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Cosmetics Manufacturing Business Plan

Strategy and Implementation Summary

Our strategy is to develop Bluespa as a brand that represents quality and value. The tactics underneath this strategy and the programs we will put in place cover a broad range of disciplines. They are presented here in order of importance.

5.1 Strategy Pyramid

  1. Products that perform:
    • Continually develop and bring to market products that function as intended and represent an acceptable price--value proposition to the consumer.
    • Skin care and fragrance will be developed around two natural themes: Thalasso therapy, and Botanicals.
    • Working with female fitness instructors and students to develop an apparel and accessory range that meets their performance and fashion needs.

  2. People:
    • Locate, nurture and develop a team that is talented, committed and understands the concept of brand.
    • Training and incentive programs will assist in inspiring our people to "walk the walk," and reward performance.
    • Employee stock option and profit sharing programs will be available at all levels.

  3. Targeted marketing programs:
    • Focus on PR campaigns and affiliations with opinion leaders that reinforce our image.
    • Print advertising will be focused on the benefits of our products, both physical and emotional. They will speak to the lifestyle our target consumer aspires to have. It will be carefully placed to insure the proper affiliation.
    • Point of sale graphics will reinforce our message of function and quality. We will create a package of shop in shop and concession concepts for spas and retail accounts.
    • Develop a team of "technical representatives" to support key accounts with product and sales training.

  4. Development of Bluespa day spas and retail stores:
    • Day spas will be carefully sited to generate acceptable revenue and enhance our brand image.
    • Existence of our own day spas will help to establish and reinforce our authority.
    • Retail stores will be located in major shopping areas and malls. Bluespa retail stores will bring the product and brand image to consumers in major markets.

  5. Distribution through day spas and resorts:
    • Further enhance the Bluespa image with the consumer by targeting prestige spas and resorts.

  6. Controlled distribution at wholesale:
    • Affiliating with retailers who have a consumer image and awareness that supports Bluespa will reinforce our image.

  7. Creation of the Bluespa catalogue:
    • Allow us to reach a broader (geographically) audience at reasonable cost and in a controlled method.
    • Explain our products and our philosophy in an informative and interesting format.
    • Create brand awareness in new markets and measure consumer acceptance prior to committing brick and mortar resources.

  8. Implementation of the Bluespa website:
    • Provide the consumer with a reference for treating the skin.
    • Provide a training tool for Bluespa accredited facilities on the Web.
    • Wholesale customers will be able to utilize the site to train their staff and to place reorders or learn about new products.
    • Retail and wholesale customers will be able to set up automatic replenishment on the Web and we will be able to reach out and remind them when they need product, based upon average usage data and time since last purchase.

5.2 Value Proposition

Our value proposition must be viewed at two levels. First, the end consumer, what do we offer her that she will recognize as a benefit and a value? Second, the retailer, their motivation to purchase and market our products will not always be in sync with the consumer's motivation to buy.

The end user is being bombarded with claims and propositions from cosmetic companies. They are all somewhat mysterious and expensive. She is unclear what really works for the skin and why. She is unclear how to choose the correct products for herself. Spas are seen as a luxury. A day of pampering, requiring a commitment of time and money. We will provide her with simple statements of benefit and recommended use for our products. Our day spas will offer a new approach to treatments. We will have a menu that is designed to provide the consumer with a relaxing and rejuvenating experience during lunch or in an hour before or after work. We will provide her access to the products she enjoyed at the spa and the information necessary to gain the maximum benefit from using them at home. Our multi-channel distribution strategy will insure her easy access to product when and where she needs it. By combining a simple approach to product knowledge, a distribution strategy that insures availability, a pricing proposition that puts us at the lower quadrant of the high quality brands and a quality brand image for Bluespa, we believe we will create a compelling value proposition for our target consumer.

