Executive Summary
There are many components to a successful organization, among them is a steady flow of
innovative products that are consistently produced to high standards, available to
customers when and where they are needed, and backed with diligent service and support.
We will demonstrate the viability of capturing a significant market share of sunscreen
products Down Under. We will inform you of our unique market entrance plans, our unique
product and its marketable attributes. We will layout our target markets and their
demographic information, and we will conclude with the profitability remarks necessary to
gain your confidence and investment.
Oceana
Sun Cosmetics, Inc., the parent company, was founded in 1955 and has been a publicly held
company since 1973. It was incorporated in the State of Massachusetts. Any U.S. legal
conflicts fall under the jurisdiction of the Massachusetts state court system. It's
annual North American sales of sunscreen products are in excess of $20 billion.
Sun Cosmetics created Oceana's development team for the express purpose of penetrating
Australia's regional markets. Its members were selected based on their cultural
appreciation and adaptability, their research expertise, and their discerning abilities
with both primary and secondary data.
Cheri Brown, Vice President of International Operations
Robert Roy, Director of International Sales & Marketing
Helen Quinn, Director of Cultural Adaptation
Becky Barth, Director of Research & Development
Sun Cosmetics, Inc. will send two expatriate executives to F.H. Faulding & Company
Limited to work in commensurate positions and pay grades. The training and marketing
guidance is invaluable from both perspectives.
Product introduction and formulation
Due to the high incident of skin cancer Down Under, primarily originating in young
children, we have developed an additive that enables parents and children to see that
this sunscreen has in fact been applied to all areas of exposed skin. This additive is a
coloring agent that fades approximately three minutes after application. Taking
advantage of the Sydney 2000 Olympic Summer Games approach, we have incorporated the
additive with an olympic theme: Oceana Gold, Silver &
Bronze.
The coloring agents will actually be gold, silver or bronze according to the label of the
particular sunscreen purchased. In addition to these choices, each color would be
available in several degrees of sun protection factor (SPF): SPF4, SPF8, SPF15 & SPF30
(SPF4 being the least and SPF30 being almost total sunblock). Oceana is a non-greasy
water resistant sunscreen with aloe vera gel, vitamin E and is paba free.
Incidence of skin cancer
The high incidence of skin cancer in Australia is the reason for our choice of this
product. Skin cancer has been on the rise due to environmental issues caused by
humankind. Australia is known for its sunshine and carefree good life attitude; but
Australians are facing a severe problem with exposure to the sun. Australia is the
perfect market for sunscreen because two out of every three Australians will develop skin
cancer at some point in their life. One half of Australians under the age of fourteen
already have some damage to their skin. Australians have the highest rate of skin cancer
in the world, with are approximately 140 thousand new cases per year. See Appendix A for
additional information.
Cultural aspects surrounding market entrance to the Oceanic region
Australia
The seven states of the Australian country/continent are very similar to those of the
United States. That is to say, all of these states are English speaking, with a high
literacy rate, a well-developed infrastructure, a significant volume of tourism and laws
that promote interstate commerce. These elements are what make this market an easy
entrance for our product.
Tahiti
This territory is part of the French Polynesian Overseas territory. This territory falls
under the French Republic guidelines of government. Some aspects of this territory have
autonomy. Tahiti's principle trade imports come from Australia, France, Germany, Japan
and New Zealand. They export mainly to France, New Caledonia and (limited) United
States. The facts that Tahiti is known for tourism and has principle importing and
exporting, make this market accessible for our product. It's location geographically,
climate and infrastructure, make for easy distribution and market entry. Its principle
language is French, but with a cultural adaptation to English products, we may utilize
standardized production.
New Caledonia
This territory is also part of the French Overseas Territory, which means that it also
falls under the French rule of government court and political systems. This territory is
in the European Parliament. It's primary imports come from Australia, France, Germany,
Japan and the United States. Its exports are mainly to France, Germany, Japan and the
United States. The same basic infrastructure, climate and tourism as Tahiti makes this
market accessible and allows for standardized product introduction.
