As part of my Executive MBA program at St Mary's College of California, I worked on a Capstone project in which I helped Indonesian Cosmetic manufacturer to help export their Purbasari body scrub product into the North American Market. This presentation is a draft outline to my export strategy plan for PT Gloria Origita Cosmetic. If you have any questions or comments for improvements please feel free to reach out to me or comment below.

1. Baber Mehkeri
Gloria Origita Cosmetics:
Marketing & Strategic Recommendation
CANTIK Consulting
1

2. Agenda
 Introduction to Gloria Origita & Products
 Project Research & Objectives
 Indonesia & North America Market Overview
 6 P’s of Marketing : Spa Market Analysis
 Supply Chain
 Financial Analysis: Pricing
 Strategic Recommendation
 Conclusion
2

3. Introduction of Gloria Origita
 Gloria Origita is a cosmetic and skin care
manufacturer in South East Asia founded in 1993
 Location: Jakarta, Indonesia
 Employees : 500-1000
 Revenue: $50 Million in sales annually
 Distributed throughout Asia – (Vietnam to
Brunei)
 Market share: 2.9% Indonesia
3

4. Brands
Gloria Origita Brands
 Purbasari - Aromatherapy body scrubs, regular
body scrubs, hand & body lotion
 Freya - Cosmetics line (lipstick, eye shadow)
 Kanna - Cracked heel cream
4

5. CANTIK Project Research
 Conduct analysis of North American market, consumer
needs, trends, & products
 Provide financial analysis
 Provide regulatory requirements
 Define a strategy for entry into the North American
market
5
Gloria Origita has expressed interest in exploring
opportunities to increase company sales by
expanding their products into the North American
retail markets

6. 6

7. Primary Research
 Phone consultations with client company
 Phone consultation with industry professionals (Chair
of Skincare Council, Canadian Export Consultant)
 Phone consultation with Subject Matter Expert
(Sephora)
7

8. Secondary Research
 Research of professional databases (Mintel,
Euromonitor,)
 Web research (cosmetic industry websites,
International SPA association, FDA, Canada
Trade)
 Retail store visits ( T&T Asian Store, pharmacy
store, The Body Shop)
8

9. 9

10. Indonesian Bath and Shower Market Share
2012
Unilever
Group, 39.8,
48%
Wings Corp,
18.5, 23%
PZ Cussons
Plc, 6.2, 8%
Bina Karya
Prima PT, 4.6,
6%
Johnson &
Johnson
Inc, 4.5, 5%
Kao Corp,
3.4, 4%
Gloria Origita
Cosmetics PT,
2.9, 3%
L'Oréal
Groupe, 2.1, 3%
Sales
Source: Euromonitor
International from official
statistics, trade
associations, trade press,
10

11. Gloria Origita’s Market Challenges
3% market share
Rising international &
domestic competition
Rising material & production
costs
11

12. Why North American Expansion?
12
Increase brand
awareness and
prestige
Better
opportunities
for growth in
North
America
Opportunity to
introduce
Indonesian
heritage &
rituals
Products
unique to
North America

13. US Market Attractiveness
13
Competitive
rivalry
High
Threat of
new
entrants
Medium
Buyers
bargaining
power
Medium
Threat of
substitutes
High
Suppliers
bargaining
power
Medium

14. Marketing Tools = 6 Ps
14
Package

15. 1. PRODUCTS
15
Aromatherapy: 250 g Conventional Body Scrubs: 250 & 135 g

16. Positioning
 Position as an exotic & relaxing product
 Provides a more invigorating cleaning routine by
opening the pores and removing dead skin cells
 Perception: provides a relaxing soothing Bali experience
 The scent is soothing and calms the mind and eases
stress
16

17. 2. PACKAGING
 Using packaging to target specific consumer needs in North
America (replace “Whitening” label to “Brightening”)
 Give Gloria Origita the shelf appeal that appeals to North
American consumers
 Packaging for hotel spa market would be more sophisticated
to attract hotel guests
17
Current Packaging

