Team:SSTi-SZGD/Entrepreneurship
Overview
In order to bridge the gap between laboratory research and commercialization, we implemented our project “hyaluronic acid production plus microneedle patch formulation” into commercial advantage. Imagine that we are a startup company that provides solutions right from various mass hyaluronic acid production to comprehensive microneedle preparation. Based on the analysis of the current market, relevant products, and feasible promotional channels, we came up with a comprehensive business plan with respects to business model, marketing strategy, market and financial analysis.
Business Model Canvas
We constructed a business model canvas (below) as a guideline for our overall project direction. It plays the role of summarizing business model, and providing guidance for long-term implementation. From time to time, we would make changes on the canvas, through looking for loopholes on the existing business model to avoid potentially incorrect business decisions. Overall, this canvas will help us stay on top of the project.
Key Partner |
Key Activities |
Value Proposition |
Customer Relationship |
Customer Segments |
Cost Structure |
Channels |
Key Activities |
Revenue Streams |
Business Plan
Below is a copy of the 'Business Proposal' (Chinese version) we have written as a supplementary material to the entrepreneurship competitions we participated through the year.
Some key sections of this pdf has been translated into English and shown below.
Market Analysis
According to the data of “2018 market analysis report of sodium hyaluronate in China -- industry operation situation and development trend forecast”, hyaluronic acid containing cosmetics and skin care products raised to a sale of $2,543 million in 2017. (see Fig.1) As the global economy recovers, the global market for cosmetic sodium hyaluronate is forecast to exceed $2.8 billion by 2018.
Fig.1. Global beauty use hyaluronic acid sales in 2015-2017
According to figure 1, at present, hyaluronic acid is on the rise in the beauty industry, showing a strong marketing potential. In recent years, with the rapid development of biotechnology, biological and microbial preparations of active ingredients and effective materials used in cosmetics have been widely applied in many aspects of industrial production. Many biological materials, such as hyaluronic acid (HA), superoxide dismutase (SOD), and epidermal growth factor (EGF), have been successfully applied in cosmetics as effective additives. One of the main directions of cosmetic development is towards biologization. With the improvement of fermentation technology and production expansion, hyaluronic acid (HA) has become an important component in skin care products, and highly recognized by the market and consumers.
Currently, most of the HA products on the market only stay on skin epidermis temporarily, and cannot penetrate into the skin dermis. As a result, the water retention effect of HA is not obvious, and the duration is short, which requires frequent use to maintain the effect. According to the market prospect and demand, we proposed to develop a crosslinked HA based microneedle product. Through the percutaneous penetration system of microneedle, HA can be released efficiently through the epidermis, giving full play to the role of HA, with better effect. According to the current demand of consumers for HA and the market analysis of the cosmetic’s industry, hyaluronic acid microneedle has a strong market potential to replace the traditional injection methods.
SWOT Analysis
We analysed HA based microneedle closely to understand the advantages and disadvantages with respect to various internal and external opportunities and threats. By conducting a SWOT analysis, favorable and unfavorable factors can be reveled, existing problems can be identified and solutions may be located.
| Strengths |
|---|
| 1. Technology well established, with feasible control. |
| 2. Safety, using food grade bacteria for HA production. |
| 3. Easy to use, HA microneedle is absorbed completely without waste. |
| Weaknesses |
|---|
| 1. High product development cost. |
| 2. Stringent requirements for mould crafting. |
| 3. Market incubation period is long. |
| Opportunities |
|---|
| 1. Great market demand. |
| 2. Promising product proposition. |
| 3. Potential for multi-function product development. |
| Threats |
|---|
| 1. Similar products exist in Asia (i.e. Japan) |
| 2. Can be copied |
Target group characteristics
European phenomenon
Cosmetics as a kind of daily consumables have been accepted by more and more consumers. According to TNS Worldpanel Europe, women aged 40-59 in Europe spend nearly twice as much on facial care as women aged 25-39, while women over 60 account for almost 34% of the facial care market. These data reflect that the consumption of cosmetics by women in developed countries increases with age. On the one hand, with the disposable income increases, the demand for anti-aging products also increases.
