Market

Market Size

IT is expected that the personal styling and electrical appliances market is likely to expand and grow to up to A$ 28,007 by 2022. It wont be wrong to say that the overall market for hair care, hair removal that involve the use of electronic devices is huge. As can be seen from the graphs below, the overall industry is expected to grow by 2025.

Source: IBISworld.com, Hairdressing and Beauty Services in Australia

It is also very obvious that the market is not yet reached its maturity, as there is still more potential for growth in the industry.

Growth Rate & Competition

As per the report generated by Statista, (2019) the overall growth rate for the entire industry is expected to be more than 20%. The overall competition in the industry is already high and is constantly increasing. There are many businesses operating in the market of both small and large sizes.

Key Trends

Few of the major trends that have taken place in the industry are the ones in which major players have lowered their prices to increase the competitions. Many local and international businesses have launched similar products in the past and are constantly introducing new innovative products in the market (Mills, 2016). Another interesting trend to consider is the fact that there’s an increase in the male grooming trend that is likely to support the hair and beauty industry in coming years (Youl. T, 2019).

Market Segmentation

In simple words, market segmentation is the process with the help of which large markets can be subdivided into small identifiable markets (McDonald & Dunbar, 2004).

Market segmentation will be done on the basis of the diversity of demand. As stated by Kotler & Armstrong, (2010), there are three steps involve in segmenting the market, that consist of:

1. Identifying the bases of market segmentation

2. Developing segmented profiles

3. Measure of segment attractiveness

By following the above three process the market segmentation will be done for ONYX.

The product will be marketed to the following segment of the market.

Age: 12+ years

Gender: Female

Income Level:

Major Competitors

The following table will a clear information about the available brands that are available in the Australian market, what costs they are selling at and where people can buy them from.

There are many other brands available as well, on stores like Kmart, Big W, Target which are not in this list and apart from these brands a lot of international brands are available on different websites like eBay and Amazon as well.

Location

The Initial start-up of the business would be in such a way that the products will only be sold online or through other stores like Myers and David Jones. The two major locations would be the Melbourne CBD and Sydney CBD to focus on. For the first year, we are expecting to sell around 10,000 units of the product through all channels.

Operations & Technology

Technology Development

When it comes to introducing new technology and specially if the product has to be distributed on a large scale, then the best way to for it to be developed is through subcontracting. Getting the product manufactured in China would be the best approach as it will not only reduce the production cost but at the same time those manufacturers already have the technology to product such product at competitive prices as compare to local manufacturers.

Technology Changes

There’s no doubt that technology has played a major role in disrupting the department store industry over the last few years (Youl. T, 2019). Many customers are comfortable buying products like Hair Straightner online as compare to going to department stores. Not only this, but other recent developments like virtual reality and other augmented reality technologies are creating new possibilities for brands to get engage with customers. As stated by Reid (2016), changes that are taking place due to which prototypes of products are developed are likely to have a major impact on businesses.

Sales and Distribution

The sales and distribution of ONYX will be done through various department stores like Myers and David Jones who themselves have their own distribution network. For sales generated through the website, the products will be delivered through AusPost and FedEx.

Resources

The majority of the resources required for the production of ONYX will be provided by the subcontractors, that will be based on the model/prototype provided by the business. Other than that, the other resources required such as the marketing experts, finances, and so on, the company will be engaged in that directly.

Laws and Regulations

The first thing that needs to be taken care of when starting a new business is to make sure that the business is registered with the concerned authorities for taxation purposes. In Australia, every business has to have ABN i.e. Australian Business Number and ACN Australian Customer Number. ONYX has to make sure that all of its intellectual property rights are reserved with the brand.

Professional Ethics

As far as the ethics are concerned, from the professional point of view Ethics cannot be ignored in the process of product development (Bloom, 2017). As for this reason it is very important that customer satisfaction should be considered as the primary concern and there should not be any compromise on the quality of the product.

Human Resources

For the marketing of ONYX the company cannot rely on inexperienced staff members, therefore the person has to have extensive experience in the field of marketing. Similarly, the person looking after the technical aspect has to have the experience and technical knowledge to be able to put his experience and skills in the development of ONYX hair straightener. All the experts will be hired in house in order to run the operations smoothly.

Owners and their Roles

The owner of this brand ONYX are Sultan Al Mutairi and Abdullah Aziz who are the co-founders. Both the owner’s will be among the board of directors and will oversee all the operations of the business.