Our target retail and spa customers are motivated by a different set of values. Today they need products that draw consumers to their establishments and offer them an acceptable return. They need their vendors to provide training and marketing support and they need to be able to offer their customers a reason to come to them. Bluespa will address each of these needs for our retail clients. Because we will create Bluespa as a brand we will be pulling consumers into their doors. Our technical representatives will offer them a resource for training and developing their own staffs while our shop in shop programs will offer them in-store fixturing and point of sale support, and our concession program will provide them the opportunity to have a complete Bluespa operated facility in their location. We will offer a product return and exchange privilege for qualified accounts that assures them a maintained margin of 50%. We will limit wholesale distribution so retail clients will gain a market advantage over their competitors. Because Bluespa has been conceived as a retail strategy, we will be able to better understand and serve the needs of the retailer.

5.3 Marketing Strategy

Bluespa will utilize a brand building (pull) strategy as the basis for our marketing plan. We will position our print media spend in magazines that influence our target consumer and validate the brand. The publications we will utilize are: W, Vogue, Wallpaper, Cosmopolitan, Travel & Leisure, Vanity Fair, Departures, In Style, Food & Wine, Shape, Town and Country and the New York Times Sunday edition. These are the same publications retail buyers and trend analysts scour to find emerging brands or trends. In addition to paid ads in regional issues of the publications mentioned, we will retain a PR firm to develop a grass roots program for obtaining product placement and celebrity/trainer endorsements. Our media and PR strategy will bring the brand to the forefront for the consumer and set the stage for our image development. We will have a separate plan to market to spas and retailers at trade shows. In addition we will develop a unique in-store graphic and communication package that explains our products benefits and advantages at point of sale.

5.3.1 Marketing Programs

  1. Development of product packaging: Develop a packaging and labeling system that communicates the Bluespa message.

  2. Development of product brochures: Create a series of brochures that will function at point of sale and at trade shows.

  3. Creation of a Bluespa video: Develop a video that explains the connection between the sea and the human body.

  4. Selection of a PR firm: Begin the selection process for a retained public relations firm in April of 2001.

  5. Creation of our graphic language: Mr. Dane Johnson will complete this project by March 1, 2001.

  6. Selection of an advertising firm: Begin the selection process for an advertising agency in March of 2001.

  7. Development of our print campaign: Development of this campaign will begin immediately after selecting an agency.

  8. Creation of consumer seminars: Develop and implement these programs by July 2001.

  9. Development of bonus week programs and products: Ms. Kelly Anderson will work with Ms. Brunner to develop and source these products by October 2001. Our first bonus week event will be December 2001.

5.3.2 Pricing Strategy

Our pricing strategy at retail will be to create a price-to-benefits ratio that positions Bluespa as a superior value. At wholesale we will price our products to provide the retailer with a 50% maintained margin and offer a product exchange program for current accounts. Our wholesale prices will be derived after the appropriate retail is determined to insure that the shelf price represents a value to the consumer and the retailer has a 50% margin.

5.3.3 Promotion Strategy

Our promotional strategy will cover a broad range of programs.

We will not have price promotions in our own facilities and we will discourage our wholesale customers from reducing prices. Instead we will have a quarterly bonus week. During the bonus week consumers will receive a free gift with any Bluespa purchase over a pre set amount. The gift sets will consist of sample size Bluespa products from our most current launch in a specially designed tote or gym bag.

Consumer Mailers:
We will have a monthly mailer for Bluespa customers. It will be designed to educate the consumer about the benefits of a particular product or ingredient. The mailer will be redeemable for a sample of the product.

Our point of sale system will track consumer sales and usage by customer. We will invite our best customers to quarterly seminars on skin care and wellness.

We will outfit select female yoga and fitness instructors in key cities.

Public Relations:
We will contract a top public relations firm to develop and execute a gorilla campaign. The objective will be to secure product placement in key publications and endorsements by opinion leaders.