Chinese phenomenon
The 2018 analysis report of China's cosmetics industry － in-depth market research and development prospect forecast released by Guanyan World. According to the report, the consumption proportion and growth rate of people aged between 26 and 35 in facial skin care and perfume and color cosmetics in 2016 were significantly higher than that of other age groups. Among skin care products, anti-wrinkle products accounted for the highest average consumption amount in 2017, followed by moisturizing and moisturizing products. At present, the post-80s generation is the main anti-wrinkle consumption target group. With the enhancement of young people's awareness of skin care and the early start of skin care, the number of anti-wrinkle products among the post-90s generation is also increasing, accounting for nearly 15%. According to a report on the survey of cosmetics consumers in China in 2017, the proportion of cosmetics consumption of 25-35 years old is 76%, and that of those over 35 years old is 12%.
In general, we have two types of consumer groups, one is young consumers, young women aged 20-30. The other group is the middle-aged consumer group, a group of women aged 35-55.
| Description of young cosmetic consumers |
|---|
| 1. Young, with impulsive tentative purchase habit. |
| 2. No definite target product in mind, willing to experience novel products. |
| 3. Often experience skin problems from mental pressure or physical issues . |
| Description of middle-aged cosmetic consumers |
|---|
| 1. Mature, with more stable income and willing to spend money. |
| 2. The middle-aged group with position and status, pay more attention to appearance. |
| 3. The needs for anti-aging products are strong. |
Marketing Strategy
Strategic & Enterprise Planning
At the early stage of entrepreneurship, besides continue in R&D, we also look for partners/investors to obtain sufficient financial support by participating in various entrepreneurship competitions.
Sometime at this preliminary stage, we intend to reach a cooperative relationship with our school in order to start the early production on campus. Our school can provide laboratory space, equipment, technical instructions, etc. We also file patent applications for our products.school can provide laboratory space, equipment, technical instructions, etc. We also file patent applications for our products.
At the next stage, after the completion of the initial production, we intend to outsource production procedures to one of our key manufacturing partners who is well equiped to carry out microbial production.
At the later stage, we will concentrate on product promotion by setting up trial display at communities and markets. Feedback will be collected to further improve product development and introducing new product line. Various promotion channels will be implemented to strengthen brand awareness.
Promotion & Sales Strategy
Our target customers are young and middle-aged population. Based on their different consumption characteristics and behaviors, we formulated different product promotion strategies.
Consumption characteristics of young people
Active thinking, more willingness to accept new products, willingness to incorporate modern technology into daily life, thus pursuing personalized, cheap, convenient and quick consumption behavior, prefer online shopping.
Consumption characteristics of the middle-aged group
rich life experience, highly rational purchasing behavior, more concerned with core inner value and quality, more conservative purchasing behavior, less willingness to try novel products, prefer shop offline.
In order to target these different groups, we plan to establish both online and offline promotion channels. Online channels include shopping APP such as Alibaba and Amazon, social media channels such as WeChat or Facebook. Offline channels are established via supermarket channels, cosmetic stores and beauty clinics.
General marketing channels
| Company website |
|---|
| Establish the company's website through one-stop site construction. Customers can learn about the company and products from the official website, and registered members to purchase products. Timely update product information, release discount information, etc. Use search engine for keyword optimization and advertising, improve company's website ranking, and regularly maintain the website. |
| Audio-visual publicity |
|---|
| Design the product introduction of the creative video, as well as the special publicity of making the skincare column. To popularize knowledge of products and skin care industry, to achieve consumers' awareness of products and mobilize consumers' desire to purchase, and to achieve the ultimate video marketing effect. |
| Online discussion board/blogs |
|---|
| Look for potential customers through online discussion board or blogs, actively attend to readers problems regards to skin care, discuss key professional issues, establish a good corporate image, improve their credibility and concern in related industries, and promote the transaction of products through publishing articles. |
Online channels for young people
| Shopping APP |
|---|
| Put the products on the shelves in the early stage, decorate the store, and attract potential customers or target customers. Planned product promotion activities, and purchased full package mail reduction for the first time，the second purchase has 20% discount, etc. Quickly attract customer attention to achieve the potential customer shopping effect. |
| Social APP |
| Set up the public service number to add the website of the company and e-commerce website and cooperation contact information. Starting from the hot consumption spot every month, establish an information pushing platform for cosmetology and skincare with relevant experts to push knowledge related to cosmetology and skincare, and update relevant technical knowledge at home and abroad in a timely manner, so as to achieve the purpose of publicizing products and improving the company's popularity. |
Offline channels for middle-aged people
| Retailer |
|---|
| After entering the products into major cosmetics retail stores and attracting consumers' attention with novelty on the packaging, the product effect will be publicized from the perspective of product promotion, so as to improve product popularity and arouse consumers' desire to buy. |
| Beauty clinics |
| At the early stage, we conducted product experience activities in nearby public places, invited consumers to experience and introduce products, etc. Increase potential customers' attention to the product and develop corresponding membership system, set the level through the consumption situation and make corresponding discount, and improve consumers' consumption desire. |
Financial analysis
Conduct financial analysis and assessment of profitability, operating capacity and growth capacity status on the basis of accounting and financial statements and other relevant information.
