King of Shaves Company

Market Report

Contents

Chapter 1: Introduction Page

Methodology 3 Brand History 4 Brand Essence 4 Brand Design/Architecture 5

Chapter 2: Setting the Scene

Men’s Market 5 UK Competitors & Positioning 6

Chapter 3: Brazilian Market

Overview of Brazil 7

Rationale for Brazil 7 Market Analysis 8

Chapter 4: Market Expansion Strategy

Product 9 Price 9 Place 10

Promotion 10 Conclusion 11

References 11 Appendix 11

2 Training Material| King of Shaves Company

Market Report

Introduction

This report will introduce you to the King of Shaves brand as well as specific products. Also it will analyse its position in the current shaving and grooming markets in which it operates. This report will also propose rationale for product entry into the emerging market of Brazil.

Brazil is a member of the B.R.I.C nations (Brazil, Russia, India and China). Brazil is also one of the emerging and sustainably growing Gross Domestic Products (GDP’s) of the B.R.I.C. nations second to China and in the top 10 higher than some developed economies such as Canada and Australia (Statistica. 2014. online.)

The changing lifestyles brought about by an expanding middle class, has created a new demand for western products (Brazil Business. 2011. online.) This is a unique opportunity to propose a communication strategy promoting the King of Shaves brand expansion in this market

Methodology

In order to propose a market entry strategy, certain marketing and research methods and tools, such as PESTLE were needed to gather informative quantitative data. This data was used to develop a viable and robust marketing strategy. This report mainly use’s secondary quantitative research methods to pinpoint the elements of the macro environment regarding grooming and shaving markets, firstly in the UK and then Brazil in South America.

This involved accessing a number of market survey reports conducted by Mintel, The Telegraph broadsheet, Cosmetics design-Europe, NPD Group, Companies and Markets.com, Statista and The Brazil Business. These online reports were used to primarily highlight the important trends in the buying behaviour of men in the UK and Brazil.

3 Training Material| King of Shaves Company

Market Report

Brand History

The creation of the king of Shaves brand, at its earliest genesis, began, like most innovation out of necessity. Since like most men King found shaving uncomfortable, therefore he set about making that experience less painful by manufacturing shaving oil. This was the conception of the very first King of Shaves product, born in the kitchen of Will King and launched in the department store Harrods, London, United Kingdom (UK) in 1993.

Since then the King of Shaves brand can be found within drug stores and supermarkets throughout the UK such as: Superdrug, Boots, Tesco, Waitrose and Sainsbury’s. The King of Shaves brand has grown in strength, for example, since the innovative design of the Azor in 2008 to the ‘game changing’ Hyperglide in 2014 this constant development in blade design and shaving gel, and female shaving range has created sales to make King of Shaves the top selling brand in the UK . In addition, this British based brand has represented quality, innovation and enterprise in countries throughout the world such as America, Australia, Turkey and Japan.

Brand Essence

There are a number of elements that make up the heart or centre of the King of Shaves. Firstly there is innovation; this has lead to creation and being a challenger. The brand puts standing market leaders under pressure, by its hard and soft product range and interaction with its customers, and thus maintaining customer loyalty.

This ‘customer centricity’ strategy or customer driven approach used by King of Shaves has created a very strong brand, maintaining sales by serving its best customer segment in any economic climate. Added to this are humour, fun and quality as being inherent in all communications to its customer, and connecting with them emotionally to a unique, fun and personal brand. In a functional way, the brand is built on innovative technology. Being that Will Kings background was in manufacturing engineering, many of the male and female shavers are technologically cutting edge. Their aim is to provide a smooth shave and reduce the skin problems caused by constant irritation.

The customers can find all their skin care needs from preparation, shaving on through to after shave care, and connected to this is the relevancy of the products and strong identification with consumers, who can find all their skin care needs in a personalised and unique brand.

This customer-centric orientation essentially reduces the need for large R&D (Research and Development) departments. For this business model fundamentally builds customer loyalty, increases up-sales and embeds customer service as an integral aspect for the company.

4 Training Material| King of Shaves Company

Market Report

Brand Design/Architecture

Building a brand is essential for its longevity and success within the market place (refer to figure 1, in Appendix). The importance on getting it right is imperative to a long term strategy as well as, reaching different or new consumer segments.

