3. AYUR HERBAL COSMETICS
2009
EXECUTIVE SUMMARY
We, Ayur, are a herbal cosmetics company which has become one of the most desired brands
in India through continuous improvement in quality and 55 variants of products that enhance
beauty with no ill-effects. Consumers get full value for their money when it comes to Ayur
products. Ayur has been successful in the domestic market, India, and has been exporting to
USA, Mauritius, Panama, West Indies, Nepal, Bangladesh, Thailand and South Africa. Our
efforts to enter the global arena have encouraged us to next enter Vietnam which is a
potential market.
The plan proposed here is formulated after a thorough analysis of the economic, political,
cultural, legal and geographical environment of Vietnam. Vietnam has the fastest growing
economy and its government is stable. Also, the barriers to foreign entry into its market have
been loosened to the extent that 100% FDI is possible. The people are enthusiastic, dynamic
and international fashion trend oriented. The weather is hot and humid throughout the year
making it necessary for the people to have sun care products at low and medium prices.
Moreover, 60% of Vietnam‟s population is young aged below 25 years. Thus, there is
demand for low and medium priced beauty products.
After a thorough analysis of the cosmetics market, both competitive and consumer, we
selected our target market to be the young (18-29 years) and middle-aged (30-45 years)
Vietnamese population who demand for low and medium priced acne, moisturizing, oil-
control and suncare products. We position ourselves initially as one roof solution to beauty
problems with products 100% herbal which is symbolic to youth and radiance. In the long run
our positioning will be oriented as becoming the „first choice‟ amongst those seeking genuine
beauty.
Ho Chi Minh City has been selected as the city of export due to is modern facilities of
container loading. It is also a shopper‟s paradise with modern shopping centres and fun
places. It is Vietnam‟s commercial hub which will make future expansions easy for Ayur.
Ayur will be promoting itself using the gift promotion strategy which is the most common
and best form in Vietnam. After the product makes the initial required market, newspaper
advertisements and electronic media will be used through the importer‟s resources.
The strategic plan here will give us a competitive edge as we are a 100% herbal cosmetics
company in a market where imported cosmetics occupy 90% share. Exporting will reduce
risks and investments thereby helping us to obtain low cost leadership
The proposed plan requires enthusiasm, commitment and proper implementation and it will
be a giant step towards making Ayur an international number one brand. Let the efforts be
true to pave yet another path for greater success.
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4. AYUR HERBAL COSMETICS
2009
DILVINDER SINGH NARANG, AYUR
HERBALS
WRITTEN BY DARE
THURSDAY, 01 JANUARY 2009
What started with meager Rs 5,000 in 1982 is now a Rs 150 crore company, and propelling
fast towards the Rs 200 crore mark by the end of this year. Today, Ayur Herbals boasts of
over 55 variants of hair, face, and skin care products, coupled with 2,000 distributors
nationwide in the Rs 3,000 crore herbal cosmetic industry. Dilvinder Singh Narang, the
entrepreneur behind Ayur Herbals, spoke to DARE about his entrepreneurial journey so far...
Can you share with our readers the genesis of Ayur Herbals?
Ayur Herbals came into being with one main motto — to make Indian women beautiful!
Looking back, I think the journey has been very pleasant. Of course, there were a lot of
hurdles en route. However, I have always faced all these hurdles with confidence, and
ensured that we will always give the best to our
customers.
As for the genesis, I used to be a salesman in a
company, back in 1982-83. It was during that job that
I felt that there was tremendous scope in the business
of cosmetics. I saw an opportunity lying vastly
untapped. I believed I could do well in this industry
so I took the leap and started Ayur Herbals, which is
now a Rs 150 crore company.
Did you always want to be in the field of
cosmetics?
I came from the field of electronics. I did give a shot
to become a doctor as well. However, in those days
getting into medical schools was extremely difficult.
So I went ahead and studied cosmetology instead.
This is where, you could say, my interest in
cosmetics started. Dilvinder Singh Narang
Ayur Herbals
What was the biggest challenge that you faced in
starting up?
I would say it is something like this — the day a child is born, challenges start in the form of
ensuring healthy growth, to provide good food, to educate, etc. Similarly, when I started up
this company, there was no dearth of challenges that came my way. The thing with me is that
I decided to take one step at a time.
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5. AYUR HERBAL COSMETICS
2009
The biggest challenge though was entry into the field of cosmetics. There were many
established players already in the market. This led to a lot of questioning by the customers on
the lines of: “Why pick your product over the others?” This problem was all the more
aggravated as we did not have the kind of funds required for massive advertising and
promotions. At this point we decided to route our products through beauty parlors, small
cosmetic shops, etc. Eventually, the sales picked up a decent number and we started doing
good business.
