Our first class assignment was to create a business idea. Cosmetics have been something that has interested me for many years because of my work in the entertainment field. I know how important makeup products are to women and some men as well. Actors, models, and on camera personalities must often give the appearance of flawless perfection. Makeup is their tool to achieve this illusion.
My work with an environmental activism group led me to want to develop a natural cosmetic product. Through my research I found that there were quite a few companies that market natural beauty products.
Worldwide interest in sustainable and nontoxic cosmetics is growing fast! PACHAMA COSMETICS is a global venture that will provide a variety of beauty products that appeal directly to this movement.
Consumers all over the world increasingly want their products sourced from sustainable and natural ingredients, both in terms of the product, and in terms of the packaging. The global cosmetics and toiletry industries had more than $270 billion in sales as of 2006. Source: NPD Group, Inc.
Teens and young adults who are fashion forward and environmentally conscious gravitate toward credible products. Pachama Cosmetics will offer a line of skincare and beauty products formulated from natural ingredients and driven by market preference. Social media will be a major development tool for the company. Through its network social communities, Pachama will engage the market by offering its consumers the ability to propose new product ideas, test new products, name new products and exchange ideas with one another
Products include, Nail Polish, Eye Shadow, Lipstick, Natural Concealer and Blush.
Note: Pachama is derived from Pachamama, a goddess revered by the indigenous people of the Andes. Pachamama can be translated as mother earth or mother world.
Our purpose is to provide an emerging market with beauty products that are holistic, connecting the body, the natural world, and creating a sense of wellness and beauty.
Our vision is to create glamorous, youthful and innovative cosmetics that are made from sustainable sources, and containing all natural ingredients. No animal testing will be used in the development and formulation of Pachama Cosmetics.
Pachama Cosmetics is a global venture, although worldwide interest in sustainable and nontoxic cosmetics is growing, the market is considered to be a niche. The cosmetics market can perhaps be considered a mopolistic competition, meaning there are many producers in a highly competitive marketplace. Product differentiation, promotion and advertising will be key to generating sales and growing the company.
Initially, the company will generate sales through ecommerce and direct marketing. As the company grows and we build brand recognition, we plan to move into the highly competitive retail or “glamour” market. This includes, department stores, drug chains, and boutiques.
Our target will be the youth market, pre-teen to young adult. Since the price point of our products will be on the high end, we should focus on middle to upper income households. Social media will be a major development tool for the company. We envision having a very large online presence. Pachama will engage the market by offering its consumers the ability to propose new product ideas, test new products, name new products and exchange ideas with one another via social media and other means.
1. Nail Polish
2. Eye Shadow
4. Natural Concealer
Below are professor Kane's comments in response to draft one of our Business Plan. His main criticism was that our naturally derrived cosmetic product was not distinctive enough in an already saturated market.
Good job on your first draft. Your company talks about being an eco friendly company but doesn't fully explain how or why your company is going to stand out amongst an over saturated market. How is your company going to be this alternative choice makeup company is missing from your BP. You mention the cosmetic industry but nothing about how big this alternative market is. Also how is your idea any different than Ester Lauder viewpoint on their cosmetics: http://www.elcompanies.com/Pages/Viewpoints.aspx
-Great market analysis but I don't see how your niche is going to give you that competitive edge over your competitors? There is a lack of detail on how your business is going to survive this industry. Anybody can start a cosmetic company, but how are you going to stand out and make a name for yourself. Going on the premise of, being eco-friendly is not going to do it.
-The first half of your BP is talking about the
The first half of your BP is talking about the major Cosmetics companies and than your competitive analysis talks about the eco-friendly companies. The problem is I don't think most woman know or care about eco-friendly cosmetics. You could be the difference but that isn't clearly stated in your BP. Towards the end of the BP you started to mention how your colors will stand out more and be able to compete with the colors of MAC. When I think about make up colors, I think MAC. They stand out and woman love them because their colors are very vibrant. If this is important to your company, make sure to have an emphasis on this early on in your BP.
-I thought you would enjoy to read about a new niche entering the cosmetic industry: http://www.pr.com/press-release/469922
My solution to Professor Kane's concerns was to infuse our makeup products with vitamins A, C, E, and B3. Through my research, I found that chemists have been developing vitamin additives for makeup products. I was also inspired by the success of VitaminWater, an enhanced water product.
What if everyday makeup could provide health benefits rather than health risks? Pachama Cosmetics will combine the vital nutrients provided by vitamins A, C, E, and B3 with the elegance of high-end cosmetics. We will ask consumers to ponder: If you wouldn’t put it in your body, why would you put it on your body?
Our next assignment was to laydown the financial documents that support the viability of our company. We found a great deal of information regarding the growth of the cosmetics industry and the natural cosmetics segment.
Our group split up the work of generating financial data. Kevin Nembhard handled our P and L projections as well as our break even analysis. Tremayne Cunningham took our financing information and I took the start-up expenses document.
Attached are updated financial docs.
Pachama PnL 12mo_3Year.xlsx 12 Month and 3 year tabs
Our team created two versions of our video pitch, the first one ran long at one minute and twenty-four seconds. In the video we presented our mission statement, core team, problem or issue in the market, and our product (solution).
We later created a second, shorter video pitch. I recorded the voiceovers in PowerPpoint and exported the project as an AVI for upload to YouTube.
Our group was granted funds and access to ivefinancial.com where we established our virtual storefront in the global virtual economy. I built the Pachama site and created the product artwork. Tremayne Cunningham created the company logo and color scheme which I used in the Pachama virtual store.
Selection of an international market and development of business partnerships. Each business is also required to write-up a “case study” about a real business and how this business could be a potential partner for their own global business.
Social Media Strategy (click here to download)
This document outlines our social media campaign. We created a Facebook page which currently has 45 likes. https://www.facebook.com/PachamaCosmetics?fref=ts
Strategic Business Partnership Case Study (click here to download)
I chose to do a case study of a canadian company called Solegear, Inc. This company produces a revolutionary new material called bioplastic. This substance is a biodegradable alternative to traditional plastic. I had proposed apartership with Solegear where the company would provide Pachama Cosmetics with compostable makeup containers.
Analysis of a publicly listed partner firm and industry.
500 word posting about a global company that recently went public. I chose Seaworld Entertainment, Inc.
Below is an analysis of five companies and an industry that best reflect the business that Pachama Cosmetics operate within.
Natura is Brazil’s largest natural cosmetics manufacturer. The company uses natural ingredients grown in an ethical and sustainable way to make cosmetics, perfumes, deodorants and health products.
This company exemplifies many qualities of a modern global business, mainly a sustainable business model. Natura operates in an environmentally responsible way and as a result this company generates an enormous amount of goodwill with consumers.
A global beauty products manufacturer located in Paris, France. The company makes fragrances, color cosmetics, and skin care products and markets products numerous well-known brands like Adidas, Calvin Klein, Chloé, Davidoff, Marc Jacobs. Coty is also known for its association with celebrities like Katy Perry, Justin Bieber and Jennifer Lopez.
Founded as a candle company in Maine by Burt Shavitz. Today the company manufactures a variety of popular products with natural ingredients. Originally a lifestyle company, Burt's products become so popular that in 2007, the Clorox Company acquired Burt's Bees for $925 million. This company is a great model startup because is demonstrates a possible exit strategy namely acquisition by a larger company. Burt's shows that building a value from the ground up is possible.
Make-up Art Cosmetics, better known as M·A·C or MAC Cosmetics is a premier cosmetics company founded in Toronto, Canada by Frank Toskan and Frank Angelo in 1984. Now headquartered in New York City, MAC began as a supplier for professional makeup artists who had to rely on heavy cosmetics, cake makeup and stage makeup to create the visual effects needed to withstand bright lighting during photo shoots. Known for its deep pigments and vibrant hues, MAC’s products were initially specifically designed for professional make-up artists but are now sold to consumers worldwide and has established itself as one of the leaders in the beauty and fashion market. Pachama Cosmetics aspires to obtain the same level of high-end quality, brand loyalty and longevity as MAC Cosmetics.
Maker of Vitamin Water, Glacéau was founded by Darius Bikoff who came up with the ideas of enhanced water when he took some Vitamin C and drank some mineral water to improve his health. Vitamin Water became popular through grassroots marketing. The company used Vitaminwater street teams and "brand-ambassadors" to help promote their products. In 2007, Glacéau was acquired by The Coca-Cola Company for $4.2 billion.
The industry that best reflects the Pachama's business model is the Health and beauty segment. This industry encompasses a diverse group of products ranging from vitamins and fitness equipment, to cosmetics and contact lenses. This industry is home to a broad mix of manufacturers, brick and mortar business, and online brands that sell merchandise directly to consumers. Pachama will operate mainly as an online retailer.
Development of IPO presentations and report, as well as corresponding PowerPoint slides.
IPO Presentation PACHAMA COSMETICS
The average American woman uses 12 health and beauty products every morning before leaving her house. With over 10,000 ingredients used in personal care products, only 11 percent have been safety-tested by the cosmetics industry.
Today, young woman across the world are increasingly well educated, environmentally conscious, and health obsessed. The mission of Pachama Cosmetics is to provide this growing population with a healthy beauty alternative. Our makeup products combine the vital nutrients provided by vitamins A, C, E, and B3 with the elegance of high-end cosmetics.
- Why is your business successful and what will be required to insure that it continues being successful?
The success of Pachama Cosmetics is linked to the innate human nature to always strive for perfection. After many thousands of years, the worldwide demand for makeup has not diminished but in fact it has grown. By offering a unique, high end product and maintaining low production costs, Pachama has seen enormous success.
Our continued success will be driven by expansion of our product line. We want to develop a more diverse color palette and introduce a new assortment of nutrient enhancements to our makeup products. By offering new products on a fairly regular basis, Pachama will maintain relevance in the cosmetics market.
- Why do you think that your business needs to grow and expand?
The overall cosmetics industry is expected to grow by 3.1% annually between now and 2016. Ever growing consumer awareness of health, environmental, and sustainability concerns is driving the demand for natural beauty products. In fact, consumer demand for natural cosmetics products grew 13.9 percent in 2011 alone, according to research firm Kline & Company. With all this growth, many new competitors will emerge in the market. Growth and expansion will be required for Pachama to survive in a more competitive environment.
- How do you plan to expand your business and what are the markets that you will be focusing on?
Currently, Pachama Cosmetics is an ecommerce company. A major part of our growth strategy includes opening a network of kiosks at several shopping malls throughout the U.S. This will increase our brand recognition and bring our product into a retail environment.
In order to gain a greater market share, Pachama will need to increase in promotional and advertising budget. A large infusion of cash is required to implement a broad marketing strategy and build our brand nationally.
The next step for Pachama Cosmetics is to branch out to overseas markets, including Europe and Asia. We will need to implement marketing and advertising strategies specific to these markets.
- How much is your company worth now (make sure that you simulate this component as close as possible to your partner corporation)?
Using a cash flow valuation model that takes into account the average cost of capital, we estimate the current value of Pachama Cosmetics to be $394,901.
- How can you support your answers to the questions above through financial data/projections (add an updated financial statement reflecting this)?
Net Profit Before Tax
 FDA Warns Cosmetics Industry to Follow Law on Untested Ingredients http://www.ewg.org/news/testimony-official-correspondence/fda-warns-cosmetics-industry-follow-law-untested-ingredients