APOSTOL, GEMINN LOUIS C.

STRAMA II: Reyes

Competitive Profile Matrix (CPM)

In the Philippine market for natural beauty and cosmetic products, three brands come
into mind: Human Nature, earlier market leader, The Body Shop and new entrant,
ZENutrients. The Competitive Profile Matrix below summarizes categorical comparison of
these three brands using a selection of critical success factors deemed applicable and
important in the natural cosmetics industry.

CRITICAL SUCCESS
FACTORS
Wt
1
2

Product Quality &

Performance
Effective Sales
Distribution

The Body
Shop
Ratin Scor
e
g

Human
Nature
Ratin Scor
e
g

ZENutrient
s
Ratin Scor
e
g

0.25

1.00

1.00

0.50

0.20

0.60

0.60

0.40

Market Acceptability

0.15

0.45

0.45

0.30

Brand Management

0.10

0.30

0.40

0.20

Pricing

0.10

0.20

0.40

0.30

Customer Loyalty

0.15

0.45

0.60

0.30

Advocacy

0.10

0.30

0.40

0.20

TOTAL

3.30

3.85

2.20

Note: weight score: 0.0 (not important) to 1.0 (very important)

Rating score: 4= major strength, 3= minor strength, 2= minor weakness, and 1= major weakness

In determining competitive superiority of the players in the natural cosmetics

industry, the following critical success factors have been identified:
1. Product Quality & Performance: A brands commitment to its customers is to deliver
what the consumer expectsa deodorant should deodorize, a mosquito repellent should
repel mosquitos away and moisturizing lotion should moisturize. The primary consideration
for a cosmetic products success is its ability to produce results which in turn is directly
affected by its product quality and performance.

In the its early years, The Bod y Shop was able to attain market leadership by showing
that it can deliver the same results with its natural products when compared with less
natural but more commercially available products. Backed by a strong research and
development arm as well as by internationally recognized manufacturing standards and
practices (Humane cosmetics, ECOCERT), The Body Shop merits a score of 4.

APOSTOL, GEMINN LOUIS C.

STRAMA II: Reyes

Taking heed after The Body Shop experience, Human Nature likewise focused on product
development and quality certification in its early years before going mainstream. By
attracting new science and technology graduates as a major part of its launching
workforce, Human Nature was able to acquire certifications from both manufacturing
quality certifications (FDA, DTI Bureau of product Standards (PS) Quality and Safety
marks,

SGS

Good

Manufacturign

Practice)

and

the

likes

of

Natural Products

Association Standard and Certification in as early as its third year of operation. This gives
Human nature a score of 4.

As relatively new player in the natural cosmetics, ZENutrients built on the credibility of
existing players in the natural cosmetics industry as well as on the existing body of
research establishing the efficacy of the certain natural products. The performance and
reliability of its products are therefore derived. For instance, the efficacy of Cococnut Oil
lather banks upon the established efficacy of existing coconut oil-based products in the
market as well as the extensive research by Dayrit et al on the efficacy of Coconut oil in
skin revitalization. Practical though less dependable, ZENutrients garners a score of 2.

2. Effective Sales Distribution: A product is only successful as far as its reach. The key to
success for a consumer goods product such as the natural cosmetics is availability in all
channels. In the Philippines, downline channels such as department stores, retail centers
and even personal dealers are very crucial.
In Global Market Research, effective sales distribution is actually measured by what
they call Numeric In-Stock or NIS. With a given universe, it will give you data on how widely
distributed your product is. Another tier of analysis on effective distribution is the Weighted
In-Stock or WIS reading which will generate quantities in each distribution point. An
indication of whether or not there is enough stock cover on-shelf or in the stock room.
An accounts acceptability however greatly depends on offtake. This is sometimes
referred to as secondary sales, our customers sales to their customers (our end-consumers).
Indirectly, offtake is also indicative of shelf turnover, how often do retailers replenish their
stocks on-shelves. No retailer would be willing to purchase products that are slow moving or
worse, not moving at all because their shelves would be useless in terms of income
generation. This may be the case for products that are considered as luxury or otherwise not
considered basic needs, as in the case of natural beuty products.

Globally, The Body Shop has 2600 stores in 66 markets. In the Philippines, The Body
Shop has established 42 stores nationwide. But by being a subsidiary of LOreal,
certain The Body Shop products are also available in various LOreal outlets and mall

APOSTOL, GEMINN LOUIS C.

STRAMA II: Reyes
placements, boosting sales by as much as 28% annually for The Body Shop since the
LOreal takeover in March 2006. In a 2011 study by Roberts, however, sales have
been found to be dropping at average rate of 4.1% annually since 2010 due to the
alck of innovation and limitation in inventory. Despite this, The Body Shop continues
to be one of the market leaders in terms of product sales, owning 20-25% of the

market. This merits The Body Shop a score of 3.

