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Final Project

Elijah Olusegun Famodimu

Nexford University

BUS 6100: Final Project

Dr. Bill Reed

04/21/2022
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International Market

Ria's Organics is a cosmetic company offering customers with organic skin care

products such as soap, cream, and body oil. Our vision is to ensure that customers have

access to natural and effective beauty products. “The global cosmetics industry market size

was valued at $380.2 billion in 2019 and has been projected to reach $463.5 billion by 2027

recording a compound annual growth rate of 5.3 percent” (Chouhan et al.).

Our organization’s plan is to launch in Nigeria and further deploy to other African

countries such as Ghana, South Africa and Egypt while taking advantage of the African

Continental Free Trade Agreement (AfCFTA) during our growth stage. Our market entry

plan is to take advantage of the online marketing campaigns and use affiliate marketing to

focus on our target market. Our target market is the working professionals between the age of

23 to 40. This demography covers both men and women, while we also target females

between the 23 to 55. Local celebrities that have a loyal fanbase among women and youth

will also be used as brand ambassadors.

Governing Bodies

The National Agency for Food & Drug Administration & Control (NAFDAC) and the

Drug Registration & Regulatory Affairs (DR&R) Directorate are the two major bodies in

charge of regulating the activities of cosmetics products in Nigeria. The Agency gives

permission for the production and marketing of cosmetics products in Nigeria. For the

organization to successfully operate in the country, the following steps need to be followed.

i. Documentations: Company and product registration

ii. Product Approval Meeting: Meet with the Food and Drug Registration

Committee (FDRC) for product approval.

iii. Compliance with product labelling registration as issued by the Agency

Challenges and Opportunities

The cosmetics industry in Nigeria faces challenges with production and logistics.

Epilectic power supply and high exchange rate of the dollar to naira have led to an increase in

production cost over the years. Poor road infrastructure and the poor road network has led to

distribution difficulties, and the presence of established brands provide stiff competition to

new entrants. The rise of more competition may lead to more regulation by government

authorities.

Notwithstanding the challenges, the Nigerian cosmetic market is experiencing a fast

and dynamic growth, making it a worthwhile opportunity for beauty companies from within

the region and beyond. The market is currently valued at an estimated US$3 billion,

according to Euromonitor International, and this value is likely to keep rising, with an

increasing number of working-class women and seasoned youth searching for new ways to

pamper and present themselves. Strong population growth – particularly of the young, urban,

and female populations – means beauty and personal care in Nigeria has plenty of scope for

growth, especially in terms of exciting, new products. (Colombini, 2017).

Sustainability

The cosmetics industry produces about 120 billion units of packaging annually and

contributes to the loss of about 18 million acres of forest annually (Kenta, 2021). As an

aspiring player in this global industry, it is important that the organization carry out its

business activities with sustainability in mind. The approach listed below will be followed to

reduce the organization environmental footprint.

i. The company will put in place a measure to reduce the consumption of

resources such as energy and water. Efforts will also be made to switch to a

renewable source of energy. This in the long run will help us reduce our cost

of energy and reduce our carbon footprint.

ii. The business will advocate for recycling and try to reuse plastic, reward points

will be given to customers who return their products containers. This will

enable us cut costs on packaging and reduce our contributions to waste

iii. The business will contribute to tree planting by collaborating with

organizations that champion sustainability causes in Nigeria, this will enable

us to contribute to the preservation of our forests.

iv. The business will source for it inputs from ethical and green sources.

v. Finally, the business will encourage its local customers through its branding to

recycle and reuse plastic packaging, instead of disposing it as waste.

Supply Chain Management

As the business moves forward it is essential that the organization plans its entire

supply chain with the aim of generating optimum level of customer service while being as

cost effective as possible. Effective coordination of the flow of information, material and

finance will be paramount to the business. Our workforce will be empowered with the

relevant skills and information necessary for them to have a solid understanding of the

business vision.

