Marketing Plan Flavors of France Lipsticks

Norris Robinson, Carla Lieblein, Monique Balgobin, Kristie Bookhout Group A MMBA-6422-02 International Marketing Walden University

Marketing Plan Flavors of France Lipsticks Table of Contents

MARKETING PLAN: FLAVORS OF FRANCE LIPSTICKSERROR! BOOKMARK NOT DEFINED. Background 3 Marketing Objectives 3 Target Market 3 Expected Sales for year 20 4 Profit Expectations year 20 4 Market penetration ad coverage 4 Product Adaptation and Modification 4 Core Component 4 Packaging Component 4 Support Services Component 5 Promotional Mix 6 Advertising 6 Objectives 6 Media Mix 6 Message 6 Costs 7 Sales Promotions 7 Objectives 7 Coupons 7 Distribution 7 Distributors 7 Sales Agents 8 Packaging 8 Pricing 9 Company's Gross Margins 9 Retail price 9 Terms of Sale 10 Marketing Budgets 10 Product Cost and Selling Expenses 10 Distribution Expenses 10 Method of Payment 11 Sales Forecast 11 Break-Even Analysis 12 Pro Forma Income Statement 13 Resource Requirements 14 Measurement Milestones 14 BIBLIOGRAPHY 16

Marketing Plan Flavors of France Lipsticks Marketing Plan Flavors of France Lipsticks

Background The most up to date findings from the 360 Youth/Harris Interactive College Explorer Study demonstrate the momentous influence of the U.S. college market, with expenditures at nearly $200 billion dollars a year. It is a hefty and prominent market, with over 15.6 million students, and is a vital division for marketers concerned with serving the needs of youthful consumers. This is why we believe a venture such as flavored lipsticks would be quite successful in France, a country known for its strong influence on style and fashion. The following pages outline the marketing plan that we would follow in order to start the establishment of a well-known and successful brand of flavored lipsticks in France.

Marketing Objectives During the first year, we plan to contribute to the company $100,000 profit. We will establish the brand with $80,000 start up costs. We plan to reach out to our target market of teenage girls and educate them on our healthy product like, a healthy delicious taste, its environmentally safe, and lead free ingredients. We will educate them about being healthy, protecting the planet, and protecting yourself. Our competitive advantage is that we offer a newly formulated preservative free formulation, which has all natural oils and is in accordance with the European Laws. Our one-year goal is to break into the French market and make a profit to give back to our company of $10,000 per month profit after expenses. Target market the target market country is France because its the fashion capital of the world and we plan to compete with LOreals Color Riche product that has the largest amount of poisonous raw materials like lead in their lipsticks. The target market is girls 16-24 yrs old, basically the generation Y because they spend money on products that help a good cause. And they seem to be conscious of environmental factors, recycling and metal free natural ingredients. Also our representatives will educate them on the negative effects that other lead products have and they may become life long loyalist to our company and goals. Specific Messaging - Our specific messaging is - etre en bonne sante which means be healthy. They will learn metals negative effect on the nervous system as well as its propensity to cause renal and cardiovascular diseases. And learn that more than half of the name brand lipsticks tested contained detectable levels of lead. Frances Largest Cosmetic Company LOreal Color Riche True Red has unacceptable levels of lead and topped the list at .65 ppm lead. Even Burts Bees Lip Shimmer Merlot contains lead (less than .1 ppm). 3

