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ALAM Cosmetics entering to

the Asian Market

Mioara Mihaila
Alexandra Petre
Laurentiu Simion
Andrei-Bogdan Stanciu

(Kotler’s Crew)
Mission and Objectives of the Company

Mission
ALAM’s mission is to empower you with innovative and natural products for your skin
and beauty care needs.
You can benefit from a wide range of products created under the latest technological
novelties with respect to the health and safety of your skin! We seek to indentify new, richer
sources of value and use them to create a beautiful lifestyle.
We aim to penetrate new markets, so women from all around the world to benefit from
our secret and unique formula based on natural ingredients.

Company’s Values
Passion for Customers: we put our customers first in everything we do.
Passion for Nature: nature has been a driving and inspiring force for Alam Cosmetics since it
was first launched in the market.
Transparency: Alam Cosmetics has always been driven by its respect for the skin needs of
women and its commitment to provide high quality cosmetic products at affordable prices.
Constant Quality: Our company is certified ISO 9001:2008 regarding the Quality Management
System, ISO 14001:2004 regarding the environmental management system and ISO 17025:2005
regarding the general requirements for the competence of testing and calibration for laboratories.
Meaningful innovation: We constantly invest in clinical research and cosmetic technology to
create ever more effective products that are safer for your skin.

Company’s Objectives
Financial Objectives
 To make our brand visible on the new market in Asia, within the first 12 months of
activity there; to earn the new customers respect and loyalty by consistently providing
the highest quality products.
 Profit increase with 10% of sales in 2011; create value for our shareholders.
 Sales increase of 15% by the end of 2012 through development of new markets.
Commitment to employees
 Demonstrate our commitment to employees by promoting and rewarding based on
performance and by creating a safe work environment that reflects our values.
Global citizenship
 To fulfill our responsibility to society by being an economic, intellectual and social asset
to each country and community where we do business. To define the beauty and ecology
in the same rhyme: to offer manufacturing, and use environmentally friendly products.
We certainly not affect the quality of products, but instead we reduce for example,
packaging and advertising costs.

Before launching our product we need to find out various aspects of the Asian targeted
market. For this we need to answer a series of questions regarding the economical,
demographical, geographical, cultural, social and political statistics.

1. Economical criterion

The product is situated between low and medium range price cosmetics accessible for
people with medium and high income. Given the fact that our product is not among the basic
consumer products our first filter is based on the economical status. We prefer for our business,
countries with a higher GDP per capita. Based on this criteria the targeted region limits to the
first 20 countries.
Table. 1

GDP world
Asian rank Country GDP per capita rank

1 Qatar $85,638 69

2 Singapore $49,754 44

3 United Arab Emirates $37,941 55

4 Japan $33,596 3

5 Bahrain $31,899 105

6 Republic of China (Taiwan) $30,322 19

7 Israel $27,147 52

8 South Korea $24,803 14

9 Oman $23,987 77

10 Saudi Arabia $22,852 22

11 Malaysia $13,385 30

12 Lebanon $11,279 84

13 Iran $10,570 18

14 Thailand $7,907 24

15 People's Republic of China $5,325 2

16 Jordan $4,906 99

17 Syria $4,492 63

18 Sri Lanka $4,265 65

19 Indonesia $3,728 16

20 Philippines $3,383 37

25 Mongolia $3,222 141

26 Pakistan $2,594 26

27 Vietnam $2,589 46
28 India $2,563 4

29 East Timor $4,770 156

30 Yemen $2,343 81

31 Laos $2,054 128

32 Papua New Guinea $1,974 131

33 Cambodia $1,818 103

34 Bangladesh $1,311 48

35 Nepal $3,397 96

36 Burma $1,040 78

37 Afghanistan $733 112

2. Political criterion

As new entrance on Asian market we are looking for stability in the political systems
meaning flexible and approachable government politics and principles. We excluded from
our sample Asian countries which have a communist or dictatorial political systems where
the barriers of entry are elevated.
Table. 2

No Country

1 Qatar

2 Singapore

3 United Arab Emirates

4 Japan

5 Bahrain

6 Israel

7 South Korea

8 Oman

9 Saudi Arabia

10 Malaysia

11 Lebanon

12 Thailand

13 Jordan

14 Syria

15 Sri Lanka

16 Indonesia

17 Philippines

18 Iran

19 People's Republic of China

20 Republic of China (Taiwan)

3. Demographical criterion.
Considering that our product is designed for both young and mature women we are
interested in the population structure by gender and age. One question we must answer is in
which region the number and density of women between 15-65 year suits best our product. After
applying a selection we limited our possible entry regions at the top 10 countries in Asia with a
population of women in the 15-64 year category between 79 million in Indonesia and 2.2 million
in Israel.

