Daily naturals

Daily Naturals 

Bachelor of International Marketing University of Technology, Sydney

Due date: 15 June 2018 Heidi S. Figenschau

This paper is done as a part of the undergraduate program at BI Norwegian Business School. This does not entail that BI Norwegian Business School

has cleared the methods applied, the results presented, or the conclusions drawn

Project Report Part 2a

Bachelor of International Marketing University of Technology, Sydney

Due date: 15 June 2018 Student ID:  0984649

This paper is done as a part of the undergraduate program at BI Norwegian Business School. This does not entail that BI Norwegian Business School

has cleared the methods applied, the results presented, or the conclusions drawn

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Table of Contents

1.0 Internal Analysis ... 2

1.1 Current state of Daily Naturals ... 2

1.2. Resources and Competencies ... 5

1.3. Embodiment and Performance ... 6

1.4. Customer segments ... 6

1.5. Strengths: Identified cultural and structural assets ... 7

1.6. Weaknesses: Identified cultural and structural issues ... 7

2.1. Market Analysis ... 8

2.1.1. Market size ... 8

2.1.2. Market Trends ... 9

2.1.3. Market profitability ... 10

2.1.4. Distribution channels ... 10

2.1.5. Key Success Factors... 11

2.2. External Competitor Analysis ... 11

2.2.1. Direct and Indirect Competitors ... 12

2.4.1. Political ... 16

2.4.2. Economical... 17

2.4.3. Sociocultural ... 17

2.4.4. Technological ... 17

2.4.5. Environmental ... 18

2.4.6. Legal... 18

3.5. Key Issues ... 21

References ... 22

Appendices ... 26

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1.0 Internal Analysis

The internal analysis is based on a Business Model Canvas (Figure 1), which is used to assess the current state of Daily Naturals about the firm's value proposition, infrastructure, customers and finances.

Figure 1 - Business Model Canvas

1.1 Current state of Daily Naturals

Daily Naturals is a startup brand which has been developed by the well-established mature company Dresslier. The startup phase involves many challenges, and Daily Naturals need to establish objectives that are concise, measurable and quantifiable in order to move forward and become a successful company. Additionally, it is important to keep the corporate strategy balanced between profitability initiatives, product development and other value-adding activities.

Daily Naturals’ general marketing goals are to:

- Build brand awareness through Word of Mouth - Get engagement rates

- Be high on Google search ranking and search engine optimisation.

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Daily Naturals´ corporate goals are to:

- Increase market share by expanding from South Australia into New South Wales, and throughout Australia

- Expand current product lines

- Achieve more sales per stock keeping unit (SKU) as this in turn will receive good profits for the company.

Figure 2 - Business Life Cycle

Figure 2 shows the business lifecycle. As a startup company, the initial annual growth is expected to be small, yet increasing. As the company gets more knowledge within the field, growth is expected to increase more significantly year after year. A mature company traditionally experiences a declining increase, and in the final stage growth is expected to be

negative if not preventative measures are taken.

According to representatives from Dresslier, in 2015, the Daily Naturals range achieved growth in sales of 11%. Further, the growth went to 9% in 2016 to 7% in 2017. In 2018 Daily Naturals is expecting a 5% sales growth. What is interesting about Daily Naturals is how their growth the last years, including the expected growth in 2018, shows a declining increase.

Figure 3

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Referring again to the business lifecycle, we see that Daily Naturals is acting more like a mature company when in theory the business should find itself in the startup or growth phase. The question that arises is to what degree Daily Naturals actually manage to differentiate itself from mature sister brand, Davroe. The embodiment of attitudes and goals within Daily Naturals is building on the same principles as Davroe, but yearns for its own, unique approach to the market.

Product Line

All information on the product line is obtained directly from the Dresslier brief. The range in its entirety is naturally derived and environmentally friendly, it is further described as “an easy to use, high quality/high-performance professional range of hair care products now being made available to mainstream retail outlets”. Daily Naturals is a low irritant product that is free of Sulphate, Paraben and Sodium Chloride (salt).

The shampoo and conditioner are focused on five different hair care areas:

- Colour protect shampoo and conditioner - Volume enhance shampoo and conditioner - Moisture intense shampoo and conditioner - Smooth control shampoo and conditioner - All clear anti-dandruff shampoo and

conditioner

The treatments and styling consist of:

- Rich moisture hair mask - Leave-in mask

- Leave-in argan oil

- Leave-in sealer to battle split ends - Detangler spray

- Styling lotion

Curl enhancer

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1.2. Resources and Competencies Physical resources:

Daily Naturals aim to use as many Australian produced ingredients as possible, whereas all extracts are Australian. Considering Australia is the driest inhabited continent on Earth, with 70% of its mainland classified as arid or semi-arid (Outback Australia Travel, 2018), only 5%

of the ingredients are actually from Australia. The excess ingredients are sourced from other parts of the world; 55% from the US, 30% from Europe and 10% from Asia. Certified Moroccan Argan Oil is frequently used in the range. In terms of property,

Financial resources:

According to the Dresslier brief, the company as a whole has shown positive, sustainable growth in sales over the last 3 years with an average growth rate at 28.33%. Dresslier is in a good financial position to launch the start-up company Daily Naturals without interfering with Davroe. Due to already established deals through Davroe, transaction costs can be kept at a low level. The two brands contain around 70% of the same ingredients (J.& M. Centofanti, Personal Communication, April 16, 2018), which facilitates low production costs of Daily Naturals.

Human resources:

Through decades of experience, Dresslier has attained valuable knowledge of the beauty industry, which seeps through the organisation. At present a third generation member of the Sloan family still hold the reins, assuring the original core values are still intact. These are irreplaceable, intangible assets confirming trust throughout distribution networks and production sites, all the way to the retailer and end user.