Where did you get your early support from?
My early support came from my parents and my siblings who gave me the confidence to start
up. As for funding, my father gave me Rs 5,000 to start this business in 1982. Besides this,
my parents also gave me our old house, where I started manufacturing products on a very
small scale and then tried to sell them daily. Like mentioned earlier, we had to route our sales
through beauty parlors and small cosmetic shops.
Besides this, I would also say that I got a lot of support from the ladies using my products —
many beauty contest winners, Mrs. Chawla, and more who helped me enter into the field of
cosmetics.
What was your first big success as an
entrepreneur?
My first success came after three years
in 1985, when I introduced a nail polish
remover, which at that time was an
innovative product. The sheer simplicity
of this product was that ladies just had
to dip their fingers in a bowl full of this
product to get rid of nail paint. This product helped me gain a lot of acceptance in the
cosmetics market. After this, I introduced sugar-based hair removal wax, which again was a
new concept and garnered huge success. Then I came out with an amla-shikhakai shampoo,
which was basically a homemade product that we used ourselves — this product too was
loved by customers. It is then that we came up with the brand name Ayur for our products.
What would you say was a failure that you learned a lot from?
There were many failures — which I would say was mostly bad luck. However, there was
one failure that I learned a lot from. I had got this huge export order. We manufactured the
whole order, which they cancelled on the day of shipment. We had to sell the whole batch of
products in India slowly.
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6. AYUR HERBAL COSMETICS
2009
Who were your biggest critics?
Everybody! By everybody I mean the shopkeepers and dealers, not
the customers. When we started off, our products were looked upon
skeptically and rejected more often than not. I had to hear rude
statements such as “Kahan se utha ke laaya hai?” (Where have you
picked this up from?). As our products were conceptually new in
the market, rejections were flying in from all directions. Back then,
nobody had used a black shampoo, or a sugar-based wax hair SUCCESS MANTRA
removal cream, and so on. However, we kept going on and some
Be sincere and true in
dealers in the market gave us a chance. Once this happened, they
whatever you choose to
realized that the customers were liking our products — the quality,
do as a business
the price, etc. From a state of inertia to a small move, we had to be
Believe in God.
ever so persistent.
With so many corporate giants in the field, how should an aspiring entrepreneur find
success?
One needs to come up with innovative concepts, good quality products at reasonable pricing
to click with consumers. Of course, the big companies spend loads of money on advertising
and promotions; also they have five- to ten-year plans figured out, etc. So for them it is not so
difficult to maintain their market share. However, for aspiring entrepreneurs it is crucial to
keep a watch on the current market trends, and they must start slowly. I cannot really say how
to find success in this fiercely competitive market. But I would suggest that slow and steady
wins the race.
Can you tell our readers about market trends that you have seen for so long?
Every day one sees new products coming into the market. And why shouldn‟t they? Every
day is a good business day in this field of business. If you are wondering when it is a right
time to introduce any product into the market, I would say, whenever you have the resources
and product ready — just roll it out. As for gender break-ups, my products are used by both
the genders, even though one would like to think of it as a mainly woman‟s brand. The fact of
the matter is that the break-up is equally distributed. However, most of my customers come
from a middle-class background.
Things were different back in the old days. Twenty years back, women hesitated to go out of
home. Nowadays, all of them are coming out — for work, for socializing, etc. When going
out they all want to look good, feel good about themselves. Quite simply, they need
cosmetics.
Looking back how much was luck and how much was hard work?
I believe all this success is God‟s blessing. Hard work has always been 100%, but then
without Almighty‟s blessing, all this would not have materialized.
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7. AYUR HERBAL COSMETICS
2009
COMPANY
Ayur is in Herbal Cosmetics business since 1985 and since its inception it has been a
reflection of customer requirements. With an objective to become one roof solution for all
beauty and cosmetic problems, Ayur provides a wide range of beauty cosmetics strictly
prepared with herbal components so that you look great without bothering about any ill-
effects on your skin and hair. Ayur ensures, always, that the consumer gets his value for
money and this is the most prominent reason behind Ayur‟s successful establishment in
domestic market and increasing impact in other countries.