Fiji
Fiji is an established country. It's form of government is much like the English
Parliament. It's imports also come from Australia, Germany, Japan and New Zealand. It
exports mainly to Australia, Germany, Japan and New Zealand. Once again established
infrastructure and trade routes within the region, tourism and the climate, make this
country's accessibility applicable for our product. Primarily an English speaking
island, Fiji also allows Oceana to be a standardized product.
All of these islands and countries, including Australia and New Zealand, have the same
principle religions. These are Catholic, Protestant, Muslim, and few native island
beliefs.
Intellectual property laws in Australia
A joint venture has been established so our license is already in place. A patent is
pending for the three gold, silver, and bronze coloring agents. This patent will be
exclusive for a period of five years before renewal. Our trademark name that for our
product is Oceana Gold, Oceana Silver and Oceana Bronze.
Trade Relations APEC and ANZCERTA
ANZCERTA is trade agreement between Australia and New Zealand.
(Australia New Zealand Closer Economic Relations Trade Agreement)
ANZCERTA has been around since 1983, when it replaced their NAFTA, and has undergone
significant changes in industrial and agricultural trade. Free trade between these
countries has enabled rapid development in world exporting. At this time the process of
improving air transportation and expanding trade laws is underway. The goal of ANZCERTA
is to become a single trade entity representing a unified economic front. In the next
ten years they hope to remain committed to the same economic goals and effectively
compete with the Asian Pacific region through their alliances to the commonly known APEC
(Asian Pacific Economic Cooperation).
APEC is the formation of trade alliances among 18 countries in the south pacific region
of the world. The leaders of these countries meet regularly to discuss ways of improving
liberal trade and creating a more open environment. Australia has been active with this
alliance since 1989. One of the benefits of Australia's involvement is that the
economies
of the different countries range from underdeveloped to industrialized countries. Our
product will be marketed in a diversified economic range, enabling us to reach more than
one specific market. Skin cancer and environmental issues are discussed at these
meetings and concern all leaders of the different governments. APEC hopes to reach free
trade as already established by GATT.
Political risk
There are no governmental policies or parties who could politically overrun the
government, therefore, expropriation is not a major consideration. The concern for
nationalism is also unwarranted because Australians have hopes of attaining the "American
good life." Our image as a nation demonstrates a positive public relation between two
countries.
Joint Venture (unincorporated)
A foreign company deciding to do business in Australia has a selection of business
structures available. The most common forms of organizations are representative offices,
branches of parent companies' subsidiaries, sole trades, partnerships and joint ventures.
Joint ventures in Australia are a very common business practice, with some differences
in structure from that of the United States but they are similar enough for American
investors to comprehend.. An unincorporated joint venture may be described as
"contractual", meaning that a separate entity is not formed. Shares are not allocated
for payment of any kind; and they end up resembling a partnership. Incorporated joint
ventures are companies that have shareholders with no rights to the company's assets;
which are not exposed to sharing losses, but which do participate in distributed
dividends. Legal restrictions are limited and private companies operate basically
uninterrupted as long as established ethical business codes are followed. Any company
that registers in Australia falls under their corporation law jurisdiction. Hybrid forms
of joint ventures can be created to meet the demands of each participant involved. After
having carefully reviewed our options, we chose the unincorporated joint venture with a
company whose name and reputations are established.
Our Partner
Australians are very demanding regarding timely delivery, product warranties along with
consistent advertising and promotions. They are proven to be very quality conscious and
discerning. The decision to pursue a joint venture was to limit initial investment and
operating expenses, limit liability/lower risk and ease into the market via a company
well aware of the culture and infrastructure. Our partner company is F.H. Faulding &
Company Limited, positioned in Parkside, South Australia, Australia. They possess the
capacity to meet our company objectives (production and distribution) and are aligned
with our corporate ideals and values. F.H. Faulding has an 11 year financial history of
established success in all facets of production management, distribution and customer
trust. Combined with their current assets, desire for growth and development, they are
very attractive to Sun Cosmetics, Inc. as an unincorporated joint venture partner for
Oceana. Their location is significant, and of strategic importance to the actual
distribution of our product.
