Doing Personal Care Doing Personal Care Product Business in Product Business in

USAUSA

A A Brief Brief Overview Overview

Presented byPresented by

Mike NaveMike Nave

President – PBD / BIR, Inc.President – PBD / BIR, Inc.

Who is Mike Nave ?Who is Mike Nave ?

50 year career in beauty products 50 year career in beauty products industryindustry

• DistributorDistributor

• Publisher Publisher

• Dot com company VP CommunicationsDot com company VP Communications

• Free lance writer for industry trade pubs. Free lance writer for industry trade pubs.

• Sales and marketing consultantSales and marketing consultant

Size of U.S. Size of U.S. Personal Care Markets Personal Care Markets Mass retail market segment sales excluding Wal Mart*Mass retail market segment sales excluding Wal Mart*

• Total Haircare sales $4.3 billion -1.5% Total Haircare sales $4.3 billion -1.5%

• Total Ethnic HABA sales $107 million -7.5%Total Ethnic HABA sales $107 million -7.5%

• Total Hair Coloring Products sales $1.09 billion +4.4%Total Hair Coloring Products sales $1.09 billion +4.4%

• Skin Care sales $2.79 billion +4.9%Skin Care sales $2.79 billion +4.9%

• Grooming aids sales $1.11 billion +.04%Grooming aids sales $1.11 billion +.04%

• Shaving needs sales $1.81 billion +4.9%Shaving needs sales $1.81 billion +4.9%

• Deodorants sales $1.26% +1.9%Deodorants sales $1.26% +1.9%

*(52 week sales total through May 14, 2005 (Source AC Nielsen)*(52 week sales total through May 14, 2005 (Source AC Nielsen)

PBD

Size of U.S. Size of U.S. Personal Care Markets Personal Care Markets

• Annual revenues of salon services Annual revenues of salon services and product sales $60+ Billion.and product sales $60+ Billion.

• Total salon industry professionals Total salon industry professionals 754,000754,000

• Natural/Organic personal care Natural/Organic personal care sales $4.3 billion projected to sales $4.3 billion projected to reach reach $6.6 billion by 2010$6.6 billion by 2010

PBD

Mass Retail MarketMass Retail Market

Department StoresDepartment Stores (Federated, Nordstrom’s, (Federated, Nordstrom’s, Saks Fifth Avenue)Saks Fifth Avenue)

““MasstigeMasstige” (Ulta, Sephora)” (Ulta, Sephora)

MVRsMVRs (Costco, Sam’s, Target, Wal Mart) (Costco, Sam’s, Target, Wal Mart)

GroceryGrocery (Safeway, Albertsons) (Safeway, Albertsons)

Chain DrugChain Drug (Rite Aid, CVS, Walgreen) (Rite Aid, CVS, Walgreen)

SpecialtySpecialty (Bed Bath & Beyond, Hot Topics, Bath (Bed Bath & Beyond, Hot Topics, Bath & Body Works)& Body Works)

Electronic RetailingElectronic Retailing (QVC, HSC) (QVC, HSC)

Market Segment Market Segment (A brief description)(A brief description)

Market Segments Market Segments (A brief description)(A brief description)

Independent Salons Independent Salons (45,000)(45,000)

Chain Salons (25,000)Chain Salons (25,000)

Salon beauty stores Salon beauty stores (2,000)(2,000)

Distributor’s Distributor’s professional-only beauty professional-only beauty stores (1,800)stores (1,800)

OTC beauty stores OTC beauty stores general market (3,000)general market (3,000)

OTC beauty stores Multi-OTC beauty stores Multi-Cultural market (9,000)Cultural market (9,000)

Sally Beauty Supply Sally Beauty Supply (2,800 stores in U.S.)(2,800 stores in U.S.)

Distributors (350 Distributors (350 exclusive and open exclusive and open line) line)

Spa (5000 estimate)Spa (5000 estimate)

Nail Salons (60,000)Nail Salons (60,000)

Barber (85,000)Barber (85,000)

Beauty Schools (1,500)Beauty Schools (1,500)

Professional Beauty MarketProfessional Beauty Market

Alternative Marketing Alternative Marketing InitiativeInitiative

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

Marketing to the US Marketing to the US Mass Retail and Pro Mass Retail and Pro Beauty Markets Beauty Markets a a

Good News/Bad News Good News/Bad News story!story!

