies on the market, but in reality, they all fall under the massive umbrellas on huge manufacturers (Willett et al., 2017). It is important to understand how interconnected brands truly are, because only then one can notice the similarities of the sub-brands.

4.3.1 COMPETITORS IN THE MARKET “But what's interesting, and relatively unknown to the average buyer, is that plastic pink-capped bottle "save" from your local drugstore and the gold-plated designer lipstick are more similar

than you'd think ...

... because they're actually owned by the same company.”

Figure 29. Top brand in the beauty sector (CB Insights, 2018).

Figure 30. World of beauty (Author’s own, 2020).

- Megan Decker (2019)

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4.3.2 DIRECT COMPETITORS

Although there are hundreds of brands who all pose a threat, it is crucial to filter and categorise to find out the direct competitors. Since True Beauty is embracing both sides of the industry, the clean and the mainstream side, then it is important to look at competitors from both side of the industry.

Here is a list of top 10 of both areas of the market. They all pose a threat for different reasons: packaging, marketing, concept, price range, same target customer. This table showcases the pros and cons of the competitors of True Beauty. This comes in handy because True Beauty can learn from the mistakes of its competitors and look what they are doing good and do it better.

TOP 10 COMPETITORS: CLEAN AND MAINSTREAM MAKEUP BRANDS

Clean Cosmetics Pros

Pros

Cons

ConsMainstream Cosmetics

LILY LOLO

DR. HAUSCHKA

COULEUR CARAMEL

MADARA COSMETICS

HONEST BEAUTY

RMS BEAUTY

KJAER WEISS

VAPOUR BEAUTY

JUICE BEAUTY

W3LL PEOPLE

FENTY BEAUTY

ANASTASIA BEVERLY HILLS

JEFFREE STAR COSMETICS

HUDA BEAUTY

TARTE COSMETICS

NARS

BECCA

MORPHE BRUSHES

HOURGLASS

SMASHBOX

Wide product range; strong packaging.

Strong brand message and concept.

Strong brand identity.

Wide product range.

Small colour range.

Weak brand message.

Weak brand message.

Bad ingredients.

Lack in product diversity.

Bad ingredients.

Lack in product diversity.

Lack in colour diversity.

Weak brand message.

Weak brand message.

Low brand awareness.

Low brand awareness.

Uninteresting packaging.

Low quality.

Low brand awareness.

Lack in product diversity.

Weak brand message; small colour range.

Lack in product diversity.

Wide product range.

Very pigmented colours.

Strong brand identity and equity.

Strong brand identity and equity.

Strong packaging.

Good storytelling.

Extremely wide product range.

Strong brand awareness.

Unique packaging; strong message.

Great packaging; strong products.

Interesting concept.

Strong brand awareness.

Strong brand message.

Strong brand message.

Wide product range.

Great brand image.

Small colour range.

Undiverse product range.

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Figure 31. Dr. Hauschka (K-Rauta, 2020).

Figure 32. Madara Cosmetics (Madara, 2020).

Figure 33. Fenty Beauty (Sephora. no date).

Figure 34. Top competitors for True Beauty (Author’s own, 2020).

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This brand positioning map locates True Beauty in the middle of both areas of the industry. The map was conducted by comparing every brand’s eyeshadow palette: its ingredients and price in euros. The map includes 4 clean beauty competitors and 4 mainstream beauty competitors. In conclusion, True Beauty is located on the upper side of the map, meaning that the price is on the lower side yet the products are still high quality and have good ingredients.

4.3.3 RISKS

It is critical to evaluate risks when starting a business. One of the main risks is competitive risk, which is the chance that a competitor will prevent one from achieving a goal (Spacey, 2017). Furthermore, Michael Porter created a tool called Porter’s Five Forces (1979) which identifies five forces that make up a competitive environment and which can disrupt the profitability of a brand (Mind Tools, 2020). This framework will be used to analyse and examine factors that could impact True Beauty and its success.

Figure 35. Brand positioning map (Author’s own, 2020).

Figure 36. Porter’s Five Forces (Author’s own, 2020).

BRAND POSITIONING MAP

PORTER’S FIVE FORCES: RISKS

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TRUE BEAUTY

Figure 37. True Beauty campaign image (Author’s own, 2020).

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4.4 CUSTOMER ANALYSIS

Chapter 4.2.2 already discussed the different consumer segments of the beauty industry and chapter 4.2.3 talked about True Beauty’s positioning and targeting. The latter also explained that True Beauty will be positioned within Europe and target Millennials and Gen Z.

As a brand, it’s actually much more than just saying you target this age group at this location. One needs to know the customer inside and out, their characteristics, needs and wants. Steve Jobs was often quoted saying he didn’t listen to his customers, but later he admitted his mistake and that when his greatest success happened (Steuer, 2018). Despite the fact that it is very important to listen to your customers, a brand can skip that part if they already know beforehand what they want by doing their research. A brand should always be one step ahead of their customers. On the other hand, it is also important to listen to customers for their feedback, for instance.

KNOW YOURCUSTOMER

LIKE THE BACK OF YOUR HAND.

Figure 38. Beauty consumer (Beauloye, 2020).