History
History of the company spells the triumph of burning desire, courage to face the entire
hardihood en route turning dreams into a reality and a lot of spadework, of course. At this
time, Ayur has more than 55 variants in Hair, Skin & Face Care Products. But it all started
with a single product- Hair Removing Wax. 1985 was the year when Ayur wore an identity
of a company with a promise to enhance the beauty of Indian women and then, women across
the world. Avid success of this single product fuelled this company to introduce Herbal Hair
& Skin Care Products in the market. Very soon these products became „the first choice‟
amongst women seeking for genuine beauty products in the horde of chemical based beauty
enhancing products.
People
Ayur‟s success story has been scripted by three ambitious brothers with exceptional
expertise.
The eldest brother, S.Raminder Singh Narang, is the Chairman of M/s Three-N-Products Pvt.
Ltd. His expertise and dexterity has made Ayur a leading brand, to a great extent.
The youngest brother, S.Manminder Singh, is the Managing Director of M/s Three-N-
Products Pvt. Ltd. He may miss the ball while playing lawn tennis but he make sure not to
miss a ball in business.
The dynamic second brother, S.Dilvinder Singh, is the M.D. of R.D.M.Traders Pvt. Ltd. His
far-sightedness, perseverance & spadework have helped the Company to achieve phenomenal
success in such a short span of time.
R&D
Our research & development domain makes it sure to offer the quality products, no matter
how much pain they go through for this, and they have no complaints for this. Ayur‟s
independent R&D center is divided into different sections to test, receive and inform. Ayur is
well-equipped with foreign advanced equipments to result in most efficient and quality
products.
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8. AYUR HERBAL COSMETICS
2009
The R&D sphere consists of ample experience and strong ability of scientific research,
always giving ways to new formulas and making imitations according to clients‟
requirements, controlling and improving manufacturing technological process. Ayur‟s R&D
keeps close scientific research assistance with the expert dealing with chemistry and
medicine.
Exports
Ayur, after establishing successfully in domestic market, now is in optimistic mood to repeat
its success story across the International market. Presently, Ayur‟s Products are being
exported to countries like USA, Mauritius, Panama, West Indies, Nepal, Bangladesh,
Thailand and South Africa. With bursting zeal and practical approach Ayur Herbal Cosmetics
wants to capitalize on „Business Partnership concept.‟
Ayur is always looking for partnerships around the world to promote its range of herbal
products as the company firmly go with the line “together we grow, together we grow faster”.
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9. AYUR HERBAL COSMETICS
2009
SWOT ANLYSIS
Wide variety of products: 55 variants in hair, skin & face care products
New product launches expected soon
Long term market presence; established in 1985
Products are strictly herbal and has no ill-effects
Consumer gets value for money
Ayur is looking for partnerships around the world to promote its range
of herbal products
Gender break-up of products is equally distributed
Target market is concentrated to middle-class people
Independent R&D center well equipped with foreign advanced
equipments
Products not well perceived by consumers initially
Enhanced variety does not prove to be very effective
Lack of advertisements and promotional ventures
Lack of global presence although they are exporting to USA, Mauritius,
Panama, West Indies, Nepal Bangladesh, Thailand & South Africa
Cosmetics sale in Vietnam rising about 30% recently
Foreign companies performing better than domestic ones
Over 60% of population are under 25 years of age
3,260 km of extended coastline making it ideal for trade
One of the fastest growing economies; annual GDP growth: 8.4% -
1990-97, 7.5% - 2000-06, 8.5% - 2007
During 2002-07 imports have increased by 25.5% per year and
exports by 23.8% per year
Asia accounts for 69.8% of the total FDI
Sale of skin care products expected to grow at around 10-15%
annually over the next three years
Vietnam market is dominated by Korea – 30%, EU – 23%, Japan –
17%, Thailand – 13%, US – 10% and others – 7%
Top brands: Estee Lauder, Clinique, Menard, Lancôme, Kose, Elizabeth
Arden, Shiseido, Carita, DeBon and Nivea have become increasingly
available
Ponds, Sunsilk, Dove and Hazeline brands which are packaged in small
containers and are affordable to a larger segment of the population
Spending on cosmetics averages US$4/person/year
Vietnamese cosmetics market is highly price sensitive and full of low-
cost “knock-offs”
Presently, the sale of cosmetics and beauty products is largely
uncontrolled and is plagued by a wide range of fake, mislabeled, and
smuggled products
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10. AYUR HERBAL COSMETICS
2009
Strengths
The strengths of Ayur gives it an edge over its competitors as it has been a choice of many
middle class Indian women over two decades now. The value provided by Ayur over the
range of varied products has been the prominent reason behind its successful establishment in
the domestic market and increasing impact in other countries. Establishing partnership in
countries they export to with well established brands ensures knowledge sharing and
experience. As for gender break-ups, the products are used by both the genders, even though
one would like to think of it as a mainly woman‟s brand. Most customers come from a
middle-class background which suggests that prices are affordable and reasonable for any
slow developing country‟s population. Ayur has an independent R&D center well-equipped
with foreign advanced equipments to result in most efficient and quality products.
