Project Cost: USD 14 000
Amount Invested : USD 4 000
Amount Required : USD 10 000
Knowledge / Experience Required:
Proposed Investor’s Role:
Industry: consumer goods
Project Stage: seed
We are a team consisting of a formulation chemist, a business development strategist and a marketing manager. Jeannie Chung, the founder, formulates all products under the brand. She has a BA in Chemistry from Northwestern University. Junna Gui is her partner in Chicago. She studied marketing at DePaul University.
Product / Service Description: THE STORY OF C’AMOUR
Imagine a beauty brand that understands you so well it knows exactly what you need to the very small detail. What if your cream has just right texture for you-neither too oily nor too dry. Don’t need that aloe vera extract in your cream? Well, you already have smooth, healthy and elastic skin. But what about a cream for skin lightening? We have one with the right texture just for you. Do you have a favourite scent for your cream? Sure, let us know and we will add that for you-at no additional cost.
We know no one has enough time in a day to get everything done. This is why C’AMOUR offers hybrid products-multifunctional creams that address multiple needs in one single application. Instead of the two-step makeup remover and cleanser routine, now C’AMOUR customers can reduce it to a single step with our hybrid makeup remover and cleanser product. We also offer other time- and cost-effective products like serum with toner and tinted moisturizers, all of which can be customized.
WHY DID WE CREATE THIS BRAND?
We believe that beauty does not have to be only skin deep. Beauty is a package; it is a hybrid of what is beheld, what is useful, and what is enlightening. It is a hybrid of cosmetics, personality and intelligence.
That is why C’AMOUR is more than just a skin care and cosmetics brand. It is a lifestyle and community center. It sells more than just products. It sells care for our community and the lives they live. We put an emphasis on updating our blogs and responding to letters from our community. We believe that beauty is more than what is beheld. It is also what is within, and that relies on our values and actions.
WHAT VALUES DO OUR CUSTOMERS GET?
QUALITY- Products are made from natural ingredients. C’AMOUR stays away from known harmful chemicals. Our products effectively serve the functionalities as sold. They have good storage life.
CUSTOMIZATION- Customers no longer choose from what is available. Now, they can choose what they want according to what they need from C’AMOUR. The personalization provided comes at no additional cost.
SIMPLIFICATION- More and more new products are introduced into the market these days, adding to a wider range of products that customers can choose from. This may seem beneficial to customers, but it is time-consuming to pick and choose from such a diverse range of offering. At C’AMOUR, we offer hybrid products that simplify beauty routines for customers. Our products are also organized as such that makes it easier for customers to choose what she wants.
The latest market research from Lucintel, “Global Beauty Care Products Industry 2012-2017: Trend, Profit, and Forecast Analysis,” projects that the beauty industry, taking into account skincare, sunscreens, hair care, color cosmetics and fragrance, could reach around $265 billion by 2017 and that the industry will grow at a CAGR of 3.4% over the next five years. According to this research, growth will be driven by rising consumer incomes and changing lifestyles, with increasing demand coming from Europe and Asia Pacific region.
Another highlight from this report is premium cosmetics has outperformed mass cosmetics across Western Europe, North America, and Asia Pacific in 2011, growing at 4.7%.
This report also highlights skincare as the largest product category, followed by hair care. Highlights on hair care segment include rising demand for multi-feature products such as moisturizing cream with sun protection and hair dyes with more dramatic effects.
How is C’AMOUR different from our competitors?
Most beauty brands fall under a single category: mass market, premium or niche. C’AMOUR offers flexibility in terms of products and pricing. Our customization is unique in this industry, yet our pricing makes our products affordable to a wider market. Our natural and customized skin care, cosmetics and body care products put us in a niche market, yet our wide offerings at lower prices include us in the mass market category. Through overlaps of categories, C’AMOUR stands out as a brand that stands for values that customers want, and not for general categorization that is the usual way of doing business.
Who are our customers?
We target sophisticated, regular beauty customers who appreciate the added value of personalization of beauty products. Because of this, our pricing must be attractive enough to entice customers to switch brands and at the same time gives us a premium position as a value-added brand. Our main target customers will be young, working-class to middle class women who regularly consume beauty products. Targeting approach will be done via Google Analytics and targeted direct selling. We will also be launching online beauty campaigns via facebook and Youtube advertisements that clearly send the message of personalization of beauty.
We project that sales will reach 2000 units in the first year, which will give us an average income of USD 30 000. Our cost of production per unit, including cost of raw materials, container and label is USD 2.20. At an average price of USD 15 per unit, the COGS is approximately 15% of the final price.
Where does the other 85% go to?
A) LABOR COST
We want to help contribute to the US economy by hiring locally for our operations. We need help with customization, mixing, packaging and shipping of final products. Also, we need help with emailing, customer service and other community events that we will participate in. Our operations will be based in the US and will not be outsourced overseas.