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4.4.1 CHARACTERISTICS 4.4.2 SATISFYING THE NEEDS

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This graph showcases the most basic characteristics of the two generations who True Beauty will target.

GEN Z MILLENNIALS

– Generation born between 1990-2010 (Business Insider, 2019).– Raised on the internet and social media therefore very tech-savvy (Business Insider, 2019).– Are interested in clean and organic makeup and personal care products that make them look like themselves (Hunter, 2019).– Experience focused (Hunter, 2019). – They are hungry for truth and transparency (Francis et al., 2018).– Interested in unique and ethical products (Francis et al., 2018).

– Also known as generation Y, born between 1981-1996 (Business Insider, 2019).– Entered the workforce at the height of the Great Recession so they are extra careful with money (Business Insider, 2019).– The most willing to pay more for clean-label and ethically sourced products (Hunter, 2019). – Experience led (Francis et al., 2018).– Technology based, optimistic, ethical spending, educated (Cheng, 2019).– Spiritually, financially, socially and health conscious (Cheng, 2019).

PHYSIOLOGICAL NEEDSFood, water, warmth, rest.

SAFETY NEEDSSecurity, safety.

BELONGINGNESS AND LOVE NEEDSIntimate relationships, friends.

ESTEEM NEEDSPrestige and feeling of accomplishment.

SELF-ACTUALISATION

Achieving one’s full potential, including creative activities

BASIC NEEDS

PSYCHOLOGICAL NEEDS

SELF-FULFILLMENTNEEDS

Possibly the most important part is satisfying consumers’ needs, because that is when they will make purchase. It is clear from the research that both Gen Z and Millennials are highly conscious about their health, wellbeing and are interested in buying cosmetics, thus it should be quite easy to satisfy both consumer groups. To give an example, Gen Z are hungry for clean products – True Beauty will deliver clean cosmetics. Millennials are financially conscious – True Beauty’s pricing strategy will give them their money’s worth.

Moreover, True Beauty will satisfy the two upper levels of the Maslow’s Hierarchy of Needs (1943), which is a motivational theory comprising a five-tier model of human needs (McLeod, 2020). The basis of the theory is that the needs lower down the hierarchy must be satisfied before one can move up a level (McLeod, 2020). If a consumer decides to buy True Beauty to feel accomplished for instance, then they would need to have the 3 lower ties satisfied beforehand.

Figure 39. Characteristics of Gen Z and Millennials (Author’s own, 2020).

Figure 40. Maslow’s Hierarchy of Needs (Author’s own, 2020).

CHARACTERISTICS OF GEN Z AND MILLENNIALS

MASLOW’S HIERARCHY OF NEEDS

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4.5 PRODUCT

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The first launch of brand would be the Face Base Collection. It would include the 4 essential products that anyone can use to create a flawless base for their makeup, or just wear on its own for a “no makeup” makeup look. The reasoning behind brining out face products first is that foundations, concealers and setting powders are universal. Not only women wear “base” makeup – men have been wearing stage makeup to enhance, define and correct their features (Mode Dion, 2016), and even Donald Trump, the president of France and actor Daniel Kaluuya are known to use “base” makeup to cover uneven skin tone (Elan, 2020). For financial reasons, it is the best choice to come out with one collection first. Later the company can expand to other product groups such as eyes; brows; lips; cheek products and even skincare or haircare.

The Face Base Collection includes 4 items: a foundation, a concealer, a pressed face powder and a loose setting powder. This collection focuses on creating the perfect base with just 4 products that both men and women can use.

TRUE BEAUTYTHE FACE BASE COLLECTION.

CONCEALER

FOUNDATION

PRESSED FACE POWDER

LOOSE SETTING POWDER

HONEST FOR ALL.

THE FACE BASE COLLECTION.

Figure 41. True Beauty Face Base Collection campaign image (Author’s own, 2020).

Figure 42. True Beauty Foundation (Author’s own, 2020).

Figure 43. True Beauty Concealer (Author’s own, 2020).

Figure 44. True Beauty Pressed Face Powder (Author’s own, 2020.

Figure 45. True Beauty Loose Setting Powder (Author’s own, 2020).

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4.5.1 COLOUR RANGE

#1

#2

#3

#4

#5

#13 #25

#14 #26

#15 #27

#16 #28

#17 #29

#18 #30

#19 #31

#20 #32

#21 #33

#22 #34

#23 #35

#24

#6

#7

#8

#9

#10

#11

#12

FOUNDATION AND CONCEALER SHADES

The collection includes 35 unique shades that will cater to every skin tone and undertone, so no one is excluded. Launching more than 30 shades of foundation and concealer today is not a rare sight. On the other hand, when Fenty Beauty first launched its 40 shades, there wasn’t a brand on the market that truly reached every skin tone, from very dark to very light (Saputo, 2019). Rihanna created to so called “Fenty effect” which celebrates every skin tone and it has had a massive effect on the beauty industry (Philips, 2018). It does not come as a surprise that her brand made $100 million in sales in the first 40 days (Philips, 2018) – people, who have previously felt that they have been left out or abandoned by beauty brands now had the opportunity to buy cosmetics that actually matched their skin tone.