Print Campaign:
We will have a paid placement program that includes monthly placement in regional issues of W, Vogue, Wallpaper, Cosmopolitan, Travel & Leisure, Vanity Fair, Departures, In Style, Food & Wine, Shape, Town and Country and the New York Times Sunday edition.

5.4 Sales Strategy

Our retail sales strategy consists of just two parts. First we will hire and train people who fit the Bluespa image and lifestyle. Our training programs will insure that they have the product knowledge necessary to serve the customers needs and close the sale. Second, our commission and retention programs will insure we recognize and reward performance. Our sales people will be on a commission program that compensates for follow up sales at progressively higher rates. This will provide an incentive for consumer follow up and the creation of repeat business. Our commission program will also insure that individual performance is monitored and recognized. Top performers will be singled out for recognition and poor performers will be given additional training or encouraged to seek a profession more suitable to their skills.

Our wholesale sales program will evolve through two phases as we grow. In the first phase leading showrooms will represent us. Alweil Studios will act as our national sales manager. They will be paid a 15% commission on all sales and will manage the contracts with other showrooms. This rate is three points above the average for small firms and five points above the average for larger accounts. These higher rates will motivate the reps to promote Bluespa products and aggressively pursue reorders. They will also handle order follow up and customer service. Their commission will be paid 50% at time of shipment and 50% at time of payment, insuring a vested interest in customer satisfaction and payment. After we reach $6,000,000 in wholesale business to outside accounts we will begin to develop an internal sales force and customer satisfaction team. Our internal sales team will be paid 6% of sales. The customer satisfaction team will handle all post sale activities. Insuring delivery, claim processing and collection. (This team will cost approximately 8% of sales in salary and support costs.)

5.4.1 Sales Forecast

Sales at Bluespa retail stores are planned to grow astoundingly from 2001 to 2005. This represents a phenomenal growth rate per year for the first five years. This growth is comprised of two factors. First, average comparable store sales growth over five years. This average rate is a composite of the planned rates year one through year five. Second, a new store-opening schedule resulting in eight locations being open at the end of year five. The average store size is planned at 1,500 square feet. Mature store volume is planned at $450 dollars per square foot. New stores are planned at $325 per square foot. It is assumed that of the initial eight locations three will include day spas and five will be retail stores without day spas. The three stores with day spas will be located in Portland, Oregon; San Francisco, California and Southern California. Of the five stores without day spas, two will be in southern California and three will be in the bay area of northern California. A mix of two free standing and three mall locations will be planned. The catalogue is planned for launch in the third quarter of 2003. Catalogue sales are planned to begin in 2003 and projected to grow to triple in 2004. This is the result of three additional mailings in 2005. The addition of e-commerce and the catalogue escalates total sales direct to consumers by the end of 2005.

Wholesale sales are budgeted to grow enourmously by the end of 2005. While we believe this growth is achievable for the following reasons:

  1. A great deal of our growth will come from adding doors. We will begin 2001 with no accounts. As we add accounts we will experience both per door growth and geometric growth in the size of our wholesale client base.
  2. Our product launch schedule will result in our range being approximately 10 times as large in product offering by the beginning of 2005.
  3. Our advertising plan (media and PR) is to grow our annual media spend extensively by 2005. This will increase brand awareness by both the consumer and the retailer.

Our wholesale sales plans do not include sales to our own outlets or from the catalogue. Our margin plans reflect these sales coming from first cost. It is our belief that this approach assures a true measure of profitability for our retail stores and a true measure of growth for our wholesale efforts.

Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Retail $245,801 $487,500 $1,033,500 $2,219,100 $4,803,942
Wholesale $224,500 $3,000,000 $8,000,000 $15,000,000 $30,000,000
Catalogue and Internet Sales $0 $250,000 $1,000,000 $2,000,000 $4,000,000
Total Sales $470,301 $3,737,500 $10,033,500 $19,219,100 $38,803,942
Direct Cost of Sales Year 1 Year 2 Year 3 Year 4 Year 5
Retail $61,450 $121,875 $258,375 $554,775 $1,200,986
Wholesale $85,310 $1,140,000 $3,040,000 $5,700,000 $11,400,000
Catalogue and Internet Sales $0 $62,500 $250,000 $500,000 $1,000,000
Subtotal Direct Cost of Sales $146,760 $1,324,375 $3,548,375 $6,754,775 $13,600,986

5.4.2 Sales Programs

  1. Development of the Bluespa sales training program: To be completed in the second quarter of 2001.

  2. Creation of the Bluespa commission program: To be completed in the first second quarter of 2001. Mr. Brunner and Ms. Anderson will develop the program.

  3. Identification of and contracts with key wholesale showrooms: Mr. Brunner and Ms. Alweil will complete this task in the second quarter of 2001.

  4. Selection of a customs broker to insure efficient flow of inventory and accurate classification of product: To be completed in March 2001.

5.5 Strategic Alliances

We have secured strategic alliances on the supply side. The arrangements with our labs in France give us access to gradable production flow, plus state of the art research and development resources. They will allow us the critical assets previously enjoyed only by the largest firms. We will develop additional alliances with yoga and fitness instructors in key cities.

5.6 Milestones

The following table shows the milestones set for Bluespa.

Milestone Start Date End Date Budget Manager Department
Completion of Store, SIS and Trade Booth Fixtures 3/1/2000 5/1/2001 $150,000 R. Brunner Marketing
Completion of Product Development- Earth 6/1/2000 3/1/2001 $10,000 R. Brunner Marketing
Completion of Product Development - Water 6/1/2000 3/1/2001 $10,000 R. Brunner Marketing
Completion of Bluespa Video 10/1/2000 1/2/2001 $10,000 L. Ermatinger Marketing
Understanding of FDA Regs/Compliance 10/1/2000 2/1/2001 $0 R. Brunner Marketing
Package and Label Design 10/1/2000 3/1/2001 $5,000 D. Johnson Marketing
Selection of Spa Personnel and Services 11/1/2000 4/1/2001 $2,000 K. Anderson Marketing
Selection of a Customs Broker 12/1/2000 1/2/2001 $0 R. Brunner Marketing
Complete Lease Negotiation for Store #1 12/1/2000 2/1/2001 $5,000 R. Brunner Marketing
Store, SIS and Trade Booth Design 12/1/2000 4/1/2001 $30,000 R. Brunner Marketing
Product Brochures 1/2/2001 3/1/2001 $5,000 D. Johnson Marketing
Development of Accessory Range 2/1/2001 5/1/2001 $4,000 B. Brunner Marketing
Identification of Key Showroom Alliances 2/1/2001 5/1/2001 $3,000 K. Alweil Marketing
Product Development for Fire Range 2/1/2001 6/1/2001 $5,000 R. Brunner Marketing
Registration of the Name and Logo 3/1/2001 10/1/2001 $1,000 B. Brunner Marketing
Select a Director of Finance 8/1/2001 10/1/2001 $20,000 R. Brunner Marketing
Development of Sales Training Programs 3/1/2001 6/1/2001 $6,000 F. Wonnacott Marketing
Complete Store #1 3/1/2001 6/1/2001 $75,000 R. Brunner Marketing
Completion of Initial Apparel Range 4/1/2001 11/1/2001 $8,000 R. Brunner Marketing
Land Initial Product in U.S. 4/1/2001 5/1/2001 $40,000 R. Brunner Marketing
Staff Selection and Training for Store #1 4/1/2001 5/1/2001 $5,000 K. Anderson Marketing
Creation of Launch Ad Package 4/2/2001 5/1/2001 $50,000 D. Johnson Web
Creation of Launch PR Package 4/2/2001 5/1/2001 $20,000 R. Brunner Web
Completion of Arrangements with Wholesale Reps. 5/1/2001 7/1/2001 $10,000 K. Alweil Marketing
Totals $474,000

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