management

Group Research Project

Entry of Clear Essence Ethnic Skincare & Cosmetics Brand into the

Kenyan Beauty Supply Market

Contents

Executive Summary………………………………………………………………………...……3

PART I: Evaluating Sustainability Business Model Opportunities

• Purpose……………………………………………………………………………….……4

• Environmental Analysis………………………………………………………………...…4

• Market Structure Analysis…………………………………………………………………5

• Market Opportunities…………………………………………………………………...…6

• Competitor Analysis…………………………………………………………………….…6

• Key Insights…………………………………………………………………………….…7

PART II: Evaluating Capability readiness of the

• Purpose…………………………………………………………………………………….7

• Value Analysis…………………………………………………………………….………8

• Growth Strategy……………………………………………………………………...……8

• Collaboration/ Acquisition…………………………………………………………...……9

• Key Insights…………………………………………………………………………..….10

PART III: Implementation plan

• Purpose…………………………………………………………………………………...10

• Cage Analysis…………………………………………………………………….………10

• Stakeholder Analysis………………………………………………………..……12

• Business Model………………………………………………………..…………13

• Key Insights……………………………………………………………..……….13

Exhibits/ Appendices

• STEEP analysis………………………………………………………………………..…14

• Five Forces analysis……………………………………………………………………

• Blue Ocean analysis……………………………………………………………………

• 9 M analysis……………………………………………………………………

References………………………………………………………………………………………

Executive Summary

The Clear Essence Brand is one that has for many decades shown that it has the capabilities and the competencies, as well as tools and offerings, to enter into multiple markets. These entries have all ensured that there has been in place a direct and careful framework established that taps into the needs and openings in markets that have room for the Clear Essence brand to make an entry. The decision to explore the entry into Kenya is a recent move in that same direction. Kenya has a budding and exponentially growing cosmetics and beauty industry that is attracting the attention of local, regional and multinational cosmetics companies and firms. The room is available and the time is right for Clear Essence to make an entrance into this market while there are still many unexplored and untapped segments of the market that can be capitalized off of. Clear Essence can and should take this moment to enter as it has the growth potential and the tools needed, as well as an environment in Kenya that is an aligned match for the products that it has to offer. This is backed up through an extensive look at the operational realities of the Clear Essence brand, as well as the environmental realities of Kenya at this time.

Part I – Evaluating Sustainability Business Model Opportunities

Purpose

The sustainability and the ability for this concept to work in Kenya is the main consideration of this segment. Here there is a push to understand the existing forces that can and will dictate the direction that the company can go in to compete and how its competition is in the first place. This will be accomplished with a breakdown of the existing competencies had and the existing market segments held by the competition which ranges from domestic brands, regional players as well as large multinationals that have all in recent years made a push to enter into the Kenyan beauty market (Situma, 2013). By understanding this, there can be a realistic analysis of the best direction and decisions that Clear Essence can make as it considers its potential into the Kenyan market.

Environmental Analysis

Social, technological, economic, environmental, and political conditions in Kenya all point to a nation that is a good fit for the expansion of this organization. The nation is one that in many ways has already been tested out over the last 5 years by other nations in terms of the strength and stability of these factors (Situma, 2013). Not only are these conditions stable and positive, they are also growing in terms of the manner in which the environment is able to support and allow for success for new entrants. This is because the as the economy and the political situations stabilize further and more economic investment occurs in East Africa, the more the population is able to support the growing demands amongst the middle and upper classes for luxury items, of which makeup counts towards. This is seen in a recent report that noted that the beauty industry is slated to grow across the board in East Africa specifically:

(Odero, 2016)

Clear Essence falls directly into these categories and is entering in a time when their products, which are crafted specifically for ethnic skin and hair, can capitalize off the growing trend and push in the cosmetics increases in Kenya. The environment in terms of the social and the economic are therefore very much so open and supportive of the decision to enter.

Market structure analysis

The Five Forces conditions on their own however do not necessarily seem that positive. This is because mainly the bargaining power of consumers, the threat of new entrants and the threat of substitute products are all quite high. This is because, while in some markets Clear Essence stands out for catering to the minority needs in healthcare/ skincare, in Kenya, this will be the major push and focus of the regional players and the domestic players in a big way already. There is in fact a large trend in Nigerian products making their way into Kenya as well (Beauty Africa, 2016). This leaves the consumers needing a large amount of push in marketing to establish any differentiation in the Clear Essence brand and the existing choices that there are.

Market Opportunities for Alternative Business Models

This is surely then for Clear Essence a red ocean that they are stepping into. However, they can attempt a blue ocean strategy and find new manners to offer to the population the same products, but under different concepts and with more creative marketing. This may be the manner in which they are able to address the needs of the company in a way that allows for a way to avoid the red and create the blue. This can be in the manner in which the products are gotten to the hands of the consumers, such as home to home Avon methods, or more of a collaborative and exclusive rollout and line to the consumers. There are manners in which they can avoid the red ocean by not entering into the market in the same manner that the existing competition, such as big names like Revlon have been doing since 2013.

