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Nature nurtures

best

Marketing Plan
MKX 5955: Marketing and the International
Consumer

Lecturer: Mr Kimble Montagu


Tutor: Mr Lou Katz
Tutorial: Thursday 2.00pm

Group Member:
Vichida Nithipiat (25853716)
Yang Li (25217496)
Xiaoyun Ma (25837893)
Dan Luo (25544136)
Due Date: 22/05/14
Words: 3462
Executive Summary

The purpose of this report is to provide a marketing plan for Natios


facial masks to enter skincare market in Beijing, China. First, China
has the fastest cosmetic and skincare industry in the world. Natio is
one of the fastest growing beauty brands in Australia. SWOT
analysis indicated that although Natio has some entry barriers to
enter Chinese market such as testing facial masks on animal,
Chinese industrys trend overview and market growth provide an
opportunity for natio to make profit in the future. Second, females
and males aged 25 to 35 are chosen for our target market. This
target group has high disposable income and their lifestyle and
behaviour suggests that they require premium and high quality
products. Naito will suitable for them because of its natural
ingredients offers more radiant skin and are not harmful to their
skin. According to conceptual map, Natio will position itself as a
niche to gain competitive advantage. Third, marketing objectives
will be changed over time. For short term, 30 percent brand
awareness will be achieved. 5 to 8 percent profit margins and 5
percent market share will be achieved in medium and long run,
respectively. Fourth, market strategies will be developed, including
product & brand, service, price, distribution and promotional
strategies. Joint venture will be used as entry mode to gain access
to local knowledge effectively. Natio has to commit to deliver
product quality and services to customers. Pricing strategy suggests
to lower price of Natios facial masks in China. In this way, it enables
Natio to attract more customers. Furthermore, implementation,
control and monitoring plans are developed for Natio to implement
the marketing strategies and adapt to the changing efficiently.
Overall, this marketing plan will allow Natios facial masks to enter
Chinese market successfully. It is essential that Natio must retain its
position and commit to implement strategies to achieve its

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marketing objectives and deliver high quality product and services
to maximise customer value.

Table of Contents
Executive Summary...........................................................2
1. General Introduction....................................................4
1.1 Situation Analysis........................................................................4
1.1.1 Analysis of Skincare industry in China...................................4
1.1.2 Microenvironments................................................................5
1.1.3 Trend overview......................................................................6
1.1.4 Company Analysis.................................................................7
1.1.5 Entry mode............................................................................8
2. Market Segmentation and Targeting...............................9
2.1 Market Segmentation..................................................................9
2.2 Target Market.............................................................................10
2.3 Positioning & Estimate market share.........................................10
3. Marketing objectives...................................................12
4. Marketing Strategies...................................................13
4.1 Product & brand strategy...........................................................13
4.1.1 Market offering and five product levels...............................13
4.1.2 Packaging............................................................................13
4.2 Service strategy.........................................................................14
4.2.1 Fresh customers service.....................................................14
4.2.2 Loyal customers service.....................................................14
4.3 Pricing strategy..........................................................................14
4.4 Distribution strategy..................................................................15
4.4.1 Online shopping website & Natio official website in Chinese
.....................................................................................................15
4.4.2 Natio store in shopping centre............................................15
4.4.3 Agency................................................................................15
4.5 Promotion mix (IMC), strategy and rationale.............................15
4.5.1 Advertising..........................................................................16
4.5.2 Sales promotion..................................................................16
4.5.3 Events and Experiences......................................................16
4.5.4 Direct and Interactive Marketing.........................................17
5. Implementation and Control.........................................17
5.1 Tactics to implement strategies.................................................17
5.2 Monitoring strategies.................................................................18
6. Recommendation.........................................................19

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7. Conclusion.................................................................20
8. References................................................................21
9. Appendices................................................................23

List of Appendices and Figures

Appendix 1: Sales of Skincare by category

Appendix 2: Porters five forces

Appendix 3: Administrative licensing system

Appendix 4: Key success factors

Appendix 5: SWOT analysis

Appendix 6: Ansoffs product market expansion matrix

Appendix 7: Competitors analysis in Chinas facial masks


industry

Appendix 8: Five product levels

Appendix 9: Implementation of marketing strategies

Figure 1: Conceptual map for facial masks in Chinese


skincare industry

Figure 2: Elastic demand of Natios facial mask

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1 General Introduction
China is considered to be one of the fastest growing emerging
economies. China had a strong decadal growth rate of 10.5 percent
between 2001 and 2010 (IMC 2013). Such a high economic growth
rate has attracted many foreign investors. Moreover, China is the
largest emerging cosmetic and skincare market in the world (FBIC
2012). Facial masks have the highest sales among other skincare
and cosmetic products in China. This is why Natios lipstick and
M.A.C. are not chosen to be the first product launched in China.

