Transcript Tips for working successfully with Reps

Doing Personal Care
Product Business in USA
A Brief Overview
Presented by
Mike Nave
President – PBD / BIR, Inc.
Who is Mike Nave ?

50 year career in beauty products industry
• Distributor
• Publisher
• Dot com company VP Communications
• Free lance writer for industry trade pubs.
• Sales and marketing consultant
Size of U.S.
Personal Care Markets
PBD

Mass retail market segment sales excluding Wal Mart*
•
Total Haircare sales $4.3 billion -1.5%
•
Total Ethnic HABA sales $107 million -7.5%
•
Total Hair Coloring Products sales $1.09 billion +4.4%
•
Skin Care sales $2.79 billion +4.9%
•
Grooming aids sales $1.11 billion +.04%
•
Shaving needs sales $1.81 billion +4.9%
•
Deodorants sales $1.26% +1.9%
*(52 week sales total through May 14, 2005 (Source AC Nielsen)
PBD
Size of U.S.
Personal Care Markets
• Annual revenues of salon services
and product sales $60+ Billion.
• Total salon industry professionals
754,000
• Natural/Organic personal care sales
$4.3 billion projected to reach
$6.6 billion by 2010
Market Segment
(A brief description)
Mass Retail Market

Department Stores (Federated, Nordstrom’s, Saks
Fifth Avenue)

“Masstige” (Ulta, Sephora)

MVRs (Costco, Sam’s, Target, Wal Mart)

Grocery (Safeway, Albertsons)

Chain Drug (Rite Aid, CVS, Walgreen)

Specialty (Bed Bath & Beyond, Hot Topics, Bath &
Body Works)

Electronic Retailing (QVC, HSC)
Market Segments
(A brief description)
Professional Beauty Market

Independent Salons
(45,000)

Sally Beauty Supply (2,800
stores in U.S.)

Chain Salons (25,000)


Salon beauty stores
(2,000)
Distributors (350 exclusive
and open line)

Spa (5000 estimate)

Nail Salons (60,000)

Barber (85,000)

Beauty Schools (1,500)



Distributor’s professionalonly beauty stores (1,800)
OTC beauty stores general
market (3,000)
OTC beauty stores MultiCultural market (9,000)
Alternative Marketing Initiative
Direct On-line Manufacturer Sales,
a new marketing concept of
manufacture selling on-line direct
to consumers while at the same
time establishing distributor/retail
relationships.
Marketing to the US Mass
Retail and Pro Beauty
Markets  a Good
News/Bad News story!
First, The Good News
(The Reward)

Awesome opportunity selling to
the world’s largest market in
terms of buying power.

U.S. consumers are major
shoppers always looking for
something new and innovative.
Now, The Bad News
( The Challenges!)

Huge marketing challenges due to
consolidations in all major market
segments

Surviving Mass Market Retailers’ shelfspace is a premium. You want it you
buy it! Or more accurately, you rent it!

In mass market payment terms can
stretch out 6 months or more. (Being
paid promptly – Forget It!)
Now, The Bad News
( The Challenges!)

In order to have credibility with large account
retailers you must be represented by a high
profile broker.

Pro beauty field consists of multiple submarkets
with overall limited sales potential requiring two
step pricing accessed primarily by rep groups and
distributors

Both segments require large margins to cover
high cost of doing business.

Your product line must be unique and different,
or address a untapped market niche.

There must be a compelling reason for your
product line’s existence.
What Accounts Expect

Need manufacturer to create product demand

Need manufacturer to promote product

Need manufacturer to bring consumers into stores

Need US distribution center for
timely replenishment

Need complete timely shipments

Need professional sales representation

Want company decision maker on the
key sales call

Require $5 million product liability insurance
Payment Terms

Standard terms 2% 30, net 31

Introductory first order 2% 60, net 61

Seasonal terms
• Pay at end of season, return remaining product
• % payment in 60 days, balance end of season

Major accounts:
• Pay on scan
• Expect free goods
Product Returns

Guaranteed Sale

Return product if it does not sell

Failure Rate on New Products is 75%!

Product fails, company goes out of
business, chain stuck with inventory
What Brokers Expect

Plenty of Samples

Professional Sales Materials

Compelling Sales Story, reason for being:
• Patent, previous success, strong advertisings, excellent
packaging and displays, timely shipping

7-10% commission paid promptly

Long Range growth opportunity

Company responsiveness and professionalism

Factory field key account sales support
What Brokers Do

Represents a large number of companies

Regular sales calls on food, drug & mass accounts

Handles all paperwork

Checks stores for distribution, pricing, location,

Speaks to buyers frequently

“Eyes, Ears, Feet”— extension of manufacturer

Brokers respect what manufacturers inspect
Barrier to Entry

Lack of knowledge of the market

Major investment required

Need to have US point of distribution
• Public Warehouse
• Joint Venture
• Company Owned Operation

Meeting US Customs import regulations
How to Market

Gain adequate working knowledge of the U.S. marketplace by
doing the preliminary investigative activities
• Attending trade shows
• Contacting trade associations
• Hiring a marketing/sales consultant

Create strategic marketing plan

Choosing right broker or rep organization

Using public relations versus advertising to start
How to Market
(Exhibiting at Trade Shows)

Pro Beauty Market
• Major salon trade shows (4)
• Rep association sponsored shows (2)
• ISPA Spa Show plus additional smaller
spa shows (6)
• International Esthetics Cosmetics and Spa
Conference (2) plus half a dozen other
esthetics shows
• Professional nail shows (5)
How to Market
(Exhibiting at Trade Shows)

Mass Retail Market
• NACDS (chain drug)
• GMDC
(grocery)
• ASD/AMD (general merchandise 6)
• ECRM-EPPS (one-on-one apts.
with major retail accounts 30+)
ECRM-EPPS

Guaranteed 20 minute meeting with
buyer and/or category manager in a
4 or 5 star     hotel room setting

60 retailers in attendance

Food, Drug & Mass

Perfect way to jump start distribution
in mass market
How to Market
Packaging
Make sure it meets U.S. market
requirements from both a
regulatory and marketing
effectiveness standpoint.
Important Information

Key Trade Associations
• NACDS (National Chain Drug Store
Association)
• PBA (Professional Beauty Association)
• ISPA (International Spa Association)
Important Information
(Mass Retail Market Publications)
 Chain
Drug Review
 Drug
Store News
 Mass
Market Retailers
 Supermarket
 NACS
News
Magazine
Important Information
(Pro Beauty Market Publications)

American Salon

Skin Inc

Modern Salon

Derma Scope

Salon Today

Day Spa

Beauty Store Business

American Spa

OTC Beauty Magazine

Nails

Beauty Times

Nailpro

Launchpad
Important Information
(Pro Beauty Market Publications)

and last but not least, my
newsletter the Beauty Industry
Report.
Download Complete BIR
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by Mike Nave
editor
BIR is in “rehab” after
News Articles
Pravana’s Super Shape’s sales
are sizzling
Company has a Good Hair Day
Jim Fisher returns to Jungle at
Nexxus
Lafayette Jones’ Multicultural
Column
Access Brands keeps salons’
phones ringing
Expo Latino opens doors to new
sales and marketing opportunities
for beauty biz
IESCS mirrors skin care
category’s growth
Bob Oppenheim: “Manufacturers
don’t want to control diversion”
Mr. and Mrs. BIR make a quick
escape to Santa Barbara to cover
show
Feature Sections
spending five fast and furious days and
nights in LV covering the third annual
Cosmoprof North America Show and all
the other happenings during the show
weekend. Cosmoprof Bologna it’s not! But
maybe given time, Cosmoprof NA will
reach its potential. Read about the
happenings in the September issue.
In this issue, BIR covers the Santa
Barbara Beauty Expo and Latino Expo.
BIR also drove out to Malibu to interview
Michael Apstein, president/CEO of Access
Brands, to learn more about his 1-800THE SALON new client referral program
for salons.
Last month the salon industry lost a
wonderfully creative hair stylist with John
Sahag’s passing, and in this issue, Dwight
Marketing lesson
By Bob Salem
Marketing represents the greatest
opportunity for independent salons to fuel
their future growth — but not in its current
state. Marketing is most successful when
it results from a fully integrated strategy
that is specific to the brand and
importantly, when the immutable laws of
marketing are respected. We experience
the power of marketing every day through
the choices we have in the products and
services we consume.
For each of those choices, the marketing
intent is to create a memorable and
motivating image. At the same time,
marketers attach attributes to that image
to elicit your trust in its performance.
Everything leading to the creation of trust
Get Your eBIR Free Trial Subscription Complete the
Hand out form and submit to Mike Nave or Fax to:
001-818-222-7828 or email Mike Nave with your
request to [email protected]
Remember, if you ain’t reading the
“Blue Thing,” you know NOTHING!
Important Information
(Valuable Resources)
•
Reshare Corporation, a provider of patented channel management
software. (www.reshare.com)
•
Katherine Frank Creative, a full service marketing and trade show
management group. (www.katherinefrank.com)
•
Kirschner Group USA (Sales rep organization covering the pro
beauty market on national basis. (www.kirschnergroup.com)
•
John O’Maley & Associates, Sales & Marketing Consultants covering
mass retail market on national basis. (www.omaley.com)
•
Fred O'kasick Sales Inc. Sales rep organization that covers the U.S.
Chain Drug Store market. (www.foksales.com)
•
Joni Rae Russell/JRA Associates. Full service marketing
organization specializing in product development and packaging
design. [email protected]
•
ECRM-EPPS Efficient Collaborative Retail Marketing - Efficient
Program Planning Sessions a business process that streamlines the
consumer packaged goods sales and marketing supply chain
(www.ecrm-epps.com)
So where do you go from here?

Use a knowledgeable consultant to gain
sufficient information to make an intelligent
decision, whether to market in the U.S. or
not.

Do the necessary home work

Visit trade shows

Do store checks

Contact trade associations,
Thank You for the
Opportunity!
PBD / BIR, Inc.
Publisher of the Beauty Industry Report
International Representive
Master Broker
Consulting
Michael Nave
President
22287 Mullholland Hwy. Suite 403
Phone: 818-225-8353
Calabasas, Ca. U.S.A 91302-5157
Fax: 818-222-7828
[email protected]
Mobile: 310-614-9880