Human Nature products are available in 29 stores nationwide (8 in Metro manila, 12
in Luzon, 7 in Visayas and 2 in Mindanao) and a flagship store based in
Commonwealth, Quezon City. Products are also available in all Rustans and
Robinsons department stores and supermarkets nationwide. Products may also eb
purchased online with an additional delivery charge. But the strength of Human
natures distribution channels lie in its personal dealers, who provide the best way to
market the companys products through personal marketing. At present, Human
Nature has 50 main dealers in Metro Manila and 32 Provincial dealers, with more than
600 downlines all over the country. By balancing its sales strategy with traditional,
online as well as personal approaches, Human Nature has easily become the market
leader in natural cosmetics since 2011, overtaking the Body Shop, with a market
share of 47% and annual sales growth reported at 17%. This merits Human Nature a

score of 4.
ZENatures distribution channels is primarily through its store presence in various
department stores (All Landmark malls In Manila, Festival Mall) and partner brands
(Sesou, EchoStore). It also has 14 standing stores all over Luzon and a showcase
store based in Pasig. Products can also be purchased for delivery online via its own
website and through Facebook. Being a relatively new and a Manila homegrown
product, the sales reach of ZENature products is limited at present. Despite this, an
informal interview with ZENature CEO Anj Dinglasan reveals that the brands sales
have been increasing at an annual rate of 8% since 2011. For this, ZENature merits a
score of 2 for the effectiveness of its sales distribution company.

3. Market Acceptability: An indication of a brands success is market acceptability. It

signals dominance and stronghold into the category. More importantly, market acceptability
is also an indication of consumer trust in the brand. All three brands target a niche market,
that is environmentally and health conscious consumers who have grown tired and wary of
the toxic long term effects as well as the adverse environmental impact of commercially
available cosmetics.

With a market share of 20-25%, The Body Shop continues to be considered a market
leader in the natural cosmetics industry. While it has been overtaken by newer and

APOSTOL, GEMINN LOUIS C.

STRAMA II: Reyes
innovative brands, The Body Shop continues to be the First In mind product in the
general market when it comes to natural cosmetics. In its niche market especially
among its well-researched and updated consumer base, however, The Body Shop
brand has been under attack in the past five years for its alleged use of synthetic
emollients and preservatives. As such, market acceptability has been at a decline for

Body shop, giving it a score of 3.

As the dominant Market leader in the natural cosmetics industry with a market share
of 47%, Human Nature garners a score of 3. Despite its growing popularity, however,
Human Nature is continually challenged to establish itself not only in the actual

market but in the consciousness of its consuemrs as a global and reliable brand.
As a new entrant, ZENature is neck on neck with a myriad of other new players in the
natural cosmetics industry. But given its presence in established outlets and stores,
ZENature is able to capture 5-7% of natural cosmetics market, and thus meriting a
score of 2.

4. Brand and Marketing Management: Brand reputation is highly critical in sales. A

brands performance, on the other hand, is highly dependent on the marketing plan that
companies design for it. Brands are a means to achieve market hold, sustain market
leadership and acquire resources for growth. Whilst brand management may pertain to only
managing a brand or a portfolio of brands, there are also ways on how to go about it
especially given dynamic times, companies should be flexible enough to adapt to changing
times versus traditional ways of doing things (Posters, fliers, billboards). In this highly
connected world, an emerging strategy especially for new players is to use the power of
internet and social media to establish and expand ones brand. This is very much evident in
the existing strategies of our three companies.

Being multinational in nature, The Body Shop has its own brand managers and brand
development counterparts in the region who ensure that all details pertaining to the
brand are tied-up to the global brand strategy. In the Philippines, The Body Shop
establishes its brand primarily through product placements and through its online
presence. It has a handful of major billboards in the Metro but it tends to be more
aggressive in marketing itself to its online consumers. As of October 2014, The Body
Shop Philippines has a total of 48, 241 likes while the global page has 85,157. This

gives The Body Shop a score of 3.

With its fast growth and expansion, Human Nature was wise enough to hire tis won
Brand and marketing manager in 2012. Human Nature combines both traditional and
online approaches to brand and marketing management. It has four major billboards
scattered all over the metro and maintains a very active online presence. As of

APOSTOL, GEMINN LOUIS C.