Marketing Plan Flavors of France Lipsticks Expected sales year 20 2 million with 3% going to an AIDS foundation. Profit expectations year 20 whether the profits exceed expectations of not for the first few years, we are expecting $100,000 profit the first year. However the second and third year should reach much higher expectations. We would like to go public and expect the interest in Flavors of France to rise. Market Penetration and Coverage We have sales people, distributors, magazines, Sally Beauty, Printemps and French boutiques. Use the following magazines: French Marie Claire, French Vogue, and French Elle. We will approach stores throughout France in Nice and Carnes to spread our distribution because they have the glitzy film festivals with top models and film stars; with a chic and trendy local customer base. We will target trendy spas and hotels to distribute Flavors of France in their hotel cosmetic stores. And we will offer a trial sampler collection that is placed in the hotel rooms or at the hotel locker rooms. We will have a corporate customer service orientated office located in Paris that has two French speaking sales people. After the first year, we will have a name brand recognition in France so we can spread more readily throughout the country into all markets to gain more distributors and open more customer service offices. Product adaptation or modification Core component Product Platform the essential technology, design and functional features are the variations that can be added or deleted to satisfy local French consumers. The core needs to be unalterable and consistent because it can be costly to change an entire line and will affect product processes. Design Features Red, blue and white colors, flavors of France like apples, which are the type of flavors that are expected of this culture. Citrus flavors are more pleasing than other flavors. Functional Features can be added or eliminated depending on the French market and local safety standards like being in accordance with the European Laws of France. Ingredients have been examined by and they are not hazardous to adults, children or pregnant women. Packaging component Trademark We have trademarked the name Flavors of France which will be called Arome de France. We trademarked the fruit line of flavors is called Arome de Fruit and the flavors Arome a la Pomme, Arome a la Mangue. Brand name The Company is called Flavors of France or Arome de France and the fruit line is called Arome de Fruit or fruit flavors. The two flavors are apple Arome a la 4

Marketing Plan Flavors of France Lipsticks Pomme, and mango - Arome a la Mangue. We will expand the line to offer more flavors after the first year once we meet our projected sales. Price - Our price is $6.95 retail which undercuts our competitors. Our competitors offer similar lipsticks without acceptable levels of lead according to EU Laws like Christian Dior Addicts Ultra shine for $24.50, LOreals color rich lipstick for $8.95 retail. Similar to other brands in France, we will donate a percentage of profits (3%) to an AIDS fund similar to MACs AIDS fund that have raised 100 million since 1994. We are competing with the biggest brands in France like LOreal and Christian Dior and we have gained a portion of their market share because we offer all the advantages and none of the disadvantages of those non-flavored lipsticks. Quality Our quality meets the standards of the European Law. Because of the Campaign for Safe Cosmetics we have a no lead product and we guarantee that raw materials are free of lead and other contaminants. Package The lipstick is a tube inside a recyclable box and a small pamphlet listing the benefits like, lead free, non-allergic, all natural oils and, its environmentally safe. Styling - After research we will use the French style of chic and the French national colors. A special crafted tube that looks sheik and glossy with red, white and blue colors. Labels showing ingredients and instructions have been printed in both French and English. Support services component Instructions Its not legally necessary to have a manual. However, it will come with a list of benefits and a list of damaging effects of lead toxins in the body. Other related service Having two service representatives based in Paris and talk about health benefits regarding the all-natural ingredients and non-allergic components. They will also go into the community and educate our target market. Having a call service center in France rather than one in America closes the language barrier. However at first we will manufacture in Stoughton, MA where the product will be drop shipped from there. Deliveries All Products shall be suitably packed for shipment. FoF may charge for packing and/or packaging including special documentation to comply with Customer requirements and international customs requirements. Customer, regardless of the circumstances, will not hold FoF liable for any liabilities, penalties, or charges of any nature due to the late performance of any Service date. FoF assumes no liability for any direct or liquidated damages during shipment or delivery of Material. Warranty Material may not be returned to FoF without a receipt and must be writing 30 days of sale.

Marketing Plan Flavors of France Lipsticks Promotional Mix Advertising We have taken the time to develop a campaign that will be orientated at educating young women to be healthy Our research shows that these lipsticks have an excellent compatibility with the target age group and may become lifelong loyalists to our company and goals. Our specific messaging is - etre en bonne sante which means be healthy. Most of our lipsticks are advertised through television, internet, magazine ads, and through word-of-mouth. Our lipsticks will also use these advertising channels in addition to using celebrities at fashion shows, and the film festivals thats how successful young celebrities that appeal to our target audience. Objectives Our objectives are to let the public become familiar with our all-natural lead free lipsticks, to let them understand that all-natural lipsticks are better for you while still feeling and tasting delicious and that all of our products are affordable and easily available. Research has shown that the French market for naturals is showing the highest growth rates in Europe. (Pitman, 2006) This growth has been largely been driven by the perception that natural-based products present lower risks of potential toxins and are also less likely to trigger allergic reactions. We are marketing a lipstick that is good for you, that tastes great and that is chic and trendy. During the first year, our company would like to establish the brand within the target market, become a household name in lipsticks and sustain substantial sales in order to make profits, thus we will strive to make $30,000 each month in order to make a monthly profit of $10,000. Media Mix Our media mix includes ads in magazines that our target audience reads as well as television ads on channels that appeal to our target audience. With the boom in technology and websites, such as facebook.com and myspace.com, we will also include online viral ads to advertise our lipsticks on sites that appeal to our target audience. In addition to these types of advertising strategies, we will also include personal endorsements of our lipsticks by rising stars and include them in our print, TV and online ads. We have decided to use one company, DRTV reach, that can execute our entire ad placement strategy in a variety of media and who can recommend the best places and best uses for our ad budget in order to maximize our reach. Message Our message will be along the lines of promoting a lipstick thats of high quality, allnatural, delicious, affordable, chic and trendy. We have chosen the brand name Flavors of France and we will focus on educating health for young girls using the 6