Natio is Australian skincare and cosmetics products brand and offers


varieties of product lines such as natural make-up, facial treatment,
and skincare for men. Natio has been successfully operating in
Australia. Natio is one of the fastest growing cosmetics and skincare
brands in Australia (Michael Edwards 2008). Thus Natio has
considered this prospect as a good opportunity for Natio to launch
facial mask to China by setting up the first store in Beijing. The
scope of this report is based on the study of the skincare industry
and facial mask industry in China.

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1.1 Situation Analysis
1.1.1 Analysis of Skincare industry in China

1) Industrial Players

A number of major competitors includes both Asian and Western


brands. LOreal, Shiseido, Herborist, Inoherb and Artistry are
considered as Natios competitors in Chinese skincare market.

2) Industry revenue, size and growth

The growth of skin care products is mainly driven by purchasing


power of Chinese females. According to Ibisworld (2014), total
revenue made by cosmetic industry in China is approximately US$
17 billion at the annual rate of 9.9% since 2010. The skin care
products hold about 45% of total cosmetic industry revenue in 2014.
The demand of cosmetic and skin care products is expected to
increase and industry revenue is expected to grow at the annual
rate of 5 percent with total of US$ 21.5 billion in 2019 (FBIC 2013).

In addition, according to Euromonitor International (2013), facial


masks had the fastest growth among other skincare products in
China. Facial masks achieved approximately US$1.07 million and
presented 13 percent in current value growth in 2012. Sales of facial
masks experienced about 135.8 percent in current value growth
from 2007 to 2012. This indicates the highest sales among other
skincare products as shown in Appendix 1.

3) Industry Attractiveness

Porters five forces model is applied to analyse the facial masks


industrys attractiveness in China. According to Appendix 2, it
suggests that the nature of competition in facial masks industry
contributes a fast pace movement in China. Hence the facial masks

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industry is considered to be attractive as industry is expected to
continually grow.

1.1.2 Microenvironments
The external forces must be considered in Chinas facial masks
industry. PESTLE Analysis is applied to analyse six external forces as
follows:

1) Political/Legal forces

First, China has implemented administrative licensing system on


imported cosmetic products (see Appendix 3 for more detailed).
Second, China has levied 5 percent of tariff and 17 percent of value-
added tax on imported skin care products. This indicates a barrier to
enter facial masks market in China. However, China has signed Free
Trade Agreement (FTA) with Australia. Sino-Australian economic and
trade relationship has maintained a good momentum of
development.

2) Economic force

Chinese economic development has achieved smooth and rapid


growth in recent years. Chinese people are now spending more
money and enjoying a high quality of life more than just satisfying
their basic needs.

3) Socio-Cultural forces

Beauty and appearance become more important for Chinese people,


especially female. Good-looking appearance is not only attractive
but it can also increase self-confidence.

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4) Technological forces

The rapid development of online shopping has a powerful impact on


the life of Chinese people. More people are willing to shop online
due to the convenience of the Internet. Many famous cosmetic
brands have their online stores.

5) Environmental forces

Chinas air pollution is so serious that people need to take special


care to protect the skin, such as using natural and healthy facial
masks. It is indispensable for white-collar workers to use facial
masks since they always spend a long time working in front of
computers and the computer radiation is very harmful for skins.

1.1.3 Trend overview

First, cosmetic and skincare industry has been growing significantly


along with the rapid improvement in living standards in China.
Consumer tastes and preferences with growing disposable income
raise level of sophistication towards premium skincare products.
Premium brands become more attractive while mass skin care
products decline. Skincare producers have to increase their
production volume to serve the demand (Euromonitor International,
2013). The key success factors (KSF) for facial masks industry in
China is provided in Appendix 4.

Second, Chinas skincare industry involves mainly eight product


trends such as anti-aging through rejuvenating whitening, skin
whitening matters, and natural cosmetics products. Facial masks
with herbal or natural ingredients are popular among local
consumers who concerns about allergic skin or prefers fairer
completion and more radiant facial skin (Euromonitor International

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2013). Skincare products for men increasingly grow. Mens skincare
sector presented an increase in current value growth of 13 percent
between 2009 and 2010. Moreover, social media and e-commerce
significantly play as another distribution channels for skincare
producer to sell their products (APCO 2013).

