APPENDIX

Table of Contents
APPENDIX ................................................................................................................................................... 1
Introduction ................................................................................................................................................... 1
1. Marketing .............................................................................................................................................. 2
1.1 Industry analysis: .......................................................................................................................... 2
Aftershaves market research: .................................................................................................... 2
Perfumes market research: ........................................................................................................ 3
1.2 Market Analysis Summary: .......................................................................................................... 4
P1: Aftershave ................................................................................................................................... 4
P2:Perfume ........................................................................................................................................ 4
1.3 Positioning Statements .................................................................................................................. 5
1.4 Pricing Strategy: ............................................................................................................................ 5
1.5 Promotion Strategy ....................................................................................................................... 6
P1: ............................................................................................................................................................. 6
P2: ............................................................................................................................................................. 7
1.6 Distribution Patterns ..................................................................................................................... 7
2. Management .......................................................................................................................................... 7
2.1. Organizational Structure ................................................................................................................... 8
2.2. Management team gaps:................................................................................................................ 8
2.3. Personnel Plan ............................................................................................................................... 9
3. Financial Plan ........................................................................................................................................ 9
3.1. Important Assumptions ............................................................................................................... 10
3.2. Long-term Plan ........................................................................................................................... 11



Introduction

Company Name: Hana Scent Corporation
Location: Amsterdam, Netherlands
Founded: 1/8/2014
Field of operation: Perfume & cosmetics
Product: Perfume and aftershave
Objective: We will create value to our stockhoder,doubling the original stock price within
two years, and become a market leader.
Mission: We commit to bring the best services and the best quality to customer,
especially retailers.
1. Marketing
1.1 Industry analysis:
Perfumes and scented oils have been used since the beginning of human history and its
use has been recorded as far back as the ancient Egyptians and ancient China.
It wasn't until the 19th century that the scent industry as it is known today became
apparent. Spending such a long time until now, those factors such as the growing trend
toward urbanization, higher spending capacity, and rising concerns for personal
appearance have helped to create a remarkable and huge profit-making industry in over
the world. In addition, the increased demand for youth oriented, floral and exotic
fragrances is ready to set the pace for quick market expansion. Even though womens
perfumes and fragrances continue to dominate this market, there is a significant growth in
the sales of mens fragrances and perfumes, which is opening up new opportunities in the
fragrances industry.
One of the most recognizable sectors of the scent industry is the perfume and aftershave
business. Companies of this type produce a wide range of scents that are sold to
consumers for personal use.
According to market forecasts, the flavor and fragrance market is expected to reach
$2,060 million by 2018 with a good growth rate over the next five years.
North America and Europe were the largest regions in terms of consumption of perfumes
and aftershaves, followed by APAC and ROW with some noticeable features as follow:
Aftershaves market research:
The market for aftershave grew dramatically during the 1980s to reach total revenues of
approximately $1 billion. Aftershave developed a reputation for being the classic Fathers
Day gift, which meant highly seasonal sales. Women accounted for 60 to 70 percent of
demand for mens fragrances, often purchasing them to wear themselves. In response to
declining aftershave sales, industry heavyweights such as Proctor & Gamble created new
products to influence mens buying habits, such as bath gels, and stepped up marketing of
traditional mens fragrances.
Aftershave sales are closely related to sales of mens razors and are, therefore, affected
by mens grooming habits. Proctor & Gamble purchased Gillette for $57 billion in 2005
only to find soon after that razor sales were declining. Around 2010, beards became
increasingly popular. As a result, razor sales have declined at a record pace. Higher-end
razor sales declined more than lower-end disposable razors. This was evident in the 1
percent decline in unit sales of aftershaves during fiscal 2011. In addition to the decline
stemming from fewer men shaving, aftershave sales have seen erosion from the
proliferation of bath products, such as all-in-one bath and body wash, which is also used
for pre-shaving.
According to Mintels research in EU market, although there has been a slow growth in
razor and other concerning shaving products sales in five large countries in Eu (the
revenue of those product just increased from $1.85 billion in 2005 to $2 billion in 2010),
the revenues of skin care products for men have seen a rapid growth- from 289 million
in 2005 to 420 million in 2010.
Germany and Spain has had the highest growth of the turnover of skin care for men
products throughout the 5 latest years. Those products market in Germany has been
increased from 65.000.000 in 2005 to 130 triu in 2010 (increasing at 100%). At the
same time Ones Spain market as well increases from 29.000.000 to 51.000.000 ,(
increasing at 76%)
In 2010, the average expense for beauty products for men in Spain was highest in Spain
at 61,7 while that in Italy was the least at 41,5 .
The research also has shown that Europeans might have a tendency to purchase
more new products in the industry, such as plants and herb related products in the future.
Perfumes market research:
At the present time, European has the largest perfume market worldwide (13 billion
USD), which is twice as many as North America market. With a great number of
manufacturers, many EU firms producing perfume currently take the lead in the whole
world market with world famous perfume brands such as Dior, Chanel and Guerlain ....
In the North America, Elizabeth Arden is now the biggest firms with 15% market share.
In 2010, the firm reached the turnover of about 5,3 billion USD and has estimated to
reach nearly 5,7 billion in 2015.
In the future, the growth of scent industry will be boosted by the development of new
products with the growing tendency to prefer natural fragrances and environmentally
friendly material.
1.2 Market Analysis Summary:
P1: Aftershave
- According to some market researches, there is a large and untapped market for quality
aftershaves.
- Those researches also indicate the general tendency among NAFTA and EU aftershaves
markets, when the average price pushes over $150 per unit, men start to conserve on the
amount of aftershave applied, or to make it clearer market decreases as price increases. All
the same, if the price moves into the low price ($80 to $90 range), consumption is
forecasted to pick up sharply, but they are used on other body parts ( other purposes).
- Estimated Annual Demand at the start of simulation: In NAFTA, there are 100.000 to
150.000 units. In, EUROPEAN UNION, there are 80.000 to 120.000 units.
-There is a sharp seasonal demand for mens aftershave.
P2:Perfume
- Initial demand for ladies perfume is gigantic, and the market for those products is also
more active and complicated than aftershaves.
- A market group average price for a unit in the range of $140-$180 would seen ideal, but
there still is a demand for product above $300 and below $125 unit price.
- There is the noticeable fact that men purchase most of the ladies perfume. When faced
with a choice between expressing some degree of affection, most men will tend to buy on
the safe and more expensive name brand side. It means that the quality and image of those
product are more important than price.
- Estimated Annual Demand at the start of simulation for both areas is 100. 000 to 250.000
units.
- The product should be supported through advertising and a sales force.
Market Segmentation
-P1: We realize that the P1 market is quite sensitive to price, but it is also quite hard to
follow low price because of a high cost at the beginning.
-P2: The customers in both areas seem tend to purchase quality and imaged products and
willing to pay for expensive products as long as the price is not too high. Therefore, the
very important thing is how to create the brand with the high valid for customer there.
In order to well adapt to selected markets and base on the firms perception, we decided to
chose middle-end segment for Product 1( aftershave) and high-end segment for Product2
(perfume) in both areas NAFTA and EU.