This highlights the issue that there are many consumer groups that feel like they are left out – and not only with the lack of foundation shades, also with products meant for women only. Hence, True Beauty has a wide variety of foundation shades that suit both men and women. The concealer shades are the same as foundation ones, so that people can easily find a concealer that matches their foundation. Powders will have 10 shades, plus one translucent shade, since they are more versatile and an exact shade is not necessary – for instance, a person with darker skin can use powder that is much lighter to give more dimension and highlight to the face.

NOTE: Swatches marked with * are the equivalent to the powder shades.

*

*

*

*

*

*

*

*

*

*

Figure 46. True Beauty shade range (Author’s own, 2020).

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4.5.2 PACKAGING 4.5.3 UNIQUE SELLING POINT

The unique selling point or USP is definitely the factor that the brand would have

non-toxic and clean ingredients. Although it is a growing trend, there are not that many competitors yet and it is quite new on the market.

The second USP of True Beauty is that it is genderless. The research pointed out that makeup isn’t uncommon among men, and it is a toxic and outdated way of thinking that only women can wear makeup. Admittedly, many other brands have brought out makeup made “for men”, but this brand is “for everyone”. For the young, the old, for men, for women, for light skinned and for dark skinned.

The third and last USP is the fact that due to the unique formula it will still have

strong pigmentation. Usually, natural or organic makeup have really light pigmentation on their products and have a “no-makeup” makeup feeling to them. If the laboratory finds a perfect formula then this brand could still have all of the non-toxic ingredients, yet still can create a full glam look or a light coverage one, if needed.

The packaging of True Beauty will be simple to portray the simplicity of the brand. Foundations and concealers will be in glass bottles, the pressed powder in a compact packaging and the loose powder in a glass jar. The packaging will be white and fade into the colour of the product.

The outer packaging will be in white cardboard boxes. Considering that the brand stands for environmental issues as well, the packaging will be compostable and recyclable. This means that the outer packaging can simply be thrown into the recycling bin and its lifecycle will be infinite.

Figure 47. True Beauty packaging (Author’s own, 2020).

Figure 48. True Beauty Concealer (Author’s own, 2020). Figure 49. True Beauty packaging (Author’s own, 2020).

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TRUE BEAUTY

Figure 50. True Beauty campaign image (Author’s own, 2020).

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4.6 MARKETING & PROMOTION

what is the vision?

what is the mission?

what are the marketing objectives?To improve brand recognition amongst Millennials and Gen Z; to launch 4 new products; to meet the needs of the customers; to achieve strong sales; to increase revenue growth; to gain an advantage over competition; to create a strong brand image amongst consumers; to increase brand equity; to successfully enter the beauty industry.

* The objectives were refined using the SMART criteria, which was created by G. T. Doran (1981) to help to guide goal setting (Mind Tools, 2020). The goals are specific, measurable, achievable, relevant and time bound (Mind Tools, 2020).

The vision is to become a market leader in the clean cosmetics industry.

True Beauty is dedicated to delivering high quality, clean, non-toxic and colourful cosmetics to every beauty lover.

Marketing, advertising and promoting are remarkably crucial aspects of a brand. Wertz emphasises that nearly 8 out of 10 businesses fail within the 24 first months, often due to bad branding and an excessive emphasis on the product rather than marketing the product (Wertz, 2019). This means that marketing needs to be spot on in order for True Beauty to not fail its initial launch.

Wertz has also said “content is king, and selling a vision is as important as selling the product itself” (Wertz, 2019). This implies that there needs to be a strong vision, and for True Beauty it is to be a market leader in clean cosmetics. One very important factor that needs to be recognised is that the target customer was brought up submerged in technology and today’s digital era is hungry for smart, catchy and experience-driven marketing. Considering that True Beauty will first be sold online and only with direct sales, experience needs to come to online where the majority of the marketing will happen. Thus, the marketing strategy is built around digital marketing.

“It's not the best product that wins but the best-known one

that wins.” - Jaiden Vu (2019)

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MARKETING MIX

PRODUCT

PLACE

PROMOTION

PEOPLE

PRICE

PROCESS

PHYSICAL EVIDENCE

Clean and non-toxic makeup. Target customers, Gen Z and Millennials, have showed great interest in cosmetics, especially in clean and natural makeup.

Advertising is extremely important to an upcoming brand. There are many ways to promote a brand, but True Beauty will use a mixture of online website, SEO (search engine optimisation), influencer marketing, paid social advertising and social media. The latter will possibly have the strongest effect and will be used most often, as they are free platforms and easy to use.

The price range will be located in the ‘masstige’ category. ‘Masstige’ is a middle ground in beauty, which mimics the look and feel of luxury products, however, the price point is above a drugstore brand, but below a Sephora one (Strugatz, 2019).

The company will start off with 2-3 employees who will do everything from sending out packages to customer service to marketing. Freelancers will be used for design purposes and for technical support.

The process begins with creating the formula which is usually done by a lab (See chapter 4.7.1). Then the products get packaged and sent to a warehouse or a storage where they await their shipping. After a customer places an order, the products get sent out for the customer to enjoy.

