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ANALYZING THE OPPORTUNITY FOR LUBRIDERM PRODUCT RANGE

ENTRY INTO THE UNITED KINGDOM

STUDENT NAME

COURSE NAME

DATE

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1. EXECUTIVE SUMMARY: 

The problem that is identified in the United Kingdom cosmetic and daily cream market is

that there is no special moisturizing cream for men that addressed their skin care issue

specifically. Most of the creams in the market are high level street brands that might not be for

daily use and does not address special needs for men’s skin. Lubriderm’s men’s product brings

therapeutic value and addresses the needs for men’s moisturizing needs. Lubriderm is currently

sold in the United Kingdom through some third party vendors, non-affiliated with the company.

The Lubriderm organization proposes to sell their product directly through the internet and also

indirectly to the UK’s metrosexual males who are the target segment and others.

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TABLE OF CONTENTS

1. EXECUTIVE SUMMARY:................................................................................................................................... 2

INTRODUCTION.................................................................................................................................................. 4

2. THE PROBLEM AND THE OPPORTUNITY...........................................................................................................4

2.1. BUSINESS OVERVIEW.............................................................................................................................................42.2. PRODUCT SERVICE FEATURES...................................................................................................................................42.3. MARKET ANALYSIS.................................................................................................................................................52.4. MARKET STRATEGY................................................................................................................................................6

3. TARGET MARKET............................................................................................................................................. 7

3.1. MARKET SEGMENT (CONSUMERS AND PROFILE).........................................................................................................73.2. 4 P’S OF MARKETING.............................................................................................................................................7

3.2.1. Product......................................................................................................................................................73.2.2. Price and Promotions.................................................................................................................................83.2.2. Place..........................................................................................................................................................8

4. COMPETITION................................................................................................................................................. 9

4.1. DIRECT COMPETITION............................................................................................................................................94.2. INDIRECT COMPETITION..........................................................................................................................................9

5. OPERATIONS AND PROCESSES....................................................................................................................... 10

5.1. INBOUND PROCESSES............................................................................................................................................105.1.1. Indirect Export and Internet.....................................................................................................................10

5.2. OUTBOUND PROCESSES........................................................................................................................................11

6. FINANCIAL SUMMARY................................................................................................................................... 11

7. MILESTONES AND TIMELINES OF THE PROJECT..............................................................................................11

CONCLUSION.................................................................................................................................................... 12

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INTRODUCTION

The plan for launching Lubriderm Men’s range of products is discussed in the plan. The

gap in the market and the opportunity for Lubriderm is discussed alone with the market for

men’s cosmetics. Lubriderm will launch its products both directly through internet based units

and through indirect export. This will give Lubriderm better coverage to its target market of

metrosexual males and also men in general.

2. THE PROBLEM AND THE OPPORTUNITY

2.1. Business Overview

Lubriderm lotions started off as an independent formulation of Dr. Louis Scheluse a

pharmacology professor in the year 1945 (Lubriderm, 2015). Used for dry and itchy skin, the

formulations range grew to become usable by different consumer segments, which were looking

for a light weight cream or a daily day cream. As of 2006 Lubriderm lotions is a part of the

Johnson Consumer Products Company.

2.2. Product Service Features

Lubriderm comes in three different formulations. The formulations are for extra dry skin

to normal, normal skin and sensitive skin. It has a different product for men, and then there are

therapeutic lotions for itchy skin also. Lubriderm is not prescribed for children under a certain

age.

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Source: Lubriderm Collections, 2015

2.3. Market Analysis

The cosmetic industry in the United Kingdom can be broken down into several

diversifying segments. It is a fast growing industry and is forecast to grow by more than 16

percent in 2016 and this growth has not been impeded by the economic recession (Aidin, 2014).

It is the niche segments that contribute to much of its growth. Lubriderm here plans to take

advantage of such a niche segment only. A recent study shows that more than 52 percent of

people rate their skin as being sensitive and this is not just the women (Hart-Davis, 2011). The

sensitive skin care product range for men is seen to be low in the United Kingdom.