Intellectual capital:

Dresslier has been ahead of their time since the company was founded 80 years ago, by being pioneers in all natural hair care products. By strengthening core company values, Dresslier has continued to reap profits from their labour. In 2011, Dresslier showed strong initiative to change according to changing market demands, when launching Daily Naturals to reach a new

target market.

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The company values expertise and strive to deliver quality products. All ingredients are carefully selected by experts within the field, which reflects the integrity of the Dresslier organisation.

1.3. Embodiment and Performance

Relationships are key in the market value chain, and Dresslier has the opportunity to utilise this further by using the same suppliers and distributors for both their brands. This will generate lower transaction costs, as Daily Naturals benefits from Davroes’ position in the business market. Introduction of new products equals an increase in supply orders from existing suppliers. Increasing supply orders enables Daily Naturals to profit from economies of scale due to increased unit cost. Dresslier as a company has always been ahead of their time, with a strong focus on Research & Development which is one of the reasons for their success with Davroe.

The value proposition of the business is directed at the end user. By creating Daily Naturals, the end user will be able to access a high-performance, natural and vegan alternative. Daily Naturals has a product line that will let the consumer access high quality, premium products available through suitable and more convenient retailers. Being certified “cruelty-free” is a significant point of difference, and adds value for the conscious consumer. The VRIO framework (Figure 4) has been used in order to map Daily Naturals competitive advantage:

Figure 4 - VRIO Framework

1.4. Customer segments

Daily Naturals was established as a reaction to pressure from National Pharmacies, whom

initially wanted to acquire Davroe in their shelves. As Dresslier did not want to distribute its

salon brand through other retailers, Daily Naturals was created. Through Daily Naturals aimed

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to fill a gap in the market, namely to target the customers who value premium quality, but do not buy products from their hairdresser.

Dresslier as an organization has been producing vegan, natural products since the 80´s, which gives Daily Naturals a high level of trustworthiness. A noticeable sociocultural trend is the focus on natural resources, “clean living” and a renewed attention towards the environment (Murray-Ragg, 2018). To ensure that customers return and will remain loyal in the future, it is vital that the product deliver what is expected by the consumer. Through trustworthiness and transparency, they will be able to build up a positive word of mouth, which has shown to be an efficient and important channel in today’s society. One of Daily Naturals’ current market goals is to ensure that customers recommend products to their friends through this channel.

1.5. Strengths: Identified cultural and structural assets

Dresslier as a company has a strength through their already established brand name Davroe.

Their acquired beauty care knowledge is a strong and valuable resource they are able to use in their new brand Daily Naturals. Already existing production and distribution systems, as well as business partners, can be utilized in a beneficial way for Daily Naturals. The startup company will have to use less of their resources and financial capital to establish new business relationships.

1.6. Weaknesses: Identified cultural and structural issues

Issues regarding Daily Naturals´ organizational structure include allocation of resources and capital, and especially in terms of research and development. It is important to acknowledge that a new product line requires just the same amount of care and commitment as a completely new business, considering the main object is to be differentiated from and not mistaken for the existing product line.

One challenge when expanding a new product line within the same organization is keeping the

brand culture intact, while clearly differentiated. Strategic direction is lacking, in terms of not

explicitly specifying how it is differentiated from Davroe other than place. At this point, the

two product lines appear too alike, which will make it difficult for customers to understand the

difference between the two. Instead of being a more “available” product, Daily Naturals has

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been identified as the “cheaper” version of the quality brand Davroe. Anticipated issues regarding sales and retailers include assumptions regarding natural and vegan products, is short recommended shelf time and low performance. Low performance both entails the products not being able to remove the dirt and soil properly, and not fulfilling the specific areas of promised hair care. It is important to educate retailers and customer regarding these issues, to prevent them from becoming popular opinions.

2.0 External Analysis

2.1. Market Analysis

2.1.1. Market size

The beauty industry is a highly competitive market which involves nearly 3 out of 4 Australians (Roy Morgan Research, 2016). The study conducted by Roy Morgan Research found that in 2016, 73.9% of Australians purchased shampoo at least once in an average 6 months. By rounding this number up to 75% to account for the growth in population since 2016, we can identify a total market size of 18,695,230 consumers based on an estimated population of 24,926,973 Australians on the 7th May 2018 (Australian Bureau of Statistics, 7th May 2018).

Due to a number of factors such as an aging population and increase in net overseas migration, the population of Australia is expected to increase to over 25 million people this year and reach 40 million people within 40 years (Ting, Hoad, Doman & Liu, 2018). This means that the total market size for hair care products within the beauty care industry will grow, but it does not necessarily lead to a percentage market increase.

The initial target market for Daily Naturals will be in the Sydney area and focusing predominantly on 20-34-year old’s in the Eastern suburbs area. The target market will expand to the Greater Sydney area after a 6 month period and evaluation of Dresslier should reassess and make any modifications to improve sales whilst potentially expanding into the Greater Sydney area and still focusing on the 20-34-year old age bracket.

●

The population in the Greater Sydney area in 2016 was 4,823,991 people, with over

half being females (50.7%) and a median age of 36 ("2016 Census QuickStats: Greater

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●

The overall population of 20-34-year old’s in the Greater Sydney area in 2016 was 1,115,138 people, increased from 984,146 people in 2011 ("2016 Census QuickStats:

Greater Sydney", 2017).

●

The population in the Eastern Suburbs was 267,037 people in 2016 with 51.5% females and a median age of 35 ("2016 Census QuickStats: Sydney - Eastern Suburbs", 2017).

●

In 2016 there was 75,159 20-34-year old’s living in Eastern Suburbs, 28.1% of the Eastern Suburbs population. The overall number of people in this demographic has risen from 71,020 people in 2011 but was 28.4% of the population in the Eastern Suburbs at that time ("2016 Census QuickStats: Sydney - Eastern Suburbs", 2017).

●

Using the Roy Morgan Research results and accounting for growth, 75% of the target market would purchase shampoo once every 6 months. This number would be 56,369 people purchasing shampoo every 6 months (Roy Morgan Research, 2016).