Weakness
In the initial stages of its inception the products of Ayur were not perceived well by the
customers. Although there is huge variety among the products the consumers feel the
products are not much effective. They are conceived to be cheap. Lack of advertisements and
other promotional ventures creates unawareness among consumers. Here the company gets
beaten by its competitors. Although Ayur products have been exported to only one developed
economy the USA and all the other countries are LDCs. It does not have a reach in the
world‟s powerful economies revealing the fact that it lacks global presence.
Opportunities
Cosmetics sales in Vietnam have been rising about 30 percent per year for some years now.
This has made Vietnam number three in the world in terms of potential for cosmetic sales,
just behind China and India. While the potential is indeed enormous, domestic cosmetic sales
are way behind that of foreign companies. Vietnamese employees respond to challenges well
and fast, they are very committed to develop their country, themselves and the firms they are
working for. Professionals are normally able to conduct business in at least one foreign
language, with the importance of English growing continuously. Sales of skin care products
are expected to grow at around 10-15 percent annually over the next three years, as this
previously untapped market segment becomes cluttered with more and more foreign and
domestic brands.
Threats
Presently, the sale of cosmetics and beauty products is largely uncontrolled and is plagued by
a wide range of fake, mislabeled, and smuggled products. Because Vietnam is still a rural,
agricultural country with a population that for the most part lives on far less than US$100 per
month, spending on cosmetics averages US$4/person/year, far below that in the more
developed countries in the region. The Vietnamese cosmetics market is highly price sensitive
and full of low-cost “knock-offs”.
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11. AYUR HERBAL COSMETICS
2009
CRITICAL ANALYSIS OF THE
ENVIRONMENT
Demographic Analysis
Location : South-eastern Asia, bordering the Gulf of Thailand, Gulf of Tonkin, and
South China Sea alongside China, Laos and Cambodia
Capital: Hanoi
Area: Total: 329,565 sq km, Land: 325,360 sq km, Water: 4,200 sq km
Coast line: 3,444 km (excluding islands)
Population: 88,185,000
Literacy: 90.3%
Languages spoken: The people of Vietnam speak Vietnamese as a native language.
Various other languages are spoken by several minority groups in Vietnam. The most
common of these are Tày, Mường, Khmer, Chinese, Nùng, and H'Mông.
Per capita income: $832
There are 54 ethnic groups, of which the largest are Kinh (or ethnic Vietnamese)
(comprising 87.17% of the population), Tay, Thai, Muong, Chinese and Khmer. Viet
Nam‟s literacy rate is over 90%. Close to 73% of the population live in rural areas,
and over 60% of the population is under 25 years of age.
Religions: Buddhism-85%, Christianity-8%, Caodaism-3%, others-4%
Culture: The culture of Vietnam has been influenced by neighboring China. Due to
Vietnam's long association with the south of China, one characteristic of Vietnamese
culture is filial duty. Education and self-betterment are highly valued. Since the
1990s, Vietnam has seen a greater exposure to Southeast Asian, European and
American culture and media.
Weather: Viet Nam is located in both tropical and temperate zones. The climate is
tropical in Southern and Central Viet Nam, with a wet and a dry season, and warm
and humid weather all year round. In the north, there are four seasons with a distinct
winter. The average annual rainfall is around 223cm. The whole country is affected by
a strong monsoon influence, with a considerable amount of sunshine and a high rate
of rainfall and humidity.
Government type: Viet Nam is a socialist country operating under the leadership of
the Communist Party.
Political System of Vietnam
The National Assembly is the highest law-making body in the country. It comprises
delegates who are elected for a five-year term from various strata of people and
different ethnic groups from all around the country. The National Assembly is both
the supreme state authority and the unique legislative body and has the power to
promulgate and amend the Constitution and Laws.
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12. AYUR HERBAL COSMETICS
2009
Viet Nam has 59 provinces and 5 cities directly under central authority (including
Hanoi, Ho Chi Minh City, Haiphong, Da Nang, and Can Tho).