Table. 3

No. Country 15-64 years

1 Indonesia 79000000

2 Japan 40000000

3 Philippines 30000000

4 Thailand 23000000

5 South Korea 17000000

6 Malaysia 8000000

7 Saudi Arabia 7500000

8 Sri Lanka 7500000

9 Syria 6500000

10 Israel 2200000

11 Singapore 1800000

12 Jordan 1800000

13 Lebanon 1400000

United Arab
14 Emirates 1000000

15 Oman 780000

16 Bahrain 217000

17 Qatar 200000

4. Geographical Criterion

The density of population is one of the important criteria in launching a new product in a
foreign market. It is in a positive relationship with the costs of transportation, distribution and
with the final cost of the product. Considering that our target is to minimize the final costs and
make our product accessible we are looking for areas with higher population density. We
considered that Saudi Arabia’s population density of 12people/km2 isn’t compatible with our
forecasts.

Table.4

No Country Density

South
5. Social Criterion 1 Korea 490

Developing countries 2 Japan 336


offer higher possibilities of 3 Sri Lanka 322
development because the
cosmetic and toiletries 4 Philippines 308
industry is in a continuous
5 Israel 290
emerging process. This kinds
of market will provide a 6 Thailand 127
higher rate of evolution
7 Indonesia 120
which will be positively
correlated with the evolution 8 Syria 92
trend of our new entry
9 Malaysia 84
product. Thus we excluded
from our possible regions the Saudi
fully developed countries 10 Arabia 12

Table.5

No Country 15-64 years Density

1 Sri Lanka 17000000 490

2 Philippines 40000000 336

3 Thailand 7500000 322

4 Indonesia 30000000 308

5 Syria 2200000 290

6 Malaysia 23000000 127


South
7 Korea 79000000 120

8 Japan 6500000 92

9 Israel 8000000 84

6. Tax and Tariffs criterion

Regarding the tax system we are oriented towards the regional organization of ASEAN
(Association of Southeast Asian Nations) This limits our regions to Indonesia, Philippines,
Thailand and Malaysia.

7. Transparency and availability of information.

The market research depends on the availability of information. From economical


indexes, population, social cultural and politic status to consumers behavior there are all
important in managing a lower risk investment policy. From this point of view we considered
Malaysia’s cosmetic and toiletries market to be the most suitable for our new product.

PEST analysis of Malaysia:

Political point of view:

Malaya (what is now Peninsular Malaysia) formed 31 August 1957; Federation of


Malaysia (Malaya, Sabah, Sarawak, and Singapore) formed 9 July 1963 (Singapore left the
federation on 9 August 1965); nominally headed by the paramount ruler and a bicameral
Parliament consisting of a nonelected upper house and an elected lower house; Peninsular
Malaysian states - hereditary rulers in all but Melaka, Penang, Sabah, and Sarawak, where
governors are appointed by the Malaysian Government; powers of state governments are limited
by the federal constitution; under terms of the federation, Sabah and Sarawak retain certain
constitutional prerogatives (e.g., the right to maintain their own immigration controls); Sabah -
holds 20 seats in House of Representatives, with foreign affairs, defense, internal security, and
other powers delegated to federal government; Sarawak - holds 28 seats in House of
Representatives, with foreign affairs, defense, internal security, and other powers delegated to
federal government.

From the economical point of view:

The Economy of Malaysia is a growing and relatively open state-oriented and newly
industrialized market economy. The state plays a significant but declining role in guiding
economic activity through macroeconomic plans. In 2007, the economy of Malaysia was the 3rd
largest economy in South East Asia and 29th largest economy in the world by purchasing power
parity with gross domestic product for 2008 of $222 billion[4] with a growth rate of 5% to 7%
since 2007. In 2009, GDP per capita (PPP) of Malaysia stands at US$14,900. In 2009, the
nominal GDP was US$383.6 billion, and the nominal per capital GDP was US$8,100.

Social point of view:

Population density is highest in peninsular Malaysia, home to some 20 million of the


country's 28 million inhabitants. The rest live on the Malaysian portion of the island of Borneo in
the large but less densely-populated states of Sabah and Sarawak. More than half of Sarawak's
residents and about two-thirds of Sabah's are from indigenous groups.
Religion:
• Muslim 58%
• Buddhist & Chinese religions 21.59%
• Christian 9.21%
• Hindu 5%
• Non-religious/other 4.5%
• Animist 1.2%
• Baha’i 0.4%
• Sikh 0.1%

In Peninsular Malaysia the official and majority religion is Sunni Islam. In East Malaysia
Islam is a minority religion. There is a constitutional guarantee of religious freedom. However, it
is illegal to proselytise Muslims and there has been some pressure upon Chinese and tribal
groups to embrace Islam.

