Innovation Technology Fashion Luxury

Innovation Technology Fashion Luxury

Introduction

Cugaes cosmetic laboratory is a promising and developing cosmetic organization. Cugaes works towards exploring and re-developing cosmetics products that are wholly made of natural ingredients. The uniqueness of the formula used in this facility consists of the absence of synthetic emulsifiers, stabilizers, preservatives, and last ostrich fat. The cosmetics industry is one of the fastest-developing manufacturing sectors. As a result, the development of new products, technologies, and production methods is required. The economic crisis had a small impact on the cosmetics branch as a result of the perspectives of the industry and the consumers’ interest.

Innovation in the Cosmetics Industry

The majority of cosmetic companies use traditional ingredients in their products, while ostrich fat is still considered exotic. The industry of cosmetics has been speedily growing. This requires the development of new products, technologies, and production methods (Prokopowicz & Różycki, 2017). The economic crisis had a small impact on the cosmetics branch as a result of the perspectives of the business and the consumers’ interests. There is a demand for facial products with no preservatives, including parabens for sensitive and problematic skin. In 2012 the cosmetic industry grew with 5.8% compared to 2011. In 2012, the cosmetic industry market shares equaled 75 million dollars in revenue. White cosmetics contribute approximately 15 million dollars, while medical products have an estimated market share of 5 million dollars (Hwang, 2014). The growing demand for natural products worldwide has impacted the Bulgarian market as well. This secures the opportunity for a flying start of the product with a competitive price and high quality, which will then guarantee a place on the market with long-term consumers’ interest. Innovation in this industry should be equipped to eliminate specific threats like the appearance of a similar product with no patent ownership or plagiarism, unknown side effects of products and possible contamination during the production process.

Cugaes cosmetic laboratory suggests specific preventive measures to avoid potential threats. Possible contamination of the product during the production process could be avoided by permanent control and microbiological analysis (Prokopowicz & Różycki, 2017). Further dermatological tests would prevent unknown side effects. Consumers’ interest would be sustained by following market tendencies, maintaining the high quality of the product, a competitive price, as well as a targeted advertising campaign. Cugaes cosmetic laboratory focuses on the development of innovative products and a series of products that would satisfy the rapidly changing tastes and needs of the customers.

Assessing competitiveness is done on a national branch and competitive product levels. Thorough research concluded that a majority of companies use traditional ingredients in their cosmetic products (Sahota, 2014). While ostrich fat is still considered exotic, they emphasize on rose and lavender oil, extracts from various medicinal plants. The cosmetic product satisfies high requirements of the target group, namely natural origin, lack of synthetic aromas, coloring agents, and preservatives including emulsifying agents, universal application, and market accessibility.

Assessment of the New Product and Innovative Technologies

The Ksenoleum is an example of a unique cosmetic product that heals skin diseases, helps women to be healthy at twenty years, gorgeous at thirty years, charming at forty years, and irresistible for the rest of their life at a reasonable price. The latter is possible due to the facilitating standardization procedure compared to other medical products. To respond to market demand and its objectives, Cugaes cosmetic laboratory should be built up its marketing mix. The company emphasizes a well-known product concept while developing innovative and one of a kind cosmetic composition. Additionally, the company intends to employ low-cost and classical technological method to produce special brands of Ksenoleum. The technology incorporates a mixer fitted with a water shirt which purifies the ostrich fat. A spiral stirrer is conducted with an Intensive mechanical homogenizer after adding pure shredded beeswax to the fat. Vanilla fruit and pure bee propolis are also added upon the melting of the beeswax. A cooler is used to cool the product after undergoing filtration in a vacuum filter. In the homogenizer, the product is stirred consistently while adding cinnamon oils, wheat germ, gapes seed, and almond. The innovative technology for production of Ksenoleum also incorporates glass containers which keeps the processed cosmetic composition. The storage room is used to keep the final product at optimal conditions. The tools for building up the technology will be sourced from Mondragon Assembly, one the leading developers of cosmetic production technologies in the region. Some of the tools that will be sourced include advanced linear motors, welding technology systems, robotics, and magnetic transfer systems.

The firm will acquire the technical know-how for quality control from the Society of Cosmetic Chemists (SCC). The technical team set to operate the innovated system will benefit from training opportunities from seminars conducted by various cosmetic associations in the region. More importantly, Cuages will partner with other stakeholders and retailers in other industries, particularly manufacturing, biochemistry, and agriculture to access the equipment and raw materials for the new system. The management will play a critical role in providing the export referrals as well as the financial and legal advice to guide the process of establishing the innovated technology system.