Economic Development
GDP measured at purchasing power parity: $261 billion
Real GDP growth (% growth): 8.44(2005), 8.23(2006), 8.48(2007), 6.30(2008)
Annual rates of inflation (% growth): 8.28(2005), 7.39(2006), 8.89(2007), 24(2008)
Consumer expenditure (US$ million): 48,032.91(2008)
Cosmetics and toiletries (VND billion): 8,281 (2009)
Trade Systems
At present, Viet Nam has established diplomatic relations with 168 countries, and it
has economic and trading relations with about 165 countries. Viet Nam joined the
United Nations in 1977.
Viet Nam became an official member of the Association of South East Asian Nations
(ASEAN) in 1995, and has concluded a cooperation agreement with the European
Community. Relationships with multi-national financial institutions such as the World
Bank (WB), the International Monetary Fund (IMF) and the Asian Development Bank
(ADB) have been re-established. Viet Nam has been participating in the ASEAN Free
Trade Area (“AFTA”) since 1996 and became a member of the Asia Pacific
Economic Cooperation Forum (APEC) in 1998. Viet Nam became an official member
of the World Trade Organization (WTO) on 11 January 2007. In January 2008, the
country started a two year term as an elected non-permanent member of the UN
Security Council.
A FTA is about to be signed between India and ASEAN in early 2009. When the
India-ASEAN FTA is completed, the chance of economic cooperation between India
and ASEAN members will grow considerably.
Legal Aspects in a Cosmetics Business
In order to filter out low quality cosmetic product, the Vietnamese Government has
imposed a series of legal measurements. These measurements are product registration,
product testing, imposing tax, and advertising regulation.
Before the issuance of Circular No.06/2006/TT-BYT every cosmetic company needed
the license issued by the Ministry of Health before importing cosmetics into Vietnam.
However, since May 16, 2006 with the Circular No.06/2006/TT-BYT the cosmetic
companies can freely import cosmetic products into Vietnam. Even though, during the
custom processing companies are required to produce the original testing certificates
for the imported cosmetics. The certificate must be issued by the producer. Once the
products are imported, the cosmetic companies need to register their products with the
Vietnam‟s Ministry of Health (MOH). The companies are requested to be responsible
for their products‟ quality (Ministry of Health, 2006). The Ministry of Health requires
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13. AYUR HERBAL COSMETICS
2009
cosmetic importers to provide at least three samples of each new product in order to
examine its safety. The product categorized as cosmetics which are required quality
assurance by the Ministry of Health are skin creams, lotions, foams and epidermal
ointments, skin powders, shampoos and conditioners, hair dyes, lipsticks, blushes,
eyeliners and mascaras. (International Business Strategies, 2006) The taxation is
another factor which directly affects the cosmetic importing into Vietnam. There are
two types of tax: Import tax and Value Added Tax (VAT). The VAT for cosmetic is
10 percent which is the same with that of other commodities. In an attempt to reduce
inflation rate, on August 3, 2007 the Vietnam‟s Ministry of Finance had issued two
Decisions No. 69/2007/QĐ-BTC and No. 70/2007/QĐ-BTC to reduce cosmetic tax
from 50 percent to 30 percent (Ha, 2007). Currently, Vietnam has four categories of
tariff rates:
1. Normal Trade Relation (NTR)/ Most Favored Nation (MFN) rates that
apply to all WTO Member countries;
2. Common Effective Preferential Tariff rates that apply to imports from
ASEAN countries;
3. Preferential Tariff rates applied to China under the ASEAN-China Free
Trade Area (ACFTA) and to South Korea under ASEAN-Korea Free
Trade Area (AKFTA);
4. General tariff rates that apply to all other countries. (International Business
Strategies, 2006)
Lastly, the regulation on cosmetic advertisement is another concern. The Vietnamese
Government is strictly regulating the advertising activities. The purpose is to confirm
that the advertisement‟s content is in line with product‟s quality. Therefore, all the
advertising messages for pharmaceuticals, agri-chemicals, cosmetics and toiletries are
to be registered and approved from the government before being broadcast. The
content of advertising message is approved by the Ministry of Culture and
Information.
Thus we can see the strengths of Ayur and the opportunities in Vietnam go hand in hand
thereby ensuring huge potential for the company in setting up a business. The economic,
trade, financial, legal and political environment of Vietnam seems to have an open door for
Ayur Herbal Cosmetics.
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14. AYUR HERBAL COSMETICS
2009
ENTRY MODE STRATEGY
Current Scenario: Ayur, after establishing successfully in domestic market,
now is in optimistic mood to repeat its success story across the International market.
Presently, Ayur‟s products are being exported to countries like USA, Mauritius, Panama,
West Indies, Nepal, Bangladesh, Thailand and South Africa.
