Business Plan Analysis: Boost800
Boost800 is a kind of cosmetics that is natural and thus does not really affect the customer’s body system. This means that it is a natural and thus mostly safe range of products that are aimed at improving the customer’s appearance and thus encouraging a better mental state given the established connection between looking good and feeling good. The international cosmetic industry is however flooded with products that have been in existence for a very long time. Brands like L’Oreal, Clinique and Mac among others continue to flood the industry with their own innovations that are aimed at spreading beauty in all parts of the world. It can thus be appreciated that the cosmetic industry is rather mature at the moment and that new entrants are likely to face significant challenges especially in terms of gaining a sustainable market share. The kind of investment that must be made in order to register some credible progress in market awareness and boosting sales volumes cannot be underestimated. It should however be appreciated that high risks are often associated with high returns. If the product is able to gain the market presence and awareness that it deserves owing its quality and effectiveness, the company should be able to make a lot of money within a very short period of time. Effective cosmetics often possess an advantage of consumer to consumer marketing and customer loyalty, thus giving the industry a significant comparative advantage to any willing investor. This essay evaluates the decision against and in favor of investing in Boost 800 proposal.
Industry Analysis (SWOT)
The global cosmetic industry is really large with each geographic region having its specific set of needs and expectations when it comes to cosmetic products. The first point to note about this industry, however, is that it belongs to the luxury category, but it is also included in the basic goods category especially considering the significance of looking good in the current environment (Pike & Neale, 2006). This means that in order to benefit from the market, it is important for a given product to be positioned in such a way that it is not only effective but also affordable. The second factor to consider in terms of this industry is that globalization greatly affects market penetration in a positive way. People today are very mobile in terms of where they live, work and study. Considering that they are likely to need their personal care brands regardless of where they are, it is important for the cosmetic industry to operate without geographical boundaries (Pike & Neale, 2006). People may need different products depending on which part of the world they come from, and which part of the world they are in, but they often need a brand that they can trust to meet all their varying needs and expectations. It may also be appreciated that among other things, the cosmetic industry depends heavily on innovation not only with respect to R&D but also in terms of marketing since there are far too many competitors with enough expertise and capital. This generally means that only competitive companies are likely to survive within this industry, and competition is basically good for business in the long term.
This industry is very large, since every human being has skin and they are likely to need some skin care product at one point or another. Companies with a wide range of products available in all markets across the world are thus likely to make a lot of profits since they will have to meet basically universal needs, albeit varied in every given context. The industry thus gives a great opportunity to sell a product that has a global market demand. Another impressive factor regarding this industry is that people are often willing to pay a high price for the products. The value of the product is often determined by their demand, with most people considering these cosmetics as very important for their general wellbeing. As such, it can be noted that cosmetics companies can get away with generally high prices for given products meant for the high end market. These often include anti-ageing and skin-lightening products that target a audience that is overly sensitive to their skin color and general appearance. Other than the universal market and high end market demand that liberates the industry’s pricing concepts, it can also be noted that the cosmetics industry has a long life-span. There may be generated new technologies and scientific discoveries every other day but people continue striving to look good with minimal effort. This means that while there may be a number of technologies that could challenge the cosmetics industry, the products will always be useful to a certain percentage of the global population.
One of the weaknesses associated with cosmetics industry is ease of entry, which means that new competitors will keep coming in and battling for the market share. This industry is all about creating products that are appealing and effective in the sphere of skin care and beauty. There is a need for constant groundbreaking research, but the industry mostly relies on creating products that are already in existence, simply making minimal alterations to distinguish one product from another. This allows for too much competition with the larger companies investing significantly in R&D while the smaller competitors stay on the sidelines and wait to borrow the concept of the new products, thus producing it without additional expenses for the same market (Frey & Bytes, 2012). Another weakness of this industry is the operational cost, where there is a clear need for the company to be international in order to register a sustainable profit margin. Here, companies with adequate capital investments are more likely to succeed unlike those who are limited in their resources.
The world is a very large market for this industry, meaning that there is a possibility for the world domination if the company’s products are able to not only be relevant for all people but also actually work as they are expected to. Asians and Indians seeking to whiten their skin are most likely to continue using Boost800 if they are impressed with the transformations the products are making to their skin. This means that other than effective products, the industry generally benefits from relevance in the lives of the consumers. Skin whitening may be scarce in a place like the Middle East but it is very common in Asia. Understanding these trends in terms of customer needs and expectations is a great way of prospering in this industry.
A major threat here is often represented by the scientific aspect of the product. Most products here work based on the chemical reactions that they trigger or might trigger. Damaged skin is often a very bad price to pay and the industry needs to be especially keen when it comes to skin care products. This means that the industry is often at risk of lawsuits and product failures that might cost a fortune. Also, with inadequate research companies are not likely to get this market well. Each demographic segment has specific skin care needs that depend on their ethnic heritage and location. Africans especially need moisturizers, while the Asians are more interested in skin whitening formulas.
Pros and Cons
With this industry analysis in mind, there are nearly three good reasons for investing in Boost800 as a cosmetic product. First, this is some really impressive innovation that is likely to impress a great number of people in the cosmetics industry. Customers are generally against the products that put their appearance at risk. They are more comfortable with brands that are safe and secure for them to use (Frey & Bytes, 2012). Boost800 is natural, and thus safe enough to use considering that it does not trigger any chemical reactions that could have a negative impact on the user. The functionality of the product means that it is a great investment for the customer who appreciates safety more than anything else. This gives the company a reputation of a caring and trustworthy organization that is attentive to the customers’ needs and ensures that their products are good and safe enough to use. Secondly, it can be noted that the company’s financial projections are very positive.
Most companies need up to five years before they can comfortably make some good profit. This company’s balance sheet indicates that they will be spending more on creating market awareness while also continuing with the R&D in order to always be at the forefront in terms of technology within this industry. The last advantage of investing in this company is that there is a great chance that with the right product quality and market presence, the Boost800 brand is likely to become a household name. After all the initial expenses are catered for, the company is likely to grow within its first two years of existence since the market is rather large and the company will have the right products to satisfy the customers’ needs. The only minus here is that the company still needs to do a lot of ground work regarding its marketing strategy. The product is really good, and the marketing strategy laid down at the moment is rather expensive. And while it may be justifiably so, it should be noted that the company will not have as much capital at their disposal unless they manage to make good sales within the first year of production.
Boost800 is a great product with little competition at the moment. There may be numerous other kinds of natural cosmetics that claim to purify, exfoliate or even whiten the user’s skin, but only Boost800 actually facilitates a purely physical process of increasing the amount of oxygen in the user’s skin. With such groundbreaking concepts, the company only has to work hard to ensure that they have consistently good-quality products in order to stay ahead of their competitors. The basic reason for investing in any business is to make profit, and in this case Boost800 is likely to get enough customers for a sustainably profitable future.