Detailed Business Plan: ABC Pvt. Ltd. for Russian Skincare Market

This business plan outlines ABC Pvt. Ltd.'s strategy for entering the Russian market with its organic skincare products. It begins with an overview of the Russian market environment, including economic and demographic profiles, highlighting the country's economic recovery, population demographics, and urbanization trends. The plan then details the company's product offerings, including shower gels, creams, serums, and other skincare items made with natural ingredients sourced from Siberia. A SWOT analysis is provided, identifying the company's strengths (high-quality, organic ingredients), weaknesses (low brand awareness), opportunities (growing online market), and threats (geopolitical crisis, competition). The plan also addresses the external environment, considering political, economic, social, technological, and environmental factors. The business plan concludes with the company's objectives, such as increasing brand awareness and sales. The references used for the business plan are also listed.

BUSINESS PLAN

Table of Contents
OVERVIEW OF RUSSIAN MARKET ENVIRONMENT........................................................................1
Economic Profile.....................................................................................................................................1
Demographic Profile...............................................................................................................................2
PRODUCTS AND SERVICES OF PROPOSED BUSINESS....................................................................2
EXTERNAL ENVRIONMENT AND SWOT ANALYSIS........................................................................4
REFERENCES............................................................................................................................................7

OVERVIEW OF RUSSIAN MARKET ENVIRONMENT
Economic Profile
After nearly two years of economic downturn, Russia has finally ventured on the path to
recovery. With international trade and growth strengthening at the end of 2016, the country’s
economy demonstrated signs of overcoming the financial crisis caused by the economic
sanctions and shock of low prices of oil. Its economy shrank in 2015 by 3.7% and the real
disposable income reduced by 10%. However, the economic outlook for 2017 has been brighter.
The World Bank had indicated earlier this year that growing prices are driving the nation into
poverty. The number of poor people grew to 19.2 million in 2015 (World Bank Group, 2016). It
is estimated that the poverty rates are likely to go back to the 2007 levels, signalling “almost a
decade’s worth of gains”.
Real GDP fell by .9% year-on-year (y-o-y) in the first six months of 2016 and the
domestic demand also decreased by 2% y-o-y. Due to continued shrinking in real incomes,
consumer demands remained depressed, and household consumption was the biggest negative
drag on the growth of GDP. The GDP per capita (USD) was 8,947 in 2016. Public consumption
also deteriorated as the government followed expense consolidation in the new policy of low oil
price. In spite of the sustained economic stagnation, the country’s employment rates were at
almost maximum levels. Absolute figures of employed and economically active people were
nearly unfazed in the initial eight months of 2016 as against the same time-frame in 2015
(Kulikov & Porokhova, 2017). This is partially explained by the position of the country’s labour
market, which reacts mostly via wages and not employment. Other reasons entail the outflowing
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of labour migrants from the nation, which has mitigated negative unemployment and wage
pressures from local workers. The employment rates and labour force involvement even
increased to levels over 66% and 70% respectively, compensating for the fall in population of
working age. Resultantly, the unemployment did not rise considerably and stayed at 5.6% in the
initial eight months of 2016 (Focus Economics, 2017).
Demographic Profile
The population of Russia as of July 2016 was 142,355,415. The population growth rate is
-.06% (2016 est.). The median age is 39.3 years, with the median age of males being 36.4 years
and that of females being 42.3 years. 74% of the total population is an urban population with
12.166 million people living in the capital city Moscow. The population distribution in other
cities is St. Petersburg (4.993mn), Novosibirsk (1.497mn), Yekaterinburg (1.379mn), Nizhniy
Novgorod (1.212mn), and Samara (1.164mn). The rate of urbanization is -.13%. The literacy rate
in the country is 99.7% with a literacy rate of males being 99.7% and that of females being
99.6%. 3.9% of the GDP is spent on education-related expenditures (Index Mundi, 2017). The
ethnic profile of the country is as follows:
Russian – 77.7%
Tatar – 3.7%
Ukrainian – 1.4%
Bashkir – 1.1%
Chuvash – 1%
Chechen – 1%
Others – 10.2%
Not-specified – 3.9%
PRODUCTS AND SERVICES OF PROPOSED BUSINESS
The proposed company’s name is ABC Pvt. Ltd. It is a 3 years old start-up enterprise
dealing in natural skin-care products. ABC Pvt. Ltd. plans to compete against Amazon. The
reason behind choosing Amazon is that ABC Pvt. Ltd. is also an online platform for selling
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organic beauty products. It is an all-organic brand of beauty products which provides a skincare
line made with herbs and other natural ingredients found in the ecologically clean region of
Siberia, where nature is still untouched by genetic mutation and carries immense health potential.
