Doing Personal Care Product Business in USA A Brief Overview

1
Doing Personal Care Product Business in USA A
Brief Overview

• Presented by
• Mike Nave
• President PBD / BIR, Inc.

2
Who is Mike Nave ?

• 50 year career in beauty products industry
• Distributor
• Publisher
• Dot com company VP Communications
• Free lance writer for industry trade pubs.
• Sales and marketing consultant

3
Size of U.S. Personal Care Markets
PBD

• Mass retail market segment sales excluding Wal
  Mart
• Total Haircare sales 4.3 billion -1.5
• Total Ethnic HABA sales 107 million -7.5
• Total Hair Coloring Products sales 1.09 billion
  4.4
• Skin Care sales 2.79 billion 4.9
• Grooming aids sales 1.11 billion .04
• Shaving needs sales 1.81 billion 4.9
• Deodorants sales 1.26 1.9
• (52 week sales total through May 14, 2005
  (Source AC Nielsen)

4
Size of U.S. Personal Care Markets
PBD

• Annual revenues of salon services and product
  sales 60 Billion.
• Total salon industry professionals 754,000
• Natural/Organic personal care sales 4.3 billion
  projected to reach 6.6 billion by 2010

5
Market Segment (A brief description)

• Mass Retail Market
• Department Stores (Federated, Nordstroms, Saks
  Fifth Avenue)
• Masstige (Ulta, Sephora)
• MVRs (Costco, Sams, Target, Wal Mart)
• Grocery (Safeway, Albertsons)
• Chain Drug (Rite Aid, CVS, Walgreen)
• Specialty (Bed Bath Beyond, Hot Topics, Bath
  Body Works)
• Electronic Retailing (QVC, HSC)

6
Market Segments (A brief description)
Professional Beauty Market

• Independent Salons (45,000)
• Chain Salons (25,000)
• Salon beauty stores (2,000)
• Distributors professional-only beauty stores
  (1,800)
• OTC beauty stores general market (3,000)
• OTC beauty stores Multi-Cultural market (9,000)

• Sally Beauty Supply (2,800 stores in U.S.)
• Distributors (350 exclusive and open line)
• Spa (5000 estimate)
• Nail Salons (60,000)
• Barber (85,000)
• Beauty Schools (1,500)

7
Alternative Marketing Initiative

• Direct On-line Manufacturer Sales, a new
  marketing concept of manufacture selling on-line
  direct to consumers while at the same time
  establishing distributor/retail relationships.

8
Marketing to the US Mass Retail and Pro Beauty
Markets ? a Good News/Bad News story!
9
First, The Good News (The Reward)

• Awesome opportunity selling to the worlds
  largest market in terms of buying power.
• U.S. consumers are major shoppers always looking
  for something new and innovative.

10
Now, The Bad News ( The Challenges!)

• Huge marketing challenges due to consolidations
  in all major market segments
• Surviving Mass Market Retailers shelf-space is a
  premium. You want it you buy it! Or more
  accurately, you rent it!
• In mass market payment terms can stretch out 6
  months or more. (Being paid promptly Forget
  It!)

11
Now, The Bad News ( The Challenges!)

• In order to have credibility with large account
  retailers you must be represented by a high
  profile broker.
• Pro beauty field consists of multiple submarkets
  with overall limited sales potential requiring
  two step pricing accessed primarily by rep groups
  and distributors
• Both segments require large margins to cover high
  cost of doing business.
• Your product line must be unique and different,
  or address a untapped market niche.
• There must be a compelling reason for your
  product lines existence.

12
What Accounts Expect

• Need manufacturer to create product demand
• Need manufacturer to promote product
• Need manufacturer to bring consumers into stores
• Need US distribution center for timely
  replenishment
• Need complete timely shipments
• Need professional sales representation
• Want company decision maker on the key sales
  call
• Require 5 million product liability insurance

13
Payment Terms

• Standard terms 2 30, net 31
• Introductory first order 2 60, net 61
• Seasonal terms
• Pay at end of season, return remaining product
• payment in 60 days, balance end of season
• Major accounts
• Pay on scan
• Expect free goods

14
Product Returns

• Guaranteed Sale
• Return product if it does not sell
• Failure Rate on New Products is 75!
• Product fails, company goes out of business,
  chain stuck with inventory