Marketing Plan Flavors of France Lipsticks messaging is - etre en bonne sante which means - be healthy. This messaging is reflected on our packaging and ads. Costs Our costs will be kept at a minimum, about $0.05 per package, by using recycled, environmentally friendly, metal free and natural materials. They will be packaged locally in the USA, and then exported to France. If our sales forecasts prove true, we will expand the company and establish a factory in France to further lessen our production and distribution costs while maintaining a quality of manufacturing higher than China. We will however, spend a large part of our budget on advertising in order to establish our lipstick in the first year and ensure that our sales continue to grow. Budgets for initial sales promotions and launches will be close to $10,000, but as the brand becomes assimilated into the market, budgets will decrease and only be increased during peak sales times like Christmas. Sales Promotions Objectives We plan to launch in the late summer / early winter months (August November) in order to capitalize on the need for moisturized lips in the cold. We will advertise our product using the media mix described above and have premier in-store launches in main department stores Printemps and Galeries Lafayette. We will be sure to target our audience through the use of incentives and coupons as well as free trials and feedback on how to improve the product. We will also plan on creating competitions for our audience to create flavor and advertising ideas so that they can use our product to voice their opinions. Our sales promotions will differ as the product is established, but will always emphasize the quality, affordability and trendiness of our lipstick. Coupons At our launching, we will promote the lipstick by offering specials such as buy one get one free or even sell them in conjunction with other products that are appropriate to our messaging. As the brand becomes more known, different coupons and specials will be offered and special over-the-top coupons will only be done once a year. Distribution Distributors We need distributors in France, but to begin we will target essential distributors like Printemps to sell Flavors of France in Paris chain stores. We have gained the distributor Sally Beauty who has lost the right to distribute other major name brands like LOreal 7

Marketing Plan Flavors of France Lipsticks and they will distribute our lipstick as a replacement. We will approach stores throughout France in Nice and Carnes to spread our distribution because they have the glitzy film festivals with top models and film stars and a chic and trendy local customer base. We will target trendy spas and hotels to distribute Flavors of France in their hotel cosmetic stores. And we will offer a trial sampler collection that is placed in the hotel rooms or at the hotel locker rooms. We will have a corporate customer service orientated office located in Paris that has two French speaking sales people. After the first year, we will have a name in France so we can spread more readily throughout the country into all markets to gain more distributors and open more customer service offices. Sales Agents We plan to have our sales people who will be similar to Mary Kay representatives who can go to fashion week, which attracts the fashion industry from all over the world to Paris twice a year and give out trial size lipstick collections with our lipstick samplers to makeup artists and models. This way we will be worn on top fashion models and in the French magazines within weeks. We are going to have a make-up day at local school and churches where sales representatives like the Mary Kay women will show girls how to apply our lipsticks and give makeup demonstrations. Packaging costs $.0.05 Our packaging is typical for lipsticks tubes, but these are crafted in a unique outer box which is different from our competitors and stands out. For shipment, the tube is placed in boxed packaging to protect the lipstick and to prevent it from being dented or destroyed. This packaging outer box will hang or to stand in displays at stores. Pricing Companys gross margins