1.1.4 Company Analysis

Natio is plant based, simple and gentle beauty care and cosmetics
brand that suitably fit within contemporary lifestyles. Natio offers
varieties of products from skincare and cosmetics to body care by
targeting both men and women. Natios products contain natural
ingredients with 100% pure essential oil blends. The benefits of the
pure essential oil provide healthier and more radiant skin to
customer with wide range of skin types. Natio aims to maximize the
customer value by delivering natural, easy-going, and refreshing
products (Natio 2014). The products are currently available for
purchase via different channels including David Jones, Priceline and
some pharmacies.

However, core competencies of Natio will be examined in order to


see whether it will be able to compete in Chinese market by using
the SWOT analysis provided in Appendix 5. Even though Natio has
some barrier to enter Chinese skincare market, there are some
opportunities and potential future development that will contribute
high profitability in Beijing, China. Natio can advertise and promote
their products and its brands through online distribution channel and
social network. Also, FTA will allow reduction of government
intervention about animal testing. However, Natio shows a strong
brand and its strength that potentially will be successfully expanded
to Chines market.

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1.1.5 Entry mode

According to Ansoffs product market expansion matrix in Appendix


6, Natio can apply market-development strategy as Natio expand its
existing product in the new market in China. Natio enter Chinas
facial mask market through joint venture (JV). Natio will join
business with Chinese partner. Chinese JV partner will help the
company to develop local knowledge and Chinese culture faster and
easier. Natio can share profit and loss with its partner. However,
managerial management must communicate well to avoid conflict in
the future.

2. Market Segmentation and Targeting

2.1 Market Segmentation


Market segmentation could be classified by four segmentation
variables; geographic, demographic, psychographic and behavioural
segmentations. Table below shows keys of relevant segmentations
of customers based on facial mask market in Beijing, China.

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Segmentati Segment A Segment B Segment C
on
Demographic
Age 17-24 25-35 36-65
Gender Female & male Female & male Female
Life-Cycle Young, high school Single, in labour Mature women and
stage kids and university force or/and men with family and
students newlyweds children
Income Limited income High disposable Higher disposable
income income and wealthy
Geographic
Location Beijing Beijing Beijing
Psychographic
Lifestyle Highly Concerns and Prefer the brand
influenced by conscious of that provides
trends, family health and skincare specialist
and friends beauty knowledge and
opinion and appearances suitable for their
media Prefer more skin types
(eg. Make-up radiant skin and Likely to stick with
tutorial on younger and the products that
YouTube) healthier looks used over a period
Prefer products of time
with natural
ingredients

Behavioural
Benefit Seek for the Price sensitive Loyal to one
sought high products Seeking for specific brand that
volume with low premium served their
or affordable products than satisfactory and
prices that mass products used for over a
suitable with period of time
their incomes.

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2.2 Target Market
According to Market segmentation, the target market for NATIOs
facial mask is Segment B or 25 to 35 year-old females and males
who have high disposable income and mainly live in Beijing. Their
lifestyles suggested that they are willing to spend money on Natios
premium facial masks that contain natural ingredients to keep their
healthy and young appearances. Also, Natios facial mask will satisfy
their behaviors. This is because NATIOs facial mask possesses
natural, easy-going, and refreshing values that will make the
customers feel comfortable and contribute more radiant skin. Hence
the evidence above illustrates that the target segment chosen for
NATIOs facial mask will be the best suitable and attractive for
females and males aged 25 to 35.

2.3 Positioning & Estimate market share

Beijing has a highly competitive skincare industry. There are a


number of major facial mask brands already existed in the market.
The main competitors are LOreal, Shiseido, Herborist, Inoherb and
Artistry. Appendix 7 shows competitors description in detailed.
LOreal is masstige brand and is leading facial masks brand in China.
With its good quality and varieties of product lines at affordable
prices, LOreal achieves highest market size and demand from
customers. Inoherb and Herborist are local Chinese facial masks
brands. They are different from other foreign facial mask brands
because they are positioning its products as contain Chinese
Traditional Medicine, TCM (APCO 2013). This helps them achieving
high market share successfully. Also, these local facial mask brands
have similar features to Natios facial mask with natural ingredients.
Hence Inoherb and Herborist are our direct competitors. Shiseido is
very well-known worldwide. Artistry won many rewards in skincare

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industry (Euromonitor 2013). Hence these two facial masks
presented as reliable skincare products in Chinese market. The
position of NATIOs facial mask in the skincare industry will be
discussed by using the perceptual map as shown in Figure 1.