18. Labeling
1. Ensure labeling is standard and similar to
those products already on the market
2. Volume, number of items in metric and
imperial units of measurement
3. Directions
4. Warnings or cautions in English where
necessary for safe use of the product
5. Company name
6. Business address
18

19. 3. PROMOTION
19

20. 4. PLACE
20

21. North American Bath & Shower Brand Landscape
2012 by Percentage
15.9
8.5
6.7
5.2
3.2
2.7 2.5
1.9
0.6
0
2
4
6
8
10
12
14
16
18
1
Dove Unilever Group Dial Henkel AG & Co KGaA
Bath & Body Works Limited Brands Inc Softsoap Colgate-Palmolive Co
Olay Procter & Gamble Co, The Suave Unilever Group
Old Spice Procter & Gamble Co, The Lux Unilever Group
The Body Shop L'Oréal Groupe
21

22. 2012 US Bath & Shower Retail Distribution
Health
and
Beauty
Retailers,
18.7, 22%
Beauty
Specialist
Retailers, 10.4,
12%
Parapharmacie
s/Drugstores,
8.2, 10%
Mixed
Retailers (Dept.
stores,
Walmart,
Target), 24.6,
29%
Department
Stores, 3.3, 4%
Mass
Merchandisers,
14.0, 16%
Warehouse
Clubs, 6.2, 7%
22

23. Ethnic Retail Market in North America
 Rise of large ethnic supermarkets combining modern
grocery and international brands and products
 Modern Asian supermarkets are becoming a shopping
destination for ethnic beauty care products
 Provides high margins for retailers and differentiate
from major brands
 Markets include in-store beauty boutiques featuring
Asian products and staffed with multilingual Sales
Consultants
23

24. Ethnic Market Challenges
 Inundated with products
 Very competitive market!!
 Niche segment: small pool of buyers
 Japan and Korea are dominant Asian competitors
 Shiseido, Amore Pacific, Dr Wu.
 Japan and Korea are known for better quality cosmetic
products
24

25. Multiple Channel Challenges
 More resources required and coordinating channels
will become exponentially difficult
 Two separate branding strategies required = costly
 Different positioning options - High end or low end
product
 Channel relationships need to be considered
 Exclusive distribution agreement with distributor and
retailer required
25

26. US Spa Market
 There are an estimated 19,800 spas throughout the U.S (2013
Spa Industry Association)
 The Eastern/Asian influence continues to be very strong in
the industry and there is a consumer desire for natural
ingredient products
 Female consumers look for:
 Enhancing their appearance
 Escape, indulgence, relaxation
 4.7 % total spa revenue growth rate (2013 Spa Industry
Association)
26

27. Why Do People Use Spa Services?
27

28. Most Booked Spa Treatments in
North America in 2011
28

29. Types of Spas
 Club Spa- primary purpose is fitness club
 Day Spa – spa service on day use basis
 Destination Spa – seven day wellness stay as purpose
of visit
 Medicinal Spa- provides medicinal and wellness care
 Resort / Spa – owned and operated by resort or
partner and offers unique spa experience
29

30. Number of Spas by Type
30

31. Hotel Resort Spa in Whistler BC
31

32. Competitor link
 https://www.youtube.com/watch?v=aMtuHis08fU
32

33. Spa Revenue per Establishment
33

34. 2011 SPA Revenue Composition
34

35. Composition of Retail Revenue
35

36. US Hotel Resort Spa Market Potential 2011
Average Spa Revenue per Store $1,467,000
Spa Retail Revenue % from Products x 10%
$147,000
Skin Care Product Retail Revenues x 57%
$83,619
Total # of Hotel Spa Resorts 1760
Market Potential $147,169,440
N= # of Exotic hotel Resort Spas
Unknown Revenue Sales from Exotic Hotel resort Spas
N x $83,619=
36