Branding is not the same as advertising. Although advertising also eats up a certain percentage of our budget, we focus more on developing a solid community-based marketing avenues to promote the brand. We also focus heavily on social media like Facebook, Youtube and blogs. This gives C’AMOUR a more personal touch to our customers.
We are a profit-making entity. Profit goes to reinvestment in the business to expand our product offering and locations. It also goes to the team members and our investors.
Management Team: Management will be split into three areas. First is product development which is handled by Miss Jeannie Chung. She manages the portfolio of products, operations and finance. She has a BA in Chemistry from Northwestern University. Ms Junna Gui will be in charge of marketing strategy and business development. She has a marketing degree from DePaul University.
Current Status: Concept stage.
1. COST OF GOODS SOLD can be broken down into cost of raw materials, shipping cost, packaging expense, warehousing and storage costs. Estimated average unit cost of final product is $2.15. This unit cost varies depending on whether production warrants bulk purchases that can reduce cost by over 30% for some raw materials. There is also an estimated 10-20% cost reduction for packaging materials for bulk purchases.
2. ONLINE ADVERTISING include pay-per-click advertising fee, estimated at $0.30 fee per click. This sales channel is expected to have a conversion rate of 8.8% into actual sales. This also includes SEO optimization and Goggle Analytics cost to bring the brand’s e-commerce URL to the top ranks in search engine results. This is important if the website is to become one of the main sales channel for the brand. It is also important as an indirect advertising method to promote the website through search engines results.
3. PRINT ADVERTISING EXPENSE include brochure and business card printing expenses to be used for direct selling activities. Projected cost is $195. Active selling directly through word-of-mouth marketing will be done by C’Amour’s marketing partner who will also conduct networking and brand launch activities.
4. LAUNCH EXPENSES include costs related to rental rates for mall launches, estimated at $100 per day, staff compensations, brochure expenses and other promotional costs.
5. E-COMMERCE EXPENSES relate to costs for producing and maintaining a functional e-commerce website. The cost is estimated at $994 per year, including cost of domain name.
6. R&D ASSET includes raw materials incurred during product formulation stage. These include extra materials left in the laboratory that are still functional. They are considered asset as raw materials can be converted into final products at a future date.
7. LEGAL SERVICES include fees paid to external parties to handle legal paperwork related to setting up a business with the state of Wyoming. Included in the fee are state fees to legally run a business from the state.
8. GRAPHIC DESIGN EXPENSES are fees paid to a graphic design studio to design labels and company logo for C’Amour. Design work will be done in-house in the future.
9. PRODUCT PHOTOGRAPHY EXPENSES are payments made in return for professional studio quality picture of products offered on the website and on brochures.
10. RENTAL AND WAREHOUSE EXPENSES vary depending on production and operational strategy employed. For the first year, the company shall avoid incurring such expenses as work will be done from a residential location. In the future, production will be done on a rented unit on a small-scale basis, with an output rate of 100-200 units per day. This operation is labor-intensive and will cost approximately $600 per worker per month. Rental rate is projected at $3000 per year. Machinery investment will be minimal. This arrangement is planned for just the initial year. As production volume increases, contract manufacturing will become a more viable production method. Alternatively, production facility will have to move to a larger location with heavier investment in machineries.
The company is valued at 6 times its first year sales at USD 180 000.
The investor shall receive 5-6% equity in return for USD 10 000 funding.
Expected Return On Investment:
Projected Net Sales = USD 30000
Projected Gross Profit = 25700(85.7%)
Projected Net Profit for year ending 2015 = 13369.83(44.6%)
5% equity will translate into profit of USD 668, which gives ROI of 7% for the first year for an investment of USD 10 000. This ROI is projected to increase for the following years if sales continue to grow at a healthy rate.
Investment Risk and Mitigation:
C’AMOUR start-up operation assumes that we would be able to secure minimal initial investment but would have to invest for the long run. Among necessary investments include sales and advertising expenses that may not generate return in the short run. The lack of liquidity in the early start-up years forces us to prioritize spending only on areas that are absolutely necessary. Our tight budget also necessitates small-scale production that minimizes total production cost even if this means higher unit cost. This strategy reduces start-up risk associated with heavy capital investment that may be difficult to liquidate when the time becomes necessary to do so. C’AMOUR incorporates lean approach to use of capital with the belief that the highest return on capital can be achieved not only by long term growth but also by taking small, calculated risks in initial start-up costs.
At the same time, I remain optimistic that prospects are good for us if the brand follows an effective sales strategy that can capture the imagination of the widest group of customers. I will be cautious in executing sales and production efforts in the first year as I have to be sure that the efforts are sustainable and can secure increasing sales in the future and that the brand truly captures the imagination and aspiration of people for prestige beauty.
Exit Strategies: Investor has to option of selling its equity to the founder, Miss Chung, after an agreed amount of years from startup date.
Jeannie Chung ( firstname.lastname@example.org)
Company Name: C’AMOUR
Postal Address : Mont Kiara
State : Kuala Lumpur
Post Code : 50480
Country : Malaysia
Telephone : 0142298652