Marketing Plan Flavors of France Lipsticks TABLE A - Cost-Plus Calculation of Product Cost
Export Sale Factory price (includes pamphlet and box cost) Domestic freight subtotal Export documentation subtotal Ocean freight and insurance subtotal Import duty (12 percent of landed cost) subtotal Wholesaler markup (15 percent) subtotal Importer/distributor markup subtotal Retail markup (50 percent) Final consumer price $.50 .20 .70 .30 1.00 .50 1.50 .18 1.68 .25 1.93 1.54 3.47 3.48 $6.95

Retail Price - Price of $6.95 Some less expensive brands such as Revlon $7.49 retail so we can undercut Revlon to gain more market share at $6.95 retail. Understandably, we have a lower price because we are a new company on there market but we want to appear inexpensive because we cannot compete with the brand names and be more expensive than them. MACs lipstick tubes are $14 with some profits going to help AIDS Fund. And since 1994 it has raised 100 million for the VIVA GLAM lipstick.

Marketing Plan Flavors of France Lipsticks Terms of Sale Purchase orders are accepted for bulk orders over 100 units or more. The purchase order should be signed a copy of a check, cashiers check should be provided. We have a downloadable order form online and once the credit card it processed the order will be placed. The manufacturer assumes all responsibility for the customers satisfaction or problems so our distributors can call us to replace the product. It will be the stores/ outlets decision to determine if they will give a store credit. Once the order is place the product processing time is 2 weeks for bulk orders. Marketing Budgets Packaging and product design will not play as important of a role in the immediate success as it will in the long-run when other corporations begin to manufacture their competition in regard to flavored lipsticks. However, maintenance of packaging does catch the customers eye out of recognition and household name status. In order to gear the message toward the youthful audience that is the college majority, the package design must reflect that ideal. Size, shape, color, material and wording are all crucial aspects of the packaging and design. Along with a recognizable figure or logo that studies have shown improve attraction to the product (Brown, 2003b). The Fair Packaging and Labeling Act established mandatory labeling requirements and we intend to meet these requirements along with the U.S. Food and Drug Administration or FDA procedures which are strict in labeling the items such as lipstick that may have an effect on a persons body (Brown, 2003a). Marketing budget will be set at $10,000. Product Cost and Selling Expenses The price is $6.95. In determining the $6.95 per tube cost we have considered all associated charges: raw materials; office overhead; shipping; taxes; and owner advertising as a few. We could potentially increase the price to $8.95 in order to compensate for employee salaries. As a profitable business we plan to operate between the price ceiling and price floor. An increase to $8.95 would be incredibly beneficial to account for slower than expected business growth, bad debt and any possible returns even though up to this point we have had very few returns on the item.

Distribution Expenses Distribution We have $1.54 expense given to distributors shown in table A.

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Marketing Plan Flavors of France Lipsticks Method of Payment The running costs of approximately $30,000 per month, which includes owner draw, payroll, rent, utilities, and an estimation of other related costs. We have $10,000 a month profit after salaries for the Paris office is taken out. Salaries and rent are the two major development expenses, while depreciation is another significant cost that will increase as the company proceeds. The company wants to finance growth mainly through cash flow. We do not sell anything on credit. We assume the continued popularity of makeup in France Monthly sales are the largest indicator of growth for the cosmetics business. We assume access to capital and financing sufficient to maintain our financial plan as shown in the table. Sales Forecast Our financial plan indicates that monthly sales are expected to be much greater than this break-even point mentioned. TABLE B Start-up Requirements $10,000 Rent Stationery, forms, etc. Total Start-up Expenses Start-up Assets Needed Cash Balance on Starting Date Start-up Inventory Other Current Assets Total Current Assets Long-Term Assets Total Assets Total Requirements Funding $1,000 $50,000 $0 $51,000 $27,000 $78,000 $80,000 $10,000 11 $1,600 $300 $2,000

Marketing Plan Flavors of France Lipsticks Investment Total Investment Current Liabilities Total Capital and Liabilities $10,000 $80,000 $0 $80,000

Break Even Status We have a $3.48 profit margin and we need to make $30,000 a month to break even. So we need to sell 8621 units each month.