Distribution
Our joint venture partner will enable us to use their established sources of
distribution. A distributor acts as an independent agent who purchases products from an
agent and delivers them to wholesalers and/or retailers. It is common practice for
Australian distributors to ask for exclusive geographic rights due to the size of the
market. Australian distribution and sales channels are comparable to other
industrialized countries. Channels of distribution are direct sales, use of agents, and
direct investment. Their duties include good faith representation and the maintenance of
proper accounts, We will be utilizing all methods of distribution as available and
established through our joint venture partner. Through our direct and distributor sales
we expect to attain the mix that will achieve Oceana the market share it deserves and
meets the customer needs Down Under. See Appendix B for additional information.
There are many major ports located throughout the continent. Transporting to these
active ports is very accessible through several shipping means (including air
transportation, where applicable). The size and population locations are very unevenly
distributed. Key population areas tend to center around the outer perimeter of the
country where these major cities' airports and seaports are located.
The following is an overview of the transportation and communications systems:
Established railway systems 40,478 km
The highways of the country total 873,872 km
The telephone communication systems are very extensive both internationally and
domestically. Radio broadcast frequencies include 258 am and 67 fm. There are 134
broadcast stations. (National Trade Databank).
Raw materials
All raw materials will be purchased and supplied locally through ICI Australia Pty
Limited's botany plant. ICI Australia is a large manufacturing facility that produces 50
organic and non-organic chemicals located in Castle Hill, South Australia. Our
suncreen's ingredients are, or can be, produced by this facility for easy "just-in-time"
inventory delivery. Our sunscreen will be safe for the environment and everyone that
uses it. The main ingredients in our products are octylmethooxycinnamate, oxybenzone,
octylsalidylate, titanium dioxide, octocrylene and the secret ingredients necessary for
our gold, silver and bronze coloring agents.
Target Market Demographics
Since such a high incident rate of skin cancer and skin damage exists in this region,
there is an ever growing need (market) for sunscreen products. Based on our marketing
research we have focused on three specific markets: tourism, teenagers/young adults and
parents with young children. These target markets will allow for market penetration and
diffusion at a quick rate since they are the groups that have the highest need for our
product and the greatest purchasing power.
Geographically, our focus is on the Australian states, New Zealand, Tahiti, New Caledonia
and Fiji. The following demographics will highlight the targeted areas beginning with
the Australian states:
+ NEW SOUTH WALES -- SYDNEY & CANBERRA
- Tourism: 1,237,900 per year or seasonally and is expected to increase by 60% for
the 2000 summer Olympic games.
- Teenagers/Young Adults: 26,000.
- Parents and Children: 6,066,000 with a population growth rate of about .07%
per year.
+ VICTORIA -- MELBOURNE
- Tourism: 728,200 per year or seasonally.
- Overall population: 2,676,000.
+ NORTHERN TERRITORY- DARWIN & AYERS ROCK
- Tourism: 146,650 per year or seasonally.
- Overall Population: 892,150.
+ SOUTH AUSTRALIA -- ADELAIDE
- Tourism: 182,050 per year or seasonally.
- Overall Population: 1,427,460.
+ WESTERN AUSTRALIA -- PERTH
- Tourism: 364,100 per year or seasonally.
- Overall Population: 1,695,113.
+ QUEENSLAND -- BRISBANE, CAIRNS & GREAT BARRIER REEF REGION
- Tourism: 1,092,300 per year or seasonally.
- Overall Population: 3,033,361.
+ TASMANIA -- HOBART
- Tourism: 36,500 per year or seasonally.
- Overall Population: 2,027,200.
NOTE: Overall population of Australia is approximately 18,000,000 with a growth rate of
1.1% per year.
The following demographics are for the countries that border Australia in the Oceanic
Region:
+ NEW ZEALAND -- NORTH ISLAND -- Auckland
- Tourism: 546,000 per year or seasonally.
- Overall Population: 1,540,000.
+ NEW ZEALAND -- SOUTH ISLAND -- Christchurch & Queensland
- Tourism: 756,420 per year or seasonally.
- Overall Population: 1,630,000.
+ TAHITI
- Tourism: 150,000 per year or seasonally.
- Overall Population: 213,000.
+ NEW CALEDONIA
- Tourism: 81,000 per year or seasonally.
- Overall Population: 179,000.
+ FIJI
- Tourism: 288,000 per year or seasonally.
- Overall Population: 588,068.