First, The Good NewsFirst, The Good News (The Reward)(The Reward)

Awesome opportunity selling Awesome opportunity selling to the world’s largest market to the world’s largest market in terms of buying power.in terms of buying power.

U.S. consumers are major U.S. consumers are major shoppers always looking for shoppers always looking for something new and something new and innovative.innovative.

Now, The Bad News Now, The Bad News ( The Challenges!)( The Challenges!)

Huge marketing challenges due to Huge marketing challenges due to consolidations in all major market consolidations in all major market segmentssegments

Surviving Mass Market Retailers’ Surviving Mass Market Retailers’ shelf-space is a premium. You shelf-space is a premium. You want it you buy it! Or more want it you buy it! Or more accurately, you rent it! accurately, you rent it!

In mass market payment terms In mass market payment terms can stretch out 6 months or more. can stretch out 6 months or more. (Being paid promptly – Forget It!)(Being paid promptly – Forget It!)

Now, The Bad News Now, The Bad News ( The Challenges!)( The Challenges!)

In order to have credibility with large In order to have credibility with large account retailers you must be represented account retailers you must be represented by a high profile broker.by a high profile broker.

Pro beauty field consists of multiple Pro beauty field consists of multiple submarkets with overall limited sales submarkets with overall limited sales potential requiring two step pricing potential requiring two step pricing accessed primarily by rep groups and accessed primarily by rep groups and distributors distributors

Both segments require large margins to Both segments require large margins to cover high cost of doing business. cover high cost of doing business.

Your product line must be unique and Your product line must be unique and different, or address a untapped market different, or address a untapped market niche.niche.

There must be a compelling reason for your There must be a compelling reason for your product line’s existence.product line’s existence.

What Accounts ExpectWhat Accounts Expect Need manufacturer to create product demandNeed manufacturer to create product demand

Need manufacturer to promote productNeed manufacturer to promote product

Need manufacturer to bring consumers into Need manufacturer to bring consumers into storesstores

Need US distribution center for Need US distribution center for timely replenishmenttimely replenishment

Need complete timely shipmentsNeed complete timely shipments

Need professional sales representationNeed professional sales representation

Want company decision maker on the Want company decision maker on the key sales callkey sales call

Require $5 million product liability insuranceRequire $5 million product liability insurance

Payment TermsPayment Terms

Standard terms 2% 30, net 31Standard terms 2% 30, net 31

Introductory first order 2% 60, net 61Introductory first order 2% 60, net 61

Seasonal termsSeasonal terms

• Pay at end of season, return remaining productPay at end of season, return remaining product

• % payment in 60 days, balance end of season% payment in 60 days, balance end of season

Major accounts:Major accounts:

• Pay on scanPay on scan

• Expect free goodsExpect free goods

Product ReturnsProduct Returns

Guaranteed SaleGuaranteed Sale

Return product if it does not sellReturn product if it does not sell

Failure Rate on New Products is Failure Rate on New Products is 75%!75%!

Product fails, company goes out of Product fails, company goes out of business, chain stuck with business, chain stuck with inventoryinventory

What Brokers ExpectWhat Brokers Expect

Plenty of SamplesPlenty of Samples

Professional Sales MaterialsProfessional Sales Materials

Compelling Sales Story, reason for being:Compelling Sales Story, reason for being:

• Patent, previous success, strong advertisings, excellent Patent, previous success, strong advertisings, excellent packaging and displays, timely shippingpackaging and displays, timely shipping

7-10% commission paid promptly7-10% commission paid promptly

Long Range growth opportunityLong Range growth opportunity

Company responsiveness and professionalism Company responsiveness and professionalism

Factory field key account sales supportFactory field key account sales support

What Brokers DoWhat Brokers Do

Represents a large number of companiesRepresents a large number of companies

Regular sales calls on food, drug & mass accounts Regular sales calls on food, drug & mass accounts

Handles all paperworkHandles all paperwork

Checks stores for distribution, pricing, location, Checks stores for distribution, pricing, location,