STRAMA II: Reyes
October 2014, Human Nature has a total of 86,362 likes on its Facebook page. It
should be noted that Human Nature has more online approval than both the local and

international The Body shop brands. This merits Human Nature a score 4.
As a relatively new player ZENutrients has is no brand manager nor marketing
director, since each business unit operates on its own and reports directly to the CEO.
This structure is unique but tends to be missing out on the opportunistic advantages
that one category can benefit from another since the business units are separate
entities altogether and the only point of reconciliation is already at the CEOs level
whose concern is too many. Given this, ZENature is practical and wise enough to
prioritize an online approach to brand management. Since putting up its Facebook
page in 2011, the brand has been able to garner 6481 Facebook likes, giving it a
score of 2 for Brand and Marketing Management.

5. Customer Loyalty: With the proliferation of all sorts of media and on-the ground
activities, loyalty is so easy to win and lose. Even though market shares are high and would
seem to be stable enough, it still faces a lot of risk. It has been said that it is easier to make
a customer stay because all you have to do is to keep them happy whereas, if you lose a
customer, it would be more difficult to w in them back or to look for new ones.

The Body Shop gets a score of 3 due to its steady level of sales (which is an indirect
reflection of customer loyalty) but also because of its declining percentage of loyal
customer base, highly attributed to controversies in 1994, 2004 and in 2013 accusing its
founder Anita Roddick of fabricating its advocacy stories and recently, attacks on its
manufacturing practices which purportedly used extensive amounts of artificial
colourings, scents and preservatives.

More than achieving market growth, Human Nature is also expanding its loyal customer
base with much help from its dealers who ensure that customers are continually supplied
and hooked with their personal products as well as updated with new products. Dealers
as well as retail stores are also equipped with feedback communication systems to
ensure that consumers are always satisfied. This gives Human Nature a score of 4.

Even as a young company, ZENature is already able to acquire itself a steady base of
loyal customers, although not as extensive as that of Human Natures and The Body
Shops. A score of 2 is given.

6. Pricing. Because all three companies offer a variety of products, a common product was
selected allow for a more standard comparison

APOSTOL, GEMINN LOUIS C.

STRAMA II: Reyes
BRAND / DESCRIPTION

Price Per
Piece Incl. Tax
(LPAT/pc)

SRP in
Php
(per pc)

% Trade
Margin

Absolute Trade
Margin in Php

The Body Shop Phils.

1,195.00

1,063.00

11%

132.00

Human Nature

265.50

241.50

9%

24.00

ZENature

343.00

318.90

7%

24.10

Human Natures pricing is affordable in comparison to its competitors, Significantly

with The Body shop and to some extent when compared to ZENature. But more than looking
at the actual prices, it is prudent to compare the Price per piece as well as the trade margins
as a more standardized way for comparison. The Body shop has an 11% trade margin and
this is in consideration that all of its products are exported from abroad. But comparing
Human Nature and ZENature, it is to be noted that while Human Nature sells the same
products at a lower cost, it is able to do so at a higher % trade margin and at an equal
absolute trade margin. This allows for greater sales potential and increased chances of
profitability for Human Nature as compared to ZENature.
7. Advocacy. In a global study of its customers in 2011, The Body Shop discovered that
83% of regular buyers of natural cosmetics say that they choose products who take social
and environmental issues seriously. A brands advocacy and the way it communicates it to
tis buyers is therefore a unique rubric in the natural cosmetics industry.

From its inception, The Body Shop has been very vocal about its advocacies on antianimal testing, environmental conservation and fair traide. The Body Shop
proooviiides financial ain

Body Shop provides financial aid in charities by giving small amount of money from
particular products they sell. Body Shops support in local charities and non-profit
organisations enhances its image in the local society. ong-term
change such as our Stop Sex Trafficking campaign,
and by leading the way in responsible sourcing using our
positive engagement approach. We invented and run an
exceptional Community Fair Trade programme, working
directly with farmers, where our long term commitments
have brought benefits to over 300,000 marginalised
people. We have an ongoing commitment to animal
welfare and our position against animal testing is as
strong as ever. We know that we need to improve on
our environmental performance, and we will, having
set challenging targets for ourselves.

APOSTOL, GEMINN LOUIS C.

STRAMA II: Reyes

Porters Five Forces of Competition Model

Threat of

Bargaining Power
LOW

HIGH

New Entrants

of Buyers Rivalry among Bargaining Power

Existing Competitors
LOW
HIGH

Threat of

Substitute Products
HIGH

of Suppliers

APOSTOL, GEMINN LOUIS C.

STRAMA II: Reyes

evaluating the Sarap Philippines packaged soups retail business using the five forces of
competition, it can be said that there is no middle ground in this category. Primarily because
of the complexity, there is low threat from new entrants, whilst both buyers and suppliers
have low bargaining power. The real and bigger threats are those that come from substitute
products and somehow, from existing competitors as these are one in the same companies
that manufacture both commodities. This is also probably the same five forces evaluation of
any fast moving consumer goods product such as the packaged soups.

