Ethiopia: populous market

Similar growth is being witnessed in another populous sub-Saharan African

country: Ethiopia. With 91.73 million people in 2012, Ethiopia is currently the
continent’s second fastest growing economy, with GDP growth averaging 
8%-10% over the past five years. In 2012/13 Ethiopia imported cosmetics,
perfume and toiletry products with a total value of $84m, according to the
Ethiopian Revenues and Customs Authority: a marked 25% increase on
products imported during 2011/12 ($67m).
Domestic manufacturers have also benefited from the country’s economic
progress and increasing urbanisation. There are currently 30 companies
manufacturing personal care products for formal retail sale within Ethiopia.
Zenith Gebs-Eshet Ethiopia is a leading Ethiopian supplier of personal care
products to the domestic market and other east African countries including
Kenya, Uganda, Sudan, South Sudan, Somalia and Djibouti. Zenith also
distributes Unilever’s Alberto Culver brand.
“As the purchasing power increases, Ethiopians are increasingly buying
personal care products. There has also been a cultural shift in grooming
habits, from the traditional use of butter as a hair product to buying shampoo
and conditioner,” says Zenith’s Managing Director Gebregzi Tsehaye. He says
Zenith’s sales have grown 24% annually on average over the last four years.
Major international cosmetics brands have also been entering the Ethiopian
market, with L’Oréal now firmly established as the leading overseas brand in
the country. However, counterfeit cosmetics are also selling fast, spurring the
government to promise that it will tighten quality controls of imports and local
production.
ll major beauty players have set up expansion strategies to capture the expected boom in the beauty
and personal care market expected to grow to $2.2billion by 2025

 Strength:

Our location, the Business model we will be operating on (selling franchise and
opening chains of stores in various locations), varieties of payment options, wide
range of hair care and shower products, cosmetics, skin care products, fragrances,
nail care products, deodorant and shaving products, sun care, baby care and other
related products et al from different manufacturers both from the United States of
America and from other countries and our excellent customer service culture will
definitely count as a strong strength for Spotless Cosmetics, Beauty & Fragrance
Stores.

 Weakness:

A major weakness that may count against us is the fact that we are a new
cosmetics, beauty and fragrance store outlet and we don’t have the financial
capacity to compete with multi – million dollars cosmetics, beauty and fragrance
stores like L Brands, Sephora, Sally Beauty Holdings Inc. and Ulta Salon, Cosmetics
and Fragrances Inc. when it comes to retailing cosmetics products at a rock bottom
prices.

 Opportunities:
The fact that we are going to operate our cosmetics, beauty and fragrance store in
one of the busiest streets in Carson City – Nevada provides us with unlimited
opportunities to sell our cosmetic products to a large number of people.
We have been able to conduct thorough feasibility studies and market survey and
we know what our potential clients will be looking for when they visit our cosmetics,
beauty and fragrance store; we are well positioned to take on the opportunities that
will come our way.

 Threat:

Just like any other business, one of the major threats that we are likely going to face
is economic downturn. It is a fact that economic downturn affects purchasing /
spending power. Another threat that may likely confront us is the arrival of a new
cosmetics, beauty and fragrance store or even a supermarket that retails cosmetics
in same location where ours is located.

MARKET ANALYSIS
 Market Trends

Cosmetics, beauty and fragrance store cum retailing business has been in existence
for as long as human started trading goods, which is why you can easily find mom
and pop shops scattered all around world. In most cases, those people that you find
running mom and pop business in a very small scale in a street corner may not have
the education that would want them to aspire to run the business on a large scale.
Just like in any retailing business, it is common to find cosmetics, beauty and
fragrance stores locating their business in a location with the right demographic
composition and a place that is visible to their target market.
Lastly, it is a common trend to find cosmetics, beauty and fragrance stores that are
determined to stay top if the game retail a wide range of hair care and shower
products, cosmetics, skin care products, fragrances, nail care products, deodorant
and shaving products, sun care, baby care and other related products et al from
different manufacturers both from the United States of America and from other
countries.
With that, they can be considered a one stop cosmetics, beauty and fragrance shop
and if they retail in rock bottom prices, then they are going to stay atop for a long
time.
8. Our Target Market
As a matter of fact, the cosmetics, beauty and fragrance stores industry has one of
the widest ranges of customers; everybody on planet earth has one or more things
that they would need from cosmetics, beauty and fragrance store- be it an adult or a
kid.
It is difficult to find people around who don’t patronize cosmetics, beauty and
fragrance stores. In view of that, we have positioned our cosmetics, beauty and
fragrance store to service the residence of Carson City – Nevada and every other
locations where we intend opening our chains of cosmetics, beauty and fragrance
stores.
We have conducted our market research and we have ideas of what our target
market would be expecting from us. We are in business to retail a wide range of
cosmetics, beauty and fragrance products to the following groups of people;