Marketing

The basic products respond to market needs. The goal of its marketing strategy is to inform the customer about its exclusive qualities and positive effects as well as its distribution in the supply chain. The first stage of our successful marketing strategy is the creation of a distinctive logo in “eco” colors; economical, environmentally friendly, and recyclable packaging (Prokopowicz & Różycki, 2017). The internal packaging consists of a frosted glass container branded with the company`s logo in bright natural colors which will serve as a protection against oxidizing, contamination resulting in loss of effectiveness. The second stage of our marketing strategy is the promotion of the end product via a targeted advertising campaign. Web advertisements and videos, handouts, publications, and samples in women’s magazines and TV commercials all corresponding to the company`s philosophy, calling consumers for action and persuading the need for this product. The advertising merchandise will be in the form of business cards, notebooks of recycled paper, eco –pens with the company’s logo.

The promotional campaign would include a live demonstration of the product, applied directly to the customer’s skin using ostrich feathers. Professional promoters will do this. There would be a sample gift with every purchase of another product of the same series for the purchase of two or more products, a 10% discount card upon the next purchase. The promotional campaign will include introducing the products to beauty salons as a natural product for total skincare. Once successfully positioned on the market, the sustainable advertising campaign would be in the form of monthly promotional sample giveaways.

The result of this marketing strategy would be the customer’s profound knowledge about the product and a series of opportunities for market expansion. The commercialization stage would be realized through our marketing strategy for product placement in the cosmetics market. The unique features of our product will attract the customer’s attention, which would then increase the purchase and demand for commodities.

Consumers from different target groups are often inadequately informed about the cosmetic products on the market. Therefore, the company will organize convincing presentations held out by leading dermatologists who will explain the contents, characteristics, and advantages of our product and that its use is a must. The successful stage of popularization would lead to production growth and market recognition of the product (Sahota, 2014). Optimization of the technological process would decrease production costs. They are thus maximizing unit profit. Expanding business and the production of new ecologically clean products would lead to the creation of workplaces. The initial investment of the company is formed by two main cost centers, namely single expenses and other regular costs. Single expenses are considered as fixed assets and other intangible assets.

Cugaes cosmetic laboratory would consider the products’ sale via both indirect trade channels and direct trade channels of distributors. These would include beauty salons, online stores, pharmacies, and bio shops. The end price that distributors would have on their premises would correspond to the pricing conditions of the manufacturing company. According to the long-term perspective, the Cugaes cosmetic laboratory presumes annual income increase based on the popularization of the brand and its main and new products. During the first twelve months, the expected revenue will be reinvested in the expansion of a different series of products. It would allow the price of the presently produced products to be reduced to cope with the competition.

SWOT Analysis

Cugaes boasts of having strong leadership which marks one of its strengths. The ongoing success of the company has been largely attributed to the efforts of its leadership to achieve the vision of the business. The management shares the vision with the team to ensure the success of the business. Moreover, the country is dedicated to continuous research which contributes to the firm’s competitive advantage since the marketing trend reveals a significant shift by cosmetics consumers towards innovative products. More importantly, Cugaes has a strong distribution network that incorporates beauty outlets, specialist health centers, and pharmacies. Other elements that make the company a strong competitor in the cosmetics industry include the production of high-quality products and effective target market advertising strategy.

However, several things weaken the capabilities of Cugaes. One of the major issues that mark the shortfall of the business is low-profit margins compared to its rivals. As the company forecasts a rise in digits in terms of profit in various segments, the outcomes do not usually meet the business’s anticipations. The problem has been partly attributed to high-end marketing and advertising activities. But despite this challenge which has contributed to the weakening of the company, there are still a lot of opportunities for exploration by the firm in the cosmetics industry. According to Yapar (2017), the demand for beauty products continues to grow giving Cugaes potential prospects for diversifying its products and services to other segments including skincare, color, hair styling, and perfumeries. Cugaes should seek to venture into the international market in the future following the potential growth of the industry as observed by (Yapar, 2017).

While developing Cugaes’ business proposal, it is important to note that the company faces several threats to its growth and success in the cosmetics industry. Since the firm is a new entrant in the industry, there is a potential threat posed by the monopoly of established cosmetics businesses. There is a danger that the cosmetic giants will suppress Cugaes’ market share and as a result, reduce its profit margin. Since Cugaes does not have a strong financial base compared to the established firms, it will find it difficult to expand its portfolio and operations to keep up with the existing competition. To mitigate this threat, there is a need for the company to focus on its newly innovated products which will make the firm distinctive in the market. Moreover, the possibility of the economic crunch and the ever-changing spending habits of the consumers present another potential threat to the growth of the company. While Cugaes may be offering quality and innovative product lines, the consumers might skip purchasing the products because they are perceived not to be basic needs following the effects of the economic downturn. However, it is vital to note that this damage is far from being realized since the country’s economy as well as the cosmetics industry are projected to grow rapidly within the next 10 years.