Established and effective logistics companies will be used for the distribution,

storage, and transportation of the products. A vendor-managed inventory (VMI) approach

will be implemented to help the business reduce the risk of carrying too much stock and

respond better to changing demand patterns. Technologies such as RFID and cloud data

logging solutions will be deployed to monitor shipments conditions and enhance traceability

of products in the supply chain to the finest details. Our goal is to carry optimum level of

inventory and deliver to our customers at the fastest possible time.

Innovation
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“An innovation is the implementation of a new or significantly improved product

(good or service), or process, a new marketing method, or a new organizational method in

business practices, workplace organization or external relations” (OECD Glossary of

Statistical Terms - Innovation Definition, 2005). Innovation plays a vital role in management

as shown in the ways new products or service are being created. It can be radical,

incremental, or disruptive. Unlike other industries that have remained the same, the cosmetics

industry is rapidly experiencing change. New products are made on a regular basis for hair,

skin, makeup, and personal care to meet consumer needs and desires. Despite innovation

being a constant process in the cosmetic industry, revolutionary discoveries are unusual, our

innovation approach will be in the research and development of new products, this R&D will

focus on consumer behavior and beauty aspirations, the biology of skin will be studied using

innovative techniques and sustainable development methods.

The goal is to discover new ingredients and improved formulations different from

others in the market which will be safe and easy to use or apply. The company’s approach to

innovation will not only be in the development of new product, but also in the packaging and

distribution of the improved products, innovative materials that will make the product

packing more sustainable to the environment and fun to the users will be introduced.

Technology will be used to manage inventory to reduce the risk of carrying too much stock

and respond better to changing demand patterns. Solutions that will monitor shipments

conditions and enhance traceability of products in the supply chain to the finest details will be

deployed. We know that what decides the pathway of innovation in cosmetics are the

consumer needs and desires for the new, better, and safer products designed and delivered by

trusted and responsible brands (Batista, 2017). And we aspire to be that trusted and

responsible brand that will fulfil the desire and needs of the consumers in the cosmetics

industry.
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Economic Indicators

After we achieve a breakeven in our home country, we aspire as an organization to

establish our foreign business operations in our neighboring west African country Ghana.

According to the International Trade Organization, Ghana plays an important part in both the

consumption and manufacturing of cosmetics products in the $670 billion global beauty

industry. The whole of Sub-Saharan Africa is experiencing massive economic growth and is

home to about 821 million consumers eager to buy a wide range of cosmetics and beauty

products. The market leaders – South Africa and Nigeria – are followed by frontier markets

Ghana, Kenya, Ethiopia, Tanzania, and Cameroon (International Trade Organization, 2022).

We will increase FDI in Ghana by first exporting the technology and expertise we

have gained over our years of experience by collaborating with local formulators and

distributors. Our plan is to identify local small and medium scale enterprises and collaborate

with them through a merger or acquisition. The aim of this strategy to collaborate with the

host country’s companies who will satisfy the local regulatory requirements and handle sales

in the Ghanaian market.

Our second strategy to increasing FDI in Ghana is to collaborate with local farmers in

the cosmetics ingredients value chain to boost their productivity. There are opportunities for

the large-scale production of cosmetic ingredients such as Shea butter, Avocado Oil, Castor

Oil, Mango Butter, Baobab oil, and Neem oil in Ghana. We plan to invest in capacity

development programs that will boost the quality and quantity of the producers of these

cosmetics inputs.

In conclusion, we understand that Ghana possesses the risk of political and economic

uncertainties and an occasionally difficult business environment coupled with a mediocre

business environment (Ghana: Risk Assessment, 2021). But this risk is of acceptable level.

We forecast that through our expansion to Ghana we will be able to increase the total sales
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and investment of the organization while having access to quality and regular inputs for our

production.