The distribution of True Beauty will initially be online through an online shop. Since the target consumers are exceptionally tech-savvy, it would be a logical choice to sell the products online. On the other hand, they are also noticeably experience-driven which indicates to a brick-and-mortar store, but a new brand does not have many resources and finances to start distributing from a physical store straight away. In addition, in the beginning True Beauty will only do direct sales to build brand equity.

Since True Beauty will not have a physical store, the physical evidence will be based on the branding. The logo (See chapter 4.1.2) is straightforward, because simpler logos are instantly recognisable, crystal clear and versatile (Bowker, 2014). Furthermore, another aspect of physical evidence is the packaging of the products, which is very important in cosmetics. Packaging is directly related to sales and profit – Tiffany & Co. ‘s blue box is more recognisable than the jewellery itself and Apple’s minimalist packaging is known worldwide (Conran, 2014). The packaging of True Beauty will be simple and sustainable because the whole brand message is to be kind to your health and to the environment. More about packaging in chapter 4.5.2.

The 7Ps Marketing Mix model was created by E. J. McCarthy (1960) as an essential strategy tool for small businesses (Hanlon, 2019). Although the marketing will be focused online, this model will give an excellent overview of the marketing strategy as a whole. There are many aspects that need be taken into consideration such as Process, Place and even Physical Evidence.

4.6.1 MARKETING MIX

TRUE BEAUTYBEAUTY THAT IS HONEST.

Figure 51. True Beauty campaign image (Author’s own, 2020). Figure 52. True Beauty marketing mix (Author’s own, 2020).

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4.6.2 DIGITAL MARKETING MIX

This digital marketing represents the three areas of how the marketing will happen: with earned, owned and paid media. The majority of the focus will be put on owned media, because besides paid media, that is the main way that True Beauty can control how its perceived and what content to create. The whole True Beauty online store will be built around experience. Customers can use the Shade Finder to find their perfect shade and take a skin quiz as well, which will help to determine how they should approach the application process. What this means is that a customer will take a quiz and determine whether their skin is dry, normal, combination or oily. If their skin is dry, for instance, the True Beauty Skin Quiz will suggest that they put on their foundation with a brush, since it absorbs less moisture from the skin than a sponge would, and then finish off with very little powder to avoid a dry and flaky finish. All of these tips and tricks will be portrayed on social media so that consumers can have the feeling of experience in every aspect of the brand.

With earned media it is more hit or miss. However, if the product is good then there should not be any worries that the customers will not like it. On the other hand, when True Beauty receives feedback, whether it’s positive or negative, it is important to take that feedback and use it to make the brand or the product better. Thus, it is important to also listen to earned media because they might have valuable insight of how to be more successful.

TRUE BEAUTYSHADE FINDER

Find your foundation shade so you can go about your day and not worry about

those awkward foundation lines.

Figure 53. True Beauty Shade Finder (Author’s own, 2020).

Figure 54. True Beauty digital marketing mix (Author’s own, 2020).

DIGITAL MARKETING MIX

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promotional mixadvertising

direct marketing

personal selling

public relations

sales promotion

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4.6.3 PROMOTION

The promotional strategy consists of 5 sub-categories: advertising, sales promotion, personal selling, public relations, direct marketing. Mishra explains that promotion and marketing go hand in hand (Mishra, 2015) and one can’t be done without the other. It can be said that promotion is the voice of the company which sends out the brand’s message for the consumers to hear (Mishra, 2015).

Advertising will mainly consist of advertisements on social media platforms such as Instagram and Facebook. However, there will be advertisements placed on the internet also, such as banners and Google ads. One important part of advertising on the internet is to bring the customer to the online store so that they will make a purchase. One way of doing that is with a Facebook Pixel that will be planted on every landing page of the online store. To give an example – if a customer visits the online store but does not buy anything, the Facebook Pixel will pick up on that and then a few days later place an ad on that persons Facebook feed.

Sales promotion such as discounts and coupons can be used to encourage customers to make a purchase. Although True Beauty does not condone overconsumption as the brand stands for people’s health as well as Earth’s “health”, and discounts can often do just that, then as a starting brand discount codes can be a great way to gain new customers. Discount codes can also be used though influencer marketing, via affiliate codes for example.

Personal selling is tricky when the brand only sells online. However, one way of creating that personal feeling is introducing the employees and workers of True Beauty to the followers so they know exactly who is sending out their products or who is talking to them under an Instagram post.

Public relations come handy when True Beauty wants coverage from the media. Press releases will be sent to many different media outlets, magazines and newspapers when the brand launches, which will help to attract people who otherwise would have not even known about the launch.

Direct marketing for True Beauty is basically what they are doing with digital marketing. Since True Beauty will be doing direct sales, without any retailers, every marketing tactic is a direct one. Roesler says that email marketing is a perfect way to reach mobile customers, it’s inexpensive and it’s an effective way to keep customers informed (Roesler, 2014). This indicates that email marketing is a foolproof way to still reach large number of consumers for a small amount of money, which is perfect for a new and upcoming brand.

PROMOTIONAL STRATEGY Figure 55. True Beauty promotional strategy (Author’s own, 2020).