These sub-brands have the same association to the consumer as the parent brand. In that way they share the similar values and communication in the advertising campaigns, as well as, personality, packaging, pricing and core promises. The results have been, less confusion, higher brand recognition and identification. The sub-branding strategy can produce a ‘halo effect’, the sub-brands sell well with consumers and they are more likely to try other King of Shaves product range.

The only drawback to this strategy is that there is a chance that due to one sub-brand having a negative press; this could impact upon the parent brand. However, King of Shaves has utilised sub-branding effectively, offering products to different: ages, genders, skin care segments and locations worldwide. Finally, the brand architecture of the King of Shaves has embedded in its blueprint is enthusiasm, excitement and enjoyment.

UK Men’s Market

The principle target consumers for the King of Shaves are men (refer to figure 2 in Appendix). There are 27.6 million men residing in the UK (ONS. 2011.online), although women spend more time on average than men regarding grooming, since the 1990’s there has been an increase in male grooming and facial hygiene (NPD Group. 2013. online). The male UK market has grown by 4.4% year on year, and males are spending £25 million on self grooming since 2012 (NPD Group.2013.online)

The UK male grooming market is now well established, for instance, 78% of British men claim it is important to maintain a good appearance. While 67% across regions state it is more acceptable for men to groom now than it was in the past (L’Oreal men’s grooming report.2014.online).

In addition, 47% believe a well managed appearance has lead to success/goal attainment. Although there was a 5% decline in the grooming market in 2011 due to reduction in disposable income per household (Mintel.2011.online) However, in 2014 50% of British men are turning to cosmetics to overcome the aging effect and stress of recession, in contrast to only 28% of men who began to care about their appearance after pressure from a partner (L’Oreal men’s grooming report.2014.online).

Confidence is a major factor in male grooming to establish them in the modern world, 72% of men overall and 84% of 18-29 year olds claim that being well groomed adds to confidence (L’Oreal men’s grooming report.2014.online). NPD Group’s 2013 research into the male grooming market found that skin hygiene regimes differed across regions. Also moisturisers

5 Training Material| King of Shaves Company

Market Report

represented over 20% of all skin care needs in the UK, the other skincare products outside the top ten where: anti aging cream and eye products (NPD Group.2013.online).

Competition and Positioning

The main competitors in the male grooming, shaving and skincare market are, Unilevers Gillette owned by Proctor and Gamble, closely followed by Wilkinson Sword (Cave.2011. The role of number three is not as clearly defined as stated by Will King himself, he says “But there is no number three so you realise you only have three competitors-two existing big guys and a lack of awareness. So if you get the right partner, there s no reason why you can’t explode the brand” (Cave.2011.Telegraph online).

The King of Shaves Azor razor series was designed and manufactured in the UK the first of its kind. Introduced to the market in 2008, and currently in the Azor 5 series, which was launched in 2011, during that time-2011-the Azor, in the UK, was third best selling razor by distributing 500,000 to outlets for the product.

Will King said “We sold six million handles, and about 35 million cartridges, but [the Azor series] was not enough...We needed to do more” In 2014 the Hyperglide razor was launched (refer to figure 3 in Appendix). This technology has been rated as being true innovation for the men’s shaving market, and predicted first year sales of £2-£3 million (King.2014.King of Shaves Blog. online)

Some of the other companies such as Clinique, Clarins and Lab Series have all launched an ‘advanced’ skincare products in recent years, other key competitors are L’Oreal and Lancôme men (NPD Group.2013.online). Proctor and Gamble dominate the UK market share and sales with 31% of the market share, and King of Shaves 10% (Cave.2011.Telegraph online).

By positioning the brand in the middle market( refer to figure 4 in Appendix) on price and an, innovative brand experience (refer to figure 5 in Appendix), this has allowed King of Shaves soft and hard products to acquire various young segments of the market the 18-24, 25-34 and the middle age segments also. Allowing The King of Shaves to gain a 10% share of the overall UK market, creating both Business-to-business (B-2-B), which can be more difficult than Business-to Customer (B-2-C) relationships, the skills of Mr King in getting B-2-B agreements was demonstrated when he got Harrods to first stock his shaving oil on their shelves in 1993.

