Inglot cosmetics' expansion strategy and market entry plan

Strategic Business Plan

Strategic management

Business concept

Competitive advantages

Market analysis

Marketing

Inglot Cosmetics has created a new innovative way for consumers to mix different make-up colors to suit their preferences. The company realized that there is potential in offering consumers the option to mix colors, instead of developing all color ranges. Consumers being health conscious has led to many restrictions within the different markets the company operates. Leveraging on its production facilitates the company has met the European Union regulations. There is potential for the company to expand in markets that it had earlier restricted itself. The South American market especially Brazil is considered to be a high consumer of cosmetic products, and opening a store in that location would be beneficial for the company. However, the market there is highly competitive, as other companies have already setup their stores. Within the next one year, Inglot will have opened a store in France and Brazil. Plans will then be started for setting up another production facility, which will ensure that the company can mitigate the risks of having such a facility in one location. In case of any production fault, the company will not manage to meet its supply requirements. This makes it a priority to build another facility, preferably in South America. The final decision regarding development of a production facility will be reached after the store is opened.

The company has a strong management team. Inglot has been a family-owned company from the onset, and this has ensured that each sibling can flexibly take over another's responsibilities. The management team will get overstretched if the company reaches its projected 500 stores within 2014. This means that Inglot will be forced to hire outside managers, because they will be overwhelmed with the franchise partners. Being a family owned company, Inglot has preferred to reinvest its profits for increasing production and expansion. This has allowed the company to have minimal long-term debt and make it a viable business to investors. The company currently needs to invest on its R&D in order to fight off its rivals who have started to copy its product model.

Business concept

Inglot cosmetic was founded in Poland and has been operating for the past thirty years. The company started with a vision to offer affordable cosmetics with high quality ingredients. The company has made tremendous innovations in the cosmetics industry. Launching the make-up color palette, which allowed customers to customize their own make-up, gave the company some industry leadership recognition. With such innovations and been an industry leader, Inglot was able to gain a strong foothold within the industry. To boost expansion, the Inglot employed the franchise model, which enabled the company to expand its operations worldwide. Formulating a simple franchising model has ensured that the company is able to attract potential franchisees and expand internationally. To expand in certain markets, the company has alliances with other cosmetic companies that offer complimentary products. This alliance is beneficial to the consumers as they have comprehensive offerings. With all the expansion, one thing has remained constant for the company: it still offers affordable prices for the highest possible quality. This philosophy has attracted a wide array of customers. The company policy in regards to its franchise stores is that most of the employees should be make-up artists. This policy ensures that the customer will receive on-site advice and will not be overwhelmed with different products and color choices.

Inglot cosmetics has invested heavily on research and development, which is carried out in Przemysl. R&D has allowed the company to innovate continuously on its products and consumer needs. Innovations like the breathable nail enamel gave rise to some unexpected customer benefits. Inglot has maintained its production and R&D facilities in Przemysl, which has proved beneficial to the company as it gets highly qualified laborers at a lower cost. The location also favored the company in terms of replenishing stocks anywhere in the world. Having both production and R&D located in the same location also offers the company the opportunity to make changes to its product mix as per the latest fashion trends. The company has concentrated fully on face, nails, lips, body, and eye cosmetics for women. There is potential for the company to diversify its product portfolio and include male, baby, and anti-ageing products. Product diversification will allow the company to capture other markets and increase its consumer base. The company has minimal long-term debt because it has solely based its expansion on retained earnings. This model has enabled the company to expand in markets that lenders considered risky like Greece, and overpriced locations like London.

There is potential for Inglot to enter the biggest cosmetic markets. The company has received numerous viable applications for franchise in South America, which would be beneficial in the company's expansion strategy. Targeting the huge cosmetics markets is a risky, but highly profitable venture, which would provide the company with necessary growth and market dominance. In the next five years, the company intends to have setup a minimum of 5 stores in South America. The Chinese market is attractive, but it has many challenges when compared to the South American market. Brazil is the hub for cosmetics in South America and establishing its presence there is vital for the company's strategic growth.