Figure 5- Target Market

2.1.2. Market Trends

A trend of the market that was previously mentioned involves the aging population. As the life expectancy increases, consumers are searching for high-quality products that will maintain colour and prevent hair loss. The loss of hair and colour is expected as people reach an older age but there are ways to delay and prevent this by taking care of the hair throughout a person’s life.

An increasing trend in the hair care market is the decline of shampoo which is being replaced

by natural hair washing agents (Murray-Ragg, 2018). These are seen as being better for the hair

as well as the environment and this trend will suit Daily Naturals significantly. This trend is

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consistent with the increase in environmental awareness and veganism. In recent years, society is more aware of the impact they have on the environment through the products they use and consume which has led to a shift towards more natural and eco-friendly products. The growth of veganism has also fuelled the need for more vegan products.

The consumer market is increasingly being shaped by influences of the Internet and strong social media presences. This is a force brands need to be aware of to successfully reach their customers in the modern marketplace. Trends exhibit strategies were brands use both commercial and private social media accounts to further communicate their product to end user (Forbes Communication Council, 2018).

2.1.3. Market profitability

●

Penetration rate: 9.6% ("Personal Care - Australia | Statista Market Forecast", 2018)

●

Market volume: 56369 x 0.096 = 5411 (rounded to whole number)

●

Market value: 5411 x 17.95 (price of most products) = $97,127.45

●

We have identified the market value to be $97,127.45 due to a penetration rate of 9.6%.

●

Median weekly personal income for people aged 15 years and over in the Eastern Suburbs was $1020 in 2016.

2.1.4. Distribution channels

Distribution channels in the Australian beauty industry usually consist of one or two levels of the three primary levels of distribution used for the fast moving consumer goods (FMCG) (Figure 6). An example of this is Dresslier ́s deal between Daily Naturals and National pharmacies where it operates on one level of distribution. Larger brands in the beauty industry like Head & Shoulders who works on an international level usually consists of three levels of distribution (Dasgupta, 2008).

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2.1.5. Key Success Factors

Key Success Factors are factors businesses must do or comply with within an industry to be successful (Simister, 2013). IBIS World (2018) identified 250 Key Success Factors for business and addressed the five most important ones for the Australian cosmetic & toiletry industry as:

1. Ability to control stock on hand: Industry players should ensure adequate stock controls are in place to reduce inventory costs and increase stock turnover.

2. Having a clear market position: Projecting a clear and consistent image is extremely important for industry players to attract discretionary consumer expenditure. In the age of social media and digital beauty, this factor is growing in importance.

3. Production of goods currently favoured by the market: Industry players should ensure that their product mix and pricing strategy are appropriate for their target market to be successful.

4. Experienced workforce: In line with its customer-centric focus and a reliance on one- on-one selling techniques, the quality of shop-floor staff needs to be high to ensure quality customer service. This is particularly important in the prestige or high-end segment of the industry.

5. Attractive product presentation: The store layout and stock display should encourage customers to experiment and to enjoy their in-store experience, while the store design should reinforce company image. The use of digital displays is projected to increase over the next five years.

2.2. External Competitor Analysis

Daily Naturals is not alone in providing vegan, cruelty-free, Australian-made and salon quality hair care products. However, this does not mean they cannot differentiate themselves from their competitors. Before beginning an analysis of competitors it is important to distinguish between direct and indirect competitors. Daily Naturals main aim would be to differentiate itself from competitors with the same features before targeting people who do not currently buy shampoos based on those factors. A direct competitor for Daily Naturals would have the following three qualities:

1. Vegan

2. Cruelty-free

3. Australian made

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An indirect competitor would have a combination of these factors, but not all three. In making this distinction it is now possible to analyse the competitors based on these factors. After identifying these factors, it is important to consider price (to be analysed per 100ml, from company websites) as a key differentiating factor. Also, it is important to note where brands are stocked, they could be stocked:

1. Online

2. Supermarkets 3. Pharmacies 4. Salons

Potential competitors in this industry would be companies who sell their vegan-cruelty free hair care products purely to salons but may venture into the pharmacy market. Potential competitors could also be established hair care brands such as Head & Shoulders who decide to release a vegan/cruelty-free range. There are multiple competitors which focus on the business to business (B2B) market rather than the business to consumer (B2C) market which Daily Naturals currently operates in (McPherson’s, 2018).

2.2.1. Direct and Indirect Competitors

Through this analysis, two key direct competitors and one indirect competitor have been identified. These are A’kin, Sukin and Tresemmé hair care products.

Daily Naturals A’kin Sukin Tresemmé

Launched 2011 (Australia) 2002 (Australia) 2007 (Australia) 1948 (USA)

Salon quality X X X

Cruelty free X X X

Vegan X X X

All Australian X X X

Price per

100mL $7.18 $5.40 $2.99 $0.78

Figure 7 - Direct Competitors

Looking at Porter's Competitive Strategy (Appendix 2), all of the direct competitors have the

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practices, these seem to be the key drivers for all four companies. Current Strategies include heavily marketing their adoption of these values, whether that be on the packaging or in digital presence. The main competitive strategy amongst these four direct competitors is current price, as is evident from the figure 1.1. A key weakness of the three competitors is that they do not advertise salon quality as a feature of their products, which Daily Naturals does heavily. This gives Daily Naturals a competitive edge as it places itself as the premium quality product.

It is also important to note that Daily Naturals is primarily a premium hair care product more so than it is vegan and cruelty-free. Thus, it aims to compete with brands such as Schwarzkopf, Tresemmé, and L´Oreal. Apart from being salon-quality it easily differentiates itself from these brands by having that strong association with being a vegan and cruelty-free. Hence Daily Naturals holds a unique claim that it is the only salon quality and socially responsible hair care product on the market. On the other hand, where brands such as Schwarzkopf prioritise quality over social responsibility, Daily Naturals strongly believes and proves with its product that you can have both.