6 Training Material| King of Shaves Company

Market Report

Overview

A PESTLE examination is an important model used to carry out an analysis of the macro, or larger external environment of Brazil as a whole. This allows for a further or deeper understanding of the Political, Economical, Social, Technological, Legal and Environmental implications as factors affecting business. This tool seeks to allow for a balanced informed decision regarding entry into the Brazilian market, for the King of Shaves company.

One of the main factors of this model, which is essential to focus upon is, the social or cultural complexities, which are unique to Brazil that are in contrast to the norms and values of the UK. A lack of understanding could be a cause of failure in Brazil for the King of Shaves, due to significant changes the brand essence may have to go through. Despite this, King of Shaves already has a significant foot-hold in this foreign market, which is still in its early stages. Therefore the brand is aware of what to take into consideration and also how to make a connection with its consumer targets and capitalise on this to further penetrate the market share in the Latin American Market.

The importance of this understanding culturally, King of Shaves will build cultural and personal connections with its customers especially via social media. For instance, the reaction from advertising/promotional campaign/techniques will most definitely differ from the UK. As Brazilian people focus primarily on social and environmental sustainability, which persuades their purchasing decisions. Therefore, highlighting business sustainability practices and social mobility tone be considered for this will suit consumers, especially during the 2016 Olympic games that is to be held in Brazil.

International brands are trusted due to previous exposure to them especially during the 2014 World Cup hosted in Brazil. This will enable the King of Shaves to use the well known event that is the 2016 Olympics, to promote its softer brands to further establish its market share in Brazil, whilst providing customers with quality products.

Rationale for Brazil

Brazil is the best Latin American market for King of Shaves to introduce more of its soft products, the Azor shaver was launched in the Brazilian in 2012 by Mr King himself (Brazilian King of Shaves website.2012.online), with the up and coming Olympics and further development of the IT and infrastructure, this will be an opportune time to introduce consumers to its extensive product range and increase market share.

As being one of the BRICS nations (consisting of, Brazil, Russia, India, China and South Africa) and is one of the emerging markets sixth in the Largest GDP list currently standing at USD $ 2,246,04 billion. The population stands at 204 million in 2015, with a stable balance between an aging population, and young working taxpayers due to a decrease in family sizes. The government has prepared well and maintained an economic strength, which is considered by economists as one of the pillars of the emerging economies (Ramos. Statistica.com.2014.online)

7 Training Material| King of Shaves Company

Market Report

Brazilian men’s grooming is one of the fastest growing markets for personal care, and occupies second position regarding male grooming behind the U.S. (Companies and Markets.com. 2013. online). The male market has increased 25 per cent in current value and will be estimated to reach USD $8.4 Billion. This suggests that Brazilian men are demonstrating an attitudinal change when it comes to personal grooming that has a strong attachment with social mobility and professional opportunities (Companies and Markets.com 2013.online)

Market Analysis

Politically the government is a federal presidential republic, which is based upon a democracy that facilitates rather than controls economic development. By abandoning protectionist economic policies, and moved on to deregulation, privatisation and economic liberation. In addition, with the foreign direct investment (FDI) mainly from China, contributing to the country’s infrastructure many businesses consider this country as a source of foreign expansion, with one of the most robust consumer defence systems following the U.S. model (Investopedia. BRICS.2014.online, Bussey et al, Latin America: Legal and Political Trends, 2014).

Concerning economic sustainability during the world recession Brazils GDP only shrank 0.2 per cent and income per capita, has made Brazil one of the fastest growing markets. It has the largest population of all Latin American countries with 204.45 inhabitants currently increasing 212.08 million by 2020 developing USD $2.5 trillion in GDP. The increase in wages per household, which is 15,000-50,000, which has resulted in lifestyle changes leading to the demand for quality western brands and products.

Angelis, an analyst for Companies and Markets.com explains that this change in grooming perception has been influenced by television, direct advertising merchandising and the internet. Also stating that the main reasons for this shift and increase in the use of male cosmetics is experimentation with appearance. Due to this 86 per cent are regularly using moisturisers, coupled with image consciousness attached to professional success.