High Price

Shiseido

Inoherb
Herborist
NATIO Slowly respond with current trend
Quickly respond with current trends

Artistry
Loreal

Low Price

Figure 1: Conceptual map for facial masks in Chinese


skincare industry

According to Figure1, the Natios facial masks are higher price and
more premium than LOreal and Artistry. In addition, Natios facial
masks are more affordable than Shiseido, Inoherbs and Herborist.
Customers will benefit from purchasing high quality Natios facial
masks that are non-toxic at considerable price, whereas other
brands offer customers with quality products but may be higher
price or products that contain chemicals and might be harmful to
skin. Natios facial masks will be able to compete in the industry by
positioning itself as a niche to gain competitive advantage via
strong beliefs and values of benefit of plant based and natural
ingredients that are not harmful to customers skin.

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3. Marketing objectives
Our marketing objective is to increase brand awareness, sales
volume and market share of Natios facial mask in Beijing.

In the short run, during the first six months, our marketing objective
is to sell 5,000 tubes of Natios masks and achieve about 30 percent
brand awareness. Initially, it is difficult for customers to recognize
the worth of Natios brand. People care more about a products
value and effect. Especially for a foreign skincare brand, females are
worried about the risk of destroying their skin. Thus, the sales
volume will not be so high.

In the medium term, during the following year, our marketing


objective is to sell 12,000 tubes of masks and achieve 5 percent to 8
percent profit margins. After experiencing the first half-year, Natio
will set up an elementary brand image; more and more females in
Beijing are getting to know the masks of Natio. So during the next
year, there will be more regular customers. Additionally, our
marketing strategies will exert significant influence on the increase
of sales volume.

In the long run, our marketing objective in the next two years is to
sell 28,000 tubes of masks. We are aiming to occupy 5 percent of
market share of Beijings facial mask market. Due to the augment of
sales volume in the first one and a half year, we will expand our
distribution channel. For example, the Chinese agent of Natio will
find more retailers to sell Natios masks in Beijings stores. All these
will help us fulfill long-term objective.

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4. Marketing Strategies

Natio aims to focus on both women and mens beauty and


improvement of their skin. In the marketing strategies, Natios facial
mask that will enter skin care market in Beijing will be analysed.

4.1 Product & brand strategy


4.1.1 Market offering and five product levels

Natio can achieve its long-term objective by addressing marketing


offering components: product and service quality and value-based
price. Natio is required to fulfill its commitment to deliver high value
by maintaining its natural facial masks product quality and services.
This can be done by conducting R&D and market research on
customer preferences. Five products level (provided in Appendix 8)
will be identified to satisfy customers need. For example, the core
benefit of Natios mask is improving human beings quality of skin
and more beauty and its basic product is its natural ingredient with
100% pure essential oil blends. As same logo and mission: Nature
nurtures best.

4.1.2 Packaging

The outside packaging of Natios facial masks will use pure lovely
light green which represents for natural ingredient; at the top of the
packaging is Natios logo; at the main side is an attractive young
womans face. Inside includes two partssame color as outside of
bottle and green mud mask.

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4.2 Service strategy
4.2.1 Fresh customers service

Before customers buying Natios mask, staffs will be allocated in


Natio shop to help them get to know about the product and to
understand how to use product. They can get free sample and also
have right to return the products if existed any problems and
improve them until meet customers needs. When purchase over
1000 CNY or US$160.42, customers will become Natios VIP own
special right to get loyal service.

4.2.2 Loyal customers service

Loyal customers can get a loyal card in order to collect points


annually. Natio will provide a free facial treatment course for a
certain point with specific staffs. In addition, if got customers
permission, Natios staffs could get their email address or mobile
phone number. Then they can follow up customers satisfaction after
using the Natios facial mask. For example, after using the product,
the customers skin changes better or not. With useful respondents
to improve this new product get into Chinese customers mind.
Specially, the company will send the products as gift on loyal
customers birthday.