2.3. Customer Analysis

Based on the market- and competitor analysis, we have identified four possible segments for further targeting. These segments are roughly based on demographic factors to paint a picture of consumer purchase behaviour when it comes to hair care products, as shown in table below:

Age Incom

e

Where living

Needs Type Point of sale Price Brand Size

>20

M & F Low At home with caretakers

Quick &

easy, does the job

Reliability Supermarket, online, discount pharmacy

Low Tresemmé,

Dove 288,362

20-34

Male Middle Greater

Sydney Clean & easy Three-in-one Supermarket, Discount pharmacy

Value for

money Head &

Shoulders 549,763

20-34

Female Middle Greater

Sydney Silky and shiny, smells good, healthy hair, result

Quality &

natural Online, salon, pharmacy

Premium Sukin, A’kin,

Joico 565,375

34<

M & F

Middle -Upper

Greater Sydney

Smooth, clean &

smells good

Quality &

reliability

Online, Supermarket, Pharmacy,

Mid- upper range

Pantene, Garnier, Schwartzkopf

2,520,192

Figure 8 – Customer Analysis

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2.3.1 Targeting

Whereas Davroe is servicing the hair salon market and their customers, Daily Naturals is currently servicing to pharmacies. Daily Naturals targets the customers that want the salon products, but without actually purchasing them from a hair salon. They want to catch the customers who are willing to spend more money on premium products but shop their hygiene products at pharmacies. The target market, being young consumers, is increasingly accessible through online platforms. Marketing through online channels is both cost-efficient and makes it easier to reach the actual target market, and simplifies the analysis of data.

2.3.2 Positioning

As of today, Daily Naturals have a strong brand recognition in South Australia. They are being sold at National Pharmacies, and has consistently been in the top three of the hair care category across the board including brands on promotions. Daily Naturals desires to be perceived as

“better than organic”, without focusing on the fact that they are a vegan hair care brand. They also want to position themselves with clear distinction from Davroe. However, as the current situation stands, the consumer market can find it difficult to understand the difference between the two. One of Daily Naturals’ unique selling points is that it is a salon quality product that is sold outside of salons.

To visualize how brands are positioning themselves, we have created a perceptual map based

on product quality and the emphasis on ethics. This is shown in figure 9.

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In order to accurately target our specific market segments, it is important to identify the

attributes that describe the typical persona of our target market. This analysis has helped us

form a picture of who would purchase Daily Naturals. The typical customer is a female living

in the Eastern suburbs aging between 20 and 34 years. This woman lives strongly by her own

personal values and enjoys spending time on herself and also people around her. She cares

about the goodness in the world, and spreads love through her everyday actions. When standing

in-between two choices, she will always choose the more sustainable option. Labels such as

cruelty-free, vegan and all-natural catches her eye, but she is also the kind of consumer that is

willing to check more into the labelling. She is conscious about her personal impact on the

world, and would therefore also be willing to pay a bit more for a product that is in-line with

her personal beliefs. She uses social media daily, and Instagram is an important source of

inspiration for her. As for exercise, she mainly enjoys doing this outside. Running, yoga,

surfing, swimming and going for bush walks are all on her list. She thinks it is important that

her everyday activities do not harm nature. Considering she spends much time in rough

environments, she is also in the need for hair products with high performance and quality. She

has not given herself any dietary restrainments, and therefore does not fall into any specific

group such as “vegan" or “vegetarian”.

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2.4. Macro Environmental Analysis

Daily Naturals is looking to make their products available to all Australian residents, exploring a market that is large and holds many significant competitors. The following PESTLE analysis (figure 10) is set in a national context, examining how external factors may impact the business.

Figure 10 - PESTLE Analysis

2.4.1. Political

According to IBIS World, “the cosmetics, perfume, and toiletries manufacturing beauty

industry do not receive any significant assistance”. The general Australian chemical sector does

not receive any protection or assistance other than what is offered by falling tariff barriers,

where the maximum tariffs are 5% (IBISWorld, 2017). The lower tariff barriers have allowed

an increase in imported raw materials and therefore made it cheaper for companies to

manufacture goods.

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2.4.2. Economical

Australia is a developed country with a high-income level per capita and an annual GDP growth of 2.77%. This has a positive effect on the marketplace, especially for businesses in the growth and development stages of the business life cycle. The level of inflation of consumer prices has decreased over the last three years and was in 2016 at 1.277%

estimated to reach a revenue of $1.83 billion by the year 2023/2024 (IBISWorld, 2017).

Retailers in the beauty industry had a revenue of $4.16 billion in 2018/2019 and is predicted to increase to $4.53 billion by 2023/2024. According to IBIS World (2017), the revenue growth for both manufacturers and retailers is anticipated to be consistent for the next five years, with varying annual results (Appendix 9). This growth is mostly driven by “export earnings and the introduction of new value-added, multifunctional, complex age-specific products and premium organic and eco-friendly products”. Especially the ongoing development of natural, organic and environmentally friendly products will increase the demand.

2.4.3. Sociocultural

New South Wales is the state with the largest population, with Sydney being the largest city at over 4.8 million residents

"2016 Census QuickStats: Greater Sydney", 2017

The rise of ethically and environmentally conscious consumers are leading to new trends in the use of organic, cruelty-free and natural products (IBISWorld, 2017). Ethical consumerism in Australia has had a significant growth in recent years, as consumers are more aware of the ethical, social and environmental consequences of their actions. Therefore natural products are increasing and continuing to grow into larger markets instead of only being sold in niche markets. It is also expected an increase in trends surrounding organic, eco-friendly, fairtrade and local products (IBISWorld, 2017). There has been a shift in consumer purchasing behaviours with a preference for products that aren’t tested on animals. The consumer is more conscience and they demand transparency before buying a beauty care product. This entails a higher demand for all natural products that are free from petrochemicals (IBISWorld, 2017).