New proposition: Ayur has decided to extend its market to Vietnam by using
exporting as an entry mode strategy. There are certain valid reasons behind selecting such a
mode.
Rationale of selection: "Vietnam, with a booming economy and
fashion-conscious youth market, is Asia-Pacific's lesser-hyped beauty market prospect," said
Diana Dobson from Euromonitor.
The imported cosmetic products dominate approximately 95 percent of the whole market.
Furthermore, local production of brand and non-brand cosmetic products is dramatically low
compared with the level of imported beauty products. With local production in Vietnam
being low and market domination by imported products Ayur has decided to enter the
Vietnam cosmetics market through exporting. Some fairly new Vietnamese companies
making brands like Miss Saigon and Thorakao spent plenty of money to acquire modern
production lines using the latest technology but they find themselves unable to compete with
imported cosmetics. This is because these brands have not yet built up a good reputation,
locally-made products are fairly easy to copy, the local authorities are not acting to prevent
the production and importation of fake cosmetics, and wholesalers and retailers are more than
willing to buy and sell fake products to hapless customers.
To develop a strong brand, a cosmetic company needs to make a product of consistent quality
and it must be original. Domestic companies that make an original, quality product may be
able to acquire a reputation over time and expand sales. Naturally, 'face' is very important to
people and showing others that one is using a certain cosmetic is a way to create status for
oneself. Using products of a well-known and respected brand lifts one up in the eyes of
others. Local cosmetic producers have to deal with this reality.
Competitive advantage:
Minimum risks and investment
Control over assets
Fast market entry
Can be used to maximize scale of operation
Quality control in the hands of manufacturer
Low cost leadership: Since Ayur products are low and medium priced, low cost
leadership can be achieved.
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15. AYUR HERBAL COSMETICS
2009
TARGET MARKET AND POSITIONING
STRATEGIES
Among the emerging markets in Asia Pacific, Vietnam is a strong candidate. Although the
size of the market in
Vietnam is small the
growth is the highest than
in other country in Asia
Pacific region (approx.
14-15%).
"Vietnam, with a booming
economy and fashion-
conscious youth market,
is Asia-Pacific's lesser-
hyped beauty market
prospect," said Diana Dobson from Euromonitor. (Cited in Montague-Jones, 2007)
It is reported that approximately 90-95 percent of the market for international cosmetics
products in Vietnam is centred on cosmopolitan areas of the country, for example, Ho Chi
Minh City in the south and Hanoi in the north.
“Ten years ago, fewer than 10 per cent of Vietnamese women use cosmetic and skincare
product regularly, but today nearly 80 per cent do” (Vietnam News, 2006)
“We have a lot of demanding young consumers who have been exposed more and more to
international trends in fashion, and they have an insatiable appetite for foreign goods.”
(Cited in Hazlett, 2006)
Existing
Vietnamese
Cosmetic
Market
Y-Young aged consumers (18-
29 years), M-Middle aged
consumers (30-45 years), O-
Old and mature aged
consumers (above 45 years)
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16. AYUR HERBAL COSMETICS
2009
Target Market
Young (18-29 years) and middle-aged (30-45 years) Vietnamese population who demand for
low and medium priced acne, moisturizing, oil-control and suncare products would be the
target market for Ayur Herbal Cosmetics in Vietnam.
This is because of the following reasons:
The low priced moisturizing products section is less competitive.
With 60% of population below 25 years of age there is huge potential in the low
priced acne products market.
With average temperature ranging from 25-35 degree Celsius throughout the year and
average humidity 60-80% there is demand for suncare and oil-control products. But
lack of competition in the low priced products in this sector leaves some loose bricks
for us.
USP: 100% herbal cosmetics with no side/ill effects.
Positioning
Low priced imported products
100% herbal with no ill effects
Symbolic to youth, radiance and freshness
One roof solution for all beauty and cosmetic problems
To become „the first choice‟ amongst those seeking for genuine beauty products in the
horde of chemical based beauty enhancing products.
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17. AYUR HERBAL COSMETICS
2009
STRATEGY IMPLEMENTATION
As mentioned in earlier the segments worth entering are (1) low price moisturizing, (2) low
price acne products and (3) low-price, middle-price and high price suncare products. The
marketing plan would be suggested in detail as product, price, place and promotion.
Product
The key to success is to find the product that really matter to customers. From our findings
the desired benefits of the Vietnamese people are moisturizing, acne and suncare products.
Therefore, Ayur would like to focus on them.
In moisturizing product, the products
would not be so thick or highly moist
because Vietnam weather has high
humidity. Instead, it would be light
weight and easily absorbable by the skin.