1.1.1 Threat of New Entrants: Low

Entering into the packaged soups business would require huge capitalization because not
only does it entail some sort of technology that can actually transform all the ingredients
into a packaged soup but the whole production line that would eventually yield the finished
goods. Also, other corresponding support that it would require to ensure success in bringing
it to market would also mean more investment and resources.
A new entrant would be competing with the big players, well-entrenched into the market and
are actually brands of stable multinational companies such as Sarap, Yummy and Misan.
Given this, it only means that the players in the market are well aware of their position vis-vis existing players in the industry. They are able to manage competition and the market
may be considered as sizeable, measurable or for the market leader, Sarap is able to
confidently say that they are the market. However, it may also run the risk of
underestimating new players to come in and give them a run for their money.

1.1.2

Bargaining Power of Buyers: Low

Most consumer goods products have the liberty to design their brand mix without
limitations or subject to the mercy of buyers as long as it is sound enough. By sound it
simply means that the mix is designed for the right target consumer and this is most evident
in the 4 Ps of marketing product, price, place and promotion.

APOSTOL, GEMINN LOUIS C.

STRAMA II: Reyes
However, for a consumer goods product such as Sarap, the inputs of buyers are still held
important. This is most evident in the way it values feedback for a product that is just about
to be brought to market, a product that is already out and doing very well and most
especially for a product that is on the rocks. The danger with this is that if buyers inputs,
customers and consumers alike are taken for granted, the brand mix put together just might
be off as far as filling in the gap or answering a consumer need is concerned.

1.1.3

Bargaining Power of Suppliers: Low

Regional sourcing is enjoyed by brands that are managed by multinational companies

because these companies have the muscle to put together volumes from several countries
all over the world and use it as a leveraging factor to get the best deals from the supplier or
country from anywhere in the world. Given this worldwide phenomenon brought about by
free trade, it makes it easier and cheaper for the manufacturer to acquire the raw materials
and other supplies it needs to produce the finished goods where it is cheapest then produce
it in the market that would also be wisest in terms of cost and regulations which then yield
the finished goods that will be shipped and sold to the different markets all over the world.
In the traditional buying practice by manufacturing companies, they are able to have and
sustain partnerships with their suppliers. Partnership may be in terms of the bargain price
given to them and other non-monetary terms as well such as customer service, the sharing
of the same vision, and the like. This is quite difficult or it becomes more challenging given
that the suppliers in the new world are separated by bodies of water. Hence, the relationship
becomes purely supplier-principal in nature.

1.1.4

Threat of Substitute Products: High

Major renowned global cosmetics and toiletries company such as

Proctor & Gamble; Uniliver; Shiseido; LOreal; Avon and Revlon are
Very strong on market presence and market share and in US.
b) Competition from Rivals copycats who discounts.
Every consumer product should always innovate and want to be better not only because it is
a promise it has made to its consumers the moment they brought their product to market

APOSTOL, GEMINN LOUIS C.

STRAMA II: Reyes
but there is the reality that substitute products will always try to make customers switch to a
cheaper or better alternative.
It can be said that the packaged soups business is under-attack by the powdered flavorings
category. This new player is a big threat since it is aggressively growing and eating up into
the shares of the packaged soups market. When this happens, value lost is a risk that the
packaged soups market is faced with because it means there is not much differentiation in
terms of usage.

1.1.5

Rivalry Among Existing Competitors: High

With the whole competitive activity of stealing shares from competitors, the very existence
of competition motivates all players to be the best there can be in the category. Continuous
improvement is definitely an advantage that consumers can expect from their leading
brands since battling with other big players in the category is an everyday reality that every
brand wakes up to. Saraps dominance in the category is something that is very much
valued and watched out for by the brand management team.
In a high-heat category such as packaged soups, brand switching is not a far-fetched
possibility since this is a very vulnerable category. Vulnerability in the sense that once one
stops making noise or buzz in media or on-ground, further aggravated by competition,
shares are sure to be at risk.
The fact that Sarap is always present above-the-line or running some activity in-store, shows
it wants to always stay top of mind amongst consumers. Women refer to it as their best
friend in cooking. Oftentimes, it is part of their ingredient list and this is because Sarap has
always reminded women about the value of Sarap packaged soups. This place however can
and will be easily foregone if competition such as Yummy and Misan, both two big and very
able players decide to give Sarap a run for their money. At the end of the day, all these are
brands that claim to be the best and say that they have the ability to deliver the results. It
only takes a consumer to try and experience it once for them to decide what brand to
continue purchasing. Also, losses cannot only be quantified for current markets but for
possible new category entrants as well.