Cugaes’ Buying Persona

Virani (2013) argues that by creating a buyer persona, firms are able to determine the kinds of content required for their businesses. Additionally, buyer personas set the style, tone, and delivery models for the business’s content (Virani, 2013). The buying persona of Cugaes should incorporate several fundamental filters that specifically address the needs of the target audience. One of the essentials to be considered is the description of the problem that the new skincare product solves for the targeted customers whose age should be defined. In the case of Cugaes, it should be stated that the innovated product provides natural origin to the cream consumers who mostly include women aged 25 and above. The location is another fundamental element that should characterize Cuages’ buying persona. Using the private label model, Cuages should indicate that it distributes the product to its customers within the country. Cosmetic products are specifically produced for particular genders. In this respect, in Cuages’ buying persona, there will be a need to indicate that the new product targets women. Other critical elements that should be included in the buying persona include the buyer pain points, buyer concerns, favorite websites, and the income level.

Price Strategy

Cuages mainly targets urban consumers who are largely considered to be insensitive to prices. In this regard, the business should adopt a premium pricing policy for its high quality and premium products. However, the brands offered should consider affordability by the middle-class group in setting up the prices for the different innovated products. Kim and Nam (2004) observed that in some instances, new products find it difficult to successfully penetrate the market due to existing customer preferences. For Cuages to increase the acceptability of its new cosmetic product, it should offer schemes and discounts besides the reasonable prices. This strategy will enable the company to minimize its price and consequently, attract customers leading to a heightening of the sales figure.

Break-Even of the Expenses

Requirements for Implementation of Cuages Promotional Strategy

Cost ($)

Cuages Inc.

Marketing and Promotion

25,000

Product Development

34,000

Research and Development

38,000

Total Costs

97,000

(Author’s Creation)

Figure 2: Projected Costs for Implementing Cuages Promotion Strategy

Projections

Year 1

Year 2

Year 3

Year 4

Year 5

Sales

110,000

250,000

470,000

630,000

820,000

less cost of implementing the promotion strategy

97,000

120,000

165,000

195,500

270,000

Gross profit/net sales

$13,000

$130,000

$305,000

$434,500

$550,000

(Author’s Creation)

Protection of the Intellectual Property of the Business Model Innovation

The protection of intellectual property rights (IPR) is considered crucial since the creation of innovation and application of advanced technologies have become the most adopted strategies for enhancing investments. Yapar (2017) noted that in the recent past, IPR problems have become more pervasive in the cosmetic industry. The personal care products and cosmetic industry are reported to be losing approximately 4.7 billion euros annually due to counterfeit cosmetics. Individual cosmetic firms have been largely affected by the saturation of counterfeits in the market. To mitigate the IPR challenges, Cuages is recommended to initiate measures to protect the intellectual property of its business model innovation. One of the strategies suggested for adoption by Cuages is hiding the manufacturing, transportation, and packaging methods (Yapar, 2017). More importantly, the company should maintain anonymity in its internet sales and avoid mixing its original packaging with the fake ones during the distribution process. Moreover, effective intelligence and IPR system, technical tools, resources, and sanctions need to be implemented in a holistic approach in the company’s efforts to protect its intellectual rights. Cuages should further capitalize on the existing anti-counterfeit technological solutions with sophisticated applications that are availed to brand owners and manufacturers.

References

Hwang, A. S. (2014). Integrating technology, marketing and management innovation. Research-Technology Management, 47(4), 27-31.

Kim, S. H., & Nam, S. (2004). Across the threshold: Role of performance and compatibility in innovative new products’ market penetration. Industrial Marketing Management, 33(8), 689-699.

Prokopowicz, M., & Różycki, K. M. (2017). Innovation in cosmetics. World Scientific News, 72, 448-456.

Sahota, A. (Ed.). (2014). Sustainability: How the cosmetics industry is greening up. West Sussex, UK: Wiley.

Virani, A. (2013). Consumer personality trait, brand persona and brand loyalty: A pragmatic study of Colgate toothpaste buyer. International Journal of Humanities and Management Sciences, 1(2), 155-158.

Yapar, E. A. (2017). Intellectual property and patent in cosmetics. Marmara Pharmaceutical Journal, 21(3), 419-424.