 Households
 Bachelors and Spinsters
 Corporate Executives
 Business People
 About to wed couples
 Expectant Mothers
 Sports Men and Women
 Students
 Tourists

Our competitive advantage
A close study of the cosmetics, beauty and fragrance stores industry reveals that the
market has become much more intensely competitive over the last decade. As a
matter of fact, you have to be highly creative, customer centric and proactive if you
must survive in this industry.
We are aware of the stiffer competition and we are well prepared to compete
favorably with other leading cosmetics, beauty and fragrance stores in Carson City –
Nevada and throughout the United States.
Spotless Cosmetics, Beauty & Fragrance Stores is launching a standard cosmetics,
beauty and fragrance store that will indeed become the preferred choice of
residence of Carson City – Nevada. Our cosmetics, beauty and fragrance store is
located in a corner piece property on a busy road directly opposite one of the largest
residential estates in Carson City – Nevada. We have enough parking space that
can accommodate well over 20 cars per time.
One thing is certain, we will ensure that we have a wide range of cosmetics, beauty
and fragrance products available in our store at all times. It will be difficult for
customers to visit our store and not see the product that they are looking for.
One of our business goals is to make Spotless Cosmetics, Beauty & Fragrance
Stores a one stop cosmetics, beauty and fragrance shop. Our excellent customer
service culture, various payment options and highly secured facility will serve as a
competitive advantage for us.
Lastly, our employees will be well taken care of, and their welfare package will be
among the best within our category (startups cosmetics, beauty and fragrance
stores) in the industry meaning that they will be more than willing to build the
business with us and help deliver our set goals and achieve all our aims and
objectives. We will also give good working conditions and commissions to freelance
sales agents that we will recruit from time to time.
9. SALES AND MARKETING STRATEGY

 Sources of Income

Spotless Cosmetics, Beauty & Fragrance Stores is in business to retail a wide range
of cosmetics, beauty and fragrance products to the residence of Carson City –
Nevada. We are in the cosmetics, beauty and fragrance stores industry to maximize
profits and we are going to go all the way out to ensure that we achieve or business
goals and objectives.
In essence, our source of income will be the retailing of a wide range of cosmetics,
beauty and fragrance products at affordable prices. We will retail products such as;

 Hair care and shower products

 Cosmetics
 Skin care products
 Fragrances
 Nail care products
 Deodorant and shaving products
 Sun care, baby care and other products

10. Sales Forecast

One thing is certain when it comes to cosmetics, beauty and fragrance stores, if your
store is well stocked and centrally positioned, you will always attract customers cum
sales and that will sure translate to increase in revenue generation for the business.
We are well positioned to take on the available market in Carson City – Nevada and
we are quite optimistic that we will meet our set target of generating enough
income / profits from the first six month of operations and grow the business and our
clientele base.
We have been able to critically examine the cosmetics, beauty and fragrance stores
industry and we have analyzed our chances in the industry and we have been able
to come up with the following sales forecast. The sales projection is based on
information gathered on the field and some assumptions that are peculiar to startups
in Carson City – Nevada.
Below are the sales projection for Spotless Cosmetics, Beauty & Fragrance Stores,
it is based on the location of our business and other factors as it relates to candy
stores start – ups in the United States;

 First Fiscal Year-: $240,000

 Second Fiscal Year-: $450,000
 Third Fiscal Year-: $750,000

N.B: This projection is done based on what is obtainable in the industry and with the
assumption that there wouldn’t be any major economic meltdown and there won’t be
any major competitor offering same products and customer care services as we do
within same location. Please note that the above projection might be lower and at
the same time it might be higher.
Our Pricing Strategy
Pricing is one of the key factors that gives leverage to retail business like cosmetics,
beauty and fragrance stores, it is normal for consumers to go to places (retail
outlets) where they can get cosmetics, beauty and fragrance products at cheaper
price which is why big player in the cosmetics, beauty and fragrance stores industry
like L Brands, Sephora, Sally Beauty Holdings Inc. and Ulta Salon, Cosmetics and
Fragrances Inc.et al will attract loads of consumers. Products in their stores are
tagged with the cheapest price you can get anywhere in the United States.
We know we don’t have the capacity to compete with L Brands, Sephora, Sally
Beauty Holdings Inc. and Ulta Salon, Cosmetics and Fragrances Inc. but we will
ensure that the prices of all the cosmetics, beauty and fragrance products that are
available in our store are competitive with what is obtainable amongst cosmetics,
beauty and fragrance stores within our level.

RAW MATERIALS POTENTIAL FOR SOAP PRODUCTION

The major raw materials required for the production of soap are tallow, palmkernel oil, palm
oil, cuastic soda, sodium silicate, magnessium sulphate perfume, colouring agents, packaging
materials and chemical additives like titanium etc. As can be observed, upwards of 80% of the
raw materials including palm oil, palm kernel oil and packaging mate.rials are capable of being
produced locally.

With the provision of local raw materials for our soap industries complemented with adequate
engineering services, trained personnel and regular supply of basic utilities, the soap industry can
quickly fill the yawning gap between the supply capacity of the factories and the population demand.

IMPORTANCE OF SMALL SCALE ENTERPRISE The importance of small scale enterprise to the growth of
economy cannot be over-emphas ized. Commenting on the specific importance to the economic
development of the country, 0koriel0 stated that the small scale enterprises provide employment on

a large scale and therefore make the possibility of equitable distribut.ion of national income more
realistic. He added that by creating more employment opportunity they help in mobilising capital and
human resources that would otherwise be left idle. Another importance stated was that of removal of I
regional im.ba.2ance by reducing the rush to the few developed centres of the country, thus helping in
checking rural urban migration and the associated problem of unplanned urbanisation. In another
publication, Ogaga stressed that the existence of small scale business provides considerable solution to
the imbalance of payment problem becuase of their less dependence on imported inputs there. by
reducing the demand pressure on foreign exchange earnings.

MARKET DEMAND STUDY

The estimate of demand cannot be easily evaluated both for local and industrial uses. However,
with the proliferation of laundry and dry cleaning firms, increase in populationsy, soap will
always be in demand. Domestic manufacturers have also benefited from the country’s economic
progress and increasing urbanisation.

It need also be said that the product can be used both as a toilet soap and laundry soap going by results
from the research conducted, it is to be perfumed andsohas auniquemarketniche. All consumers of the
product constitute the tool for the Obviously, the product has competitors like Truck-soap, Duck. soap,
Key soap both in bar and tablet forms as indicated in the result of the market research conducted.
However, the only difference is in the fact that the project product can not only be used on clothes but
can also be used as toilet soap because it is perfumed. The market situation is such that the project will
be more than adequately accomodated within the available domestic market. The market is more than
enough to absorb the products within a downstream industrialised Ahiazu Mbaise Local Government
Area. It can also find market in neighbouring states,but on a national scale, the product will not make
any significant impact on the supply market. The plant will in its first year of operation produce one size
of product types. In consequence of this distin-ct feature, a segment of the market is expected to be
covered. This differentiation in products is advantageous becuase it allows for deeper penetration into
the market. product.

CURRENT DEMAND I The current demand for the product (soap) is very i high as virtually every
household and organisation in the area indicated they use soap daily in body cleaning and washing. As
earlier indicated, the proliferation of laundry and dry cleaning firms has made the demand for soap
currently very high. The market size estimate is for over twenty thousand (20,000) household
presently. , The annual estimated expenditure on the average per household on the product is currently
put at over five hundred naira (W500) as indicated in the result of the research conducted. The market
size it then aimed at by multiplying the expenditure by number of households. Hence market size is
20,000 x 500 = W10,000,000 currently.

MARKET GROWTH POTENTIALS/FUTURE DEMAND Future demand is expected to be high as the

population is expected to grow with an increase in the demand for soap.

With the expected increase in the proliferation of laundry and dry cleaning firms. increase in births with
reduced infant mortality soap will always be in demand. There are valid reasons to expect improvement
in the growth of the industry. This will lead to growth of the national economy and thereby increase the
Gross Domestic Product.

PRICING POLICY The pricing ploicy will be market determined. The operation cost will be inefficient since
it may end up with a low price or price the projected product out of the market. In other words in fixing
the price, it will be in accordance with the competitors price. This implies that the price of the product
will compete favourably with that of other competitors to avoid price war and less sakes,
The advantages of the follow-the-market pricing method is favoured for 5hese reasons - Since the
product is new to the market, the price is not expected to deviate much from prices prospective
consumers are used to ; ! - Higher than the prevailing market price may encourage I unwanted
competition. Hence prices set should put off competitors from entering the field as much as possible.
The product price will first adopt.. this method and then increase the price as demand increases. The
product structure, quality specifications and competitive prices should provide the means of achieving
the desired market penetration since the immediate competitors are not extraordinarily formidable. The
price per bar of the soap to be produced is put at N=40.

MARKETING STRATEGY The marketing strategy for the product of the proposed project is to sell the
products through distributors to be appointed and partly direct to retailers especially on major
marketdays in the area through salesmen. Subsequently, attention will be focussed on expansion of the
market area to encompass nearby towns. Distribution is by way of a direct supply to fulfill orders on
long. duration contract of sales basis. Promotional practices will also be by direct dealings within which
required product specifications are reconciled and matched with, production schedulling programmes.

5.3.10 DISTRIBUTION SYSTEM The distribution system for the proposed industry's products will be
through the foll owing channels; - Driver/Salesman to location depots situated in d.istricts in primary
targets to ultimate consumers. - Driver/Salesman to retailers. in major market. - Direct to distributors
appointed by the company. - - uriveriSalesman to major provision stores. These distribution channel is in
line with responses from potential consumers during the research conducted. To facilitate distribution,
fairly used pick-up van will be required.

ADVERTISEMENT AND PROMOTION Though responses from potential consumers indicated that
advertisement do not influence their buying decision, the researcher used deductive reasoning to
establish the importance of advertisement and promotion especially for new products. Since the volume
will initially be small and becuase of the nature of the target market, it is considered that handbills be
used. Also public address system is to be installed on the pick-up van for adtertisement and promotional
purposes. For hand bills, 1,200 hand bills will be printed and distributed to retailers and consumers. The
cost of the hand bill. will be put at @000

PLANT CAPACITY The production plan considers estimates to achieve desired sales capacity. The
production plant for this project has the projected capacity of producing 200 bars of soap daily given a
projected total of 60,000 bars to be produced in 300 working days in the first year of operation at 70%
initial capacity utilization. is planned to operate a one shift working system of eight hours daily except on
Saturdays and Sundays. The level 80 of activity in the plant will be graduated in order to promote
gradual entry into the market, allow time for the development of necessay skill and also time to handle
problems associated with production plants.

MATERIALS INPUT -. --- -- In the manufacturing of soap, the pnysicai and chemical characteristics of the
finished products depend directly on the raw materials employed in the,productions. DTfferent kinds of
raw materilas are employed in the production. However, the principal raw materials that are
recommended for OSe in the proposed industry are palm oil (bieached), palm kernel oii and the
chemical components and additives include caustic soda (sodium hydoxide), caustic potash, phosphoric
acid, sodium carb~nate, sodium chloride (saltl, perfumes and colouring matte-r. Most of these raw
materials are sourced locally. Palm oil and palm kernel oil are produced in very large quantity in the
area. While palm oil will be provided through the ADA PALM NILL at Umuogu, ~bok~baise and nearby
local markets, the palm kernel oil will be obtained both from the palm kernel oii Miil in Nguru Mbaise
and other local palnkernel extraction Mills within the local government.

The chemical additives can be obtained in major surrounding towns like Aba, Owerri or even Enugu from
importers of these products.. On the whole about 95% of the raw materials for soap production are
sourced locally. The sum of W540,OOO have been projected for the provision of raw materials for the
first year of operation. A buffer provision is made to absorb the shock of fluctuating demand of product
and supply of raw materials. It is envisaged that two (2) months raw material needs will be adequate.
See schedule for raw materials cost in Table'S.1. The unit cost of raw materials per bar is put at W9.00.