2.4.4. Technological

Technological advancements in the beauty industry paves the way for new products with

innovative and advanced ingredients. Moreover, technological advancements in social media

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and e-commerce have affected the downstream activities of manufacturers. For instance, some players are integrating their Facebook presence into their e-commerce platforms. Digital technology will become a big part for manufacturers so they can reach target markets directly.

More brands will also be positioned as digital brands. As players adapt their traditional promotional activities to digital marketing, it is important that Daily Natural also enter the digital world (IBIS World 2017). The importance of handling an omnichannel is increasingly important, as users value accessibility and convenience. The overall implementation of using digital technology is to improve control and the effectiveness of new marketing.

2.4.5. Environmental

Environmental awareness has increased a lot the past few years. For instance, addressing sustainability issues is becoming an important competitive force in this industry.

Companies compete on new product developments to retain consumer interests, which is natural, eco- and cruelty-friendly products. Dresslier actively engages in many of these areas, which also impacts on Daily Natural’s value proposition. There is a big focus for every player to improve its manufacturing processes to increase its environmental sustainability. This has given more awareness of the types of packaging used, thus encouraging to change it to biodegradable packaging. Moreover, the fact that Australia is a wide country, having manufacturing operations in or close to the major cities gives you the opportunity for more efficient supply chain management. Manufacturers can reduce time and transport costs, which also give a positive impact on the environment (IBIS World 2017).

2.4.6. Legal

There are current mandatory standards for the labeling of cosmetics ingredients, which has to be labeled in accordance with Trade Practices Regulations 1991. Every manufacturer must adhere to the state laws on poisons (IBIS World 2017). Due to strict pricing regulations, Daily Naturals can recommended a retail price, but cannot force a retailer to sell the product at that price. A retailer can further set prices and discounts on their products as long as they set their prices independently of their competitors. It can be illegal to set price below cost, depending on the circumstances (ACCC 2018). Approximately all cosmetics ingredients defined as

"natural", such as oils, extracts, and essences of plants are regulated as industrial chemicals

under the Industrial Chemicals Act 1989. New ingredients to the country must be assessed by

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3.0. SWOT Analysis

The SWOT analysis (Figure 11) is a useful tool used to evaluate the company's strengths, weaknesses, opportunities, and threats. The analysis is based on both internal and external factors that may influence the company's objectives.

Figure 11 - SWOT Analysis

3.1.Strength

Dresslier has been in the industry for 80 years and has developed a well-established range (Davroe), management team and existing production and distribution system. Having one of the generation members of the Sloan family in the team helps to make sure that Dresslier keeps track of the company vision. Together, this can be utilised in a beneficial way for Daily Naturals and gives them a high level of trustworthiness and credibility. The offering of a salon quality hair care product is Daily Naturals´ main unique selling point. Being a natural, certified cruelty- free and all Australian product further creates a differentiation from its competitors. Dresslier is currently in a good financial position, which gives Daily Naturals a great starting point expanding from the new product and growth stages to the mature stage.

3.2.Weakness

Daily Naturals´ main weakness is that strategic direction is lacking, in terms of not explicitly

specifying how it is differentiated from Davroe other than place. It seems that the embodiment

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of attitudes and goals within Daily Naturals is building on the same principles as Davroe, and therefore is not mutually exclusive on its own. There is limited online presence, which makes it difficult for potential customers to do research about the product, and at the moment no market strategy on how to change this. Although Daily Naturals already has been placed at some chemist stores in the Eastern Suburbs in NSW, there is low brand recognition. Consumers do not recognize the product and it does not stand out from its competitors. According to our qualitative research, the bottle is seen as a “cheap” bottle design and does not perform to the values and standards Dresslier has set for it.

3.3.Opportunity

With rapid marketing growth in the beauty industry, it is safe to say there are countless opportunities to strengthen Daily Naturals position in the market available. Increased environmental awareness in the Australian population has heightened the product awareness of eco-friendly products. This could be an opportunity for Dresslier to expand the Daily Naturals product line to fulfill this gap in the market space. NSW has the largest population in Australia with multiple socio-cultural groups focused on “clean living” making NSW and Sydney an ideal area to expand. Another opportunity that Dresslier has not capitalised on is technology. The Internet is commonly to research hair care products before purchase. By having an online presence it can increase brand awareness, share product vision and highlight product information. Product information is important especially when you want to position your product as a prestige performance product.

3.4.Threat

When planning to increase market share and strengthen the Daily Naturals product line,

positioning it is important to consider threats existing and possible threats that can occur in the

future. The beauty industry is a highly competitive market, due to rapid changes in trends and

therefore consumer’s purchase decisions. Competing companies are constantly expanding and

improving their product lines, which puts pressure on Daily Naturals as well. New direct

competitors also pose a threat, and the government does not provide any protection or

assistance in this industry if the company falls into financial trouble.

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3.5. Key Issues

One of the main key issues identified, is in regards of differentiation between Daily Naturals and sister brand Davroe. Daily Naturals needs to develop specific strategies to target markets where Davroe is not strongly represented. It is vital that the two brands be mutually exclusive and recognisable as high performance products, without cannibalising the other. The two brands appear very similar in terms of design and packaging, which sends mixed signals to consumers. Also regarding the percentage crossover of ingredients, this causes more confusion in regards of whether the products are the same after all.

The second key issue that will affect Dresslier involves expanding into a new and unknown market. Despite the experience in the industry, expansion into a new market can be a difficult process that can be unsuccessful due to many factors. Dresslier needs to identify and reach the target market that will generate the highest revenue and allow for long-term stability. The new market may react differently to other markets so it is crucial that the Daily Naturals range be able to meet the needs and wants of the market. Furthermore, decisions regarding the distribution of the product needs to be addressed. The current manufacturing plant is based in Adelaide which may limit the distribution due to transportation costs and the longer time to reach the new market on the east coast.