Language:

The official language in Malaysia is Malay [Bahasa Malaysia]. However, there are 145
other languages, 130 of which are tribal. Other principal languages are English, several Chinese
languages and dialects, Tamil and Iban.

Tehnologic point of view:

Infrastructure:
Malaysia is served by a network of 94,500 kilometers (58,721 miles) of primary and
secondary roads, 70,970 kilometers (44,100 miles) of which are paved. This includes 580
kilometers (360 miles) of superior quality expressways, which connect Kuala Lumpur with
Singapore and with major seaports and other destinations.
However, the road transportation system is still underdeveloped in East Malaysia (Sabah
and Sarawak), with most of the roads in Peninsular Malaysia.
In 2000, there was a total of almost 7 million motor vehicles registered in Malaysia,
including 2.8 million passenger cars, 3.4 million motorcycles and mopeds, 37,000 buses and
coaches, and 400,000 trucks and vans. In response to the growing number of cars on the national
roads, the government invested in development of the public transport system, including
modernization of the country's railways and the construction of a light rapid-transit system in
Kuala Lumpur.
Malaysia has a railway system of about 1,800 kilometers (1,120 miles), part of which was
planned for privatization in 1998-99. Only 148 kilometers (92 miles) of railways are electrified.
The major tracks run from Singapore to Kuala Lumpur, and further to Pinang and Bangkok
(Thailand). However, the railways are unevenly distributed. There is only 1 railway track of
about 134 kilometers (83 miles) in East Malaysia (in Sabah). Malaysia intends to invest heavily
in development of a monorail system in Kuala Lumpur and into building new railways. The
biggest project is the US$632 million (RM2.4 billion) Express Rail Link (ERL), which will
connect Kuala Lumpur Central (the main railway station in the Kuala Lumpur City) with Kuala
Lumpur International Airport (KLIA).
Seaports : The major ports are Kelang, George Town, Pinang, and Kuantan on the
Peninsula, and Kota Kinabalu and Kuching in East Malaysia. These ports are expanded to serve
rapidly-growing Malaysian exports and imports. Competition has grown between Malaysia and
Singapore for servicing international ships and handling containers, although 40 percent of
Malaysia's international trade was handled through Singapore until recently.

Telecommunications:

The primary regulator of telecommunications in the Malaysia is the Malaysian


Communications and Multimedia Commission (MCMC).
Telephones - main lines in use: 4.311 million (2nd Quarter 2009)
Telephones - mobile cellular: 28.545 million (2nd Quarter 2009
Telephone system: international service good

MARKET SEGMENTATION

Geographic segmentation of the chosen market.


Malaysia has a growing and vibrant consumer market of well over 20,000,000,
distinguished by a multi cultural mix of Malay, Chinese, Indian and many other smaller
populations of Western and Japanese expatriates. Malaysia has relatively little poverty, and as a
whole, those living in cities are highly brand conscious, with a curious love of overseas brands.

Given the fact that we are interested in urban concentrations, Malaysia’s market is
suitable with 70% of the population located in urban areas. The homogeneous distribution of
population in largest cities will be an advantage in future distribution management and cost of
transportation, thus the majority of the targeted consumers will have easy access to the several
chains of supermarkets, stores and pharmacies that will distribute the new Alam face cream.

Population byRegion
916,409.00

1,475,337.00 Johor
Kuala Lumpur
439,296.00
Negeri Sembilan
Perak

5,831,916.00 Sabah
704,572.00
Sarawak
1,105,273.00 Selangor
658,549.00
Largest Cities
448,243
439,296 1553589.00 Subang Jaya
501,195
Kuala Lumpur
601,534 Klang
Johor Bahru
604,078 1475337.00Ampang Jaya
Ipoh
Shah Alam
Kuching
638,516 Petaling Jaya
Kota Kinabalu
658,549 1113851.00 Batu Sembilan Cheras
Sandakan
671,282 Kajang-Sungai Chua
704,572 916,409 Seremban
804,901

Demographical segmentation:

In order to obtain a better delimitation of our market segment we have to consider the
demographic characteristics of Malaysia. We studied the following key demographic rates and
facts.