Ownership Structure

The team of ONYX will be comprised of the following members, who will be responsible for their individual departments and will be in direct contact with the CEO.

Man Power

For the first year, ONYX will start with a really basic and small team just to be able to kick of the business. Including the CEO there will be 7 members in the team who will be responsible for various operations personally. All the staff members will be hired with the help of Head-hunters and through proper research on professional websites like LinkedIn. In the process of recruiting the best talent, proper professional practices need to be implemented (Koster, 2015).

Employee Compensation

Employees will be paid at the end of every month as they all will be hired as full-time employees. Their wages will vary based on their job roles and years of experience. Starting package would be $52,000 per annum, including super annuation.

Motivation

Motivating employees in such small team would not be a major issue as the they all will be working under the same roof so they will have direct communication among all the members. Apart from that, such culture will be maintained where team members will actually feel motivated. According to Koster, 2015, training and development on regular basis is another method through which employee motivation can be maintained.

Training will be provided regarding the new innovation, what new features are being introduced or likely to be included. Apart from this, through the training the team members will be briefed about various aspects of marketing and advertising, what’s working and what not so that would allow the business to get more input from all the members.

Growth Strategy

 The growth of ONYX will mainly be based on the quality of the product, customer satisfaction and affordability of the product. All these three aspects are of prime importance for the success and growth of ONYX. The price of ONYX hair straightener will be kept as low as possible so that majority of the population would be able to afford it. To do so, the profit margins would be very low as the main aim for the first two years would be to penetrate in the market.

After having proper penetration in the market and building a repute in the industry, the second aim would be to target other markets for ONYX. This will only be possible by maintaining proper quality of the product and running proper tests before launching the product in the market.

Finance

Selling Price Per Unit

Based on the market research conducted earlier, the price of ONYX hair Straightener per unit would be AUD $190 which is compared to many other brands available in the market is very reasonable. Some brands are selling their hair straighteners for as low as $90 and the high-end ones goes up to $800. Considering these prices of competitors ONYX is reasonably priced at $190.

To meet the monthly cost, the business has to make sure that it must sell at least 5000 Units per month, that will help result in achieving a monthly figure of $950,000 per month.

Start-up Cost

For complete breakdown of various costs, do have a look on the appendix.

Funding

The initial funding will be done by the two co-founders, the owner’s equity will be used for the purpose of capital funding. Based on the performance of the product, the business might consider of applying for loans or start a crowd funding project. Getting a loan from the bank is very much dependent on the performance of the business (Soni, 2019).

References:

1. com. (2019). Personal Care Electrical Appliances Market Size, Share. [online] Available at: https://www.alliedmarketresearch.com/personal-care-electrical-appliances-market [Accessed 9 May 2020].

2. Kotler, P., & Armstrong, G. (2010). Principles of marketing. Pearson Education.

3. Koster, F., 2015. Making the right move. Investigating employers’ recruitment strategies. Personnel Review, 44(5), pp.781-800.

4. McDonald, M., & Dunbar, I. (2004). Market segmentation: How to do it, how to profit from it. Butterworth-Heinemann.

5. Mills, J., 2016. Trends, tips and top products: hair care. South African Pharmaceutical and Cosmetic Review, 43(1), pp.16-19.

6. Soni, S., 2019. Design rights for Start-ups: Drawing a line of protection. International Journal of Innovation, 7(2), pp.321-320.

7. (2019). Hair Care - Australia | Statista Market Forecast. [online] Available at: https://www.statista.com/outlook/70040000/107/hair-care/australia [Accessed 9 Oct. 2019].

8. service.nsw.gov.au. (2019). [online] Available at: https://mybusiness.service.nsw.gov.au/?gclid=CjwKCAjw__fnBRANEiwAuFxET_90eOx02S4wkbu1lMMnfXK8y3dt5L5DT8qPamlfX4Jnn6T0eeAuIxoCDS8QAvD_BwE [Accessed 11 May 2020].

9. com.au. (2018). Office Supplies, Office Furniture, Stationery, Ink & Toner at low prices | Officeworks. [online] Available at: https://www.officeworks.com.au [Accessed 15^th May 2020].

10. com. (2019). Business Manager Salary | PayScale. [online] Available at: https://www.payscale.com/research/AU/Job=Business_Manager/Salary [Accessed 11 May 2020].

11. T, 2019, ‘Hairdressing and Beauty Services in Australia’, Australia Industry (ANSZIC). IBISWorld.

Appendix