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Marketing Plan Flavors of France Lipsticks

Pro-Forma Income Statement

Flavors of France For 2008 - 2011 (all numbers in $000) REVENUE Gross sales Less sales returns and allowances Net Sales COST OF SALES Beginning inventory Plus goods purchased / manufactured Total Goods Available Less ending inventory Total Cost of Goods Sold Gross Profit (Loss) OPERATING EXPENSES Selling Salaries and wages Commissions Advertising Depreciation Other Total Selling Expenses General/Administrative Salaries and wages Employee benefits Payroll taxes Insurance Rent Utilities Depreciation & amortization Office supplies Travel & entertainment Postage Equipment maintenance & rental Interest Furniture & equipment Total General/Administrative Expenses Total Operating Expenses Net Income Before Taxes Taxes on income Net Income After Taxes Extraordinary gain or loss Income tax on extraordinary gain NET INCOME (LOSS) $1200 400 200 600 800 200 300 100 300 100 0 0 300 $4500 $12100 $6900 2200 $4700 $0 0 $4700 $1400 500 300 600 800 200 400 100 300 100 0 100 400 $5200 $14000 $17500 3200 $14300 $0 0 $14300 $1600 500 300 700 900 200 400 100 300 100 100 100 400 $5700 $15500 $11500 2600 $8900 $43 12 $12000 $1800 600 400 700 900 300 500 100 400 200 100 200 500 $6700 $18000 $16500 2800 $13700 $0 0 $13700 2008 $30,000 2000 $28,000 2009 $40,000 2300 $37,700 2010 $50,000 2800 $47,200 2011 $60,000 3200 $56,800

$3500 1200 $4700 3600 $1100 $1900

$3600 1650 $5250 4200 $1050 $3150

$4200 1850 $6050 4350 $1700 $2700

$4350 1900 $6250 4400 $1850 $3450

$3500 1200 1000 1400 500 $7600

$4100 1400 1200 1500 600 $8800

$4600 1600 1400 1600 600 $9800

$5200 1800 2000 1600 700 $11300

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Marketing Plan Flavors of France Lipsticks Resource Requirements The company will start out with about three months' inventory on hand. This means the majority of company assets will consist of inventory and the starting cash balance will not be significant. Major development and industry costs include $12,500 for computer hardware, software and setup support; $1,600 for rent, $2,500 for a telephone system, approximately $1,300 for office equipment and furniture, approximately $2,700 for materials, shelving, and other warehouse equipment, $2,800 for leasehold improvements, and $7,000 for a company pick-up truck. The company has approximately $119,600 in additional funding that is needed. Promoters: free samples or coupons to try to gain new consumers Product and packaging design teams: based on research information the design teams will have to design the proper amount and aesthetic appeal the consumers in that area need. The team will have one week to collect the data and to come up with a design for the packaging for the lipstick holder and final product packaging. Based on the market research the design team will then start making different all natural lipsticks and test them for the duration and aesthetic factors. Product testing is necessary to see if the final product upholds the information concluded from the research on the consumers and culture of France. Executives: must check in with Marketing Managers weekly to be updated on the progress and to discuss about new foreign market possibilities. Executives will also set up relationships with retail stores in France that will be buying our product. Financial Management- must keep up-to-date information on sales and the cost involved in making this product. They will give executives weekly financial statements and monthly financial reports. This is essential because the financial statements and reports will alert executives if a problem is growing or if changes should be made to the marketing strategy. Since each lipstick we sell will have a different tracing number in the UPC bar code we will be able to receive information on what lipstick is selling the most and forecast future trend colors more efficiently. Measurement Milestones A Marketing plan is only as good as the people following it and adjusting it when it is necessary. With the financial reports constantly allowing executives to see what is currently happening in the market, it will be easier for executives to predict possible future outcomes. If a change needs to be made these financial reports will show it. We also have to implement a timeline for due dates for all departments, market research, promotions, advertising, production, and finance. This will keep our company on track and up-to-date on where we need to focus on, if a department gets behind in the schedule. As a growing company, selling internationally in France, we need to 14

Marketing Plan Flavors of France Lipsticks understand that marketing takes time and to not get discouraged. You must also not expect immediate results. Like exercise, marketing takes time before you start to notice any type of results. This is a long term commitment. (Yevics, 2005) Marketing is a lot like exercise, it is not the point of talking about it to get results but making a habit of doing it to get the results. Our Marketing plan and strategy will only be successful if we constantly monitor and change it to mold to the culture as is changes. We must never forget that marketing is about producing a product to fulfill the needs of a target market and to follow through with research to stay ahead of our competitors.