• Population growth rate: 1.78%

• Age Structure:
- 0–14 years: 32.2% (male 4,118,086/female 3,884,403);

- 15–64 years: 62.9% (male 7,838,166/female 7,785,833);

- 65 years and over: 4.8% (male 526,967/female 667,8

• Human sex ratio:


- at birth: 1.07 male(s)/female;

- under 15 years: 1.06 male(s)/female;

- 15–64 years: 1.01 male(s)/female;

- 65 years and over: 0.79 male(s)/female;

- total population: 1.01 male(s)/female;

• Education:
Literacy rates ( percentage of people over 15 who can read and write) are high in
Malaysia, with an overall Literacy rate of 88.7%.Literacy rates are higher among males (92%)
than females (85.4%).
• Income statement:
The chart below indicates the Malaysian household monthly income distribution. And
according to another survey done by the Statistic Department for the Economic Planning Unit
recently, the Malaysian average monthly household income is RM3686, which falls in the RM3-
4k group.
57.8% of the families are below this group, and 29.3% are above it. This shows that the
families fall on the average is actually have a higher position than the median in the distribution,
as the median falls in the RM2-3k group.
This mean majority of the households are at the poorer side of the income group, forming
a triangular distribution graph, but the income of the richer side is so much that it is still able to
pull up the average income figure.

Values(%)

30.00 29.40

25.00
19.80
20.00
15.80
15.00 12.90
Values(%)
10.00 8.60 8.60
4.90
5.00

0.00
<1RMk RM1-2k RM2-3k RM3-4k RM4-5k RM5- >RM10k
10k

• Employment:
The labor force is of 11.38 million 44 place in the world. The unemployment rate is 3.7%
( 33 place in the world)
The labor force by occupation :
- agriculture: 13%

- industry: 36%

- services: 51%

The psychographic and behavioral segmentation of the market:

Studying the characteristics of our targeted consumers we summarized the following:

– Women are better educated


– Highly qualified women enter the workforce
– An increasing number of young women are working and the wage gap is
narrowing for them
– More women are pursuing careers
– Women are becoming more visible in well-paid positions and in higher
management positions

From the culture and customs of Malaysian consumers we can conclude that:

- They are not interested in large quantities;

- They need smaller/ individual portions;

- They can exercise discretion easily;

- They can focus on what they really want and forego others because nobody suffers;

- They can afford more expensive things.

Targeting

After evaluating the market segment using the above marketing strategies and the collected
figures and information we can finalize the process of targeting. Our face cream should address
to:

- People from the most populated regions in the country. As shown in pie Graph. 1 this are:
Johor, Kuala Lumpur, Negeri Sembilan, Perak, Sabah, Sarawak, Selangor;

- People from the largest cities: Subang Jaya, Kuala Lumpur, Klang, Johor Bahru,
Ampang Jaya, Ipoh, Shah Alam, Kuching, Petaling Jaya, Kota Kinabalu;

- Women with age between 15 and 65 years old. The number of women in this category
will be sufficient to meet our demands.

- People with medium income: between 600 and 1600 USD (40% of the total population).

Considering the above we are positioning our product between low and medium range price
cosmetics and toiletries which are sold at mass market in supermarkets, pharmacies. We
considered that Asian women experience skin problems from skincare products that work well
for Caucasians. This is because of the differentiation in their skin characteristics.
Popular skincare products made for Caucasians irritate the Asian skin and may wreak
havoc to it. This is because Caucasians consider their skin characteristic in creating their
products. Dark spots appear on Asian skin early in life. This is the reason why Asians worry
about whitening rather than wrinkling. Wrinkles appear quite later but of course, lifestyle and
internal health problems may create skin issues.

Therefore, Asians should look for products that meet their skin characteristics as our new
face cream created especially to meet their particular needs.

SWOT Analysis

Strenghts Weaknesses

- The product is costumer based - Foreign brand ( unfamiliar with the local
- Natural ingredients competitors)
- Medium price - The high transportation costs will affect
- Product quality the distribution price
- A new innovative product

Opportunities Threats

- This sector is emerging so we can - Local competitors ( price wars )


contract local distributors at low costs. - Possible rise of custom taxes
- Changing customer taste. - Change in customer taste
- New distribution channels

Despite unfavorable currency exchange, some European brands (e.g. L’Oreal, Chanel,
and Christian Dior) products are successful due to their commercial responsiveness. Consumers
associate the brand with fashion, expertise in cosmetology and dermatology research, and
innovative breakthroughs.
*Top Companies by market share in 2003 (% value)
• Colgate-Palmolive (M) Sdn. Bhd. 9.2
• Unilever (M) Holdings Sdn. Bhd. 8.4
• L’Oreal (Malaysia) Sdn. Bhd. 5.7
• Unza 5.6
• Procter & Gamble 5.5
• Johnson & Johnson 4.8
• Avon Cosmetics (M) Sdn. Bhd. 4.5
• Estee Lauder 4.1
• Gillette (M) Sdn. Bhd. 3.5
• Amway 3.4
• Kao (Malaysia) 2.8
• Shiseido Co Ltd. 2.7

Regarding the competitors with the same type of products, there is known that the Asian
consumers are turning to natural and organic cosmetics as they become more aware of the
possible dangers of synthetic chemicals in cosmetics. Therefore, a lot of companies that produce
natural cosmetics are entering the market nowadays and the competition will get more and more
fierce. There are local companies that can be considered powerfull competitors like: Taharah
Global (M) Sdn Bhd, Buds Cherished Organics, I-Green, etc.