It would be in a form of gel or lotion,
instead of cream, according to beauty
experts.
In acne products, the company would focus on the acne products suitable for oily and
combination skin. It is because oily skin is acne prone skin and 50 per cent of Vietnamese
women have those skin types (Swiss Business Hub ASEAN, 2006).
In suncare products, the SPF or sunscreen protection would be high because of the warm
weather in Vietnam due to its location in tropical area and exposure to high degree of
sunlight.
Furthermore, to differentiate from the competitors, Ayur would implement its unique selling
proposition of pure herbal products. According to the cosmetic experts natural ingredients are
preferred among Vietnamese consumer since it is believed to have low side effect.
Price
The price for moisturizing and acne products would be low. The low-price moisturizer
products and low-price acne products are less competitive than in medium and high price.
Moreover, for the two products the company would target the young consumers since they
prefer low price and according to the cosmetic experts moisturizing and acne products are
desired by the young.
The price for suncare product can be low or medium since the competition is low in all
ranges of price. The company can target young, middle or mature age. However, the suncare
product for the young should be low price while in the middle or mature age should be
medium or high priced. It is because the two latter groups associate high price with high
quality and they are willing to pay for the high quality products.
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Place
Ayur Herbal Cosmetics will export to Vietnam through Ho Chi Minh City as it serves most of
the major sea ports and now has modern
container loading facilities. It is a also a
shopper‟s paradise with trendy boutiques and
modern shopping centers just steps away from
traditional open air markets. The people of Ho
Chi Minh City are fun loving and are more
international fashion oriented. This city reveals
the nations dynamic future. Since it is the
commercial hub of the nation further expansion
of business can be done easily.
Promotion
Ayur Herbal cosmetic company would emphasize
on gift promotion since it is claimed to be most effective by the cosmetic experts.
Additionally, as mentioned in the product part, skin care product would be highly effective as
the users notice the visible improvement. It is because word of mouth is important in
cosmetic product. With highly effective skin care product, the consumers will not only be
satisfied with the product, but they will also “talk” about the products to their friends,
colleagues and family and recommend them to use it. According to the research we have
found out that colleague, friends and family members affects the Vietnamese consumers‟
purchasing decision in skin care products. The advertising channels of the
importer/distributor shall be used. It will solely be under his control but also aligning Ayur‟s
strategy.
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2009
CONTROL STRUCTURE
The control process begins with the need to ensure profitability and success of a company‟s
strategies. The control process for Ayur in the domestic market is remarkable. It has
combined the synergies and always encouraged its staff to put in their total efforts. From the
time of its inception it has seen a number of rough times and yet the proper measures and
control has made it one of the most desired brands. Ayur would also monitor its success in
Vietnam where it shall export its products.
The process requires a proper understanding of the fact that though the quality is in
our hands, the distribution and channelizing of products is under the importer-distributor‟s
hands. The appropriate measures to monitor for Ayur will be ROI and steering controls
(development, social responsibility, reach of promotional offers etc.). The control process
will be established in the following manner:
Setting standards: Ayur will set latest international quality standards. It shall also set
a target sales volume and revenue. Ayur will set a price control strategy by ensuring
that the importer-distributor shall not manipulate the prices of products or restrict the
quantity available for reasons of personal gains. The price control clause will be put
down in the agreement between the importer and Ayur. For the control of importer
activity and understanding the consumer satisfaction our website will have a feedback
option wherein consumers can put in their valuable feedback.
Measuring actual performance: Actual performance measurement will be done
through financial data from the importer. The reports sent by the importer will serve
as the basis wherein we shall have data of volume sold and revenue collected, most
selling products, consumer feedback on products through the importer, local needs
and the segment(s) which is highly receptive to our products.
Comparing actual and planned performance: The comparison of actual results with
planned results is the point of decision making. Ayur shall compare the actual
profitability and financial turnover with the planned results. If it falls under the
acceptable range then the company shall move ahead with the next strategic plan. The
comparing of result will be done quarterly in the initial stage so as to have continuous
profitability information and can take proactive actions.
Corrective actions: This is to be done in case Ayur‟s strategic exporting plan fails in
Vietnam. In case of a failure of the plan Ayur will send a specialized team of experts
to handle the same and to have insight into the conditions. The team shall assess the
risks and benefits of continuation. The factors to be considered here are brand image,
product effectiveness, repeat purchases, regional profits, demand for the products and
scope of improvements in terms of quality and local adaptation. Thereafter, the
contingency plan will be implemented with necessary suggestions from the expert
team.
