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Case study 2: Trilogy

Published August 2010


New Zealand natural skincare company Trilogy was founded in 2002 by
sisters Sarah Gibbs and Catherine de Groot. In just a few years the sisters
have built their business from a boutique local operation into a recognised
and admired international brand sold in 16 markets worldwide.
Trilogy has appeared on the Deloitte/Unlimited Fast 50 Index for three
consecutive years; first appearing as New Zealands third fastest growing
business in 2006 with a staggering 690 percent growth.
Origins
The idea for Trilogy came about when Sarah was manufacturing
ingredients for the natural cosmetics and supplement industries. Sarah
discovered the oil extracted from rosehip seeds was rich in skin-loving
nutrients and had been used for centuries to heal and rejuvenate skin.
Having developed a new way to extract the purest elements from rosehip
oil the sisters knew they had found a future cosmetic star.
Catherine and Sarah were aware of the growing international trend
towards natural and organic choices in everyday consumer products and
spotted an emerging market for a range of high performance and
sustainable skincare products using natural ingredients.
Today
Trilogy is recognised as one of the pioneers of the natural and organic
skincare category and has offices in Wellington, Melbourne and London.
The company is committed to producing high performance products, has a
sustainable business philosophy, and its award-winning products have
been celebrated in the worlds most prestigious beauty magazines and
journals around the world, including Elle, Marie
Claire, Tatler, Vogue, Womens Wear Daily and the Green Beauty Bible.
The companys original range of five face care products has now
expanded to over 40 face, body and hair care products that are sold in
over 3500 stores and retail channels throughout Australasia, Ireland and
the United Kingdom, as well as Japan, Korea, Malaysia, Singapore, Europe,
Scandinavia and the United States.

Sustainable business practice


Increasingly customers are looking to support companies that
demonstrate responsible business practices both ethically and
environmentally.
Maximum effect on your skin, minimum effect on our environment.
(Trilogy philosophy)
From the outset Sarah and Catherine set out to create skincare products
that not only perform better, but are better ethically, aesthetically and
environmentally.
Responsible practice

Trilogy is a carbon neutral company. It has achieved carbon


neutral status for its corporate operations and its emissions are offset with
investment in alternative energy production projects, including the
Awapuni Landfill Gas Project in Palmerston North.

The company uses recyclable packaging from sustainably


managed sources and is committed to a goal of zero-waste. Recycle
codes are added to their packaging to aid sorting and collecting and this
code distinguishes the types of polymer used, for example, polyethylene,
and polypropylene.

Products are not tested on animals, with Trilogys team instead


choosing to work with happy human volunteers.

Ingredients are sourced from ethically traded and, where possible,


certified organic sources. Trilogy Certified Organic Rosehip Oil is
certified with Bio Gro, which is recognized for organic certification by IFOM
(International Federation of Organic Agriculture Movements).

As Trilogy has grown it has remained committed to a journey towards


responsible business practices. Catherine, Sarah and all Trilogy staff focus
on this whenever they are designing a new product or revising an old one,
creating packaging or working on
how to get products across to the other side of the world.
Operating in a sustainable manner involves businesses working through
long and complex processes. While Trilogy has attained carbon neutral

status for their corporate operations they are still working hard to develop
this status for their products as well. Such a process has to begin way
back at the design and packaging stage and can be a huge challenge,
even for businesses as committed to sustainable business practices as
Trilogy.
Sarah and Catherine want their customers to make ethical purchasing
decisions so they are continually pushing the boundaries to improve
Trilogys ability to do this. A recent example of this is the introduction and
use of new recyclable cardboard pallets in their manufacturing and
freight-forwarding processes.