Competitor Analysis

There are many local and regional players in the nation that can be considered as major firms, however, the Revlon brand is by far the largest multinational player in this market. They have entered in the last five years and have been pushing their brand quite hard as they attempt to make a strong cornering of this east African nation. Revlon is an organization that focuses on a centralized HR process that also allows for regional research and considerations so that they are able to be flexible and responsive to needs. They additionally enjoy a solid and organized supply chain that effectively gets items to their end locations with little disturbance. The customer relation strategy of the company is also refined and follows the overall parent company brands of offering integrated and responsive channels to give their consumers a voice. Revlon is additionally known for investment that falls on the side of a budgetary approach. The organization also uses a private-social combination for its stewardship that focuses on CSR as well as shareholder returns.

Conduct 9 M analysis of a major firm in the target local market, to understand the functional strategies driving that firm’s success

Key insights

This market and entering into it has certain risks that must be taken into consideration. The environment and the market are neither fully open and easy and neither are they closed off and too difficult. What is needed is a plan that takes into account the fact that the country is in fact growing its cosmetics industry and is in a position to let far more competitors in during this time when companies are still vying for open segments of the market. However, there is a need to enter in a manner that prepares for the need for differentiation to be able to capture not only new segments, but also some that are already claimed by others.

Part II – Evaluating Capability Readiness of the Firm

Purpose

This segment lays out the many reasons that the Clear Essence brand is ready to further expand and enter into the Kenyan and the East African market. This is shown through a combination of the analysis of not only the company itself, but also the readiness of the Kenyan market itself (Lati, 2014). Through a value analysis as well as a look at possible expansion, growth and collaboration potentials, there can be a manner for Clear Essence to assess itself, and see that it is indeed ready and capable of making this entry now, while there is still considerable room for it to make an entrance. The additional purpose of this segment is to highlight that there is a need to ensure that there is a focus on strategic integration and growth strategies on the part of Clear Essence before it enters, as well as in a continuous manner as it is in this nation. The threats of new entrants will only grow as time goes on, and high-level mergers and acquisitions on the part of multinationals organizations like Revlon can be a serious threat if they are not considered while making growth strategies for the company.

Value analysis

Clear Essence has a value in its precise and extensive focus on a single area of retail concern. For well over 25 years they have been offering skincare as well as haircare products that cater to a large and core customer base (Clear Essence). They have shown that they have the tools and the capabilities, as well as competencies to carry their model and their products across a variety of nations and continents having to date expanded into multiple parts of the world. They have allowed there to be multiple streams in which the products are available to the consumers which include assigning ambassadors to sell the items, online stores, physical partners and retail store locations. This combination shows that they have the custom solutions and dynamic and extensive capabilities to enter into the Kenyan market using these same tools and approaches. The advantages for Clear Essence can also be seen in the fact that the Kenyan market has related industries and support capabilities that are vital for the Clear Essence brand, such as location, raw supplies and fulfillment partners. The demand conditions also create an environment that allows there to be room for new entrants to come in as well.

Growth strategy

By entering into this new market, the Clear Essence brans will in fact be growing in a general manner. They can further this by also making an effort to engage with and work with the local brands for brand expansions, or by creating more collaborations and making purchases of local brands to allow it to have more ability in reaching market segments within the cosmetics users in the nation. There is no reason to break from and fail to align with the existing structures of their company process, as this has been one that has worked for them to date in the many nations they have gone into already. The best bet for growth in the integration would be to focus on strategic alliances to save money in the short run, as well as strategic acquisitions that can allow for careful control over well-researched market segments. The major risk for growth will be the existing competition and the real possibility that as this region expands more and more and gains the attention of other organizations, there will be new entrants that will capture more market segments through better alliances and acquisitions/ mergers.

Collaboration / Acquisition Strategy

The Clear Essence brand should be focused greatly on both of these areas of consideration. Both the idea of collaboration as well as acquisition are imperative if there is to be both growth as well as a securing of market segments for Clear Essence. The motivation should be to preemptively consider the new entrants and the potential for substitutes for the consumer. There should also be the consideration of the need to ensure growth in a dynamic and continuous manner. The collaboration can be with a number of companies and organizations in terms of both actual brands, warehousing and shipping/ fulfillment centers as well as stores. The fact that there are brand ambassadors can mean that local chain stores for beauty supplies can be worked with to create specific lines in a complimentary and related diversification strategy. There can also be special brands created with larger stores to piggyback off their market and foot traffic and increase their exposure and visibility to more consumers. There can also be a consideration of creating with these same larger stores strategic alliances that can be beneficial to them both. The major drawback of these options can be seen in the risk of getting bogged down in what may only be short-term alliances that may not be long-term what the organization needs, and can cost it some autonomy.