Siberian herbs and plants are renowned to possess incredible antioxidant properties that improve
the well-being of human body and slow-down the process of ageing. ABC Pte Ltd. has taken
these elements, expanded them with avant-garde technology and turned it into the state-of-the-art
line of skincare products which can make the users look rejuvenated and younger in a matter of
some days. The product portfolio of the company includes:
 Shower Gels
 Day Creams
 Night Creams
 Facial Serums
 Facial Milk
 Facial Scrubs
 Moisturizing Facial Tonic
 Body Butter
 Body Scrub
 Toning Massage Oil
 Organic Soaps
 Hand Cream
 Under-eye Cream
 Nourishing Cream for Feet
 Anti-age cream
 Sunscreen
The entire portfolio of products comes in different varieties and suited for different skin
types. The entire product line has been priced quite competitively, which in no way implies that
it is subpar to those brands sold on Amazon. Moreover, unlike many of the skin-care products
sold on Amazon, ingredients used in ABC Pvt. Ltd. products can only be obtained from nature,
and cannot be made in a lab.
Though the biggest markets for organic skincare products are in France, USA and
Germany, however, Russia’s marketplace for natural skincare products is increasingly growing.
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Organic and natural skincare items are amassing popularity among Russian customers. In 2014
the industry for organic and natural products for skin expanded by 10%. This is estimated to
continue expanding, however, is at present led by international brands. Although, the financial
crisis witnessed the Russian customers becoming more mindful about their expenses, however,
they continued to prefer high value-added products like beauty and skin care. While young
customers are more inclined toward innovative items containing UV protection, minerals, amino
acids or proteins, the mid-30s and above Russians are appealed by-products that bear natural
claims and contain organic ingredients (Muth, 2017).
Not only this, as per several market analysts, a large proportion of Russian customers feel
that skincare merchandise made by domestic firms have less synthetic and artificial components
and are more natural, thereby increasing their demand. This stereotype is being successfully
utilized by ABC Pvt. Ltd. which is reflected in the gradual increase in its online sales. When
purchasing goods bearing various claims, Russian customers do not tend to delve very deep in
trying to identify the percentage of a herbal ingredient or essential oil in the products they
purchase (Gurkov, 2016). Besides this, the company’s business is completely online just like
Amazon. There is the feature of door-to-door delivery. The online retail trade in Russia is
undergoing consistent growth as the higher number of customers are moving to the Internet for
their shopping. With more than 60% of the country’s population accessing the Web, internet
shopping is only hitting its stride as the sector matures (Yandex, 2017).
EXTERNAL ENVIRONMENT AND SWOT ANALYSIS
The major external environmental forces which can influence ABC Pvt. Ltd. include:
Political and legal environment – The government of Russia is pro-investment and encourages
business ventures. However, growth opportunities for the forecast period of 2013-2018 were
bleak prior to the geopolitical crisis began with Ukraine in 2014. The consumer goods safety
laws are quite stringent and the products of ABC Pvt. Ltd. would have to satisfy the outlined
safety requisites in order to avoid penalty (Elo, 2017).
Economic environment – Figures show that growth slowed a bit in personal care and beauty
market in Russia in 2011 compared to growth rates before the financial crisis, however, the
market is very far from saturation and post 2011 there have been many developments.
Nonetheless, the tightening macroeconomic situations are not likely to be very advantageous,
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plus a rise in customers’ disposable incomes is not estimated to be high. Nonetheless, growing
budget spending and low rates of unemployment are likely to trigger consumption in the nation,
and skincare is estimated to experience a consistent value CAGR of 2% over the forecast period
(Worth, 2017).