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4.6.4 SOCIAL MEDIA CHANNELS

More people are using social media than ever before – 3.48 billion in 2019 (Sherman, 2019) and therefore, is a massive platform to share True Beauty’s message and showcase the products. In the beginning, True Beauty will be using two social media platforms: Instagram and Facebook.

Ttruebeauty

True BeautyEstonian clean makeup brand championing non-toxic, responsible beautywww.truebeauty.com

Instagram’s age-demographic breakdown shows that 75% of their users are aged 18-24, 57% are 25-29 and 47% are 30-49 (Tran, 2020). This implies that it’s mostly Millennials and Gen Z who explore the depths of Instagram the most, who by chance, are the target customers of True Beauty.

There any many benefits to using Facebook such as it’s popularity, large reach and highly targeted ads (Metserve Media, 2018), but also the fact that 77% of 18-34-year-olds still use Facebook on a daily basis (Pickard-Whitehead, 2020), who are True Beauty’s target consumers. This shows that Facebook is the perfect platform to promote the business.

why instagram?

why facebook?

TTrue Beauty

TRUE BEAUTY

The type of content that will be posted on True Beauty’s social media must be engaging, unique and interesting, because the attention span of a Millennial is 12 seconds – and for Gen Zers its 8 seconds (Patel, 2017). The content for social media will be a mixture of product photos, interactive Q&A’s, campaign shoots and influencer reposts. The ongoing message, however, will always be the brands mission: to deliver high-quality, yet clean makeup.

Figure 56. True Beauty Instagram (Author’s own, 2020). Figure 57. True Beauty Facebook (Author’s own, 2020).

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4.7 OPERATIONS

4.7.1 LABORATORIES

The first step to creating your own makeup is perfecting the formula, which is usually done by a laboratory. They usually have their own army of innovators, formulators and scientists who help to choose the best ingredients, make the cosmetics and lastly help to create the packaging (McIntyre, 2017). Therefore, the key resource is a lab.

There are labs all over the world – anywhere from the USA to China to Europe. However, there are some factors that need to be kept in mind when choosing a lab to partner with. For instance, labs in China are notorious for unsafe working environments, unfair wages, hazardous packaging and toxic ingredients (Uhapi Beauty, 2018). On top of that, the E.U Cosmetics Directive list of banned ingredients are not restricted in that area. Moreover, the US’ ingredient guidelines are much less strict that those of the EU (Debra, 2020). Although they must meet and follow the FDA regulations, there is still a long list of harmful ingredients banned in the EU that are legally allowed in the US (Milman, 2019). For these reasons, it would be a logical move to have a lab inside the EU, since the core and the foundation of the brand is that the ingredients are safe and non-toxic. It is important to note that producing in the EU will be much more expensive that elsewhere in the world, but in terms of brand equity it would be a mistake to produce elsewhere, where harmful ingredients are not banned.

4.7.2 FACTORIES

Altough some laboratories offer to manufacture the packaging as well, it is recommended to work with a qualified factory who specialise in product packaging. Thomas Smale puts emphasis on the fact that the design of your brand is a key element of building trust with your customer (Smale, 2017) and similarly, an article in Business Partner Magazine states that an attractive packaging is likely to increase the sales of your brand (Business Partner Magazine, 2018). Therefore, another key resource is a factory who will produce the packaging for True Beauty.

POTENTIAL LAB PARTNERS

POTENTIAL FACTORY PARTNERS

MADE BY NATURE www.madebynaturelabs.com

www.gipiccos.it

www.phbethicalbeauty.co.uk

ALBEA

GI PICCO

HCP

PHB ETHICAL BEAUTY

BERRY GLOBAL

www.albea-group.com

www.hcpackaging.com

www.berryglobal.com

Figure 58. True Beauty potential lab partners (Author’s own, 2020).

Figure 59. True Beauty potential factory partners (Author’s own, 2020).

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4.7.3 HUMAN RESOURCES

Having or making a company wouldn’t be possible without the people behind it. They are a key element because they employees are like small screws that make the machine move.

Nonetheless, in the beginning there will only be a handful of workers and they will probably have a variety of tasks, due to the lack of financial stability. However, it should not be a problem as the company will sell small quantities, and if the sales increase and the workload as well, the company at that point should have the funds to employ more workers. Realistically speaking, the company will start of with 2-3 workers who will do everything, from marketing to sales, customer service to design.

On the other hand, working with freelancers would be a great opportunity to get a fresh perspective and not hassle with contracts and full-time employment. Lilia Stoyanov says that hiring freelancers is a sound business decision because they have rare skill sets, require no training, bring diversity of thought to the table and usually have flexible capacities (Stoyanov, 2019). In this context, freelancers could help the brand with logos, typography or anything design related.

TRUE BEAUTYBEAUTY THAT IS HONEST.

Figure 60. True Beauty campaign image (Author’s own, 2020).

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The headquarters of the brand would initially be located in Tallinn in Estonia, an Eastern European country. It is often considered as the best country in the world for start-up companies, because the government provides a decent base for supporting new businesses both in the initiation phase and later on (Tallinn, 2020). Also, the good location and the logistical abilities makes it easy to manufacture the formula and produce the packaging abroad, and then ship to Estonia for distribution.