King of Shaves can further establish the brand in Brazil. Brazil has the sixth largest gross domestic product (GDP), which places them just behind countries such as: United States, China, Germany, France and the UK who are fifth. Due to this living standards have improved allowing more households to have more disposable income. This ‘expanding middle class’ that is, class D and E elevating them into the class C income bracket concentrated in the Rio de Janeiro and Soa Paulo regions.

People who are part of this emerging middle class also want to buy products the same as classes A and B not only cheap goods that are designed for the poor (Companies and Markets.com.2013.online

Real growth prospects lay within the skincare soft products, such as moisturisers there are some 58 per cent of men aged 18-24 and 63 per cent of 25-34 are using face moisturising products. This market will reach USD $4 billion by the end of 2015. Gabriella Elani, a

8 Training Material| King of Shaves Company

Market Report

researcher at Mintel says “The fact that sales of men’s personal care products have risen sharply over the past five years, highlights the growth in product categories traditionally segmented by gender” (Mintel.2014.online).

Product

King of Shaves currently has a wide product portfolio suited for men to build a daily grooming regime (refer to figures 6-10 in Appendix). When launching before and during the Olympics of 2016, the brand will focus primarily on the range of face washes and moisturisers to cleanse and revitalise the skin. This skincare range will support the Azor range already launched in Brazil in 2009, this will accommodate for a wider consumer base, launching a skincare product alongside a shaving product to best cover all markets.

King of Shaves award winning shaving software, which are gels, serum and oils that lubricates and protects the skin. This stream of products are selling in the UK and the USA and are likely to successfully translate in the Brazilian market also as a support and compliment to the Azor product range. There are four main skin type products, which will allow King of Shaves product differentiation, and the focus upon the shaving skin, soothing and cooling effect, sensitive and newly introduced charcoal moisturiser.

Handling the language barrier regarding branding, King of Shaves already has a partner in Brazil, known as Aeager, who are part of Bright star- a USD$200 million beauty, toiletries and fragrance brand owner and distribution company. This will allow for the company logo to be in Portuguese for those who do not speak English

Price

In Brazil the Brazilian Real is its own currency, however, they also use the US dollar. The pricing of King of Shaves will be directly transferrable from Sterling to US dollars or Brazilian Real. Shipping costs may be passed on to the consumer, which could make entry price a bit higher. However, if the product skincare launch is successful in the long term, overseas partner, manufacturing should be moved to Brazil, this would reduce production costs and decrease price.

The quantities that the partner, Aeager purchase should increase during the Olympic event, as King of Shaves brand awareness is already high in this country due to online games such as: King of Defenders, King of Power and King of Guitar. King of Defenders had 4.45 million plays during the Azor launch in 2009 and there is a growing popularity of the brand name

King of Shaves needs to keep the price low as possible whilst not compromising on quality. By doing this they ensure extra costs are not passed on to the customers. Therefore, the products in Brazil will range from BRL$ 29.81 (USD$ 4-$10), which will cover shipping and manufacturing costs. Ensuring the company is built as a mid market brand making it accessible to all consumers.

9 Training Material| King of Shaves Company

Market Report

Place

The industrial power house of Brazil, Sao Paulo and the emerging Rio Di Jenario both has the fastest growing development and socio-economic booms. In, addition, Brasilia-the capital has the largest male grooming markets. (Companies and Markets.com.2013.online) It is these cities that King of Shaves should enter as they present the largest profitable market. These are cites in Brazil the highest disposable income, and are likely to buy imported goods. Consumers in these areas, including the Favelas, are open to imported products and see them as being of high quality, with the right marketing King of Shaves can emulate this.

The distribution channel provided by Aeager/Bright star will provide the consumers to access King of Shaves products in department stores and supermarkets and some drug stores. The retail group Drog Ignatem, will have a strong relationship with the Brazilian consumers and they will trust the products. The mediums used in Brazil with the highest percentage are online shopping and catalogues, only 17% of the population shop directly the store, while 53% use catalogues, 38% from the internet, 29% from telemarketing and 6% using a mobile

According to the study online shopping in Brazil has increased due to more men more than women, and more than 50% of these are 35-49 years old and within the socio-economic class A (59%) are the majority of all online consumers while class C represent 13%. King of Shaves should use the social media and internet shopping to reduce high overhead costs.