Unique Selling Proposition: While some brands address the sensitive skin care issues in

general, they do not cater to the men specifically. Lubriderm’s men’s lotion is a special

therapeutic skin care for men only. These are men from the age group of 18 and above who work

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or live around the urban environment as this is where Lubriderm would launch its product

primarily.

2.4. Market Strategy

The market strategy that is employed here is one where the unique selling proposition is

presented to the niche segment. Lubriderm will set its distribution centers and point of sales

based on metropolitan areas where it has identified through secondary research that the

consumption of cosmetics is quite high (Souiden, & Diagne, 2009).

Strengths WeaknessesLubriderm is very competitively priced

It is a name value brand in the United States; the brand can hence sell its history and the good reputation that it enjoys in the United States.

Furthermore it is not new to the United Kingdom. People who have travelled to the United States and who have worked or studied there are aware of this brand. The UK Amazon site shows that people from the UK buy this brand from third party sellers that are not affiliated to Lubriderm

There are cosmetic brands that men might prefer using

It is new to doing business with the United Kingdom

Opportunities ThreatsThere are ample opportunities in the urban market

The internet based sales will also be helpful for Lubriderm

Contamination Risks or compliance issues in transport of the product.

3. TARGET MARKET

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3.1. Market Segment (Consumers and Profile)

The men’s therapeutic range of products from Lubriderm is the main point that will be

highlighted. This will attract male consumer audience from the age range of 18 and

above.

The metrosexual male is the primary psychographic segment identified for the product.

They need lotions for everyday use that is more general in terms of fragrance and is more

specific in addressing male skin needs.

3.2. 4 P’s of Marketing

3.2.1. Product

The key points of the product that will be sold and its unique points will be highlighted in

the marketing campaign

The product is a therapeutic range of moisturizer for everyday use. The current

moisturizers for men are street brands which research studies show men are wary of

using. They opt to use cosmetic ranges such as Avene that their girlfriends use rather

than using the street brands. This also applies to the high end street brands (Bianaca,

2013). Lubriderm is a therapeutic moisturizer that includes the benefits of the

cosmetic range and is also an everyday moisturizer

Lubriderm is more cost effective. Bianaca (2013) discusses the rising costs of

moisturizer uses that is triggered by men. Lubriderm will help the consumer control

costs.

3.2.2. Price and Promotions

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The pricing of Lubriderm is more economical compared to the other high street

brands. Also in the launch promotions Lubriderm plans to release the product with

promotional offers that will be helpful for customers.

Second Lubriderm plans to release its products in one of its short sample ranges. This

will be helpful for customers that want to try out Lubriderm before buying it. The

trying out process is also made more economical for people.

3.2.2. Place

Rakesh Agarwal, the CEO of Escentual a product line for cosmetics states that “Twenty

years ago most men wouldn’t have dreamed of using a moisturizer but nowadays it is much more

common-place thanks to role models like David Beckham” (Bianaca, 2013). However the CEO

also notes that men still have not gotten to buy their own moisturizers and might tend to use their

partners products. Some of the reasons cited for this are that they do not prefer to do the

shopping for moisturizers in person (Bianaca, 2013). In this context by making Lubriderm

available online, where they can just click and have it delivered to their homes; the product

would have better sales. The internet point of sales will not have regional coverage bar. The

physical points of sales on the other hand will be restricted to only the metropolitan areas as

research studies note that the metrosexual male is more concentrated in these areas

4. COMPETITION

There are many skin care products for men in the United Kingdom. However none of

these products are therapeutic everyday usage for itchy skin and other skin conditions such as

what Lubriderm brings to them.

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4.1. Direct Competition

The main direct competition is in the form

of Lotil original cream. (Image source:

Quine, 2014). This is a cream that is made

in a nourishing way for dry skin. It also

claims that it has antibacterial properties

and that it is a cream for all men who

moisturize.