15
What Brokers Expect

• Plenty of Samples
• Professional Sales Materials
• Compelling Sales Story, reason for being
• Patent, previous success, strong advertisings,
  excellent packaging and displays, timely shipping
• 7-10 commission paid promptly
• Long Range growth opportunity
• Company responsiveness and professionalism
• Factory field key account sales support

16
What Brokers Do

• Represents a large number of companies
• Regular sales calls on food, drug mass accounts
  
• Handles all paperwork
• Checks stores for distribution, pricing,
  location,
• Speaks to buyers frequently
• Eyes, Ears, Feet extension of manufacturer
• Brokers respect what manufacturers inspect

17
Barrier to Entry

• Lack of knowledge of the market
• Major investment required
• Need to have US point of distribution
• Public Warehouse
• Joint Venture
• Company Owned Operation
• Meeting US Customs import regulations

18
How to Market

• Gain adequate working knowledge of the U.S.
  marketplace by doing the preliminary
  investigative activities
• Attending trade shows
• Contacting trade associations
• Hiring a marketing/sales consultant
• Create strategic marketing plan
• Choosing right broker or rep organization
• Using public relations versus advertising to start

19
How to Market(Exhibiting at Trade Shows)

• Pro Beauty Market
• Major salon trade shows (4)
• Rep association sponsored shows (2)
• ISPA Spa Show plus additional smaller spa shows
  (6)
• International Esthetics Cosmetics and Spa
  Conference (2) plus half a dozen other esthetics
  shows
• Professional nail shows (5)

20
How to Market(Exhibiting at Trade Shows)

• Mass Retail Market
• NACDS (chain drug)
• GMDC (grocery)
• ASD/AMD (general merchandise 6)
• ECRM-EPPS (one-on-one apts. with major retail
  accounts 30)

21
ECRM-EPPS

• Guaranteed 20 minute meeting with buyer and/or
  category manager in a 4 or 5 star ? ? ? ? hotel
  room setting
• 60 retailers in attendance
• Food, Drug Mass
• Perfect way to jump start distribution in mass
  market

22
How to Market

• Packaging
• Make sure it meets U.S. market requirements from
  both a regulatory and marketing effectiveness
  standpoint.

23
Important Information

• Key Trade Associations
• NACDS (National Chain Drug Store Association)
• PBA (Professional Beauty Association)
• ISPA (International Spa Association)

24
Important Information (Mass Retail Market
Publications)

• Chain Drug Review
• Drug Store News
• Mass Market Retailers
• Supermarket News
• NACS Magazine

25
Important Information (Pro Beauty Market
Publications)

• Skin Inc
• Derma Scope
• Day Spa
• American Spa
• Nails
• Nailpro
• Launchpad

• American Salon
• Modern Salon
• Salon Today
• Beauty Store Business
• OTC Beauty Magazine
• Beauty Times

26
Important Information (Pro Beauty Market
Publications)

• and last but not least, my newsletter the Beauty
  Industry Report.

27
                                                                          

The Beauty Industry Report was founded in 1997
to fill a need for sharing timely, interesting,
entertaining information between all segments of
the professional salon industry. Today, the BIR
is the only executive newsletter serving the
professional beauty industry, including
manufacturers, reps, distributors, associations,
chain salons, day spas and top independent
salons, with behind-the-scenes information about
the people, products and companies that are
meaningful to our readers. With the landscape of
the salon industry rapidly changing, BIR is the
"score card" that lets you know who's on first,
who's striking out and who's scoring big. I
continue to serve as the editor and principal
reporter of BIR. In addition, every month, I
invite a guest columnist to present his or her
views on a chosen topic. Our team strives to make
BIR the place where the various segments of the
professional salon industry can be heard. We
value your input, and invite you to contact us
anytime with your ideas and input. The BIR is
published 12 times a year with each issue being
12 or more pages. The paid circulation is 1,500
and growing. In addition, the circulation may
include up to 1,000 extra copies as part of
promotional mailings or show distributions. The
BIR is published in Travers, MI and mailed bulk
third class, usually arriving in the middle of
the issue month.
                  
                  
                  
                  
                  
                  
                  
                                 Articles written by Mike Nave for BSB Magazine
             
Hot New Product?