When launching a new product through a retailer, it is important to acknowledge the separation of power: today, the retailer has increased power in terms of which products lives or dies. The main goal of a new product is to look attractive on the shelves, and flaunt its unique selling point. Much effort is required in this area to get both retailer and customers to recognise this.

In this highly competitive market, where the customer is exposed to an abundance of choices, the main objective is to get the customer to favor the product again, and again. Daily Naturals faces a challenge in terms of firstly breaking into the market and then attracting market share.

Key Issue 1: Differentiation with Davroe range

Key Issue 2: Expansion into a new market.

Key Issue 3: Highly competitive market

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References

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australia-or-small-australia-you-decide-our-population/9470156

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Appendices

Appendix 1 - In-store Product Comparison

In-store product comparison

To gain some insight of what products the pharmacies and chemists today offer and how they showcase the products toward the consumer. We decided to go to six different chemist and pharmacy chains to see what products they offer in-store, how they showcase the different products and what the different prices are. The chemists we visited was Blooms the Chemist Coogee, Priceline Central Park, Chemist Warehouse Haymarket, Centennial Plaza Pharmacy, Chemistworks Broadway and Market City Pharmacy.

Blooms the Chemist, Coogee

Blooms is the only chemist we visited who already have Daily Naturals in-store, they also have A’kin which is a direct competitor with Daily Naturals offering the consumers Australian made vegan and cruelty free hair products. Blooms also offer a variation of other competing hair products which does offer some of same characteristics but not all.

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You can also see that Blooms offer their brands good spacing with many shelves being occupied by only one brand. Daily Naturals are placed on two shelves on the lower half, this placement can be considered out of eyesight and Daily Naturals may lose sales to A’kin considering A’kin is occupying the shelfs in direct eyesight when you look at the shelfs.

Priceline

Priceline offered perhaps the greatest range of haircare product of the chemists we visited. They offered some new brands of direct competitors to Daily Natural like Natural Instinct and Su’kin hair products.

They also offered a great range of other competitors like Head & Shoulders, Klorane and Botanicals by L'Oréal. As for the price we can see that the price estimated

price of $15 currently used by Blooms and recommended by Dresslier should be compatible with the current prices of the competitors offered by Priceline.

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How Priceline showcase their products are pretty straightforward, they had their own sections for natural and cruelty free products where Daily Natural would have been placed, you can see that A’kin is placed on the lower half of the section which is not an ideal placement, the shelves above A’kin would occupied by a variation of brands is the more optimal placement for Daily Natural if they were to offer their products through Priceline.

Priceline also offer Brand based sections if you got enough products to fill the section, Su’kin is using this solution.

Chemistworks:

Chemistworks at Broadway shopping center had one of the lesser range of hair care products of the chemists in

this list. It was only one direct competitors which was Su’kin, also the variety of other competing products without the exact same characteristics as Daily Naturals was quite narrow. The prices at Chemistworks is about the same level as the previous chemists on this list except Su’kin which is about

$1 cheaper than Priceline without the 15% discount they are offering in the picture (19.04.2018).

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Because of the small range of product offered by Chemist works they only use about two small sections with for their variety hair products, Su’kin and Klorane got their own sections shown in the picture below and is exposed more as brand products which makes it easier for the consumer to see the brand as quality products.

Centennial Plaza Pharmacy

Another chemist with a decent range of hair products but with only one section in the store, more understandable for this chemist considering the Centennial pharmacy is about half the size of most of the chemists on this list. Centennial is offering another direct competitor to Daily Naturals none of the other chemists have which is Al’chemy Shampoo. This is a rather small simple bottle which can be hard to spot if you don’t look after it, it is priced $14,50 which is about the same as Daily Naturals recommend for their own products.

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As mentioned earlier the shop is quite small which means a large variety of brands will be squeezed into the haircare section, leaving small to no room for a variety of products per brand in the shelfs.

Centennial also offer own brand specified sections in the store like Priceline and Chemistworks where you can display a good variety of products of your brand.

Market City Pharmacy

The Market City Pharmacy is also another small pharmacy, but they have the largest variety of direct competitors to Daily Naturals of everyone on this list. Market City offers brands like Hair Goo, Karpati and Ficcecode which are all Vegan, Australian made, Cruelty free and not offered by any other chemists on this list. Considering the size of the shop they have an impressive range of not only direct competitors but also other competitors without the exact same characteristics.

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A small size shop usually means few sections of specified products like hair care, Market city still offer four and a half sections of hair products where the half is packed with vegan and cruelty free products which also is Australian made. Market City Pharmacy also had a brand-based section for their Su’kin products.

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Chemist Warehouse

Chemist Warehouse is probably the most popular chemist on this list with Priceline, they offer a broad range of products both online and in-store depending on the size of the store. Chemist Warehouse Haymarket is of the smaller sized stores, but still offered a large variety of hair care products. Not many direct competitors to Daily Natural but a broad range of other product like Klorane, Herbal Essence and botanical by L'Oréal. Chemist Warehouse also usually offer a pretty decent price for their products, but not much to save on the hair care sections in the store compared to other chemists on this list.

Chemist Warehouses are usually quite narrow and it feels like all the product in the store is squeezed in there. You can say the same about the shelfs per section, they use quite narrow spacing per product.

Looking into the shelfs it seems like there is no thought into how the products are arranged into the shelfs with similar products like A’kin and Klorane being on the opposite sides of the hair care sections.

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Appendix 2

Porter's Competitive Strategies

Appendix 4 - Direct Competitor:

Natural Instinct

Natural Instinct, as with the majority of hair care brands also sells products in other categories of beauty such as skincare. They are perceived to be of high quality, this is clear from the Nielsen Consumer Survey of 13,500 which found that one of their skincare products was voted product of the year in 2018.