However this direct competition suffers because it is not presented as for everyday use. Also the

therapeutic benefits that Lubriderm offers for the everyday user are not advocated for in the use

of Lotil. Furthermore the cost of Lotil is around 6.29 pounds for 114 ml, wheras Lubriderm

offers 709 ml for 5.75 pounds which is a much economical rate.

4.2. Indirect Competition

Some of the indirect competition that exists for Lubriderm are the normal skin care range

of creams that are targeted at women in general. These range from mild cosmetic creams such as

Clinique, to that of high profile cosmetic creams such as Lancôme, Dior, and more.

5. OPERATIONS AND PROCESSES

5.1. Inbound processes

5.1.1. Indirect Export and Internet

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The indirect export method employed for Lubriderm would be the Licensing method. The

Licensing method is where a contract could be established with a product seller. They could act

as licensed sellers of the product. This would be better for Lubriderm, as the company will not

have to invest in manufacturing units and more within the United Kingdom. Furthermore there

will be lesser chances of any of forms of occurrence of compliance breaches. The internet based

trade is organized by means of third party sellers that would be licensed to sell the product.

Having physical point of sales of the licensed sellers would give better reach to the men

living in urban areas, such as around London and other metropolitan cities. However there would

also be significant sales segments that are living in other suburban area or area with lesser

accessibility to super marts. These people would benefit by placing their orders online and

having the product delivered to their door steps.

5.1.2. Legal Requirements: Since a licensed agent will be used as direct representative,

the licensed agent will make the customs declaration for Lubriderm. Lubriderm will be the

declarant in this case and will be liable for customs debt if any are not fulfilled. An import

declaration should hence be filed out by the company. Some of the charges that will be

applicable for Lubriderm are the customs duty and the import VAT (HM Revenue and Customs,

2013).

Cosmetic products to the United Kingdom such as moisturizers have to follow the

regulations as set in the United Kingdom of European Regulation (EC) No 1223/2009 on

Cosmetic Products or the EU Cosmetics Regulation. Penalties for breach of this regulation are in

the amount of fines ranging from £5,000 to £20,000 pounds and hence Lubriderm will work with

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its compliance and legal department so as to enforce compliance both at its end and the agents

end (UK Department for Business Innovation & Skills, 2013).

5.2. Outbound Processes

The distribution network that is planned is one that uses third party distributors. This will

be better for Lubriderm. Also Lubriderm will not directly contract with the third party

distributors. Lubriderm will use the contacts of its licensed agents. This is a positive point for the

company as the company is spared the scouting research that it will have to undertake. Most new

companies might fail to procure the right distributors, however the agents being in the country

would know these networks better.

6. FINANCIAL SUMMARY

A bank loan is the best type of financing for the expansion venture being proposed for the

company. The bank loan can be taken out for the organization, and the loan can be taken out in

the home country. The bank loan will be amortized over a period of three years, so as to give the

company time to recover its expenses in establishing licensed partnerships, the company may be

able to tax deduct for the amortizations costs under Part VI of Form 4562.

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1. Year-one revenue expectancyLubriderm Men's (Standard Size)Compact Size Promotional Samples Family Size

Number of units sold annually 5,750 3,750 750 8,750Average sales price per unit $120.00 $80.00 $40.00 $0.00Annual revenue per product $690,000 $300,000 $30,000 $0

Total year 1 revenue $1,020,000

2. Year 1 cost of goods soldLubriderm Men's (Standard Size)Compact Size Promotional Samples Family Size

Expected gross margin per product 50.00% 40.00% 25.00% 0.00%Annual cost of goods sold per product $345,000 $120,000 $7,500 $0

Total year 1 cost of goods sold $472,500

3. Annual maintenance, repair, and overhaulFactor (%) on capital equipment 15%

4. Number of years for straight-line depreciation 5

5. Annual tax rate 30%

6. Loan Value $80,000

Year-by-year profit and loss assumptions              Year 1 Year 2 Year 3  Annual cumulative price (revenue) increase - 2.00% 4.00%  Annual cumulative inflation (expense) increase - 2.00% 4.00%  Interest rate on ending cash balance   0.50% 0.50% 0.50%