Speaks to buyers frequentlySpeaks to buyers frequently

““Eyes, Ears, Feet”— extension of manufacturerEyes, Ears, Feet”— extension of manufacturer

Brokers respect what manufacturers inspectBrokers respect what manufacturers inspect

Barrier to EntryBarrier to Entry

Lack of knowledge of the marketLack of knowledge of the market

Major investment requiredMajor investment required

Need to have US point of distributionNeed to have US point of distribution

• Public WarehousePublic Warehouse

• Joint VentureJoint Venture

• Company Owned OperationCompany Owned Operation

Meeting US Customs import regulationsMeeting US Customs import regulations

How to MarketHow to Market

Gain adequate working knowledge of the U.S. Gain adequate working knowledge of the U.S. marketplace by doing the preliminary investigative marketplace by doing the preliminary investigative activitiesactivities

• Attending trade shows Attending trade shows

• Contacting trade associationsContacting trade associations

• Hiring a marketing/sales consultantHiring a marketing/sales consultant

Create strategic marketing planCreate strategic marketing plan

Choosing right broker or rep organizationChoosing right broker or rep organization

Using public relations versus advertising to startUsing public relations versus advertising to start

How to MarketHow to Market(Exhibiting at Trade Shows)(Exhibiting at Trade Shows)

Pro Beauty Market Pro Beauty Market

• Major salon trade shows (4)Major salon trade shows (4)

• Rep association sponsored shows (2)Rep association sponsored shows (2)

• ISPA Spa Show plus additional smaller ISPA Spa Show plus additional smaller spa shows (6)spa shows (6)

• International Esthetics Cosmetics and International Esthetics Cosmetics and Spa Conference (2) plus half a dozen Spa Conference (2) plus half a dozen other esthetics showsother esthetics shows

• Professional nail shows (5)Professional nail shows (5)

How to MarketHow to Market(Exhibiting at Trade Shows)(Exhibiting at Trade Shows)

Mass Retail MarketMass Retail Market

• NACDS (chain drug)NACDS (chain drug)

• GMDC (grocery)GMDC (grocery)

• ASD/AMD (general merchandise 6)ASD/AMD (general merchandise 6)

• ECRM-EPPS (one-on-one apts. ECRM-EPPS (one-on-one apts. with major retail accounts 30+)with major retail accounts 30+)

ECRM-EPPSECRM-EPPS

Guaranteed 20 minute meeting with Guaranteed 20 minute meeting with buyer and/or category manager in a buyer and/or category manager in a 4 or 5 star 4 or 5 star hotel room setting hotel room setting

60 retailers in attendance60 retailers in attendance

Food, Drug & MassFood, Drug & Mass

Perfect way to jump start distribution Perfect way to jump start distribution in mass marketin mass market

How to MarketHow to Market

PackagingPackaging

Make sure it meets U.S. Make sure it meets U.S. market requirements from market requirements from

both a regulatory and both a regulatory and marketing effectiveness marketing effectiveness

standpoint.standpoint.

Important Important InformationInformation

Key Trade AssociationsKey Trade Associations

•NACDS (National Chain Drug NACDS (National Chain Drug Store Association)Store Association)

•PBA (Professional Beauty PBA (Professional Beauty Association)Association)

•ISPA (International Spa ISPA (International Spa Association)Association)

Important InformationImportant Information (Mass Retail Market Publications)(Mass Retail Market Publications)

ChainChain Drug Review Drug Review

Drug Store News Drug Store News

Mass Market RetailersMass Market Retailers

Supermarket NewsSupermarket News

NACS MagazineNACS Magazine

Important InformationImportant Information ((Pro Beauty Market Publications)Pro Beauty Market Publications)

American Salon American Salon

Modern Salon Modern Salon

Salon TodaySalon Today

Beauty Store Beauty Store BusinessBusiness

OTC Beauty OTC Beauty Magazine Magazine

Beauty TimesBeauty Times

Skin IncSkin Inc

Derma ScopeDerma Scope

Day Spa Day Spa

American SpaAmerican Spa

NailsNails

NailproNailpro

Launchpad Launchpad

Important InformationImportant Information ((Pro Beauty Market Publications)Pro Beauty Market Publications)