assets
forecast
It costs about $9 to generate only 1.0g/1L HA in the following cost calculation, and the HA used in the HA micro-needle preparation is 1.0g.
| Lab Materials | Price(USD$) | Specification(g/btl) | Use cost(USD$) |
|---|---|---|---|
| Sodium chloride | 0.6 | 500 | 0.046 |
| Yeast extract powder | 7.8 | 500 | 0.783 |
| Casein Tryptone | 23.5 | 400 | 1.175 |
| Magnesium sulfate | 1 | 500 | 0.006 |
| Saccharose | 0.7 | 500 | 0.145 |
| Xylose | 21.8 | 500 | 1.741 |
| Anhydrous ethanol | 17.4 | 20000 | 5.225 |
Business operation cost refers to the cost of goods sold or services provided by an enterprise, and the operating cost of goods and services is formed by production and operation cost. This part includes fixed assets and current assets.
① Fixed assets include machinery, electronics, office equipment and buildings.
② Fixed assets budget statement unit: USD$
| Equipment |
Startup time
(purchase original value) |
The
first year |
The
second year |
The
third year |
|---|---|---|---|---|
| Electronics | 435.2 | 413.4 | 310.1 | 103.4 |
| Office supplies | 217.6 | 206.7 | 155 | 51.7 |
| Experimental Equipment | 42,650.8 | 40,518.3 | 30,388,7 | 10,129.5 |
| Assets Depreciation Rate | 0 | 10,284.6 | 141,787.5 | 41,138.5 |
Current assets refer to the assets that can be realized or consumed within a business cycle of one year or more, including cash, bank deposits, funds to be withdrawn, receivables and prepayments, low-value consumables and other current assets. the following table shows the current assets for one year:
| Category | Item | Cost(USD$) |
|---|---|---|
| Marketing expense | Packing material | 1,805.8 |
| Advertising expenses | \ | 4,362.1 |
| Administration expense | Office, repair, travel | 1,701.2 |
| Manufacturing expenses | Materials, utilities, labor | 48,903.4 |
| Advertising expenses | \ | 20,937.8 |
| Registered Company Fees | Registration fee, stamp duty | 145.4 |
According to the above product cost analysis and our investigation on the cosmetics market, we found that there are several kinds of products related to HA micro-needle on the market, and estimated the market price of our product.
| Product | Origin | Specification | Price(USD$) |
|---|---|---|---|
| ROYALSKIN | Korea | Four pairs | 56.41 |
| QUANIS | Japan | One pairs | 37.51 |
| Frozen age microneedle patch | SSTI | Three pairs | 54.96 |
Compared with existing products on the market, our HA micro-needle products have a price advantage. Monthly profit can be calculated based on the set price. If factory - made, it will further reduce the cost of our products. Based on a rough estimate of China's market demand, the following table shows the monthly profit forecast:
| item | Current Amount(USD$) |
|---|---|
| Main business income | 26,106.9 |
| Main business cost | 1,099.2 |
| Business tax and surcharge(at 5.5%) | 1,435.8 |
| Advertising expenses | 141.9 |
| Marketing expense | 513.9 |
| Administration expense | 4,075.3 |
| Marginal contribution rate (%)= (operating income - operating cost - operating tax - sales commission)/operating income | 72％ |
| Profit total | 18,840.57 |
| Income tax expense (at 25%) | 4,710.14 |
| retained profits | 14,130.43 |
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