Similarly their “Moisture Surge Shampoo” won best natural shampoo in the Nature & Health Natural beauty awards. Natural Instincts is also vegan, cruelty-free and Australian made. Their products are both sold and shipped from online and in retail stores as is shown in the in-store comparison. Their packaging is also recyclable showing a strong commitment to sustainability.

Price: $3.96 per 100ml

Appendix 5 - Interview Guide & Interview summaries

Individual depth interviews were conducted to learn personal experiences, opinions, and interests. The interviews was performed in a one-on-one situation with an interview guide as a starting point.

Interview guide Warm-up:

“Daily Naturals is a vegan, all natural, Australian made hair care brand. They are the sister brand of Davroe, which is a salon brand well-established within the fashion industry. Now Daily Naturals are looking to make their products available for all Australians”

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Demographics Age:

Sex: Female Occupation:

Short profile of the interview object: Who is he/she? What values does he/she hold?

(Cognitive, conative, affective)

1. Describe your daily hair care routine (behavioral situational question) 2. How often do you buy hair care products? (Conative)

3. Where do you usually buy hair care products? (Cognitive)

4. What is important to you when buying hair care products? (Conative)

5. If a vegan hair care product has all of these features, will you be willing to spend more money on it knowing that it does not have a negative impact on the environment? (Conative)

6. What kind of feelings does this (cruelty free) accreditation provoke? (Show picture) (Affective) 7. What do you expect from a vegan hair care product? Both positives and negatives. (Cognitive) 8. Who or what influences your decision to purchase a particular type of shampoo and

conditioner? (Cognitive)

9. How does the thought of using vegan products make you feel? (Affective) 10. What kinds of smells bring out the feeling of wellness for you? (Affective)

Damian’s Interview Summary

Gemma is a 20-year-old production assistant and retail stylist that mainly lives a vegan lifestyle and has done so for the past 2 years. She works in the Bondi area and first learnt about vegan products when she was in high school when a friend purchased an eye shadow pallet from Urban Decay which is a vegan company. Afterwards, she made the decision to switch to a vegetarian lifestyle but after a year decided to become a vegan. She removed all her non-vegan beauty products and now purchases vegan products whenever she can. She has also influenced her family to make vegan purchasing decisions such as soy or almond milk instead of milk from a cow.

She washes her hair 2-3 times a week with shampoo, conditioner and a conditioning treatment to maintain a ‘lush’ appearance. She purchases her products of shampoo and conditioner roughly every 2 months but does purchase new hair products such as split ends treatment and keratin hair masks every few weeks. She is willing to try new products to get a silky, smooth look. She spends $20-$40 a month on these products but when purchasing shampoo and conditioner she pays $100 a month (shampoo and conditioner cost $35 a bottle). These purchases are made from her hairdresser for the shampoo and conditioner (Redken brand) and also purchases products from Priceline (Redken not available at Priceline). When buying hair products, she is looking for a high quality product as she cares about and tries to reduce long term damage to her hair. She also looks for environmentally and ethically friendly products which are chemical free, kind to the Earth and hair. She is happy to spend more on vegan products as she knows that the impact is friendlier to the environment and people.

When shown the cruelty free accreditation bunny, she thought it was cute and reminded her of her pet bunny from her childhood. When purchasing vegan hair products, she expects them to have natural

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product to be cruelty free and ethically made, she doesn’t want the environment to be harmed where it is made and for the workers to be in good working conditions. She also expects the vegan products to be more expensive and notices that they aren’t as effective and take longer to work than non-vegan products, eg purchased vegan teeth whitening product which took a long time to work.

As she works in the fashion industry she is often surrounded by hair and beauty products regularly and is influenced by the professionals that use these products who offer her advice. She prefers word of mouth recommendations and also takes advice from her hairdresser who she shares a good relationship with and who approves of her shampoo and conditioner. Sometimes gets influenced by social media personalities who use a certain product but due to a lack of money is unable to follow up and purchase the product. Also aware of what goes into the production of a social media post due to her experience in the industry and is aware that hair and make up artists are used.

Vegan products make her feel good as she is looking after herself but also looking after the environment.

Smells that she identifies with wellness are summer smells such as mango, coconut and frangipani.

Jon’s Interview summary

Male 21, full-time worker and full-time student. Lives north of Bankstown and works in the real-estate industry. his daily hair care routine is to shower. With shampoo and sometimes conditioner, blow-dry, style with wax and use hairspray. He usually buys new hair care products when he needs new products and usually just buy them at the supermarket. His decision making while shopping for hair care products is depending on the brand popularity and prices. He doesn’t really care if the product is vegan or environmental friendly, he just looks for a product which will satisfies his need when it comes to hair care and the cheaper the better. He got no association with the cruelty accreditation symbol, positives of a vegan/cruelty product are environmental friendly and are eye catching when looking at. Negatives of these products are that the brand are less known, people can be more sceptic about the products, usually more ingredients which may trigger allergies. He usually just purchases the hair care products he decides himself but, can be influenced by hair salons if he like the product they are offering. He got no association with vegan products so using a vegan shampoo would just be another shampoo for him.

Preferred smell from hair care products is mint.

Heidi’s Interview summary

Emma is a 27 years old woman from Adelaide, living in Bondi. She cares immensely about the environment, and through everyday actions she tries to make a change. Throughout her whole life, she has been taught that taking care of nature and things like saving water, picking up rubbish, recycle bottles and plastic is just something you do. She is a part-time student, and works full-time. She strives to live her life in line with her compassionate and environmental values, however, she is by no means categorized as a vegetarian/vegan.

When talking about daily hair care routines, Emma states that it is non-existent. She’s the kind of girl who will roll out of bed and start her day with some exercise in the form of yoga or surfing. She claims that her everyday activities expose her hair to a rough treatment, and when looking for hair care products she looks for the moisture & repair alternative. The places she will go to for this are supermarkets and chemist warehouse, mainly because she believes that they will stock discounted, quality products. She cares about price when buying hair care, but is also willing to splurge out on the occasional coconut

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water shampoo when she’s in the mood. Emma is a convenience type of shopper, and will rather buy hair care in bulks.