Product Policy
1. Core component
Our product is a face cream “Alam face cream”, especially created for Malaysian
women’ needs and problems. Asian skin has larger, more numerous sebaceous glands, thicker
epidermis and larger melanin cells compared to Caucasian skin. Darker skin types are prone to
noticeable scarring. Our product contain a combination of Vitamin A and E, which is efficient at
fading scars and also promotes skin repair and rejuvenates the skin. Asian skin is also easily
darkened by the sun. Asian skin has a large number of melanocytes compared to Caucasian skin,
therefore it darkens much faster. To prevent this from happening, out product is enriched with a
high SPF that protects effectively the skin from UVA/UVB radiation. Acne is a particular
problem for Asian skins, due to the high frequency of sebaceous glands releasing sebum. The
next most significant factor affecting the rate at which Asian skin will age is whether they
smoke. Smoking introduces harsh toxins and damaging oxidants in their bodies. The skin
expresses the body’s degeneration via dryness, loss of tone, wrinkles and sagging.
Because Asian skin characteristics are different from the Caucasians characteristics, we
created this face cream using a special formula, with natural ingredients that helps defeating all
the above problems. The main ingredients are:
- Soy Proteins helps the cellular regeneration due to protein biosynthesis;
- Bioelastin, a powerful active ingredient, helps the skin increase its elastin synthesis
promoting cutaneous strength & wrinkle reduction;
- Cherry extract rich in flavonoids, provides the necessary shield to safeguard your
epidermis from premature ageing;
- Botanical serum, has stimulating effects on cellular growth, and proteins biosynthesis,
due to its peptides concentration;
- Magnolia extract, restores skin luminosity;
- Omega Complex, rich in fatty acids, re-hydrates the damaged skin;
- Licorice extract unifies the color of the complexion and eliminates brown spots;
- Actiwhite Complex inhibits the formation of melanin allowing to obtain a significant
reduction of skin pigmentation;
- Avocado Butter, it contains the antioxidant vitamins A, E and D that kill off the free
radicals that age the skin. Avocado butter also contains lecithin and unsaturated fatty
acids that are beneficial to the skin.
- Centella Asiaica, this is a special ingredient which is specific to the asian regions. The
active ingredients from this herb improves the collagen foundation of the skin and
fight oxidation - thereby making it a superb ingredient for anti-ageing skin care
products as well as improving skin firmness and elasticity.
Our product features are adapted to the Asian market, we even used some of the
ingredients that can be found only in the Asian regions. We kept the original features that our
company values – products created based on unique formula from the natural ingredients – but
we chose our ingredients according to the problems that the Asian women experienced with their
skin.
Regarding the legal procedures, we have to adapt our product to the Malaysian
government requirements also. The Control of Drugs and Cosmetic Regulations 1984 Act
stipulated that all cosmetics in Malaysia must:
• Be Registered with the Drug Control Authority;
• Manufacturers, importers and wholesalers must be licensed.
Our product must be registered with the Drug Control Authority, National
Pharmaceutical Control Bureau of the Ministry of Health, effective January 1, 2004. Due to the
large number of cosmetic products in the local market, the products are divided into two
categories for the registration exercise. Our face cream is included in the 1st Category products
which are those that have the potential of being absorbed through the skin or mucous
membranes. Applications for registration of Category 1 began in January, 2002.
Under the Control of Drugs and Cosmetics Regulations 1984, manufacturers need to
ensure compliance with the ASEAN Guidelines on Good Manufacturing Practice (GMP) for
Cosmetic. A company or person responsible to notify cosmetic products must ensure that the
products are manufactured in facilities that comply with the ASEAN Guidelines on Good
Manufacturing Practice (GMP) for Cosmetic and Malaysian Good Storage Practice (GSP) or its
equivalent.