Social environment – Organic skincare products are a bit on the expensive side, however, not as
expensive as international brands like Estee Lauder and the likes. There is a growing awareness
among the Russian customers about the positive effects of natural products on their skin, and the
females are especially becoming very conscious about the quality of their skin. This is the
reason, they are willing to spend on high value-added natural products (Tyrimou, 2014).
Technological environment – The technological innovations regarding the development of more
organic and healthier products for the skin are prevalent and companies are using the latest
technology to embed in their products. Growth in research and development in this area has now
made it possible to fill the skin care products with different proteins, amino acids, minerals etc.
after experimenting their chemical properties together. Similarly, the herbal and natural use of
several Siberian plants and herbs in skincare products are being identified and incorporated in
products (Loh, 2016).
Environmental – Russia lies in a high-altitude region where the UV radiation is higher compared
to low-altitude regions due to the thinness of the Ozone layer. Greater exposure to UV rays leads
to dark spots and ageing. This triggers the demand for products which are made from natural
ingredients and have UV protection abilities (Kudrin & Gurvich, 2015).
SWOT Analysis
Strengths
 High quality
 Products made from completely
natural and organic ingredients which
cannot be replicated in lab
 Continuous exploration for finding
better ingredients
 Certified by the European standard EU
Weaknesses
 Low brand awareness
 Low penetration in smaller cities of
Russia
 Chances of customers becoming
allergic due to natural constituents
 Tag of Russian brand
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 Wide product portfolio with
competitive pricing
Opportunities
 New technologies and R&D
 Swiftly growing online market
 Growing loyalty toward eco-brands
 Growing personal and skincare market
Threats
 Geopolitical crisis
 Unfavorable economic condition due
to which some customers are
controlling their spending
 High competition from established
global brands
The main objectives of ABC Pvt. Ltd. are:
1. To increase the company’s brand awareness
2. To augment turnover by 22-25% by the last quarter of 2017
3. To elevate the number of new clients by 80 per month
4. To enhance the frequency of repeat purchases
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REFERENCES
Elo, M. (2017). Against All Odds–A Diaspora Entrepreneur Developing Russian and Central
Asian Markets. In The Challenge of Bric Multinationals (pp. 481-502). Emerald Group
Publishing Limited.
Focus Economics (2017). Russia Economic Outlook. [Online]. Available through:
<https://www.focus-economics.com/countries/russia>. [Accessed on 2nd October 2017].
Gurkov, I. (2016). Oriflame CIS: The Successful Evolution of a Regional Subsidiary's
Mandate. Global Business and Organizational Excellence, 35(4), 44-54.
Index Mundi (2017) Russia Demographics Profile 2017. [Online]. Available through:
<https://www.indexmundi.com/russia/demographics_profile.html>. [Accessed on 2nd
October 2017].
Kudrin, A., & Gurvich, E. (2015). A new growth model for the Russian economy. Russian
journal of economics, 1(1), 30-54.
Kulikov, D. & Porokhova, N. (2017). Russian Economy: Recession Knocked Out. What Next?
[Online]. Available through: <https://www.acra-ratings.com/research/191>. [Accessed on
2nd October 2017].
Loh, X. (2016). Polymers for Personal Care Products and Cosmetics. Royal Society of
Chemistry.
Muth, S. (2017). Russian as a commodity: medical tourism and the healthcare industry in post-
Soviet Lithuania. International Journal of Bilingual Education and Bilingualism, 20(4),
404-416.
Tyrimou, N. (2014). The Impact of Russia’s Sanctions on Global Beauty Players. [Online].
Available through: <http://blog.euromonitor.com/2014/10/the-impact-of-russias-
sanctions-on-global-beauty-players.html>. [Accessed on 3rd October 2017].
World Bank Group (2016). The Russian Economy Inches Forward: Will that suffice to turn the
tide? [Online]. Available through:
<http://pubdocs.worldbank.org/en/429441478647721427/Russia-RER-36-Eng.pdf>.
[Accessed on 2nd October 2017].
Worth, O. (2017). Hegemony, international political economy and post-communist Russia.
Taylor & Francis.
Yandex, M. (2017). Assessing Russian Online Shopping Behavior 2016. [Online]. Available
through: <http://www.thegrinlabs.com/assessing-russian-online-shopping-behavior-
2016/>. [Accessed on 2nd October 2017].
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