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20. AYUR HERBAL COSMETICS
2009
The use of Statistical Process Control (SPC) software will be done to have a better account
and measurement of factors influencing business and future profitability.
Contingency Plan
If planned results are not achieved and a continuous failure is there then Ayur shall go forth
with the following actions:
Assessing reasons for failure
Opting out of exporting
Taking over business in Vietnam as a single entity by setting up manufacturing units
in Vietnam
Localization of products and making use of useful contacts already gathered
Taking over all the promotional activities by ourselves. Marketing department shall
handle expert analysis and dealings with local advertising and media to promote
products and give Ayur an acceptable face.
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2009
GUIDELINES FOR IMPLEMENTATIONS
The strategic choices for the implementation of the 4 Ps as discussed earlier is framed out for
business developments of Ayur Herbal Cosmetics in Vietnam. The 4Ps has been effectively
chalked out for the most effective results. Initial targeting of Ho Chi Minh City will add to
the benefits and would give Ayur a firm ground in Vietnam. But there are certain
implications that we need to discuss.
Product: We are targeting the market with acne, moisturizing, oil control and suncare
products initially. This is mainly targeted to the young aged people. Although 60% of
Vietnamese are young aged there are certain implications on their choices. They look forward
to foreign brands. If Ayur is not able to identify with the brand identity and is not able to
stand up to the competition with existing brands like L‟Oreal, Ponds etc. then we have to use
our USP of 100% herbal cosmetics as the only weapon. We will be adapting to the local
requirements of cosmetics and introduce a varied range of products that will help Vietnamese
people to differentiate Ayur from its competitors and position Ayur as a necessary
commodity.
Price: Low priced products being the choice of the Vietnamese already gives Ayur an edge
over its competitors. Not much of the competitors have a varied range of products in this
category. Price changes have to be effectively monitored by our local distributers in Ho Chi
Minh City.
Place: Although Ho Cho Minh City has been selected as the starting market we still have
Hanoi as another option. We are presently targeting cosmetics stores and supermarkets/hyper-
markets. These are the places most visited by the middle class people and the young for their
cosmetics shopping.
Promotion: Advertisements through gift vouchers will recently be the main medium. Within
short period when the product gets stabilized in the market then we will be going for
newspapers and magazines as a medium of advertisement.
Apart from these there are certain other implications that need to be taken care of.
Implementation tasks poorly aligned and defined from what is planned
Lack of coordination and communication between Ayur and the importer
Implementation is not given enough resources and attention
Implementation process poorly monitored.
Future Plans
Expanding to other regions like Cambodia by setting up our own production plants in
Vietnam
Associations with other major brands like L‟Oreal, Olay for sharing of knowledge,
resources and expertise for global standards
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2009
CONCLUSION
The exporting of products to Vietnam will give Ayur an insight into the market where
international brands like L‟Oreal, Olay, and Ponds etc have well established dominance. The
success of Ayur in Vietnam will bring in experience and knowledge of operating in a highly
competitive environment. Also, the cost of production in Vietnam is lower than in India and
Ayur can in future have production facilities in Vietnam and export to other countries. This
shall be a cost reduction step. The FTA if signed in to take effect will be of greatest
advantage for Ayur. It will have no barriers legally and politically to carry on trade with
Vietnam. However, factors like lack of advanced transport and communication system
between these two countries and lack of high tech machines and production facilities in
Vietnam will be the major hindrances in the road to success. Thus Ayur is looking for a
successful business in Vietnam which is also known as “the hidden charm”.
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23. AYUR HERBAL COSMETICS
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REFERENCES
Doing business in Vietnam -PWC
http://www.euromonitor.com/factfile.aspx?country=VN
http://www.cia.gov/library/publications/the-world-factbook/geos/vm.html
http://www.quickmba.com/strategy/global/marketentry/
http://www.ediplomat.com/np/cultural_etiquette/ce_vn.htm
http://www.vnbusinessnews.com/2008/12/vietnam-india-many-cooperation.html
http://luxurytravelvietnam.com/EN/Vietnam_tours/Attractions/hochiminh.htm
http://www.indochinacapital.com/index.php?l1=96&l2=100#ME_S
http://www.determan.net/Michele/mposition.htm
http://www.vietnamembassy.org.uk/climate.html
http://www.worldtravelguide.net/country/303/climate/South-East-Asia/Vietnam.html
http://www.allyoucanread.com/vietnam-newspapers/
Concepts in Strategic Management and Business Policy (Ninth Edition) by Thomas L.
Wheelen and J. David Hunger
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