Global markets
From the outset, Trilogys strategy was to take Trilogy to the world.
Global compliance
Should an inquiry come from an international market, Sarah and Catherine
wanted to make sure their products conformed to European and US
standards from day one. Conforming to EU directives ensures a company
has global compliance straight away. An example of EU compliance
requirements includes listing all ingredients thoroughly in order of their
inclusion from biggest to smallest quantities. This is not necessarily the
case with all markets with variations applying from one to another.
New markets - successes and challenges
As opportunities to expand beyond New Zealand came their way, Sarah
and Catherine would follow them up. Early on they felt there was potential
in Australia, the United Kingdom and Ireland. They undertook their own
research and engaged with a client manager from New Zealand Trade and
Enterprise (NZTE) to develop a deeper knowledge of the markets they
were exploring. NZTE were also able to meet with them in these markets
and broker relationships with potential partners and others who would
assist them in the process.
An important factor in Trilogys success internationally can be attributed to
the distribution outlets they have partnered with. The more distribution
outlets there are, the better the market coverage of the product. In
Australia the Myer department store chain has 62 outlets and the Priceline
Pharmacy chain 350 stores, which offer the brand huge market coverage.
In the United Kingdom, partnering with large chains such as Boots and
John Lewis and, in Ireland, partnering with Unicare pharmacy has enabled
Trilogy to develop a significant brand presence in these markets also.
This exposure in turn has generated interest and led to many enquiries
from outlets interested in becoming stockists of the Trilogy range. Trilogy
has set up a dedicated section of their website specifically to capture
trade enquiries.
Trilogys experience has taught them that the importance of identifying
suitable channels to market is a crucial factor in the potential long-term
success of new markets. Some markets have been particularly challenging
in this respect. Countries such as Taiwan, Singapore and Hong Kong, for

example, tend to offer very limited channels suitable for a niche brand
such as Trilogy to become established. Japan, Korea and Malaysia, on the
other hand, offer more advanced choices around niche and natural
products so could be models, offering an accessible solution into the Asian
market in the future.
Understanding the cultural norms of doing business in a new market cant
be underestimated. The success of Trilogys expansion into Ireland can
partly be attributed to the fact that the Irish do business in a very similar
way to New Zealanders. This made relationship building and mutual
understanding very straightforward.
However, negotiating through the cultural barriers of countries less similar
to your own can be a challenge, said Sarah, so opportunities to talk to
other exporters and share their ideas and experiences are really valuable.
Trilogy also found the wealth of written information available from NZTE
on the topic was helpful in further developing an understanding of this.
Part of Trilogys success in Australia came from thinking of them as a
separate market and using a very specific marketing strategy that worked
for Australians.

Innovation and edge


Innovation
Sarah and Catherine place a high value on the creation of good ideas and
recognise that it isnt easy for people to innovate when they are juggling
their busy schedules. To ensure it is not forgotten, Trilogys staffs are
asked to take one hour a week away from their work environment and
step in to a quiet place to sit and do some blue sky thinking.
These ideas are captured in their Ideas Log and shared at different times
throughout the development cycle of new or existing products.
'Its about creating an environment where you can encourage lots of good
ideas,' Sarah says.
As a part of this philosophy, they ensure that all their staff attends
planning sessions, and not just those directly involved in the strategy. This
approach ensures that everyones good ideas are captured and valued.
Looking around at the great ideas other businesses have is also a good
way to keep innovating. Trilogy tends not to focus on other skincare
brands, preferring instead to look at whats happening in businesses very
different from their own such as clothing or supermarkets.
Competitive edge
Trilogys competitive edge is the result of the companys unique
formulations, their positioning in the market place, and the way they
market their products.
Trilogy is the only natural
brand in the world with Rosehip oil as the main functional ingredient.
Rosehip oil is a powerful, clinically proven, natural skin healer.
Trilogy sources their Certified Organic Rosehip Oil from Chile.
Trilogy stands apart from the synthetic majority of skincare products as
they produce high performance, natural skincare products that offer the
consumer a simple, sustainable and effective solution for modern living.
Trilogy also stands apart from other natural skincare brands as all its
products are high performance, hence their key message: 'natural
skincare that works'.