Promotion

The aim of product expansion in Brazil is to gain market share and brand recognition in an emerging market. In addition, to increase King of Shaves global presence and income, to achieve this certain objectives need to be accomplished such as:

Marketing Objectives Communications Objectives

Successful brand with media attention Use Olympics to increase brand awareness

Gain 15% market share in 3 yrs Gain a steady growing customer base

Drive sales via website & social media Communicate brands personality to prospects

Television advertising is costly; therefore viral campaigns are a better economical alternative, which is more suited to the brand. The message should be that consumers will have clear close shave and a well groomed skin to achieve goals and personal success in life. Using the Olympics theme, the advert will be based upon the 100m sprint.

Having the camera pan across all contestants, who have lots of facial hair or ungroomed skin, as the starter fires his gun all compete whilst shaving and or applying moisturisers’: at the end the Brazilian contestant wins clean faced and fresh. Using a member of the Olympic team or the logo may be expensive or the team may be already endorsed, then the use of a

10 Training Material| King of Shaves Company

Market Report

local team can be used. After the Olympics King of Shaves can continue to sponsor such a local team athletic or sports team to further promote the brand

In conclusion, when looking at the competition, strong extensive marketing campaign, where Proctor and Gamble during the 2014 world cup became one of the important sponsors, seeing a notable jump in sales due to this. King of Shaves should invest heavily during the Olympic marketing campaign through a variety of social mediums. Some promotional ideas may be costly, but the emerging market of Brazil and population growth, can however provide a profitable return on investment (ROI) with this marketing mix of product, price, place and promotion, giving the company a strong market presence, expansion and maximise sales.

References

Cosmetics and design-Europe.com (2011) Men’s grooming set to be a driver in Brazil skin care category [online] [United Kingdom]: Headlines [cited 17th April 2015] Market Trends. Available from the World Wide Web: http://www.cosmeticsdesign-europe.com/Market-Trends/Men-s-grooming-set-to-be-a-driver-in-Brazil-skin-care-category

Companies and Markets.com (2013) Men’s grooming market dominated by Proctor and Gamble with 31% value share [online] [United Kingdom]: Finance [cited 10th April 2015]. News and Opinions Available from the World Wide Web: http://www.companiesandmarkets.com/

NPD Group (2013) Men’s prestige skincare is now worth 25 million [online] [United Kingdom]: Press Release [cited 22nd April 2015] Men’s Grooming is Booming. Available from the World Wide Web: https://www.npdgroup.co.uk/wps/portal/npd/uk/news/press-releases/mens-grooming-is-booming/

Mintel (2003) Over half of young men now use facial moisturiser [online] [Sao Paulo]: Expertise [cited 19th April 2015] Consumer Research. Available from the World Wide Web: http://www.mintel.com/press-centre/beauty-and-personal-care/young-men-using-moisturizer

Statista (2014) Statistics and facts on the BRIC countries [online] [United Kingdom]: Industries [cited 13th April 2015] Info graphs Available from the World Wide Web: http://www.statista.com/topics/1393/bric-countries/

The Brazil Busines.com (2012) Purchasing Behaviour in Brazil [online] [Sao Paulo]: Business Culture [cited 19th April 2015] Consumer Trends Available from the World Wide Web: http://thebrazilbusiness.com/article/purchasing-behavior-in-brazil

The Telegraph (2011) King of Shaves chief Will King aims to beat Gillette on price and performance [online] [United Kingdom]: Finance [cited 17th April 2015] Retail and Consumer Available from the World Wide Web: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8260261/King-of-Shaves-chief-Will-King-aims-to-beat-Gillette-on-price-and-performance.html

11 Training Material| King of Shaves Company

Market Report

Appendix 1

Figure 1

Figure 2

12 Training Material| King of Shaves Company

Market Report

Figure 3

Figure 4

13 Training Material| King of Shaves Company

Market Report

Figure 5

Figure 6

Figure 7

14 Training Material| King of Shaves Company

Market Report

Figure 8

Figure 9

15 Training Material| King of Shaves Company

Market Report

Figure 10

16 Training Material| King of Shaves Company