4.7.4 LOCATION

“In recent years, Tallinn has become Europe’s one of the most hyped startup cities. Individuals with entrepreneurial

mindset and business angels are flooding the city. Maybe that is the reason why

experts are calling Estonian capital the “Silicon Valley of Europe”. If you want to start your wonderful journey in the

Startup world, then Tallinn is a perfect place for you to do so.”

Figure 61. Natural beauty (Shevtsova, 2018).

- Ucha Vekua (2018)

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4.8 FINANCE

This table showcases a realistic and achievable 5-year finance plan for True Beauty. The goals for each year were outlined using the SMART criteria by G. T. Doran (1981) to help set feasible goals (Mind Tools, 2020). The numbers are calculated in euros (€).

The table demonstrates many important financial factors that need to be considered. The first and most important one is net profit, which will be on constant rise throughout the 5 years, unless there is a change in the business proposal. According to the plan, the biggest rise in revenue will be in second year due to an eyeshadow palette and it is predicted that it will sell more units than other products.

In terms of the products, according to Patton, an average per bottle cost is around 2,5€ per unit (Patton, 2018). Since True Beauty is a new brand and the quantity sizes are small, the cost per bottle will be higher than usual. In addition, considering the fact that the formula and ingredients of True Beauty will be clean and non-toxic, the cost per bottle will be even more expensive. Consequently, the own price for the for products is 5€. In terms of retail price, the prices are as follows: foundation is 17€; concealer is 10€; pressed powder is 16€; loose powder is 16€. The eyeshadow palette which will be released in year 2, will be priced at 24€.

EUR FY1 Forecast FY2 Forecast FY3 Forecast FY4 Forecast FY5 ForecastRevenueFoundation 13458 16150 19380 24225 30281PCS 950 1140 1368 1710 2138Concealer 5000 6000 7200 9000 11250PCS 600 720 864 1080 1350Presssed powder 5000 6000 7200 9000 11250PCS 375 450 540 675 844Loose powder 5000 6000 7200 9000 11250PCS 375 450 540 675 844Eye shadow 0 20000 40000 50000 62500PCS 0 1000 2000 2500 3125Shipping 11500 18800 26560 33200 41500Total revenue 39958 72950 107540 134425 168031Total orders 2300 3760 5312 6640 8300Direct expensesProduction 9583 15667 22133 27667 34583Shipping costs 10542 17233 24347 30433 38042Gross profit 19833 40050 61060 76325 95406Gross profit margin 49,6% 54,9% 56,8% 56,8% 56,8%Operating costsMarketing 4269 5123 6147 7684 9605Website 150 150 150 150 150Office and storage 0 2796 4200 4200 4200Testing 5667 2833 2833 2833 2833Other expenses 1000 2000 3000 3500 4000Salary 0 15000 25000 35000 40000Taxes 0 5070 8450 11830 13520Employees 1 1,5 2 2Average net salary 1250 1389 1458 1667Net profit 8748 7078 11280 11128 21098

NOTE: Numbers are approximate.

Figure 62. True Beauty finance (Author’s own, 2020).

5-YEAR FINANCE PLAN

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lusi

onThe beauty industry is currently facing many difficulties. Constant change of trends, new competitors entering the market nearly every day the COVID-19 pandemic. They are really shaking up the multibillion industry and the situation is critical. However, research shows that the industry will stand strong and will survive the crisis.

In spite of the current circumstances, the is one positive outcome that has risen. People are more concerned about their health and wellbeing than ever, which has created a gap for the clean makeup market. And that is where True Beauty will position itself.

True Beauty is a mixture of mainstream and clean makeup – the mission is to deliver makeup with clean ingredients that has the same pigmentation that mainstream makeup has. The brand is genderless and stands for equality and diversity – the colour range is 35 shades, which is impressive for a new cosmetics brand.

The consumers have shown a need and a want for clean beauty. True Beauty will deliver. No one knows what the industry or the consumers want next, but this is what they want now. True Beauty must follow the trends to stay afloat, therefore, the future might hold a different route for the brand.

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Figure 7. Blackler, J. (2018) Genderless makeup brand Jecca Blac. Available at: https://www.gendergp.com/makeup-tips-how-to-cover-beard-shadow-acne-and-scarring/ (Accessed: 1 May 2020).

Figure 8. Author’s own (2020) Intelligent Beauty. Available at: https://en.wikipedia.org/wiki/IPad_Airhttps://www.musingsofamuse.com/2012/07/sephora-pantone-color-iq.html(Accessed: 1 May 2020).

Figure 9. Author’s own (2020) Intelligent Beauty. Available at: https://en.wikipedia.org/wiki/IPad_Airhttp://beautybybenz.blogspot.com/2012/07/sephora-pantone-color-iq-advanced.html (Accessed: 1 May 2020).

Figure 10. Garten, M. (2019) Clean Beauty. Available at: https://www.goodhousekeeping.com/beauty/a26522538/clean-beauty/ (Accessed: 1 May 2020).

Figure 11. Parish, H. (2017) Clean Beauty. Available at: https://www.healthy-magazine.co.uk/clean-beauty-top-ingredients/ (Accessed: 1 May 2020).