Although Trilogy is a strictly natural range the look and feel of the brand
is mainstream. Trilogy market their range to the mainstream consumer
using sophisticated packaging, merchandising material, and marketing
techniques that compete directly with traditional cosmetic house brands.
Trilogy also treats everyone as their customer and this includes suppliers,
retailers, and retail staff, as well as the end customer. Trilogy also invests
in ways of generating word of mouth to promote their products that are
outside mainstream marketing methods.

Business models
Outsourcing
As a company focused on branding, marketing and formulating, Trilogys
business is developed around a model of outsourcing. Therefore,
collaboration with a variety of different businesses is crucial. Maintaining
good relationships with those in the supply chain is essential to sustaining
mutually successful business partnerships.
The supply chain works on a range of different levels and Trilogy has no
doubt that it is absolutely imperative the suppliers are treated with huge
respect.
'You need to enjoy each other and pick partners you like and get on with,'
Sarah says.
She says its more of an intuitive thing. In the early days they made some
mistakes on the distribution side of the business and learnt from that.
Product development
Much of the product development research is carried out internally within
Trilogy; however, aspects of this are also done in collaboration with their
laboratory partners in Auckland. This is where chemists develop the
physical formulation of the products and undertake quality assurance.
Trilogy then works with a design company to develop the look and feel of
the product, and with a packaging company to develop environmentally
friendly ways to package the products in keeping with their brand
philosophy.
Distribution
Warehousing, freight forwarding and distribution are all services
contracted by Trilogy and overseen by supply chain and distribution
managers working in-house. Their roles are to control processes related to
these functions and conduct formal quarterly reviews to ensure quality
control is maintained to the highest possible level.
Internal models

When starting out, Sarah and Catherine had clear areas of responsibility.
Sarah used her business skills to concentrate on developing the business
model and establishing channels to market, while Catherine used her
beauty editor and design experience to drive product development and
branding.
As the company has grown, Sarah and Catherine have established distinct
operational and strategic goals and set up a staffing structure that reflects
this. The operational and strategic decision-making processes at Trilogy
are allocated to different staff; however, operational staff are kept
informed early in the strategic decision-making process to avoid logistical
surprises down the track, which can be time consuming and costly.

Responding to external influences

While there is a limit to what a small company can do about the big issues
related to worldwide economic factors, Trilogy has ensured they remain
competitive despite the external influences associated with their business.
As part of this process, they have put a high priority on getting advice
around the development of a robust foreign exchange policy to ensure the
company minimizes their exposure to this in the marketplace.
Buying market data is also useful as it gives Trilogy access to finding out
how much product their retail partners are selling. Trilogy then uses this
information to negotiate additional shelf space in store.
While Sarah and Catherine acknowledge that competition in the beauty
business is tough, they know that this is a fact of life for the industry. What
they do is reflect on the kinds of partnerships they currently have and
build on these to ensure they are robust and positive into the future. This
is particularly important at the retail level, where a great deal of emphasis
is placed on training to ensure the Trilogy brand philosophy is cultivated
authentically.

Future focus
Australia is currently Trilogys biggest international market.
However in terms of percentage growth, its Ireland that has really taken
off with around 640 percent growth in 2010. The Irish are big users of
skincare and they like talking about it.
'As a market its so similar to New Zealand. We just get each other,' says
Sarah.
Looking ahead the companys short term plans include further work to
establish their partnerships in the UK and Ireland, where there is a clear
indication that the Trilogy brand is staking a claim to fame. Identifying
potential partnerships and laying the groundwork for expansion are also
currently taking place in Canada.
'Its all about persistence,' says Sarah, 'because while we have fabulous
products and a fabulous brand, so do others. You really have to have
persistence coupled with patience. Just keep going.'
Trilogys medium term plans focus on establishing a branch within Asia. At
this stage it is likely to be in Japan, where several other New Zealand
businesses with a related focus are already successfully established.

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