When being asked whether she would be willing to use vegan alternatives on her hair, her pros and cons start to appear. If the price was not an issue, she would like to use it because of the lack of chemicals.

This is an attribute that works in her favour both because she does not like the thought of putting chemicals in her hair, and also because she does not want to flush the chemicals down the drain. Her major concern when it comes to these kinds of products is that she believes it will be less efficient than the “regular” shampoo. She expects herself to be frustrated the first month, due to the adjustment period her hair would have to go through.

Smells play a big part of Emma's decision. She likes the natural type of smells with tones of coconut, vanilla and soft floral hints. Musky smells of sandalwood and potpourri does not appeal to her as for personal body care products, because of her associations with hippies and how the stereotype hippie would smell this. Emma is not familiar with the cruelty-free certification, and say that she immediately thinks of no testing on animals, and that no animals would have been hurt in the making of these products.

When being asked where she would expect to find vegan hair care products, her answer is boutique pharmacies. Places that are more like chemists, and have higher-end make ups. As for the packaging, Emma is suprised. She did not expect the kind of plastic packaging, but more of a biodegradable one - Maybe in a glass bottle. However, with the clean, sleak design it does give her positive associations to a mid-class hotel shampoo. Furthermore, she finds it convenient that the packaging tells you exactly what it is that the shampoo is supposed to do - Moisture, Volume etc. Her final statement is that it looks like someone who buys a lot of products would also buy this one.

Solveig’s Interview Summary

Daniella is a Swedish expat, aged 27, enjoying life at the beaches of Oz. She has been living in Sydney for 3,5 years and in Perth for half a year before that. She first came to Australia on a working holiday visa, and her plan was to travel the world – instead she ended up falling in love, both with the country and a man. Her favourite thing to do is picking shells that wash up on the many beaches in her neighbourhood, while on a rainy day she will most likely stay inside and read up on her uni subjects, which is pretty tough – but which she finds immense joy in. To make ends meet she works at Priceline, and a guilty pleasure of hers is to walk around and smell all the tester-products when there are no customers around. Dani loves nature, science and a good book.

When it comes to her daily hair care routine, Dani´s washes her hair with shampoo and conditioner every day before going to uni or work. This routine keeps her hair from feeling greasy, and her long, blonde, shiny locks looks very well taken care of. Her haircare routine also consists of blow drying and the occasional round with a straightening iron, so every week or so she uses a treatment to make sure her hair stays healthy. To keep away the salty dryness after a beach day, she will soak her hair in treatment then as well. At the moment the products she uses is from L´oreal´s Botanicals line, which according to Dani smells amazing - like a mix of forest and spa.

Dani buys hair care products very often, and got “thousands” of shampoo bottles in the shower. In particular she likes to buy small bottles of treatments and oils, even though she does not use it very often. She buys the majority of products at Priceline, where she works, because it is convenient and she knows the products. Additionally she will buy products from a salon almost every time she is there,

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influence to buying new products is herself, and also the convenience when getting new products to test

at work.

When buying hair care products, Dani chooses based on price, smell and design - in that order. It does not necessary need to be for a specific purpose or type of hair, as long as it smells good. Smells is obviously a big part of Dani´s wellness routines, and reveals that the smell that really makes her relax is the forest back home in Sweden, or the crisp air in the Blue Mountains. She mentions a couple of different brands that she likes the smell of, including the high end Aveda-products, the vegan brand Sukin, and the Botanicals line that she uses at the moment.

When it comes to vegan products, Dani would not necessary spend more money on this. Her values coincides more with environment, explaining that she would spend more money on the product if the bottle was environmentally friendly or not made from plastic. Dani does not call herself neither vegan or vegetarian, and thinks the vegan label may confuse a lot of customers, which ultimately will think of food and not the environment, which also is a factor of this. Working at Priceline, she has very good knowledge of the different certifications brands can achieve, and mentions the Cruelty Free bunny as a bit misleading as well, as customers might assume that this revolves around the environment in addition to animal care. In general, she feels that the world of hair care products has too many options, and looks forward to the day when we can all use the best and most beneficial product, without being afraid of

who or what we affect.

Dani´s general expectations to a vegan hair care product is mainly positive, both when it comes to smell and how it affects her hair. She pictures a neatly designed bottle, and the positive associations with caring for animals and the environment. On the other hand, she has had some bad reviews from customers, saying their hair feels greasy and that it is difficult to clean.

Daily Naturals has just been put up on the shelves in the Priceline Dani works in, and she explain that the first testing batch disappeared really quickly. On the second run, the staff decided to move the bottles away from other vegan brands such as Sukin, because the bottle looked better next to brands that matched the Daily Naturals´ color scheme. In the end, she mentions that Daily Naturals looks like a salon shampoo bottle more than a particularly natural and vegan style-product, and that she likes the smell of it so she will have to try it pretty soon.

Marie’s Interview Summary

The participant in the in-depth interview is a 21-year-old student living in Adelaide, South Australia.

She spends most of her time playing video games as well as traveling and spending time at the beach with her friends. She still lives at home and studies at Flinders University in Adelaide. She is interested in makeup and looking good when taking pictures and going out (clubbing and drinking).

Furthermore, the participant washes her hair frequently (every day) and leaves in conditioner for a longer period of time so she is able to brush her long hair. This is because it gets very knotty and oily.

She buys her hair products at the grocery store approximately once a month. The volume (size) of the bottle, price and vegan-friendly label are most important things she looks for when buying a shampoo and conditioner, therefore she would pay more for the product knowing it is not tested on animals.

Knowing she buys a vegan-friendly product makes her feel proud and good. She feels especially good about supporting “nice” companies that do not hurt animals. Online reviews people on Instagram and testing the products herself influences her purchase.

Wayra’s Interview Summary