Figure 12. Author’s own (2020) Clean beauty sub-categories. Available at: https://pngimage.net/plant-icon-png-10/ (Accessed: 1 May 2020).

Figure 13. Turk Corner (2019) Natural beauty ingredients. Available at: https://turkcorner.com (Accessed: 1 May 2020).

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Figure 14. Author’s own (2020) Three major chemical categories.

Figure 15. Author’s own (2020) Difference between the EU and US market. Available at: https://pngimage.net/plant-icon-png-10/ https://www.vecteezy.com/vector-art/435183-chemistry-icons-flathttp://pluspng.com/png-world-map-2285.html (Accessed: 1 May 2020).

Figure 16. Author’s own (2020) List of harmful ingredients.

Figure 17. Author’s own (2020) True Beauty logo.

Figure 18. Author’s own (2020) True Beauty logo.

Figure 19. Author’s own (2020) True Beauty logo.

Figure 20. Author’s own (2020) True Beauty logo with white space.

Figure 21. Author’s own (2020) True Beauty logo variation with white space.

Figure 22. Author’s own (2020) True Beauty logo with slogan.

Figure 23. Author’s own (2020) True Beauty campaign image. Available at: https://imginn.com/p/By7AYBKgXbn/ (Accessed: 2 May 2020).

Figure 24. Author’s own (2020) Global beauty industry retail sales. Available at: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/how-covid-19-is-changing-the-world-of-beauty (Accessed: 2 May 2020).

Figure 25. Author’s own (2020) Glossier’s beauty tutorials. Available at: https://pngio.com/images/png-a1137630.html https://www.instagram.com/tv/B_5mbRrJgaR/(Accessed: 2 May 2020).

Figure 26. Author’s own (2020) Global beauty industry consumer segments.

Figure 27. 100% PURE (2018) Natural cosmetics. Available at: https://www.100percentpure.com/blogs/feed/greenwashing-in-cosmetics-who-are-you-trusting (Accessed: 2 May 2020).

Figure 28. Versed (2019) Versed was launched in response to the rising popularity of skincare over makeup. Available at: https://www.voguebusiness.com/beauty/is-us-beauty-boom-over-estee-lauder-loreal (Accessed: 2 May 2020).

Figure 29. CB Insights (2018) Top brands in the beauty sector. Available at: https://www.cbinsights.com/research/top-beauty-brands/ (Accessed: 2 May 2020).

Figure 30. Author’s own (2020) World of beauty. Available at: https://jingdaily.com/beauty-luxury-consumers/ https://www.pngkit.com/bigpic/u2q8a9o0w7e6w7e6/(Accessed: 2 May 2020).

Figure 31. K-Rauta (2020) Dr. Hauschka. Available at: https://www.k-rauta.ee/p/dr-hauschka-hydrating-hand-cream-50ml/88kf (Accessed: 2 May 2020).

Figure 32. Madara (2020) Madara cosmetics. Available at: https://www.madaracosmetics.com/en/blog/best-organic-

skincare-products-teens-2017 (Accessed: 2 May 2020). Figure 33. Sephora (no date) Fenty Beauty. Available at: https://www.pinterest.com/pin/535506211935250866/ (Accessed: 2 May 2020).

Figure 34. Author’s own (2020) Top competitors for True Beauty.

Figure 35. Author’s own (2020) Brand positioning map. Available at:http://birgitv.blogspot.com/2016/01/lily-lolo-mineraalkosmeetika.htmlhttps://megrstafford.com/portfolio/dr-hauschka-redesign/https://marieonaturel.wixsite.com/sallanchesinstitut/galerie-photos?lightbox=image1761https://www.vippng.com/maxp/hohJxwo/https://twitter.com/hashtag/fentybyririhttps://logodix.com/anastasia https://www.freelogovectors.net/jeffree-star-logo/https://www.pinterest.com/pin/726486983616182674/

Figure 36. Author’s own (2020) Porter’s Five Forces.

Figure 37. Author’s own (2020) True Beauty campaign image. Available at: https://goop.com/beauty/skin/natural-and-organic-skincare/ (Accessed: 2 May 2020).

Figure 38. Beauloye, F. E. (2020) Beauty consumer. Available at: https://luxe.digital/business/digital-luxury-reports/luxury-wellness-beauty/ (Accessed: 2 May 2020).

Figure 39. Author’s own (2020) Characteristics of Gen Z and Millennials. Available at: https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.marketing91.com%2Fcustomer-analysis%2F&psig=AOvVaw1CJSbcs6wXIslXN_C0HF3Q&ust=1591270066384000&source=images&cd=vfe&ved=0CA0QjhxqFwoTCOj82YvF5ekCFQAAAAAdAAAAABAD (Accessed: 2 May 2020).

Figure 40. Author’s own (2020) Maslow’s Hierarchy of Needs.

Figure 41. Author’s own (2020) True Beauty Face Base Collection campaign image. Available at: https://www.thinkwithgoogle.com/marketing-resources/-fenty-beauty-inclusive-advertising/ (Accessed: 2 May 2020).

Figure 42. Author’s own (2020) True Beauty foundation. Available at: https://www.cultbeauty.com/cn/en/nars-all-day-luminous-weightless-foundation.html (Accessed: 2 May 2020).

