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Product Innovation and Creativity

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by

Helen McManamon

on 18 August 2014

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Transcript of Product Innovation and Creativity

Flawless Fusion
Product Architecture
“The overall architecture of the product lays out how the components will work together.” (Henderson, R and Clark, K 1990).

When looking at the product architecture the distinctive components of the product were broken down into functional elements
Colour Cosmetics Market
61% of women wear foundation - an everyday essential

Trends in Innovation - New foundation

Products that offer more functionality

Face makeup is the largest sector
UK Makeup Market
Foundation – ‘A type of makeup that is spread over the skin of the face, usually before other make-up is put on, giving it a better and more even colour hiding unwanted marks’(Oxford Dictionary, 2013)




Primers – ‘A cosmetic applied to the face before another product, intended to improve the coverage and lasting effect of the second product’ (Oxford Dictionary, 2013)

GAP Analysis
Target Segments
Key Components
Bottle
Pump
Lid
Label
Design
Curved shape
Ergonomically designed
Sturdy base

Product Details
Two 30ml compartments
140mm x 60mm x 60 mm

Colour
Clear foundation compartments and frosted primer compartments

Material
Glass Polymer

Design
Ridged effect on the pump

Product Details
Added length to reduce loss of product
100mm x 25 mm

Colour
Rose Gold

Material
Plastic
Design
Hood style

Product Details
Lid will click into place
30mm x 30 mm

Colour
Rose Gold

Material
Plastic
Design
Identity
Clarity

Product Details
One label per cartridge
Unified look when together
55mm x 40 mm

Colour
Clear
Rose Gold font

Materials
Clear Polyester
Name
Three common categories that makeup names fall into; Play on words, Aesthetics and Random

Combination of categories appeals to a wider selection of women

Important key identifying factor
Cost and Price of Product
Variable Cost: £5.64
L'Oreal Margin: 63.08%
Price Before Tax: £9.20
Selling Price: £11.04
Price Before Tax
Price Before Tax: £9.20
Total Cost: £8.11
Contribution Per Unit: £3.56
Fixed Costs: £2.47
Operating Profit Margin: 13.38%
Operating Profit: £1.09

Retailer
Retailer Margin: 41.9%
£15.82
Plus VAT: £18.98
RRP: £18.99
Population of Target Segments
Primary Segment: 2,048,480
Secondary Segment: 462,644
Turnover (3 months)
Primary Segment
Population: 2,048,480
Awareness: 70%
Purchase Intent: 38%
Sales Volume: 544,896
Total Sales Volume: 638,812
Turnover: £5,875,613
Operating Profit: £693,382
Secondary Segment
Population: 462,644
Awareness: 70%
Purchase Intent: 29%
Sales Volume: 93,917
Sales Forecast
6 Months
Primary Segment

12 Months
9 Months
Awareness: 80%
Purchase Intent: 39%
Sales Volume: 144,345
Awareness: 75%
Purchase Intent: 43%
Sales Volume: 660,635
Secondary Segment
Awareness: 75%
Purchase Intent: 34%
Sales Volume: 117,974
Turnover: £7,161,422
Operating Profit: £845,121
Awareness: 80%
Purchase Intent: 48%
Sales Volume: 786,616
Primary Segment
Secondary Segment
Turnover: £8,562,713
Operating Profit: £1,010,488
Primary Segment
Awareness: 80%
Purchase Intent: 48%
Sales Volume: 786,616
Secondary Segment
Awareness: 80%
Purchase Intent: 39%
Sales Volume: 144,345
Turnover: £8,562,713
Operating Profit: £1,010,488
Payback Analysis
Payback in Month 4.
Breakeven and Margin of Safety
Cumulative Cash Flow at:
0 Months: -£716,500
3 Months: -£23,118
6 Months: £822,003
9 Months: £1,832,491
12 Months: £2,842,979
Total Sales Volume in Year 1: 3,279,344
Breakeven Point: 2,480,241
Margin of Safety: 24.4%
Sensitivity Analysis
Purchase intent is reduced by 10%:
Total Sales Volume: 2,513,451
Payback: 5 Months
Margin of Safety: 22.5%
Purchase intent is reduced by 15%:
Total Sales Volume: 2,130,505
Payback: 5 Months
Margin of Safety: 21%
Cannibalisation Assessment
Financial Viability
Launch Plan
Concept sketch
Contingency
SMART
Objectives
Strategic
Aim to make 70% of the target segments aware of Flawless Fusion by the end of spring through a variety of an on and offline marketing strategies

Operational
To achieve revenue of £5.8m within 3 months of launching

To achieve 70% prompted awareness of FF through the use of celebrity Spokesmodel within the first quarter

Increase L'Oreal Twitter followers by 10% by the end of the pre-launch

Increase L'Oreal Facebook likes by 15% within the first 3 months after the launch

Online Strategy
Offline
Strategy
Website
Informative

Social Media
Facebook, Instagram, Twitter, YouTube, Blog

Pre-Launch Event
Launched on Facebook, Twitter and Instagram
Use of hashtag #iwantflawlessskin to create discussion
Rapport with key segments prior to launch



Celebrity Spokesmodel
Gemma Arterton

Print
Glamour, Look, Now, Cosmopolitan UK, Closer and Heat
Initial total print campaign circulation = 9,159,790

Activities and Events

Lollibop and Festivalkidz

Point of Sale


TV
Tertiary tool
Financial
Justification
Total launch campaign budget = £716,500


Celebrity Spokesmodel £80,000
Online £8,028.08
TV £142,161.92
Point of Sale £206,540
Activities and Events £60,000
Print £219,770


Timeline of Launch
Contingency
Thank you for listening
Color cosmetic industry is worth £1.5 billion

Made up of four sections:
Lip
Eye
Face
Nail

Main focus will be on foundation and primer
Definitions
Full transcript