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

Download Complete BIRAbout this eNewsletterDevelop your eNewsletterSubscribe to BIR!Contact UsEmail Mike NaveNews ArticlesPravana’s Super Shape’s sales are sizzlingCompany has a Good Hair DayJim Fisher returns to Jungle at NexxusLafayette Jones’ Multicultural ColumnAccess Brands keeps salons’ phones ringingExpo Latino opens doors to new sales and marketing opportunities for beauty bizIESCS mirrors skin care category’s growthBob Oppenheim: “Manufacturers don’t want to control diversion”Mr. and Mrs. BIR make a quick escape to Santa Barbara to cover showFeature SectionsConsultants' CornerDiversionLast Minute BlastsThe Multicultural ReportObitsPeopleRep RapShow BizSpa BizWhat’s HotWhat’s 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 it’s 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 Sahag’s passing, and in this issue, Dwight Miller, a close friend of John’s who worked with him, wrote to share some nice thoughts with BIR’s 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 brand’s intrinsic qualities that are carefully assigned to it through marketing.

(click here for full article)

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@beautyIndustryReport.com

Remember, if you ain’t reading the “Blue Thing,” you know NOTHING!

Important InformationImportant Information(Valuable Resources)(Valuable Resources)

• Reshare Corporation, a provider of patented channel Reshare Corporation, a provider of patented channel management software. (www.reshare.com) management software. (www.reshare.com)

• Katherine Frank Creative, a full service marketing and trade Katherine Frank Creative, a full service marketing and trade show management group. (show management group. (www.katherinefrank.comwww.katherinefrank.com))

• Kirschner Group USA (Sales rep organization covering the pro Kirschner Group USA (Sales rep organization covering the pro beauty market on national basis. (beauty market on national basis. (www.kirschnergroup.comwww.kirschnergroup.com) )

• John O’Maley & Associates, Sales & Marketing Consultants John O’Maley & Associates, Sales & Marketing Consultants covering mass retail market on national basis. covering mass retail market on national basis. (www.omaley.com)(www.omaley.com)

• Fred O'kasick Sales Inc. Sales rep organization that covers the Fred O'kasick Sales Inc. Sales rep organization that covers the U.S. Chain Drug Store market. (U.S. Chain Drug Store market. (www.foksales.comwww.foksales.com))

• Joni Rae Russell/JRA Associates. Full service marketing Joni Rae Russell/JRA Associates. Full service marketing organization specializing in product development and organization specializing in product development and packaging design. packaging design. jonijra@aol.comjonijra@aol.com

• ECRM-EPPS Efficient Collaborative Retail Marketing - Efficient ECRM-EPPS Efficient Collaborative Retail Marketing - Efficient Program Planning Sessions a business process that Program Planning Sessions a business process that streamlines the consumer packaged goods sales and streamlines the consumer packaged goods sales and marketing supply chain (www.ecrm-epps.com)marketing supply chain (www.ecrm-epps.com)

So where do you go from So where do you go from

here?here? Use a knowledgeable consultant to gain Use a knowledgeable consultant to gain

sufficient information to make an sufficient information to make an intelligent decision, whether to market intelligent decision, whether to market in the U.S. or not.in the U.S. or not.

Do the necessary home workDo the necessary home work

Visit trade showsVisit trade shows

Do store checksDo store checks

Contact trade associations, Contact trade associations,

Thank You for the Thank You for the Opportunity!Opportunity!

PBD / BIR, Inc.PBD / BIR, Inc.

Publisher of the Beauty Industry ReportPublisher of the Beauty Industry Report

International RepresentiveInternational Representive

Master BrokerMaster Broker

ConsultingConsulting

Michael NaveMichael Nave

PresidentPresident

22287 Mullholland Hwy. Suite 403 Phone: 818-225-835322287 Mullholland Hwy. Suite 403 Phone: 818-225-8353

Calabasas, Ca. U.S.A 91302-5157 Fax: 818-222-7828Calabasas, Ca. U.S.A 91302-5157 Fax: 818-222-7828

mikenave@beautyindutryreport.commikenave@beautyindutryreport.com Mobile: 310-614-9880 Mobile: 310-614-9880