Market Product Range Name of
products

Marrket
segmentation

EU Afershave (P1)

Hunter Middle-end
EU Perfume (P2)

Eros High-end
NAFTA Afershave (P1)

Vampire High-end
NAFTA Perfume (P2) Miracle High-end
1.3 Positioning Statements
A1P1: A kind of aftershave that creates a high level and a confidence for men. Men will
feel very confident and elegent when get out and work with their colleague. comfortable
and confident feeling for men.
A2P1: This is middle-end segmentation. All men can get a aftershave bottle for
themselve. Users will feel comfortable and fresh after use the product.
A2P2: Representative of the goddess of love a scent named for Eros will bring a little
secret for the women who want to make an impassioned appeal. With the brand we
promise to give you a high quality product that can show your own class- you will be no
one but you.
A1P2: Miracle is a smell that no stylish woman can deny if she wants her hidden beauty
to be revealed. This natural scent product will show you the way to love yourselves first
by a little magic.

1.4 Pricing Strategy:
Price based on cost:
Variable costs inclused: production costs and commission for sales reps.
Fixed expenses inclused: administrative expense, advertising, quality
control cost, selling expenses and interest.
Break- even price: total variable costs and total fixed expenses/size of products
Price = break- even price + desired rate of return
Company objectives:maximize profit argin
Rate of return:
P1A1: 60% P2A1: 70% P1A2: 30% P2A2: 80%
Proposed positioning strategies:
Low price during product introduction.
Quantity discount - offered to retailer who purchase in large quantities (5%)
1.5 Promotion Strategy
P1:
Promotion
Coupon program:
Offer $0.5 off price coupon for 100 the first retailers during product
introductions
Offer price-off in special day
Offer free of delivery cost
Support 50% value of orders for the first purchase
Retail support program:
Provide shelf display to the current top retailers ( those that do 70% of
sales)
Support salespeople for the new retailers
Give free training for the new retailers
Install showroom a week before advertising and coupon come out
Advertising:
Retail cooperative advertising program:
Grant 5% advertised costs for the new retailers. Allowance will last for four
weeks
Quality Control Budgets:
Expensing a good level of quality control budgets at $3 per unit
Sales Force:
Training well-performed trainees( for required quarters)
Compensation For Sales Force
Choosing Moderate salary/ moderate commission for Sales Rep

P2:
Promotion
Coupon program:
Offer $0.5 off price coupon for 100 the first retailers during product
introductions
Offer free of delivery cost
Support 50% value of orders for the first purchase
Retail support program:
Provide shelf display to the current top retailers ( those that do 70% of
sales)
Install showroom a week before advertising and coupon come out
Advertising:
Retail cooperative advertising program:
Grant 5% advertised costs for the new retailers. Allowance will last for four
weeks
Grant top retailer ( those that do 70% of sales) 30% cooperate advertising.
Quality Control Budgets:
Expensing a high level of quality control budgets at $5 per unit
Sales Force:
Seeking for high effective Sales Rep teams.
Training well-performed trainees( for required quarters)
Compensation For Sales Force
Choosing High salary/ high commission for Sales Rep
1.6 Distribution Patterns
Using the traditional contribution channel
Buying from producers in around the world
Selling for retailers in NAFTA and EU
Beside the current retailers, we will find the new partners to broaden the
current channel
2. Management

2.1. Organizational Structure

2.2. Management team gaps:
Our employee will perform well with customer service skill and huge range
experience in wholesale industry.
Marketing director is a dynamic person who always supports an aggressive
advertising campaign.
To take a lucrative opportunities in exchange and save considerable money, we
need an expert Finance director.
Be good at supply chain management.