Competitive advantages

The micro-level factors that contributed to the company's development are its production and R&D facility location, products, pricing model, store layout, financing, management, distribution, and promotion. These factors are all controlled by the company (Kumar et al., 2011), Which gives Inglot some competitive advantage over its competitors. The macro-level factors are political situation in Poland, economy of Poland, technology, and demographic location. Inglot started when there was political unrest in Poland, which meant the company had to base its operations away from the communist regime. When democracy was restored, Inglot had identified itself and was able to expand across Poland. The country had highly skilled workers, but the lack of opportunities resulted in cheap labor. This was advantageous as the company got the best, but paid minimal for their services. The geographic location of Przemysl is favorable for the company as it is able to ship its products to any location in the world easily. The company products arrive at their destination on time, and this ensures that it does not have stock outages.

The above situations allowed the company to focus on innovation. This innovation resulted in different products that met consumer needs. The company was able to achieve differentiation advantages as it offered consumers the option to customize their own make-up. Differentiation advantage is achieved when the company is able to offer a unique product that adds value to the consumers (Fosfuri et al., 2013), but charges for it beyond the nominal price. Inglot achieved cost advantages by offering consumers high quality products are lower prices. Cost advantage is described as selling a similar product as the competitors, but at a lower price (Afanasyev and Mendelson, 2010).

Goals

The five-year goals for the company are expanding into South American market, venture into the French market, diversify its products, and increase its production facilities. The company is currently reviewing a franchise application license from France. This potentially viable market would see the company spread its wings and compete head on with its competitors. Within the next one year, Inglot Cosmetics has to have opened a store in France and Brazil. The Brazil store will lay the foundation for the company to establish the viability of the market. With good potential, then the company will go ahead with its planned proposal for constructing a production plant in South America. The location will be decided later once analysis is completed. The French store has the potential to attract other franchisees, and the company could achieve its 500-store mark within one year. By the end of 2014, Inglot Cosmetics will be running at max capacity in its facilities. The facilities at Przemysl can only cater for 500 stores, there are two options that will need analysis. The first one would be develop a new production facility in South America and go the Shiseido way or increase its current facility capacity. Building a new facility would require a huge capital, but would ensure that the South American market is fully catered for. This would also reduce the transportation costs. The decision to develop the new facility will be made in the year 2015 based on the performance if its Brazilian franchise and demand of its products.

Broadening its product offerings will provide the company with competitive advantages as it will have more products that consumers can choose. Increasing the product portfolio will require additional production facilities, which the company cannot undertake at its current location. Having multiple locations for production would offer the company ample space to cater for diverse markets and be close enough to their potential consumers. Development of a new facility will commence in 2016 and completed within one year. The new production facility will offer the company an opportunity to diversify its production in order to handle the increasing demand and new products. The newly developed production and R&D facility will enable the company to cater for its existing stores and still offer more opportunities for expansion. Product diversification is anticipated will encourage more franchises.

Marketing

Inglot considers that advertising is too expensive and inefficient. The company prefers to use brand attributes, merchandising, and promotions to market its products. According to Kotler (2011), this are other forms of marketing that are less expensive. The company has developed a store layout that allows it to offer a high quality-shopping environment. Leveraging on this, the company has been able to display all its products and provide consumers with ample choices. This strategy will not be changed, as it has proven quite effective. There will be some revamp and additions based on the previous performance and competitors, which will offer the company an opportunity to promote its products. Leveraging more on the make-up artists, the company would promote and market its products to new consumers and encourage existing consumers to try other products In the next two years, Inglot Cosmetics plans to recruit more make-up artists, who will be given promotional products. They will try out the products and recommend them to their clients. Using the artists within its stores is beneficial, and they are experienced and would advice customers. The company will continue to invest heavily on its R&D facilities, which will ensure that it continues to produce high quality products at lower prices. This philosophy is good for marketing as the consumers are assured that the product they purchase is highly researched. The company uses beautiful packaging and presentations for all its products.

Investing in consumers, and brand promotions is a better mode of marketing that using traditional media advertising. The company has achieved production regulation compliance established by the European Union. This gives it a good basis for marketing its products as consumers can rest assured that no harmful products are used to manufacture the products. Marketing will play a vital role in informing consumers, and the company should consider running some promotional advertisements. The new stores will have to be visible and in locations with high traffic. This will ensure that the brand image is promoted, and potential consumers can visit the stores. The in store design will be redesigned within the next two years to reflect and include new products. The redesign will allow the new products to be seen and tried by consumers. Redesigning will also offer the stores new zest, which will keep the consumers interested.