4.3 Pricing strategy


Auction-pricing strategy is used prior access to the real market in
China; the Natios mask will be put on website such as eBay or
Taobao and use auction-type pricing to figure out the going price in
China cosmetics market. In this way, this is also convenient to the
company and reduces the budget. The budget plan and financial in
4 months are provided in Appendix 10. It is noted that detailed
budget plan will be provided in the financial business plan.

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S Market penetration pricing strategy will be applied by lowering the
price. Natio can reduce their price than competitors to penetrate
market rapidly and attract more local customers. However, Natio
can keep their price higher than the price LOreal and Artistry in
order to retain its position as premium product in the industry. This
consequently will be developed in the short and medium term to
achieve market objectives. Additionally sales discounts are
necessary to promote during the whole terms. For example, 20% off,
buy one gets one free, gift cards.

4.4 Distribution strategy

4.4.1 Online shopping website & Natio official


website in Chinese

First of all, some well-known cosmetics website such as Jumei,


Tianmao and Lefeng, these are perfect place to send free sample to
customers. It is also good to develop a phenomenon about supply is
far away less than demand. When these people use Natios mask,
they will comment about products and respond back to the website.
Moreover, Chinese people prefer shopping online or e-commerce,
especially young and modern people. We need set up Natio online
shopping website to reach our target group of aged 25 to 25
females and males.

4.4.2 Natio store in shopping centre

Natios staff also gives free mask sample as a present. At the same
time, if customers wish know more about the products, staff could
teach them knowledge about protecting their skin as well as provide
brochures with Natios products.

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4.4.3 Agency

Alliance or cooperation with agencies is very essential in China in


order to increase sales volume, such as beauty salon and spa and
health center. Placing and selling facial masks in these locations will
be a good opportunity to expand selling channels.

4.5 Promotion mix (IMC), strategy and rationale

Promotion strategies can be achieved by advertising, sales


promotion, events and experiences, direct and interactive marketing
as integrated marketing communication platforms. These help to
build up the brand equity such as brand awareness, image, and
responses.

4.5.1 Advertising

Traditionally, advertising among TV, radio, magazine, newspaper;


however, in modern society with high- technology, we can use new
advertising effect, such as social media includes Weibo, Weichat, QQ
to communicate with our customers, and special mobile software
used in iphone perceive the latest product. Moreover, Natio will
sponsor some special events such as in popular dramas or movies
and used famous actresses as presenters. In the second category,
after customers purchase Nations mask, staff can also give them
make-up bags or shopping bags as gifts with outstanding Natios
logo.

4.5.2 Sales promotion

Furthermore, due to cosmetic are elastic demanded goods, price


plays a significant role on quantity demanded, as shown in Figure 2.
In other word, if the price of Natios facial mask decreases a little,
the quantity demanded will increase a lot. As result, in some public

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holidays such as Chinese New Year, National Day and Labor Day, the
price of Natios mask could sale 20% off.

Figure 2: Elastic demand of Natios facial mask

4.5.3 Events and Experiences

Natio is specific sponsored activities and events for its VIP members,
which including sports, arts, entertainment.

4.5.4 Direct and Interactive Marketing

Uses of e-mail, telephone, message, or Internet can communicate


directly with the customers. On the other hand, online activities and
programs grab customers attention directly or indirectly, conscious
or subconscious.

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5. Implementation and Control
5.1 Tactics to implement strategies
Natio will start our business expansion and facial masks will be
launched in January 2015 in Beijing, China. Table below shows the
marketing strategies along with timeline in order to ensure that
marketing plan will be conducted in timely manner. Full explanation
of each activity is provided in Appendix 9.

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5.2 Monitoring strategies
The marketing plan carries out the marketing strategies in all
aspects including the brand & product, pricing, service, distribution
and promotion mix are definitely not enough. In order to make sure
that the companys marketing strategies meet marketing objectives,
they need to be monitored.

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In general, in order to find out whether the marketing strategies we
provided were effective, we need to do some market research and
get some feedbacks from the consumers. We determined to use
questionnaire and personal interview to get comments from
customers. Before we start monitoring, it is very clear that
everything we have done is to boost our sales. Setting our service
strategy as an example, we provide make up teaching courses for
customers who spent over 1,000 CNY on our products. After
experiencing products, customers will be asked to fill a
questionnaire about their feelings toward this and recommendations
need to be gotten from them. This is aiming to know that whether
consumers are satisfied with our service and what need to be done
to make progress and to check our brand awareness in the market.