37. Spa Market Challenges
 Reduced disposable incomes in a recession will
mean that consumers will be more choosy on where
their income is spent
 Medium competition of products in Hotel Resort
Spa if multiple brands are already carried
37

38. 5. PRICING
 International export pricing quotes are considerably
more complex than domestic
 Applicable tariffs and customs duty, insurance, and
transportation costs and taxes are added
 Fixed costs (transportation & marketing) affect
pricing
 Spa retail markup is medium / high
38

39. Cost Plus Pricing Strategy
 Pricing should include appropriate component of
domestic price and includes any export related costs
* Depends on the agreed terms of sale
 Basic approach without consideration of ultimate selling
price in the export market
 A markup is set for each unit, based on the profit the
company needs to make
39

40. 40

41. Supply Chain
Gloria
Origita
Wholesaler SPA
End
Consumers
41

42. The Supply Chain for Retail Goods
42

43. Hotel Resort Spa Proposed Supply Chain
Pricing
COGS 60%
margin
Aromatherapy
Spa 250 grams
0.90
Conventional
Body Scrub 250
grams
$0.79
Conventional
Body Scrub 135
grams $0.56
Wholesaler
margin 80%
Aromatherapy
Spa $1.48
Conventional
Body Scrub
$1.32
Conventional
Body Scrub
$0.94
Retailer
Margin @
100- 300%
Aromatherapy
Spa
$2.65
Conventional
Body Scrub
$2.37
Conventional
Body Scrub
$1.68
Final Retail
Price
Aromatherapy
Spa $11.00
Conventional
Body Scrub
$10.
Conventional
Body Scrub
$7.00
43

44. Indonesian Competitor Products
44

45. Market Entry for Gloria Origita into North America
45

46. The most important factor for a
successful product entry into a
new market
Is to have a clear
export strategy
46

47. Gloria Origita Export Objectives
Export
Objectives
Minimize
Risk
Sell with
Economies
of Scale
Quick
Entry to
Market
Minimize
Investments
47

48. Export Market Entry Strategies
48

49. Indirect Export Entry Mode
Indirect
Exporting
Most appropriate for firms with limited
international contacts in foreign
market
49

50. US Harmonized Tariff Schedule
HTS Number: 3304.99.50
Description: Beauty or make-up preparations &
preparations for the care of the skin, excl.
medicaments but incl. sunscreen or sun tan
preparations.
MFN Duty Rate: Free
50

51. US Government Regulations
US FDA Regulations
 Imported cosmetics are subject to examination by Customs at
the time of entry
 NOT Required to register product information, ingredient
 Labeling - Cosmetics distributed in the USA must have correct
cosmetic labeling ( direction, cautions, warnings)
51

52. Short Term
Strategies
(12 - 24 months)
Long Term
Strategies
(36 + months)
Medium Term
Strategies
(24 - 36 months)
Market Entry Strategy
52
Short Term
Strategies
(0 - 12 months)
Long Term
Strategies
(24 + months)
Research &
Development
• Explore & Develop
distributor
relationships in target
markets
• Develop sales plan
• Develop marketing
activities
Short Term
Strategies
(0 - 12 months)
“Plan”
Entry & Development
• Ship products to
shelves
• Execute marketing
activities (promotional
activities)
• Analyze sales
Medium Term
Strategies
(12 - 24 months)
“ Entry ”
External Growth
• Explore and develop
new wholesaler and
joint-venture
relationships
• Explore
complementary
products
Long Term
Strategies
(24 + months)
“Sustain”

53. • Budget & sales forecast- establish
sales benchmarks
• Strategic planning (advertising,
promotions)
• Having all export documentations &
agreements in place (see appendix)
• Develop a target list of SPA
distributors
T
Market Entry Strategy: Planning Phase
53
Research &
Development
• Explore & Develop SPA
distributor
relationships in target
markets
• Develop sales plan
• Develop marketing
activities
Short Term
Strategies
(0 - 12 months)
“Plan”