2. Packaging components

a) Package
On the package side, we have to consider both functions: protective and promotional.
We chose to pack our cream in a round jar made of PMMA (Poly methyl methacrylate). This has
a glass quality but won't break when dropped. It’s a strong and lightweight material, also, it
keeps very well the product, without alterating it; it’s resistent to humidity and heat. Also, has a
nice and attractive aspect. The capacity of each jar is 50ml. The jars’ supplier is a romanian firm
Pharma Pack. The jar of PMMA is furthermore packed in a cardboard. The colors used for both
the jar and the cardboard are white and green and gives the perception of something fresh,
natural and healthy.
When transporting the products to Malaysia by water, we package the products into big
cardboard boxex and also covered by polystiren so the jars to be safe.
b) Labeling
Regarding the labeling, we had to adapt to the legal Malaysian requirements. These say
that the products must be labeled according to the following information:
• the name of the product and its function: Alam Cosmetics – Face Cream (Skin Defence).
• instructions on how to use the product: Apply every day in cleansed face and neck.
Massage gently with circular movements to help the cream's better absorption.
• a list of all the ingredients in the product: water, soy proteins, bioelastin, cherry extract,
botanical serum, magnolia extract, omega complex, licorice extract, actiwhite complex,
Avocado Butter, Centella Asiaica, mineral oil, palm oil, parfume, hydrogenated palm
glycerides citrate, coumarin, aloe barbadensis leaf juice.

• the country of manufacture: Made in Romania


• name and address of the company responsible for the product: Produced by Alam
Cosmetics SRL. Address: 6, Dimitrie Pompei Street, Bucharest, Phone no. 021/222222.
• the content – quantity in metric units of measurement: 50ml
• the batch number: 36002
• the registration number: 5 943786 002702
• warnings or cautions, where necessary for safe use of the product: Not tasted on animals.
To be used best before…
• statement that declares the presence of bovine/porcine parts.
We will write the instructions and ingredients in both Bahasa Malaysia and English.
c) Branding
The brand name is Alam Cosmetics, it’s written with green and in Bahasa Malaysia
means “natural”. This is a family corporate brand, and also the manufacturer’s single brand.
Also on the cardboard we have a fruit in water which makes you think of bio products.
The logo also maintains the nature theme.
The support services component – for this type of product we do not have related
services like repair or mentainance.

The type of adaptation to the Malaysian market is a substansional (geocentric) one. We


kept the basic ingredients and the values of the company, but we adapted the product to the local
needs and requirments. It is both a mandatory adapation: regarding the legislation for registering
the product and diclsoing the ingredients and so on, and a discresionary adaptation (cultural)
because we adapted our product especially to the asian needs – in this way, we chose to use the
polycentric (multi-domestic) strategy when entering with our product on the new market.

The life cycle of our product:

Stage Characteristics
1. Market introduction stage - In the first year, when the market has to
accommodate with our brand, with our
product.
- The costs will be higher, the sales volumes
will not be very high.
- Getting familiar with the competition
- Demand has to be created, customers have to
be prompted to try the product.
2. Growth stage - At this level the market is already familiar
with our product, the customer awareness
increases.
- The costs are reduced.
- The sales increases significantly, profitability
rises.
- The competition increases.
3. Maturity stage - Costs are lowered as a result of production
volumes increasing and experience curve
effects.
- Sales volume peaks and market saturation is
reached
- The prices tend to drop due to increase in
competitors entering the market
- Brand differentiation and feature
diversification is emphasized to maintain or
increase market share
- Industrial profits go down.
4. Saturation and decline stage - Sales volume decline or stabilize
- Prices, profitability diminish
- Profit becomes more a challenge of
production/distribution efficiency than
increased sales.

Cost of producing the product

The cost of producing the product must take in consideration many variables. One of the most
important one relates to the fact that the product is meant for export, thus we have considered
different factors than a domestic produced good.

The cost of the product incorporates the quantity that we want to export, which is 1000000
bottles, in a one year product cycle. In order to provide the Malaysian market with that quantity,
our plant had to suffer some modifications, and this is why we also took into account the
financial costs (interests) and the depreciation for the equipment improvements.

Next we took into account the basic raw materials, labor, utilities, maintenance and repair costs,
factory and administrative overheads and distribution costs.
In the end the cost of producing the product, or the cost of 1000000 bottles across a full year
period is 7,7 million US dollars.

Below, there is the information which led us to the cost.