Entry Strategy Plan

In our first year of market entry our target to reach 300,000 units in sales, and this will

be achieved through a mix of sales funnel and marketing. With a current market valued at 3

billion dollars and rising, Nigeria is a fertile market for us to launch our products. Our target

market is the growing youth population, and we plan to reach our customer through the

following strategies.

i. E-Commerce Website: One of our strategies to entering the market is by

selling our products through an online market, this is an easy, low-cost way of

entering the global market. Prospective customers will be targeted through

digital adverts such as Facebook ads and Google ads and prospects anywhere

in the country can place orders. For this strategy to be more effective, websites

pages will be tailored to specific country requirements, content will be in local

languages and prices will be based on the currency of the country.

ii. Direct Sales: Another strategy we will use to establish our presence in the

market is through direct sales. We will achieve this by displaying our products

at fashion events and trade fairs. Although this simple and cost-effective

market entry strategy has a limited number of potential sales, it will serve as

an opportunity to interact with potential customers, get product feedback and

gather valuable field data.

iii. Distributors: The final strategy we will use in entering the market is to work

with distributors. This strategy will be used especially for our foreign

operations. Distributors will provide us with local presence in our foreign

operations and reduce our foreign logistics requirement. We will empower our
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distributors with the product and market knowledge they need to increase sales

of our product by investing in training them.

We understand that entering the global market by selling directly to customers,

marketing products through a local distributor, or selling through a website to our local

market and in export territories provide our business with different levels of cost, risk, and

control (Linton, n.d.). But innovative ways to reduce the risks and cost of operations will be

continuously researched. We have also considered some challenges that we will face in our

efforts to produce good quality products and get them acceptable in the market, some of these

challenges includes financing, infrastructural issues, distribution and logistics issues,

marketing, and branding challenges.

As a startup in Nigeria getting affordable financing is a challenge we will have to deal

with, capital is not readily available and bank loans attracts interest rate as high as 25% to

40% which makes it too expensive. However, efforts will be made to get more affordable

alternative finance through crowd funding and angel investments. There are also

infrastructural challenges facing businesses in Nigeria and Ghana. The greatest being lack of

adequate power supply. The use of alternative power such as generators in Nigeria and Ghana

increases the cost of production to a higher margin. Other infrastructural issues include bad

roads, poor warehousing. These all extend the time it takes the product to get into the hands

of the consumer. We plan to invest in renewable energy in other to sustain our energy needs.

Producers without well-established distribution channels usually have difficulty

selling their products. Retailers in Nigeria sometimes demand that manufacturers or

wholesalers supply them ahead of time to stock their goods at their retail outlet. This can be

very discouraging to enterprises that are just starting their business and do not have the

proper distribution channel to get the product to market. Lastly, Marketing and Branding

ranks high as one of the main issues for local products, people have a notion that locally
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made products are inferior to the imported ones. Therefore, convincing them to buy might be

tedious. This is seen as a marketing and branding challenge, and awareness efforts will be

made so that products of good quality are seen to be as valuable as other imported products.

Actions to improve the acceptance of locally made goods have been made with the recent

Buy Naija to Grow the Naira campaign. However, there is still some way to go to make

Nigerian-made goods competitive in the global market. (Aluko, 2018).

Pestle Analysis

PESTLE analysis, which is sometimes referred to as PEST analysis, is a concept in

marketing principles (What Is PESTLE Analysis? A Tool for Business Analysis, 2011). It is a

tool used by companies to track the environment they’re operating in or are planning to

launch a new product. As a new entrant into the cosmetics industry, it is important that we

also use this tool to analyze our political, economic, social, technological, legal, and

environmental factors that would affect our business. Below is an analysis of our company

i. Political Factors: Product safety is important in many countries including Nigeria

and Ghana. It is more openly discussed in the cosmetic segment of the beauty

industry since these products are designed for body contact. As part of our

compliance requirements will need to report ingredient used in our production.

Additionally, we required to follow all political and legal requirements in

whichever country we would operate, and it can be tedious. Europe and Canada

have harsher ingredient requirements. If any of our product contains a banned

ingredient, they won’t be allowed across the border.

ii. Economic factors: Even though customers became more price conscious after the

recession and deciding to buy only what they need for survival; Beauty products

have become a necessity like eating or having a roof over their head. People will

always feel the need to have shampoo and soap in their bathroom, others will need
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products to clear their acne or scars, and some will need products to moisturize

their skins. As mentioned earlier, the market is currently valued at an estimated

US$3 billion, according to Euromonitor International, and this value is likely to

keep rising.

iii. Social factors: Hair removal, skin care, hair styling, plastic surgery clinics,

massage parlors, medical spas, and perfume bottles are all relevant to the beauty

industry. And there are dozens of brands offering you nearly the same product as

ours. Brand loyalty spreads horizontally too. A customer may find their favorite

hair cream from a company and then sees a new moisturizer made by them and

end up buying the moisturizer because they already love the brand. This means

beauty companies will constantly keep fighting to get attention in such a saturated

market.

iv. Technological factors: Technology has revolutionized the beauty industry. Almost

any products can bough delivered to your home in a day or two. That is good and

bad for big name brands. once upon a time, big names were the only fighting

amongst similar brands to keep their products on the shelves. Nowadays, new

products can sell their products through online stores like Amazon, AliExpress

etc.

v. Legal factors: Ingredients used in the beauty industry are tricky, even the organic

ones. Law enforcement agencies such as NAFDAC in Nigeria monitor ingredients

based on their use while ensuring that there is no misinformation branded on the

products. If there are issues, the product may not reach shelves, or they may even

require a recall. Additionally, if ingredients aren’t up to code (as deemed by the

FDA) they can be banned, which is common in many countries.

vi. Environmental factors: The beauty industry is making efforts more than ever to try

and go “green.” Most product package is becoming increasingly eco-friendly for

less adverse effect on the environment, but heavy plastic usage is still a growing

issue within the cosmetic and skin care segments. Asides skin care, the kind of

ingredients used in producing products such as shampoo and spray deodorants can

have a bad effect on the environment. Even though brands are making efforts to

improve the ill effects, there’s still a long way to go to see results.

In conclusion, our company recognizes the risk, challenges, and opportunities in the

cosmetics business, but we believe that the quality of our product, the sustainability in our

operations and packaging plus the quality of our market entry strategies and management

team will help us in penetrating the cosmetics market and get a slice of the market share.
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References

Chouhan, N. C., Vig, H., & Deshmukh, R. (2021, February). Cosmetics Market Size, Share,

Industry Trends & Analysis 2021-2027. Allied Market Research.

https://www.alliedmarketresearch.com/cosmetics-market#:~:text=The%20global

%20cosmetics%20market%20size%20was%20valued%20at

Colombini, M. (2017, April 1). Africa: the next frontier of cosmetics. Kosmetica World.

https://www.kosmeticaworld.com/2017/04/01/africa-next-frontier-cosmetics/

Kenta, P. (2021, October 2). Zero-Waste Week: The Beauty Brands Reducing Their Plastic &

5 Ways To Be More Eco-Friendly. SEVENSEAS Media.

https://sevenseasmedia.org/zero-waste-week-the-beauty-brands-reducing-their-

plastic-5-ways-to-be-more-eco-friendly/

OECD Glossary of Statistical Terms - Innovation Definition. (2005, May 9). Stats.oecd.org.

https://stats.oecd.org/glossary/detail.asp?ID=6865#:~:text=An%20innovation%20is

%20the%20implementation

Batista, J. (2017). Innovation in Cosmetics: Innovative Makeup Products Efficacy and Safety.

https://repositorio.ul.pt/bitstream/10451/36037/1/MICF_Joana_Maia.pdf

International Trade Organization. (2022, March 24). Ghana - Cosmetic Industry.

Www.trade.gov. https://www.trade.gov/country-commercial-guides/ghana-cosmetic-

industry

Ghana: Risk Assessment. (2021, February). Globaledge.msu.edu.

https://globaledge.msu.edu/countries/ghana/risk

Linton, I. (n.d.). Ways for Companies to Enter the Global Market. Smallbusiness.chron.com.

Retrieved April 18, 2022, from https://smallbusiness.chron.com/ways-companies-

enter-global-market-43849.html
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Aluko, N. (2018, July 9). 6 challenges facing manufacturing in Nigeria & Ghana. Kpakpakpa

- Quality Access to the Nigerian Market. https://kpakpakpa.com/spotlight/challenges-

facing-manufacturing-in-nigeria-ghana/