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Marketing Plan Flavors of France Lipsticks Bibliography

Alexander, Antoinette (2008). industry fights lead-tainted lipstick claims. Drug Store News; 11/12/2007, Vol. 29 Issue 14, p65-65, 1/2p Business Source Premier Retrieved on February 5, 2008 from http://ebsco.waldenu.edu/EBSCO/login.aspx?direct=true&db=buh&AN=2777943 7&loginpage=Login.asp&site=ehostlive&scope=site&domain=search.ebscohost.com AMAT Skyrockets in Fiscal Q2. (2007). Electronic News (10616624); 5/22/2006, Vol. 52 Issue 21, p39-39, 1p Business Source Premier ISSN#: 1061-6624 Retrieved on February 5, 2008 from http://ebsco.waldenu.edu/EBSCO/login.aspx?direct=true&db=buh&AN=2109577 4&loginpage=Login.asp&site=ehostlive&scope=site&domain=search.ebscohost.com Brown, T. "Brand positioning." Market Research Applications. 2003a. Power Decisions Group. Retrieved January 26, 2008 from http://www.powerdecisions.com/positioning-research.cfm. Brown, T. "Market segmentation research." Market Research Tools. 2003b. Power Decisions Group. Retrieved January 26, 2008 from http://www.powerdecisions.com/market-segmentation-research.cfm Cateora, Philip R. and John L. Graham. 2007. International Marketing.13th ed. New York: McGraw-Hill Coutrelis, Nicole (1998). Marketing Foodstuffs in France. Issue: 53 Food and Drug Law Journal 543-554 (1998). Retrieved on February 19, 2008 from http://www.fdli.org/pubs/Journal%20Online/jour_toc/vol53_3.html#art11 Free Soil Party Blog (2008) Discussing Feminist Revolution. Top lipstick brands found full of lead Retrieved on February 19, 2008 from http://freesoil.org/wordpress/?page_id=243 Kotler, P. "Creating a customer focus." Kotler Marketing Group. 2001. KMG. Retrieved January 26, 2008 from http://www.kotlermarketing.com/services/audit.html. McGregor, J. "Gospels of failure." Fast Company Feb 2005: 62. Mero, Jenny (2008) THE FASHIONISTA. Fortune; 1/21/2008, Vol. 157 Issue 1, p66-66, 1p, 1c Business Source Premier Retrieved on Feb 5, 2008 from http://ebsco.waldenu.edu/EBSCO/login.aspx?direct=true&db=buh&AN=2822805 1&loginpage=Login.asp&site=ehost live&scope=site&domain=search.ebscohost.co 16

Marketing Plan Flavors of France Lipsticks NOT MUCH COLOR IN COSMETICS THIS TIME (2008). Advertising Age; 1/28/2008, Vol. 79 Issue 4, p3-41, 2p Business Source Premier Retrieved on February 5, 2008 from http://ebsco.waldenu.edu/EBSCO/login.aspx?direct=true&db=buh&AN=2869007 8&loginpage=Login.asp&site=ehostlive&scope=site&domain=search.ebscohost.com Pitman, Simon. (2006) French Naurals Market Shows Industry-Leading Growth. Decision News Media. Online article, retrieved January 28, 2007. White, D. "Spring 2002 wave of the 360 youth/harris interactive college explorer study affirms the power of the college market." College Students Spend $200 Billion Per Year. 25 Sep 2002. Harris Interactive. Retrieved January 26, 2008 from http://www.harrisinteractive.com/news/allnewsbydate.asp?NewsID=480. Why Travel to France (2008). Lots of Lead in LOreal Lipstick Retrieved on 2/132008 from http://www.whytraveltofrance.com/2008/01/19/lots-of-lead-in-loreal-lipstick/ Yevics, Patricia. (2005) How Do I Know This Stuff is Working: Implementing and Monitoring your Marketing Plan. Law Practice Today. July 2005. http://www.abanet.org/lpm/lpt/articles/mkt07053.html

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