Raw materials Price/unit/$


Glyceryl
Ricinoleate 0,57
Glyceryl Stearate 0,53
Caprylic
Triglyceride 0,71
Stearic Acid 0,55
Cetyl Alchool 0,61
Triethanolamine 1,75
Total 4,72

Cost of producing the product (million


$)
Raw materials
Glyceryl Ricinoleate 0,57
Glyceryl Stearate 0,53
Caprylic Triglyceride 0,71
Stearic Acid 0,55
Cetyl Alchool 0,62
Triethanolamine 1,75
Labor 0,6
Utilities 0,5
Maintainance - spare parts 0,2
Repair 0,2
Factory overhead costs 1
Factory costs 7,23
Administrative overhead costs 0,2
Distribution cost 0,15
Operating costs 7,58
Financial costs (interests) 0,02
Depreciation 0,1
Total production costs 7,70

Distribution
Our company is striving to enter the Asian market of cosmetics, and for that reason we
have to allow our product to reach the end consumer in a fast and visible way. Thus, our
distribution objectives are to maintain a low supply chain, to be able to enter in many urban areas
and to know instantly how is our competition positioning itself.

In order to fulfill those objectives we decided to associate ourselves with the most
important player in the cosmetics distribution industry in the South Eastern Asia region, which is
Star Asia. We decided to transport our product by ship, up to Malaysia, and there to benefit from
Star Asia’s warehousing, logistics, and merchandising advantages. As a strategy, we chose for a
well established distribution channel, which has the means and the experience of accessing the
consumers in a timely fashion.

Nevertheless, this meant that we will be going head on with our competition, as Star Asia
is distributing brands like Victoria Beckham, Nautica, Esprit, Playboy or Max Factor. We
considered that if we could enter with a long term engagement and also provide a premium for
the distribution company, we could not only have an edge in reaching our clients, but also a live,
on the spot feel of our competitors, which may be an advantage that other new entry companies
cannot have.

In the next lines, Star Asia is described with its uttermost advantages.

Star Asia

Founded in 2004, Star Asia Group is the distributor of renowned cosmetic and fragrance
brands as well as mass brands. With 8 subsidiaries and over 500 employees, the Star Asia Group
has become the Key Player in the distribution industry in the Asian Region.

The headquarter, based in Singapore, is the nerve centre for the group’s distributing
activities, serving as the warehousing and support hub to the 8 subsidiaries in Asia. Expertise,
reliability and creativity, the Star Asia assets allow brand to set up in a complex region and to
meet their consumers.

Star Asia’s objective is to be the leading regional distributor for both prestige and mass
brands in Asia Pacific.

Their mission is to implement appropriate strategy to develop a brand equity in the local
and regional environment, to aggressively build and promote the brands in the local Asian
markets, to develop strong retail networks for each brand through experienced local teams and to
provide quality of service to consumers, to train and lead a team of professionals experienced in
cosmetics & fragrances with strong local know-how and to seize all new distribution
opportunities in the region.

The Star Asia team is composed of both western and Asian professionals who provide
structure and management as well as a real know how of the Asian Market. This diversity of
cultures and people creates a dynamic and energetic team which is the real strength of the
company. Highly motivated and perseverant, our team has also attained a well known status in
the retail business, leading the group to the top of cosmetics and fragrances distributors.
Reactive, flexible, reliable and creative, our people are our best strength to support the brands on
the local markets

Star Asia Group has strong competence in logistics. Apart from the central expert team it
has a 11000 square feet entirely computerized warehouse with 9 meter storage height. Star Asia's
offices were extended at the beginning of May 2007 to better serve the ambitious development
plan of the group.

Distribution Network (Fragrance and Cosmetics)

Specialty stores: 440

Chain supermarkets: 116

Chain hypermarkets: 90

Personalized Stores: 3

Brands

Prestige: YESforLOV

Masstige: Blumarine, David and Victoria Beckham, Nautica, Esprit, Playboy, Max Factor

Mass: Adidas, Euroluxe, Rimmel , So Fragrance, Women Secret, Yekipe, Maryaj, Chris
Adams

Inhouse: Lulu Castagnette, Romance Singapore

http://www.starasia-group.com/

Pricing
When we are deciding about pricing we are for sure setting as objective the fact that we are
addressing the mass product category and the medium income Malaysian woman. Our strategy is
to offer our product in the comparable price range of our competitors, having the quality of the
product take the stand instead of the price.

It is well known that there are many factors to take in consideration when assessing the price of
the product in the foreign market. Just to pinpoint the most import ones: the purchasing power of
the Malaysian women, the cost of production of the product or the adaptation to competitors’
policies and views of doing business.
Our mass market competition has price ranges between 30 and 80 ringgits, differing on the
characteristics of the product. Translated in US dollars this means a price range between 10 and
25$. Considering the fact that we are aiming and we have reasons to believe that we can attain a
profit margin of 50%, we set out price to be 50 ringgits which is the equivalent of almost 15$.