Key Insights

What can be seen and learned in these considerations is that there are many paths that can be open to Clear Essence as far as expansion and collaboration go. Growth needs to be a constant consideration that they are focused on if they are to attempt any long-term viability and competitiveness in this potentially red ocean market. The value analysis shows that Clear Essence is in a god position and that they can in fact make the jump and have many options in front of them for expansion and collaboration. These however, will only be fruitful with a diverse look at multiple options that can be taken advantage of in a way that allows for them to grow using multiple tools. These tools include things such as the focus on creating strategic alliances that can help it to reach more people through relationships, as well as the crafting of creative and new manners of selling and presenting the products that they have in their brand.

Part III – Implementation plan

Purpose

This segment endeavors to assess the cultural, economic, administrative and geographical differences that can be found in this nation and how that will create opportunities for adjustment on the part of Clear Essence in terms of incorporating these norms into its business practices, its operations as well as its overall product pricing and offering.

CAGE analysis

The major considerations in terms of government, geography and economic differences can be seen in this organization and its intended market as not being hard to bridge. Again, this is because the company has already entered into, and in actuality started in, markets in Africa, the Caribbean and so on. They are therefore well aware of the implications and the needs of these markets. The cultural angles that most affect the offerings are in particular already addressed as the Clear Essence brand is focused on offering items custom crafted and created to be offered to the ethnic communities that are dominant in Kenya. The target market is therefore already in line with the goals and the realities of the Clear Essence company. Additionally, as the nation’s company is labeled as a lower middle income by the World Bank, the price ranges of the offerings fall in line with the economic abilities and realities of Kenya (Euromonitor International, 2017). Additionally, in terms of the economic and the administrative angles of doing business and expanding business, Kenya is ranked as participating in reform that is making doing business easier and more fluid (The World Bank).

The major area that do need to be addressed will be the operational manners in which the company addresses itself and others. This means ensuring to know that in Kenya there are cultural norms in business that intersect at a line in which there is a need and push for casual relationships as well as formal business ones at the same time. The conditions however overall are conducive and line up well enough with the Clear Essence brand that is already a multinational company that is sold across many continents. The Kenyan CAGE variables also allow for the company to enjoy many commonalities with the anticipated market with only some considerations needed for the cultural business realities and operational realities once the market has been entered into.

Stakeholder analysis

There will be a variety of stakeholders in this expansion into Kenya scenario. The largest and most obvious will be the shareholders of the Clear Essence company. These individuals will be able to decide ultimately if there is going to be any entry at all as they may not find it to be a prudent or profitable decision to make at all. These stakeholders are the ones who will make the decisions and the only manner to manage them and their power is to be prepared with answers, figures and data that shows that this is a viable and lucrative endeavor to embark upon. This can be done with transparency at the highest levels. Another stakeholder will be the employees at all levels of this organization. These individuals will have a good amount of power themselves because they will be needed to fill a variety of functions as this organization embarks on their path towards this entry into Kenya. Their power needs to be managed as well through transparency and inclusion so that they are aware of the goals and the reasons for the expansion so that they do not push against any change and internally slow down the process. This will also include the new employees of the company in Kenya directly, who will also have power and need to be treated in an equitable and balanced manner to control and manage their power.

Another stakeholder will be the consumers themselves as well as those who are connected to the company through proximity of chipping methods, store locations, etc. These individuals have power in that they can affect support for, and thereby survival of the company the latter group has much less power than the actual consumers. Both can be managed through systems that offer them transparency, fairness and cooperation as well as listening to their needs in constructive manners.

Business model

The business models that should be used is a collaborative one. This means that they should focus at first on entering with strategic alliances that sees them working with existing brands and stores to sell the items through their brick and mortar locations. This can save the Clear Essence brans considerable money and energy as they find their footing and also gives them access to larger segments of the market right from the start. The market selection process itself has identified Kenya as a nation that has a large growth and focus on the beauty industry and is increasing exponentially on a yearly basis.

Key insights

This analysis has shown that once again Clear Essence is in a strong position to enter this market and has in its capabilities the tools needed to create a multipronged approach to entering into the Kenyan market, and can choose to use multiple of them to start with, or it can choose to focus on one business strategy in full. The existing stakeholders in the company’s activities can also be managed in a way that allows for the regional realities to be addressed and focused on as well. These make the implementation plan of the company one that can very easily be put into action with a number of strengths and tools in favor of Clear Essence and its desired activities in offering their products inside of Kenya.

Exhibits

STEEP Analysis

Content

Five Forces Analysis

Content

Blue Ocean Analysis

Content

9 M Analysis

Content

References

Clear Essence Company Homepage. Retrieved from: https://www.clearessence.com/