54. Short Term
Strategies
(12 - 24 months)
Long Term
Strategies
(36 + months)
Medium Term
Strategies
(12 - 24 months)
“Grow”
Entry & Development Phase
54
Entry & Development
• Ship product to spas
• Execute marketing
activities (promotional
activities)
• Analyze sales
Medium Term
Strategies
(12 - 24 months)
“ Entry ”
•Ship products to spa with custom
brokers
• Create awareness with marketing
activities (loyalty programs)
•Conduct social media & promotion
activities
•Analyze sales figures

55. External Growth
• Explore and develop
wholesaler and joint-
venture relationships
• Explore complementary
products
• Leverage production
technology for
efficiencies and
expansion
Long Term
Strategies
(24 + months)
“Sustain”
Long Term
Strategies
(36 + months)
Sustaining Growth Phase
55
Utilize the supply chain expertise of
potential partners
 Create demand for a new market
 Further develop and secure additional
partnerships by leveraging reputation
and success of retailers
 Revise or explore alternative
distribution strategies if targets are not
met (subcontracting, joint distribution,
licensing)

56. Conclusions
6 P’s of Marketing:
 Product – Exotic Body Scrub product (natural &
aromatherapy
 Position – Exotic & Natural: “Let Bali Come To You!” ,
“Experience Bali In Your Home”
 Place – Focus on spa market as Asian stores are too
small and competitive
 Promotion – Social media, loyalty cards, free samples
 Packaging – Appealing and packaging to meet
standard labeling requirements
 Pricing – Competitive value pricing
56

57. Conclusions Continued
 Financial Analysis of spa market
 Strategic Recommendations:
 Implement 3 phase plan over 5 years:
 Plan, Entry, Sustain
57

58. Questions?
58

59. Appendices
59

60. Submitting a fully completed Cosmetic Notification Form
(CNF) to Health Canada within the first
10 days a cosmetic is available for sale.
Provides specific product information,
• address and contact of the company
• purpose of the cosmetic
• form of the cosmetic (e.g. gel, solid, liquid, etc.)
• ingredients of the cosmetic
• concentrations of the ingredients (ranges specified in the
Cosmetic Regulations)
60

61. Sales Mix Break-Even Point Calculation
(Units)
61
Product Conventional Body Scrub 250 g Conventional Body Scrub 135 g
Aromatherapy Spa Body
Scrub
Sales Price per Unit 1.32 0.94 1.48
Variable Cost per Unit 0.53 0.37 0.58
Contribution Margin
per Unit 0.79 0.57 0.9
Sales Mix Percentage 40% 10% 50%
0.4 0.1 0.5
0.316 0.057 0.45
SUM weighted-average
contribution margin
per unit 0.823
Total Fixed Cost* $20,500
÷ Weighted Average
CM per Unit 0.823
Break-even Point in
Units of Sales Mix 25000 units

62. Canadian Hotlists
 What is a Hotlist?
 A list of substances which are prohibited or restricted in cosmetics
Steps to avoid being on the Hotlist:
 Reduce the concentration of the ingredient to an acceptable level
 Remove the substance from the formulation
 Consider marketing the product as a drug or natural health
 Product (requires application for a new Drug Identification Number (DIN) or
Natural Product Number (NPN))
 Provide evidence that the product is safe for its intended use
 Confirm that the product is labeled as required
 Confirm that the product is sold in a child-resistant package
Consequences of non compliance
 Remove the product from sale
http://www.hc-sc.gc.ca/cps-spc/cosmet-person/indust/hot-list-critique/hotlist-liste-eng.php
62

63. Target North American Market
 SPA vacationers - Spa -cationer
 The Price to Value ratio has become more meaningful.
 The consumer is seeking a "value added" experience or
product.
 Women buy or influence the purchase of 80% of consumer
goods.
 Word of mouth
 Online product reviews
63