Breakeven analysis

TFC is Total Fixed Costs, P is Unit Sale Price, V is Unit Variable Cost, TR is total revenue and
TC is total cost

Considering a total fixed cost of 2,37 million $, a variable unit cost of 5,33$ and the unit price at
15$, the quantity needed to reach breakeven point would be 245000 units. This figure makes us
confident that we will succeed in providing the Malaysian market with our production capacity
of 1000000 unit cases.

Promotion
Brand awareness is a marketing concept that measures consumers' knowledge of a brand's
existence. At the aggregate (brand) level, it refers to the proportion of consumers who know of
the brand.

Brand awareness, In general, means the extent to which a brand associated with a particular
product is documented by potential and existing customers either positively or negatively.
Creation of brand awareness is the primary goal of advertising at the beginning of any product's
life cycle in target markets. In fact, brand awareness has influence on buying behavior of a
buyer. All of these calculations are, at best, approximations.

Brand awareness is an important way of promoting commodity-related products. This is because


for these products, there are very few factors that differentiate one product from its competitors.
Therefore, the product that maintains the highest brand awareness compared to its competitors
will usually get the most sales.
The best way to build and improve brand awareness nowadays is creating a website to promote
both the manufacturing company and the products. The first step in promoting any product is
creating a company vision statement. This helps potential clients to identify easily the products
of the producer. Good brand statements typically include the company’s mission, vision and
values. It has to be succinct. It’s typically something that will fit on a page easily.

The website for Alam will be done and hosted by “bjweb.my” the leading Malaysian web design
and hosting company. The costs are low compared to the goodwill provided by a website. The
costs are: 1000$ for the design of the site and 70$ yearly fee for the hosting and promotion of the
site through the distribution channels that the host is providing.

The website will be launched 30 days before the actual market penetration. But the site will only
tease the viewers by previewing some of Alam’s products. This is a strategy of making the
consumer anxious about the launch.

The product will be promoted through the help of one of the most important women
organizations in Malaysia: “Asian Pacific Resource and Research Centre for Women
(ARROW)”. As a resource and research organization, ARROW provides practical information
and resource materials to strengthen initiatives to re-orient health, population and reproductive
health policies and programs with women's perspectives and gender analysis. It works with local,
national and global women's organizations and networks to improve the capacity of women
NGOs in Asia and the Pacific to influence health, population and family planning organizations
at national, regional and international levels. ARROW runs a mailing list, which provides timely
and relevant information to various sectors involved in education, media, policy work,
governance, and community development. Free samples will be given out to the members of the
organization and the launch will be planned in association by the organization during the annual
health and beauty conference held by ARROW and organized by the Islamic Science University
of Malaysia.

These first steps will be taken in order to build brand awareness. The next steps will be taken in
order to increase brand perception. Utilizing such items in your marketing plans means that you
need to carefully think about the products you choose. Once you select a product, you first need
to consider what color you want it to be. This may seem like an unimportant and simple factor,
but it actually has a large impact on the potential of your advertising success. The product's color
is the initial thing that will grab your audience's attention. Alam being a beauty and cosmetics
company that wants to separates itself from the competition by using only natural ingredients for
its products can only choose green as color of choice for the packages and brand background.
The logo for Alam is a combination of a Butterfly and a Leaf that induces the idea of nature,
natural and vegetal ingredients. The green color is attractive for the consumers and passes on the
idea of natural ingredients the basic main characteristic of Alam products.
The advertising campaign is where the main focus of the promotion process. The campaign will
include radio spots and TV appearances. The SINGLE KEY IDEA of the campaign will be that
the products of Alam are 100% natural and that even nature uses Alam. The TV campaign will
be costly. At a price of 10.000$ the making of the spot, and almost 5.000$ the fees paid to the
TV stations for the posting the ad 3 times a day for a month. At the moment of market
penetration the spots will be posted in prime time, and after a month with the brand awareness
being raised, the ads will be posted one every 5 hours starting at 10 am.

Free samples will be distributed with the help of Audry magazine. This way the consumers can
have a real experience with Alam products. The magazine was chosen because it is the magazine
bought by most of Alam’s target. It is important to say that Alam did not use any old footage
from its European campaigns, and that the spots are adapted for the Malaysian market.

Bibliography
*** www.wto.org

*** www.wikipedia.org

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*** www.malaysia.gov.my

*** www.investopedia.com

*** www.europortal.com

*** www.market-interactive.com

*** www.asiamarketresearch.com/malaysia/

*** www.pharma-pack.org

*** www.chinasuppliers.globalsources.com

*** www.orientpacific.com

*** www.cia.gov

*** www.adb.org

*** www.unescap.org

*** www.aseansec.org

*** www.asian-nation.org

*** www.bjweb.com

*** www.audreymagazine.com

***www.ezinearticles.com