Secondly, we are going to set up an internal system to supervise the


fluctuation of the sales and most importantly to find out the
correlation among the price, distribution, promotion and sales. Our
team would collect relevant data and those data would be reported
weekly and send to the company headquarter in Australia. The data
should be analysis by particular staffs. Specifically, outcomes before
and after some strategies are implemented would be compared. In
that case, we can figure out which distribution channel is more
effective, how much profit margins and market share we achieve
and how much money should we invest to gain the best
performance.

6. Recommendation

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On account of the attractiveness of Chinese skincare market, NATIO
should not only focus on the market of Beijing, it can enter into
other Chinese first-tier cities, such as Shanghai and Guangzhou,
simultaneously, so that it can gain more brand awareness from
different region of China. In addition, after NATIO has achieved a
stable market position, the parent company should develop special
products that are more suitable for Chinese consumers. For
instance, it should make its products cause less skin irritation.
Moreover, NATIO should keep pace with technological progresses
and make good use of them. We have realized the significant impact
of Wechat to Chinese people, and put some advertisement on it.
Further technological effect should be taken into account.

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1 Conclusion

Our marketing plan focuses on an Australian skincare brand-NATIO


to enter into the skincare market of Beijing, China. We choose the
specific product-facial mask to attract the target segment, that is,
25-35 year-old female in Beijing. We will establish NATIOs stores in
Beijings famous shopping centres and online store as well. In order
to accomplish the short-, medium- and long-term objectives, we
come up with several marketing strategies. For example,
advertisements will be displayed on TV, magazines and shopping
websites, especially cosmetic websites that are frequently visited by
females. Loyal customers will have special discounts and services.
There are particular promotions on Chinese festivals. Those specific
strategies are implemented actionably and measurably. We
concentrate on the implementation of setting up the first store in
Beijing. Through effective monitoring strategy, the objectives of our
marketing plan that NATIO will gain more profit margins in Beijing
will be achieved.

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1. References
APCO World wide 2013, 2013 Chinese market study, APCO

Chinas cosmetics market 2012, Chinas cosmetics market, Fung


Business Intelligence Centre (FBIC).

China Industry Report (CIS) 2013, China Cosmetic Market: China


Skincare Industry Production & Marketing and Investment Forecast
report, 2013-2017, China Industry report

Data monitor 2010, PRODUCT INSIGHTS: SKIN CARE IN CHINA

Dallas, TX 2013, China cosmetics industry 2013 analysis & 2016


forecasts in new research report, PRWeb.

Edwards, M. (2008).Cosmetics & Perfume Survey

Euromonitor International 2013, Beauty and Personal Care in China:


Industry Overview, Euromonitor International

Euromonitor International 2013, Market size statistics, Euromonitor


International

Euromonitor International 2013, Skincare in China: Industry


Overview, Euromonitor International

IBISWorld (2014), Cosmetic & Personal Care Product manufacturing


in China: Market Research Report, IBISWorld

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Indian Merchants Chamber (IMC) 2013, India calling, IMC, India

NATIO 2014, Natio Official Website, Natio, Australia viewed 10 May


2014, Retrieved from: http://www.natio.com.au/products-static

The Economist 2014, Because its no longer worth it: Foreign


cosmetics-makers are scalling back their ambitions in China, The
Economist

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2. Appendices

Appendix 1: Sales of Skin Care by Category

Table 1: Percentage value growth between 2007 and 2012

Source: Euromonitor International (2013)

Appendix2: Porters five forces

Porters five forces model suggests that the intensity of competition


in Chinas skincare market is very high and is attractive for existing
players. However, the model shows that facial mask in Chinas
skincare industry is not quite attractive for new players unless the
new entry brands have already been successfully established

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internationally or in a host-country. Overall, the nature of
competition in skincare industry contributes a fast pace movement
in China. Hence the skincare industry is considered to be attractive
as industry growth is expected to continually grow.

Forces Evidences Level


Threat of Economies of scale in cosmetics and Medium
New Entrants skin care industry are expected to
increase in 2019 (CIS 2014),
indicating higher demand of new
skincare products
High start-up costs such as for R&D
are required
Government policy and regulation
are complex in China such as testing
cosmetic on animal and growing
protectionism of domestic industry
Bargaining Wide availability of skincare products High
Power of from local and foreign countries
Buyers Consumers are sensitive to price
because price wars between online
cosmetics retailers are causing
heavy discounting (Economist 2014)
Increasing number of online
distributor
Bargaining Large supply of diverse products, Low
Power of offering wide range of different types
Suppliers of skincare products such as
whitening, anti-aging, and organic
ingredients
Threat of Increase in demand of numbers of Modera
Substitutes facial treatment at spa and beauty te
salons but high price
Competitive Numerous international cosmetic High
Rivalries brands from Asia and Western
countries
Large domestic brands are also
highly competitive
Consumer switch brands easily
About 2,000 new products were
launched in China in 2009, which
increased by 20% from 2008
(Datamonitor 2010)

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Appendix 3: Administrative licensing system

China has implemented administrative licensing system on imported cosmetic


products. At first, the importer should apply for approval documents from State Food
and Drug Administration. Then the Quarantine and Inspection Institution will provide
customs inspection for those imported cosmetic products. Next, the importer should
apply for customs declaration and pay the tax.

Appendix 4: Key success factors


The key success factors (KSF) for facial masks industry in China
involve the following aspects.
Key success Descriptions
factors
Positioning and Facial masks producers require consistently delivering
relationship with
good products and services in order to create and
the consumer
maintain good relationship with customers and thereby
gaining consumer preferences. Chinese consumers
generally look for premium or high-quality products that
fit their needs. Thus it is important that brands to be well
positioned in the consumers mind (APCO 2013).
Distribution Three major distribution channels for facial masks brands
channel
include luxury department stores, spas and online
distributions. Toaboa and Tmall are major websites that
provide multiproduct, especially skincare and cosmetic
products (APCO 2013).
Advertising Advertising also play important role in KSF. Advertising on
billboards (eg. subway and magazine) is always an

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effective and useful communications tool. Also,
advertising on broadcasting media and television, press
radio and outdoor event are also beneficial (APCO 2013).
Social Media The most popular social media such as weibo and WeChat
are used for sharing information. Most brands use this
distribution channel to communicate with their customers
(APCO 2013).

Appendix 5: SWOT analysis

The analysis revealed that Chinese skin care industry has some risky
for expanding business but at the same time Natio still has a
potential for future development in China

Strengths Weaknesses

Naito offers skincare products Lack of brand-awareness among in


that are primarily plant based Chinese skincare market as a new
and contains finest natural entry
ingredients with 100% pure Number of competitors that may
essential oil blends and suits pose threat when enter to Chinese
for both women and men of all market
skin types.
Products have no chemical
which will not be harmful
Natio also offers various
cosmetic and body care to
create refresh and healthier
appearance and flawless
complexion for customers.

Opportunities Threats

Cosmetic and skincare industry Chinas policy requires all


is one of the fastest growths cosmetics be tested on animal
and is expected to grow (Economist 2013)
further. This provides
opportunities to enter the Large numbers of existing
Chinese skincare market. international facial mask brands
Increase in GDP indicates that are available for Chinese
higher level of living standard consumers, so it will be difficult to
and higher disposable income gain higher market share.

30
of Chinese Individuals. This
influences individuals to
consume natural skincare
products
Advanced technologies such as
social media and Internet will
be another way to build
reputation and recognition for
Natios brand and products
information.
Ongoing Free Trade Agreement
negotiation will build up good
relationship between China and
Australia in terms of trading
and investment.

Appendix 6: Ansoffs product market expansion


matrix

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Appendix 7: Competitor analysis in Chinese
facial masks market (Euromonitor 2013)

L'Oral Skincare products leaders in China with 17% value


share
The brand possessed the market share of 6.3 per cent
in the Chinese skin care and cosmetic industry.
Efficient R&D and well promotion such as high
investment in television and online advertising
Strong image emphasises; cool, urban edge and
spirited style.
Lower price; more affordable to consumers.

Herborist Local brand with market share of 1.9 per cent in the
(Shanghai Chinese skin care and cosmetic industry.
Jahwa United) Fast growing mens skincare and herbal ingredients
brands
Establish brand image by cooperating with local
hospital (Ie. Rui Jin Hospital)

Shiseido The brand possessed the market share of 1.6 per cent
in the Chinese skin care and cosmetic industry.
Japanese brands
Offered advanced technology skincare and makeup
products with higher price.
The company has been successfully operating
internationally over the past century.
Strong brand image; perceived as a luxury and reliable
brand