NOTE: Tahiti and New Caledonia are overseas territories of France. Although these are
target markets, secondary data for these areas are limited. Primary data will be
collected after the initial market distribution, subsequent to the roll out in this
area.
Direct Marketing (advertising)
Australia's direct marketing industry is at the early stages of development when compared
to the United States but due to economic levels of income and the infrastructure of the
country this market is highly accessible and affective. Australian citizens long to be
"Americanized" which in terms of television advertising and technological advancement, is
a viable means that puts this form of market at our fingertips. The adaptation of pay
television also allows for the consumer to shop at their convenience.
Direct Marketing (promotions)
Trade centers and shows are important, along with mass media ideas ranging from
newspapers to television advertisements. Our foremost research enables us to believe
that the Olympics in the year 2000 is the ultimate marketing entry gain. By utilizing
this direct market approach there are several promotional and advertising methods, not
the least of which, that F.H. Faulding is an Olympic sponsor for the Sydney 2000 games.
If we choose an Olympic team or spokesperson, we can market/advertise through actual
team/athlete T-shirts, hats, etc. This would yield global advertising and public
relations that could be a valuable option as the games approach. Along with our product
name and unique features, we have contracted with Ken Done (a world renowned painter,
based in Sydney) to design our packaging and create other promotional materials as well
(e.g., beach bags, towels, etc.).
Market plan range/rollout
Sun Cosmetics anticipates completion of all contracts and legalities by mid-1997 and will
then begin product distribution in late 1997, by introducing our product line in Sydney,
the highest populated area and one of the largest tourist stops. After advertising and
promotion have gained the attention and recognition of the home market, we will get
directly involved with the Olympic sponsorship. Promotional items such as free samples,
will be distributed in advance, to gain brand recognition. In 1998 we plan to move into
Melbourne, Brisbaine, the Great Barrier Reef region and New Zealand's South Island.
Towards the end of 1988, we will gear up for our entrance into Perth, New Zealand's North
Island and Tasmania in 1999. The final oceanic regional move will be in the year 2000
when we will complete our market rollout by entering Fiji, New Caledonia and Tahiti.
(This will allow us the time to conduct the necessary primary research on these outlying
countries/territories
whose secondary data was limited.) During the summer of the year 2000, we will initiate
our global presentation to expand our market to the other communities of the world during
the Olympic games being held in Sydney, New South Wales, Australia, 2000.
Financial portrayal
Partner percentage expense (25%)* 2,000,000
Distribution expense 500,000
Expatriate compensation 100,000
Trademark fees 8,000
Patent fees 5,000
Packaging expense (Ken Done) 20,000
Give-away expense 25,000
Advertising expense 200,000
Olympic giveaways/sponsorship 250,000
Tax expense 35,000
Raw material expense 60,000
Total Operating Expenses 3,203,000
* Projections are based on $8,000,000 in 1997 sales.
(Just-in-time inventory system to be utilized for raw materials, with the distributors
warehousing the final product in the particular city of import/distribution.)
Market share projections: 1997 5% 2,000,000
1998 15% 1,500,000
1999 5% 1,000,000
2000 5% 500,000
1997 10% 5,000,000
1998 10% 4,500,000
1999 10% 3,500,000
2000 10% 2,500,000
1997 15% 8,000,000
1998 15% 7,000,000
1999 15% 6,500,000
2000 15% 5,500,000
15% is a conservative estimate of the market share attainable by 1999 for this product,
in this plan. The current market demand is growing at an accelerated pace, with our
established competition holding market shares in excess of 20%. Due to the nature of
Australia's quality demands and the incident of skin cancer, our product will capture a
significant market share quickly.
Retail selling prices: $ 8.50 (U.S.) in urban areas, and $10.50 (U.S.) in rural areas
based on a 90 ml container.
Alternative entrance/contingency
Overall success of our plan of entrance into this region may rest solely on our ability
to implement a worthy alternate or contingency plan should we encounter any major
setbacks. Based on corporate profiles and market research, we have determined that the
best contingency plan is to form a joint venture with Hoechst Australia Ltd., located in
Melbourne, Victoria, Australia, and utilize their established production and distribution
system. An alternative supplier of raw materials has also been coordinated, should the
need arise. This plan is designed to be a substitute source or can be used to supplement
the primary source if sales increase faster than projected or we encounter any other
problems.