Figure 43. Author’s own (2020) True Beauty concealer. Available at: https://www.harveynichols.com/int/brand/fenty-beauty/727840-pro-filtr-instant-retouch-concealer-210/p3382830/?fbclid=IwAR0qIWtYeBiKL4M6Bic_JAnTP1sSeIfaEPT4nfn0oDgz-qg3xbiI-AhmqRw (Accessed: 2 May 2020).

Figure 44. Author’s own (2020) True Beauty pressed face powder. Available at: https://www.lumene.com/face-makeup/nordicchic/soft-matte-pressed-powder-86442.html (Accessed: 3 May 2020).

Figure 45. Author’s own (2020) True Beauty loose setting powder. Available at: https://farabeauty.com/loose-powder.html (Accessed: 3 May 2020).

Figure 46. Author’s own (2020) True Beauty shade range.

Figure 47. Author’s own (2020) True Beauty packaging. Available at: https://www.polishedpolyglot.com/2016/09/review-lily-lolo-vegan-nail-polish.html (Accessed: 3 May 2020).

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Figure 48. Author’s own (2020) True Beauty concealer. Available at: https://www.harveynichols.com/int/brand/fenty-beauty/727840-pro-filtr-instant-retouch-concealer-210/p3382830/?fbclid=IwAR0qIWtYeBiKL4M6Bic_JAnTP1sSeIfaEPT4nfn0oDgz-qg3xbiI-AhmqRw (Accessed: 2 May 2020).

Figure 49. Author’s own (2020) True Beauty packaging. Available at: https://sinulooduskosmeetika.ee/en/pood/mineraalne-blush-clementine/ (Accessed: 3 May 2020).

Figure 50. Author’s own (2020) True Beauty campaign image. Available at: https://coveteur.com/2019/02/21/men-wearing-makeup-2019-beauty-trend/ (Accessed: 3 May 2020).

Figure 51. Author’s own (2020) True Beauty campaign image. Available at: https://www.pexels.com/photo/woman-s-face-3373716/ (Accessed: 3 May 2020).

Figure 52. Author’s own (2020) True Beauty marketing mix.

Figure 53. Author’s own (2020) True Beauty Shade Finder. Available at: https://www.pngkit.com/bigpic/u2q8a9o0w7e6w7e6/ https://www.fentybeauty.com/fenty-face-shade-finder (Accessed: 3 May 2020).

Figure 54. Author’s own (2020) True Beauty digital marketing mix.

Figure 55. Author’s own (2020) True Beauty promotional strategy.

Figure 56. Author’s own (2020) True Beauty Instagram. Available at: https://en.wikipedia.org/wiki/IPad_Airhttps://www.instagram.com/lilylolouk/(Accessed: 3 May 2020).

Figure 57. Author’s own (2020) True Beauty Facebook. Available at: https://en.wikipedia.org/wiki/IPad_Airhttps://www.facebook.com/lilylolo/(Accessed: 3 May 2020).

Figure 58. Author’s own (2020) True Beauty potential lab partners.

Figure 59. Author’s own (2020) True Beauty potential factory partners.

Figure 60. Author’s own (2020) True Beauty campaign image. Available at: https://www.ahlens.se/Skonhet/makeup/ogon/linser-938253/swati-cosmetic-lenses-linser-sapphire-90845996/ (Accessed: 3 May 2020).

Figure 61. Shevtsova, D. (2018) Natural beauty. Available at: https://www.pexels.com/photo/black-and-brown-brush-on-saucer-1619488/ (Accessed: 3 May 2020).

Figure 62. Author’s own (2020) True Beauty finance.

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Bendoni, K. W. (2017) Social Media for Fashion Marketing. Bloomsbury.

Danziger, P. N. (2019) ‘6 Trends Shaping the Future of the $532B Beauty Business’ Forbes. Available at: https://www.forbes.com/sites/pamdanziger/2019/09/01/6-trends-shaping-the-future-of-the-532b-beauty-business/#3e512017588d (Accessed: 3 April 2020).

Harris, C. (2017) Fundamentals of Digital Fashion Marketing. Bloomsbury.

Hudson, S., Kim, A. and Moulton, J. (2018) ‘What beauty players can teach the consumer sector about digital disruption’ McKinsey & Company. Available at: https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/what-beauty-players-can-teach-the-consumer-sector-about-digital-disruption (Accessed: 1 May 2020).

Keller, K. L. (2012) Strategic Brand Management. Building, Measuring and Managing Brand Equity. Fourth Edition. Pearson.

Kotler, P. and Armstrong, G. (2018) Principles of Marketing. Seventeeth Edition. Pearson.

Kotler, P., Keller, K. L., Brady, M., Goodman, M. and Hansen, T. Marketing Management. Third Edition. Pearson.

Moore, G. A. (2014) Crossing the chasm: marketing and selling disruptive products to mainstream customers. Third edition. New York: Harper Business.

Posner, H. (2015) Marketing Fashion. Second Edition. Laurence King Publishing.

Stylight Insights (no date) ‘Best of Beauty Report’ Available at: https://insights.stylight.com/reports/beauty-report-2019/ (Accessed: 10 April 2020).