      Year 1 Year 2 Year 3Revenue          Gross revenue   $1,020,000 $1,040,400 $1,082,016   Cost of goods sold   472,500 481,950 501,228   Gross margin   $547,500 $558,450 $580,788              Other revenue [source]   $0 $0 $10,000   Interest income   $1,000 $0 $0   Total revenue   $548,500 $558,450 $590,788            Operating expenses          Sales and marketing   $40,000 $40,800 $42,432   Payroll and payroll taxes   60,000 $61,200 $63,648   Depreciation   40,000 40,800 41,600   Insurance   40,000 $40,800 $42,432   Maintenance, repair, and overhaul   15,000 15,300 15,600   Utilities   30,000 $30,600 $31,824   Property taxes   15,000 $15,300 $15,912   Administrative fees   18,000 $18,360 $19,094

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  Other   4,000 $4,080 $4,243   Total operating expenses   $262,000 $267,240 $276,786            Operating income   $286,500 $291,210 $314,002              Interest expense on long-term debt   3,590 2,866 2,106            Operating income before other items   $282,910 $288,344 $311,897              Loss (gain) on sale of assets   0 0 1,000   Other unusual expenses (income)   0 0 0            Earnings before taxes   $282,910 $288,344 $312,897            Taxes on income 30% 84,873 86,503 93,869            Net income (loss)   $198,037 $201,841 $219,028

7. Milestones and Timelines of the Project

Milestones for Project

Conducting a comprehensive investigation into Existing Gaps in a given market (2-3

Months)

Survey style Target Market Analysis (2 Months)

Feasibility Studies based on financial aspects (1 Month)

Business Description and Expansion (Product Based Strategy) (1 Month)

Marketing Plan (1 Month)

Competitors Study and Revision of Marketing Plan (1 Month)

Financial Plan (Costs, Logistics etc) (1 Month)

Conclusion

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  Lubriderm attempts to bring its product to the United Kingdom. At present it targets a

very niche segment which are, the men who want a daily wear moisturizer that also provides

therapeutic care to their skin. As noticed in the business planning, there are opportunities for

Lubriderm that would help secure good sales in this segment. In future Lubriderm would also be

able to plan for product expansion, and can bring in its whole range of products to the United

Kingdom market.

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References

Aidin, B. 2014. Business face of UK Beauty, Raconteur, Available at:

http://raconteur.net/business/business-face-of-uk-beauty, [Accessed on 25 Feb 2015]

Bianaca, L. 2013. Metrosexual men cost their partners £230 every year, Available at:

http://www.dailymail.co.uk/femail/article-2352279/Metrosexual-men-cost-partners-230-year-

beauty-products-bid-look-groomed-like-David-Beckham.html, [Accessed on 25 Feb 2015]

Hart-Davis, A. 2011. Half of us suffer sensitive skin, Mail Online, Available at:

http://www.dailymail.co.uk/femail/article-1354257/Half-suffer-sensitive-skin--natural-products-

blamed--calm-down.html, [Accessed on 25 Feb 2015]

HM Revenue and Customs. (2013). Importing and exporting goods, Available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/367274/import-

export.pdf, [Accessed on 25 Feb 2015]

Lubriderm Collections. 2015. Lubriderm Products. Available at:

https://www.lubriderm.com/products/collections, [Accessed on 25 Feb 2015]

Lubriderm. 2015. About Lubriderm. Available at: https://www.lubriderm.com/about-us,

[Accessed on 25 Feb 2015]

Quine, O. 2014. 10 best men's skincare products, Available at:

http://www.independent.co.uk/extras/indybest/fashion-beauty/10-best-mens-skincare-products-

9683927.html, [Accessed on 25 Feb 2015]

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Souiden, N., & Diagne, M. 2009. Canadian and French men's consumption of cosmetics: a

comparison of their attitudes and motivations. Journal of Consumer Marketing, Vol 26, No 2,

97-109.

UK Department for Business Innovation & Skills. 2013. European Internal Market. Available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/245908/13-1207-

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