Shanghai One of successful local brand


Inoherb Had the greatest share increase in 2012 and possessed
Cosmetics the market share of 2.2 per cent in the Chinese skin
care and cosmetic industry.
Offers Chinese natural and herbal ingredients
Effective brand awareness strategy such as distributing
its products online through famous shopping retailers
(lefeng.com), television advertising on popular variety
shows (Huan Satelite TV and Jiangsu Satellite)

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Wide range of product lines with 100 facial masks
available at competitive price

Artistry Had possessed the market share of 5.2 per cent in the
(Amway) Chinese skin care and cosmetic industry.
Late 2011 and 2012 also saw the launch of Artistry
Intensive Skin Care Anti-wrinkle Firming Serum and
Renewing Peel Face Mask, with Smart Retinol and
Smart Enzyme as the major active ingredients
respectively, which claim to rejuvenate skin in a short
period of time.
rtistry Intensive Care Anti-Wrinkle Firming Serum won
the 2012 COSMO Annual Anti-age Award, In 2012
Amway was ranked fifth in beauty and personal care in
China

Appendix 8: Five products level

Appendix 9: Implementation of marketing


strategies

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Details

Strategies
We are planning to enter our facial mask officially into
Beijing, China at the beginning of 2015. We decide to
Natio store
setup a flagship store in the most prestigious shopping
construction
mall, Shin Kong, within two months (January and February)
to accomplish the whole store construction.
During the construction of the flagship store, at the same
time, we also need to consider the recruitment staff;
appropriate staffs for running our store should be hired
within January and February 2015. Specifically, we are
planning to employ 10 workforces all together, including
Recruitment
one store manager, who is expected to be responsible for
the whole operation, 5 sales assistants as well, who are in
charge of selling goods to customers and 4 cosmetologists
to help customers with coming into an actual contact with
our products.
In order to expand the products popularity in a new
market, publicity is a very crucial thing that we need to
take into account, and which should be done at the very
first beginning, and it will never stop. Our company
determined to divide the publicity into two parts, online
and off-line.
a) Online publicity
Online agencies occupy segments online dedicatedly,
using existing social media such as We-chat, microblog
etc. They are expected to publish the newest information
about our company, products, discounts and so in their
social circles (a considerably big social circle and an
Publicity excellent communication skills are preferred), trying to
build connections between costumers and our company
so as to boost the sales. The online publicity should be
done constantly all the time.

b) Offline publicity
The celebrity endorsement is an effective way to enhance
the popularity of our products, because of the reason that
our products are all about becoming pretty, so the
Chinese famous star Bingbing Fan is the perfect
spokeswoman of our brand. We are trying to contact her
in person and planning two sign a one-year contract with
her. Except for the celebrity endorsement, we can attach
posters as well on Beijings public transports such as the
bus, subway, taxi etc.
Display Products should be organized in February as we are

34
planning to open the flagship store in March officially. We
goods in
are aiming to selling our facial mask, so we need to
store
ensure that we have plenty of inventories in store.
Our flagship store is expected to face the public on 3rd
March 2015, as that day is the womens day. Sales data
should be collected every three months from March to
December 2015. Following by being sent to headquarter
and analyzed by a dedicated data team.
Open the
A series of activities would be set up at that special day.
shop
Our brand spokeswoman Bingbing Fan would come to cut
the ribbon with our brand executive officer at the opening
ceremony; besides, our facial masks are all 30 percent off
on that day; on top of that, some samples are provided for
free to the customers as well. We are aiming to increase
the popularity through all those methods.
The new product line expansion project would be
New considered in accordance of the performance of our
product line products in 2015. According to the sales revenue and the
extension data analyses result in 2015, we will decide whether there
is a need to set up a new product line in Beijing market.
At the end of 2015, we decide to whether we need to
open a new sore in Beijing to fulfill customers
requirements. Before we decide to open a new store, we
Open a new
are planning to do some research, offering questionnaires
store
to consumers in Beijing, and the decision would be made
according to their responses and the actual performance
of Natio of the whole year in Beijing.

Appendix 10: Financial Report

Budget Plan

Short term profits (6 months) 1 million CNY


Medium term profits (12 months) 1.5 million CNY
Long term profits (2 years) 3.5 million CNY

Financial Plan (one quarter)


Sale revenues 500,000 CNY

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Cost
Rent 40,000 CNY
Wages 30,000 CNY
Online agencies 10,000 CNY
Celebrity & presenters 15,000 CNY
15,000 CNY
Social Media
13,000 CNY
Other relevant costs
Net profit (before tax) 377,000 CNY
Net profit (after tax) 49,010 CNY

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