                  
 
Download Complete BIRAbout this eNewsletterDevelop your eNewsletterSubscribe to BIR!Contact UsEmail Mike NaveNews ArticlesPravanas Super Shapes sales are sizzling Company has a Good Hair Day Jim Fisher returns to Jungle at Nexxus Lafayette Jones Multicultural Column Access Brands keeps salons phones ringing Expo Latino opens doors to new sales and marketing opportunities for beauty biz IESCS mirrors skin care categorys growth Bob Oppenheim Manufacturers dont want to control diversion Mr. and Mrs. BIR make a quick escape to Santa Barbara to cover show Feature SectionsConsultants' CornerDiversionLast Minute BlastsThe Multicultural ReportObitsPeopleRep RapShow BizSpa BizWhats HotWhats NewWho's Looking for What   by Mike Naveeditor                   BIR is in rehab after spending five fast and furious days and nights in LV covering the third annual Cosmoprof North America Show and all the other happenings during the show weekend. Cosmoprof Bologna its not! But maybe given time, Cosmoprof NA will reach its potential. Read about the happenings in the September issue.In this issue, BIR covers the Santa Barbara Beauty Expo and Latino Expo. BIR also drove out to Malibu to interview Michael Apstein, president/CEO of Access Brands, to learn more about his 1-800-THE SALON new client referral program for salons. Last month the salon industry lost a wonderfully creative hair stylist with John Sahags passing, and in this issue, Dwight Miller, a close friend of Johns who worked with him, wrote to share some nice thoughts with BIRs readers. Regards,                                               
                                                                          Marketing lesson By Bob Salem Marketing represents the greatest opportunity for independent salons to fuel their future growth but not in its current state. Marketing is most successful when it results from a fully integrated strategy that is specific to the brand and importantly, when the immutable laws of marketing are respected. We experience the power of marketing every day through the choices we have in the products and services we consume. For each of those choices, the marketing intent is to create a memorable and motivating image. At the same time, marketers attach attributes to that image to elicit your trust in its performance. Everything leading to the creation of trust is specific to the brand, its image and its attributes. Trust is at the center of the emotion consumers feel when products and services live up to their expectations. Marketers of consumer products focus on creating demand for the goods and services of their brands. Rarely do they borrow interest from another brand to enhance their own. Great marketing thrives on having a single minded focus on everything specific to the brand. The brand is the destination and consumers place their trust in the brands intrinsic qualities that are carefully assigned to it through marketing. (click here for full article)
This email was sent by Mike Nave, Beauty
Industry Report, 22287 Mulholland Hy. 403,
Calabasas, United States 91302-5157 to
catchick_at_worldnet.att.net Unsubscribe
                                              
28
Get Your eBIR Free Trial Subscription Complete
the Hand out form and submit to Mike Nave or Fax
to 001-818-222-7828 or email Mike Nave with your
request to MikeNave_at_beautyIndustryReport.com Reme
mber, if you aint reading the Blue Thing, you
know NOTHING!
29
Important Information(Valuable Resources)

• Reshare Corporation, a provider of patented
  channel management software. (www.reshare.com)
• Katherine Frank Creative, a full service
  marketing and trade show management group.
  (www.katherinefrank.com)
• Kirschner Group USA (Sales rep organization
  covering the pro beauty market on national basis.
  (www.kirschnergroup.com)
• John OMaley Associates, Sales Marketing
  Consultants covering mass retail market on
  national basis. (www.omaley.com)
• Fred O'kasick Sales Inc. Sales rep organization
  that covers the U.S. Chain Drug Store market.
  (www.foksales.com)
• Joni Rae Russell/JRA Associates. Full service
  marketing organization specializing in product
  development and packaging design. jonijra_at_aol.com
  
• ECRM-EPPS Efficient Collaborative Retail
  Marketing - Efficient Program Planning Sessions a
  business process that streamlines the consumer
  packaged goods sales and marketing supply chain
  (www.ecrm-epps.com)

30
So where do you go from here?

• Use a knowledgeable consultant to gain sufficient
  information to make an intelligent decision,
  whether to market in the U.S. or not.
• Do the necessary home work
• Visit trade shows
• Do store checks
• Contact trade associations,

31
Thank You for the Opportunity!

• PBD / BIR, Inc.
• Publisher of the Beauty Industry Report
• International Representive
• Master Broker
• Consulting
• Michael Nave
• President
• 22287 Mullholland Hwy. Suite 403
  Phone [phone]
• Calabasas, Ca. U.S.A 91302-5157
  Fax [phone]
• mikenave_at_beautyindutryreport.com
  Mobile [phone]