CHARMINE

REPORT
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BUS 345 – E-Commerce

Contents
1. The business description:.........................................................................................................2
a) Background of business............................................................................................................2
b) Products and target customers..................................................................................................2
c) Business model.........................................................................................................................3
d) Functions of business...............................................................................................................3
2. Why I select the product or service..........................................................................................4
a) Characteristics of our product..................................................................................................4
b) Comparison between our online business and offline business...............................................5
3. Market analysis.........................................................................................................................6
a) Discussion of industry characteristics and trends.....................................................................6
b) Competitors and their businesses.............................................................................................7
c) Projected Growth......................................................................................................................8
d) Customer behavior.................................................................................................................10
e) Complementary products / services.......................................................................................10
4. Value proposition...................................................................................................................11
a) How Charmine’s products and service solve the problems and improve market situations. .11
b) Benefits that customers can expect from our business...........................................................11
c) Why customers should buy from us over the competitors and how does our products and
service differ from others?.............................................................................................................12
5. References..............................................................................................................................13
 GROUP 3
BUS 345
REPORT MARKETING ANALYSIS

1. The business description:

a) Background of business
Charmine is a new brand name in the cosmetics industry. It was established in the
beginning of 2020, with the mission “Your beauty, our pleasure”. The company was born to
provide customers high-quality lipsticks at affordable prices for every class of women.
Moreover, we operate mainly in the internet, so it offers an easy access to our store for all
customers; no matter, how far the distance is!

Especially, our founders are all females, so we deeply understand about the needs of all
women’ beauty; therefore, we are confident and reliable to give all customers the best quality
products.

b) Products and target customers

We separate our products into 2 types (High-end and Drugstore) to suit with all women,
despite of the differences of income.

High-end products Drugstore products

Products We sell many kinds of Although the prices are lower
premium international than the high-end products,
lipstick brands, and these we ensure that these products
lipsticks have been the still have good quality to
bestseller products in satisfy customers.
different kinds of markets. Additionally, these products
(Dior, Givenchy, Tom are also come from well-
Ford…) known brands, and have
recently pleased a lot of
consumers around the world
 (NYX, Maybelline…)

Target Customers  High customer class  Low and medium

with the average customer classes with
monthly income: the average income:
more than 10,000,000 from 1,000,000 VND
VND to 10,000,000 VND.
 Age: from 22 to 50  Age from 15 to 30
years old. years old.
 Do not have time to  Do not have time to
go shopping at stores. go shopping at stores.
 Know how to access  Know how to access
to the online to the online
shopping. shopping.

c) