Table of Contents

Introduction

Problem Statement

Key Findings Facts and Assumptions

Target Market

Positioning

SWOT

Strengths

Weaknesses

Opportunities

Threats

Competitive Analysis

Vivier Pharma Inc.

GM Collins

Alternatives

Alternative 1 (Full Service Wholesaler)

Alternative 2 (Direct Service Selling)

Alternative 3 (E-commerce)

Solution

Place

Promotion

Product

Price

Implementation

Contingency

Conclusion

Course Concepts

Bibliography

End Notes

Introduction

Lege Artist is looking to expand its business in the Canadian market. Currently the owner, Irina is looking for help in revising the current marketing strategy to be able to establish long-term clientele. The most important task is to develop a plan that gains prospective investors that will help fund the business plans. To gain the support of our potential investors, we will introduce a distribution plan to increase our sales and expand our target market.

Problem Statement

How can LegeArtis grow the market share for their skin care products by choosing a distribution channel that will increase their net sales by 30% within 1 year?

Key Findings Facts and Assumptions

  • LegeArtis is a relatively new company established in 1996
  • Unique skin care products and methodshas been developed based on the extensive medical knowledge of the owner
  • Products line offers creams and gels that are non-irritating, and have proven results
  • Products are registered under Health Canada as “non-medical cosmetic class”
  • Already invested in one of the fastest growing segments of the personal care industry
  • Variety of products has already been developed
  • A clinical skin care product line for men is in development
  • Has single retail location with 9 employees and prices range from $50 and $110 a product
  • Has already been market tested with clientele in Toronto’s clinic
  • Product line generated $1.6 million in sales annually
  • The Canadian market which includes anti-aging products, creams, gels, toners, and face masks, generated $821.7 million in revenue in 2010

Target Market

We believe that the ideal market for LegeArtis Skin Care will be women between the ages of 35 and 50 years old. As of 2006, there are approximately 3,780,170 women between those ages which make up approximately 23% of the Canadian population[i]. This market will allow the company to grow and achieve higher sales in the future. Furthermore, as Lege Artist is developing a men’s line we also believe we should target males between the ages of 30 and 40 as a secondary target market. As we wish to increase our sales within one year, this is the ideal market segment to focus on as they account for a large amount of the skin care market’s yearly sales.

Demographics /
  • Women between the ages of 35 to 50
  • Men between the ages of 30 to 40
  • There are approximately 1,083,495 women between the ages of 35 to 39, 1,285,535 between the ages of 40 to 44 and 1,290,130 between the ages of 45 to 49
  • Marital status of this group includes married, never married, separated, divorced
  • Their birth era is between the baby boomers (1962) and generation X (1965 to 1976)
  • Average after tax income for women in Canada is $29,214. However, the dominant income range for women is over $50,000 as of 2006
  • There are 2,071,440 men between the ages of 30 and 40
  • The average income for men in Canada is 43,684 and the dominant income range is over 60,000

Geographic’s /
  • Most of the women in the target market will most likely be found in metropolitan cities.
  • Montreal has 437,315 women between the ages of 35 and 49. Vancouver has 347,400 women in this age range and Toronto has 655,110 women in this age range. Together this represents a large segment of women in these metropolitan areas.
  • The density of this population is primarily Metropolitan with nearly half of the population of this group residing in major cities.

Psychographics /
  • Suburban Elite: According to Environics, there are 2,976,063 people in this category.
  • Urban elite is further broken down into three categories: Suburban Gentry (580,890), Nouveaux Riches (288,584) and 11 Pets and PCs (2,106,589). The later refers mainly to middle class individuals and families.

Behavioral /
  • Want knowledgeable and effective customer service.
  • This age range typically has medium to a heavy user of these products.
  • In 2006 there was $8,795,408,761 spent on personal care, supplies and equipment plus a further to their quality products once they $2,277,443,274 spent on Makeup, skin care and manicure products in Canada.
  • They generally have a strong loyalty have found a product they like.
  • Men that take care of themselves and are up to date on fashion, exercise frequently and consider their appearance as a priority[ii]

Positioning

Based on our target market we intend to position our products in the mind of our consumers as a state of the art anti-aging cream and that will maintain youthful beauty. Our positioning statement is as follows:

“For elegant sophisticated females who desire to maintain or achieve beautiful, youthful skin, LegeArtis is a state of the art, non-irritating, premium skin care product that focuses on beauty and health.”

SWOT

Strengths

  • LegeArtis provides many skin services for clients (Laser therapy, photo-rejuvenation, LED light therapy and microdermabrasion)
  • Offers 5 handmade skin care line products and being successful, soon to develop a men’s skin care line.
  • Has great loyal clientele buyers in Toronto that keeps the business going strong
  • Offer’s Free Consultations which attract new clients for spa/health services
  • LegeArtis delivers beauty with medical benefits. Theyportrays themselves as a clinic and a necessity rather than a spa filled with indulgence.
  • With today’s constantly changing economy, LegeArtis’ business is not affected

LegeArtis is a proud donor to Support Sick Kids Hospital and SOS Children’s Villages charities. They’ve donated products and gift certificates to the Fitness in Fashion Charitable event

Use best technology to perform the most effective services for clients. ( LightsheerZLaser,CandelaVbeam™ laser , LHE™ IPL,Omnilux™ Light Therapy )[iii]

Weaknesses

  • Due to the lack of medical qualifications Irina has in Canada, she has to follow some restrictions. (Can’t administer Botox, prescribe Acutance or perform dermatological procedures in treating aging or lance)
  • LegeArtis is in a highly competitive skin care industry.
  • Skin Care market is dominated by popular brands such as Dove, Vaseline and Ponds (takes up 35.8% of the market)
  • LegeArtis has Facebook, Twitter, Youtube and Google Plus which can constantly attract and introduce services to new clients. However their social media websites aren’t recently updated and are very basic. ( 0 followers on Youtube , 19 likes on Facebook)[iv]
  • LegisArtis skin products are currently only targeted towards women. Not having products sold and made for men can make a huge difference in their sales revenue.

Opportunities

  • Launching a new product line for men will influence and attract more consumers to buy LegeArtis. This new product line will attract a new target market for LegeArtis which would increase sales dramatically and will give us an advantage over our competitors who don’t sell men’s products.
  • Since they only have the one store, opening stores outside of Toronto will increase market share, brand loyalty and companywide revenues.
  • With plastic surgery prices being so high, LegeArtis can market their products as an effective, affordable alternative.
  • LegeArtis Inc. could take advantage of the green movement and start producing environmentally friendly and organic products. By doing so, that will give LegeArtisInc a new target market to exploit.

Threats

  • Established companies in the market that have a strong reputation and provide a similar line of products are a threat because they are able to offer their products at a lower price and have brand loyalty.
  • Since the popularity of face lifts had grown to 19% in 2005, it is easy to say that the need and want for an anti-ageing skin care product can drop, having the business to lose its customers and sales[v].
  • Only having one location of LegeArtis Inc. in Toronto, is a threat because they are less able to expand their product line to potential customers.
  • With the advertising regulations for Anti-Aging/Anti-Wrinkle in Canada’s Guidelines for Cosmetic Advertising and Labelling Claims, it limits LegeArtis’ advertising capabilities[vi].
  • With the increasing prices of products to produce LegeArtis’ lotions and creams, it would be harder to come out of a financial crisis being such a small company.

Competitive Analysis

Based upon our target market and SWOT analysis we have selected two companies that we will directly compete with. The first is VivierPharma Inc. and the second is GM Collins Inc. They both have a strong history in Canada and already sell in the areas in which we wish to expand. We will have to overcome these companies’ advantages to meet our goal of increased sales.

VivierPharma Inc.

VivierPharma launch in 2000 and was founded by Jess Vivier CEO who has 30 years of experience in this field. Their philosophy is “At VivierPharma we bring a pharmaceutical approach to skin care products. Our experience demonstrates that achieving healthy skin begins with using the highest quality skin care products. We deliver our promise by manufacturing and testing at pharmaceutical standards. Allow our passion for skin care to make a positive impact on your skin today.”[vii] VivierPharam would be one of our main competitors because they are a well know Canadian company that has a loyal customer base and are known for having a higher quality product that would appeal to our target market.

  • They carry three skin care lines: Vivier Skin, Vivier Skin Plantine and Skin TX.
  • Vivier has offices in Montreal, Canada and Chaplain, New York. Location sales volume for Vaudreuil-Dorion in Montreal, Québec are $10,997,000, there are about 5-9 employees at this location[viii].
  • Vivier Skin Care Products are widely distributed to over 20 countries Canada, USA, Mexico, South America, Middle East and Asia.
  • Product prices range from $40.00 to $150.00[ix]
  • Vivier has been featured in magazines such as Zoomer, Flare and Elevate and has 472 likes on Facebook[x]

GM Collins

GM Collin was founded in 1957 in France but since 1991, has started to produce their products in the Dermo-Cosmetik Laboratories in Montreal, Canada. GM Collin produces the highest of quality skin care products focusing on anti-aging, sun care and organic line products. Their mission is to “Recapture your true natural radiance with the help of nature and modern technology. Beauty reborn.”[xi] Gm Collin will be one of our main competitors as they sell in the locations where we wish to expand into and have a comparable line of products which are sold to a similar target market.

  • GM Collin’s Organic Line is made from 99% organic products with completely organic and biodegradable packaging[xii]
  • Proudly not tested on animals
  • Exclusively sold at clinics, spas and doctors’ offices
  • Has a successful men’s skin care line
  • Conducts over 100 product education seminars yearly all over North America
  • Location Sales Volume (Saint-Laurent, Montreal, Canada) $4,721,000[xiii]
  • Facebook has 4.3k “likes” and Twitter has 260 followers
  • Prices: GM Collin Bio Organique Treating Serum: Serum Traitant (30ml) $59.00
    GM Collin Bio Organique Nourishing Cream: Crème Nourissante (50ml) $57.00[xiv]

Alternatives

Alternative 1 (Full Service Wholesaler)

As our 1st alternative we suggest that Irina uses an indirect channel for distribution with selective distribution focusing on specific retailers which will be higher end Spas. Indirect channel for distribution:

We suggest using a Full Service Wholesaler, Specialty Wholesaler and a pull strategy where promotional efforts are aimed at the consumer who will demand product from retailer. When using a specialty wholesaler they will carry our stock, maintain a sales force, offer credit, make the deliveries and provide management assistance. According to Pasquale Martiono summarized, most Spas purchase their products directly from the wholesaler and resell the products themselves[xv].As such there will be no shelving fee. As our target market is an age range of those who focus on quality skin care and have the funds to go to spas, we feel this would be a beneficial and rewarding distribution channel for LegeArtis[xvi].

Pros / Cons
  • With Selective distribution there is market coverage to the Spas we have chosen.
  • Allows us to focus on getting our product into Spas, where staff will be knowledgeable on the product
  • Our target market spends time and money in spas; they will also be able to sample the product through their selected appointments.
  • Reputation from selective distribution may provide value perception with consumers
/
  • The cost of wholesalers
  • Irina will have to relinquish a certain amount of control over to the wholesalers
  • Product may seem less desirable because it is more readily available through a wholesaler

Alternative 2 (Direct Service Selling)

For this alternative we have chosen non-store retailing. This deals with Direct Selling sometimes called door-to-door selling which is appealing to consumers because it involves direct sales of goods and services through personal interactions and demonstrations in their home or offices. The individual seller is responsible for placing orders, and has a limited supply of products on hand just used for showcasing to customers. The benefit for the consumer is that having the goods and services offered to you at their convenience is the ideal result forestablishing long-term clientele and would be selective distribution. It provides the customers with personalized service and convenience and is a great way to assist lack of consumer knowledge about products[xvii].

Pros / Cons
  • Employees work on a commission base, less expenses for the business
  • Representatives of the company can be located internationally
  • Customers receive a personalized service in their homes or offices
/
  • High employ turnover
  • Someone needs to be responsible for training the employees
  • The seller is responsible for the cost of brochures, business cards and product

Alternative 3 (E-commerce)

Finally, we would suggest that Irina should become involved in the e-commerce business to distribute her products. This would be a direct distribution method going straight to the customer’s door with intensive distribution intensity. She would be able to ship directly from her store in Toronto and could reach her target market across Canada. We would have to charge for shipping and with Purolator the typical shipping fee would be $9.95 although it would be delivered within 2 days[xviii]. As more individuals with our target market age range begin shopping online for their needs this would be a great opportunity to move into that market early.

Pros / Cons
  • Gives worldwide/national presence
  • Chance to buy and sell online and can interact directly with customers which helps to increase the market
  • It is cost effective to promote and market your service
  • You can offer other online services to increase customer service such as online chat
  • Customers can easily locate the products they want and allows them to compare the products available
  • Once customers have made a purchase it is easy to track if you are reaching your target market
/
  • There is a high cost to optimize the online store and to make it visible through online search engines
  • It only provides limited business as some customers would not be able to use the service do to delivery restrictions and they require access to the internet
  • If there are dissatisfied customers they tend to be quite vocal in their displeasure as they are usually internet savvy. This would lead to negative exposure through online review sites[xix]

Solution

We believe that the best solution for Lege Artist to grow and increase their sales within 1 year would be to follow our first alternative. As Lege Artist would continue to sell their product through their store this would be a multichannel approach. We would also need to retain a full service wholesaler to get the products to all of our business partners.

Place

Lege Artist skin care line will be introduced to the Canadian Market through our wholesaler Frananda’s Beauty and Spa Supplier. Frananda’s is a wholesale supplier for Spas and Salons in Canada and North America with 20 years’ experience; they are located in Mississauga, Ontario.

Promotion

We will want to promote our products at the Esthetique Spa International convention in Vancouver. This will allow us to introduce our products to spa owners, new wholesaler and dermatologist in a new region of the country. The event occurs on February 17th and 18th of 2013 and is the perfect introduction to the western part of Canada[xx].

Furthermore, having ongoing promotions for customers can attract customers to buy our products. We have three options to help promote our products

  • Discounting: Discounting the products for a certain time in the market can attract customers to come and purchase our products for a lower price. This will attract customers that haven’t had enough money to purchase our product. Now they can have look into our product and see what we offer for our price.
  • Bundling: Having our skin care products in a bundle with lotions and creams can get consumers to buy our products rather than buying one item at a time. This gives them a wider range of products to try out and to see if it suits their specific needs.
  • Seasonal pricing: Special promotions for seasonal holidays can get customers the seasonal holiday joy for purchasing our products at reduced prices and in bundle packages. This will get people to buy in bigger quantities for themselves or as gifts for loved ones[xxi].

Product

We will not be changing our product with our implementation plan. Irina has made a great line of products that are non-irritating and give youthful and beautiful results!

The 5 products hand made products developed by Irina are: