(Second of two parts)
This time we post the advice of the Go Negosyo Angelpreneurs on the following question that was asked by a reader-entrepreneur and answered in part by Dr Ned.
Q: We’re a brother-and-sister team seeking to become successful entrepreneurs in the male personal care market.
It’s my sister who had the idea. She told me once how I had in my cabinet more “beauty and personal care” products than she had. And yet, she said, “there’s no company that’s the L’Oreal, Avon or MAX Factor of the males.”
She also said that the largest need, and therefore the biggest opportunity, is with the class DE market.
When we shared our ideas with our parents, our dad was very supportive and gave us initial capital to explore the cosmetics products to market.
My sister told me that what she learned from her college marketing was that to succeed, our cosmetics for males should be unmistakably distinctive by being the best.
I devoted an entire year for this product development effort. We now have a line of high-quality male cosmetics of the best quality.
Our problem is cost.
Having the best cosmetics required the best raw materials and therefore high cost and high prices. We both knew there was no way DE males can afford our prices.
But my sister said: “If we have the best, and no one else has, then if we go especially after the male DE market with the best product line, surely success is guaranteed.”
I wasn’t comfortable with this assumption and now seek your advice.
A: The Jr MRxer asked two of his fellow GoNegosyo Angelpreneurs (established entrepreneurs who teach and mentor budding entrepreneurs at Go Negosyo seminars and conferences all over the country, visit www.GoNegosyo.net) for their take on the siblings’ dilemma.
Here’s the first piece of advice from Reuel Virtucio, supply chain guru, founder of the social enterprise Manok Mabuhay SE, and former faculty member at Asian Institute of Management (AIM):
Price sensitivity research
“This is an interesting story and would make for a good teaching case for value mapping.
“My initial take on this is that the siblings boxed themselves in a price point by defining product quality from a technical standpoint and not consulting the target market on the definition of quality.
“Naturally, they would experience profit pressure by positioning their product as low price “best” quality.
“It would have been better if they benchmarked with existing cosmetics in the male DE market first and made incremental improvements in quality as defined by their target market, instead of automatically developing the product using the best available raw materials.
“However, since they already have developed an extensive product line and targeting the DE market makes the business not feasible, one remedy is moving up to the CD market instead.
“However, it would still be best practice to get feedback from the target market segment by product testing and price sensitivity research.”
Minimum basics
The second piece of advice comes from Ramon Lopez, Go Negosyo and Philippine Center for Entrepreneurship (PCE) executive director, RFM vice president of Strategy and “Intrapreneur”:
“My thinking is that the best possible products do not often come out the cheapest and therefore probably not affordable at the DE market.
“Yes you might be tempted to price it low to cater to the DE market. But if the costs are high, it would have low or even negative margins and therefore won’t be feasible and sustainable.
“What you might have to do is go back to your target market and really test with them and assess what attributes or factors in a product they really look for. Is it the cleansing benefit or the fragrance? Is it the other benefits, the whitening or softening effect?
“Which are more important to them and focus on those items critical to their needs and wants and perhaps just meet the minimum basics on the other attributes or even remove if not deemed important.
“The latter items are where you can lower on the cost side.
“You may also review the ways and channels of bringing the product to your target market to select the most cost-efficient ways and, in that manner, we also limit the costs of making the product available to the market and be able to offer pricing at a more affordable level.
“Don’t forget to make your product known to the target market by being able to communicate well the relevant benefits those products offer. Please select the manner you would communicate the benefits to entice them to prefer your brand.
Assuming a limited budget, you can focus your resources to the least expensive but more direct medium that caters to your target market, either by focusing only on one or two TV and radio shows they watch or listen to.
“For the youth or online market-oriented products, the use of social media network and other online marketing means would do.
“Bottom-line Rx is to test the concept with your target market to select only the attributes more important to them.
“That’s where you elevate or focus the benefit and reduce or remove attributes least important to them so that the latter will be the source of your cost-reduction measures so you can price your products at levels they will find sulit.”
Questions or comments? Send them to marketingRx@pldtdsl.net or drnedmarketingrx@gmail.com. God bless!