Conclusion
As an overview, statistics have shown that the Oceanic Region has the highest amount of
skin cancer and sun related damage in the world. Awareness and the magnitude of this
problem are apparent to residents and tourists, thus creating a high demand for our
sunscreen products. Our target markets are tourissts, teenagers/young adults and parents
with young children which makeup the majority of the people directly effected by the sun.
Presently, entrance into this market is low risk. This is primarily due to the fact
that language, cultural and trade barriers do not exist. Also, the market is not
saturated and our initial expense and risk is limited due to our joint venture. We can
gain a high percentage of market share throughout this region by 1999 and begin our
global debut at the summer Olympic games at Sydney in the year 2000.
Appendix A
Here are some facts about skin cancer itself there are three basic types of this disease.
Basal cell carcinoma, squamous cell carcinoma are two types of cancer that can cause
disfiguring to the body but are not fatal. The third is malignant melanoma which behaves
like an internal cancer. It starts as a mole and can spread to other parts of the body.
The sun's ultraviolet violet rays are the most significant between 11 AM and 3 PM. This
is the time that the majority of children and outside labor workers are in the sun. In
Australia's summer months', exposure is so serious that safe sun time before damaged is
caused in Darwin is only 9 minutes. In Brisbane 11 minutes, Perth 10, Sydney and
Adelaide about 12 minutes. To demonstrate the concern for skin protection, researchers
have developed a T-shirt that has an ultraviolet sensitive paint on the front of it which
when exposed to the sun its picture will change color revealing the radiation that the
human eye cannot detect. It is said that by the year 2050, society will not be able to
go in the sun if humankind does not recognize this issue.
Australia has developed a "slip slop slap" motto to promote skin protection. Slip on a
shirt, slop on sunscreen and slap on a hat.
Appendix B
There are several resources that we can use to discover our possible available market for
distribution. The services are located by contacting the local U.S. Dept. of Commerce
distribution.
1) Agent distributor search (AD)
The US commercial service will locate and screen potential Australian agents and
representatives for US companies. CS Australia will send information to possible
companies that might have an interest in our product. If the company responds, the CS
will make the opportunity for direct contact available.
2) CRS Gold Key Service
This idea makes it beneficial for US company representatives to see the various services
available. Such as market orientation meetings, research, distributor searches and
screening. They are an affective service that truly widens the firm's eyes in a
particular country.
3) Customized Market Analysis (CMA)
This assessment provides information on the product's potential laws. This is very
important to us as a joint venturer, because we need current data and monetary trend
information which oversees research.
4) CS -- Catalog Exhibitions
CS Australia actively participates in trade shows, and a variety of other trade events
that provide actual catalogs or products for direct display.
5) Introduction to Australia
This new entry program is affective and inexpensive to test the Australian market.
Specific American firms in that industry contact Australian fin-ns. A selected target
industrial market is chosen through local agents and distributors. Interested
participants then actually follow up directly.
The CS also actively participates in trade missions, trade events, and the trade
opportunity program (TOPS). This service provides trade leads that manufactures may
request for representation, investment, licensing and finally joint ventures.
The last two services offered by CS are market research reporting and commercial USA.
The market research and reporting continually tracks major industrial investments,
projects, and policy developments.
Commercial news UA provides on new U.S. products available for the export market. This
distribution information goes to about 1,000 potential agents and distributors in
Australia. This service also identifies possible joint venture participants.
This distributive information goes to Australia. All of these services are imperative to
regarding possible market distribution resources.
Resources
Austrade
Australian Trade Commission
630 Fifth Avenue, Suite 420
New York, NY 10111
Nicholas Doumani
(212)408-8473
Bureau of Tourism Research
Cambridge Encyclopedia of Australia
Press Syndicate
University of Cambridge
1994
CD ROM -- U.S. DOC, International Trade Administration
March, 1996
CD ROM -- National Trade Data Bank
February, 1996
Europa World Year Book 1995
London: Europa Publications Limited
Volumes 1 & 2, Pages 1236-1237 and 1246-1247.
Internet: HTTP://WWW.TELSTR.COM.AU/META/AUSTRALIA.HTML
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