CEO
Nam Quang Bui
Marketing
Manager
Y Hoai Pham
Financial
Manager
Huong Thi Vu

Personnel
Manager
Quy Hoang Tran
Lien
Thi
Tran
Duong
Thi
Thuy
Nguyen
Nguyen
Vinh
Bui
Tri
Cao
Nguyen
Phuong
Ngoc
Giang
Thuy
Thi
Hong
Nguyen
Cuong
Hung
Nguyen

2.3. Personnel Plan


Quarter 1 Quarter 2 Quarter 3 Quarter 4


CEO $20.000 $20.000 $20.000 $20.000


Administrative $30000 $30000 $30000 $30000


Total People 4 4 4 4


Total Payroll $50.000 $50.000 $50.000 $50.000


Sale reps $30.000 $ 38.000 $41.000 $46.000


Total People 12 15 16 18


Total payroll $80.000 $ 88.000 $ 91.000 $96.000





3. Financial Plan
Our mission is to maximize stockholders value and this is linked to our marketing as
well as financial strategies.
For two lines of products for each area, we developed two separate strategies over two
years. For aftershave line, we desire to capture 30% share market at the end of the year
number 2. On the other hand, perfume lines for woman are positioned at the high end
market. With 14% desired share market, we expect to become the leading firm in the
niche-market providing Product 2 which is oriented in different strategy.
At the starting point, after forecasting demand for each product at each area, we estimate
total initial capital needs including working capital. Hana Corp is a commercial firm so

Hiring

Quarter 1 Quarter 2
PRODUCT AREA
SALE
REPS
TRAINEES
Sale reps's
salary per
person
Total of
sale reps
salary
Total of sale
reps salary
1 1 3 1 2.000 6.000 8.000
1 2 3 2 3.000 9.000 15.000
2 1 3 0 2.000 6.000 6.000
2 2 3 0 3.000 9.000 9.000
Total 30.000 38.000
initial fixed investment such as production plan is not required. Total projected working
capital need is:
At the position of a newcomer in the scent industry, it is not easy for us to convince
investors to put capital into our risky but potential project. Not only being managers, all
members of board directors also are experienced investors, we highly recommend a long
term financial structure with debt ratio is 0.5 for Hana Corp. At the set-up stage, we
intend to issue 400 000 shares at IPO price which is 3.5 dollar per share. To reach
targeted capital structure, we also issue $1,200,000 in bonds. According to specific
conditions, we will consider some strategies such as issue or call bonds, issue new or
repurchase stocks when necessary. New stocks should be issue at the beginning of the
year, which makes it easier to issue new debt later. However, all actions should be
controlled to get the optimal structure with the lowest WACC. We hope to satisfy our
bondholders with 8-10% rate of return per year and about 20% for stockholders.
Based on the annual average growth of the industry, our net sales will grow at 5%
percentage a year with assumption that the other conditions are maintained. However,
appropriate adjustments will be implemented after considering any seasonal changes.
With additional fund needed for any sale growth, we line up external capital sources to
find the best for us in particular conditions. On the other hand, when excess funds
become available, we consider several possibilities to do with them such as:
Increase the dividend
Repurchase stock and repay debt in the amounts that would keep the targeted
capital structure constant. The strategy should be to repurchase stock early in the
year and repay debt later in the year
Invest excess fund in marketable securities
Embark on a merger program to acquire other firms
About dividend policy, we are highly recommended to pay maximum $0.5 per share the
first time-the following quarter after the first quarter with positive earning profits. The
amount of increase each time is limited to $0.5 per share.
Next part of financial plan we want to state is financial statements as well as key financial
ratio table and break-even analysis for the first projected quarter.

3.1. Important Assumptions
The following table details important financial assumptions.
Table: General Assumptions


Quarterly Annual
Interest rate

Short term loan 2.3% 9.2%
Term loan 3% 12%
Bonds 2.5% 10%
Special loan 9% 36%
Interest bonds 2.5% 10%
Income taxes
22% on the first $6250 earn and 48%
on the balance earnings

3.2. Long-term Plan
In the next 2 years the company's main target still continues to reinforce and
expand perfume / aftershave perfume market share on NAFTA and EU market over
20%, maximizing the shareholders value at the same time. To ensure there are
sufficient funds to cover the costs, not falling into cash shortage in the next few
quarters Finance Department is responsible for providing cash flow calculations to fit
the specific business cycle. The capitals increasing through issuance or buy-back
bonds must be approved by the leadership of the company, in addition to increasing
debt capital will be close examination even if it is a more relative risk measure.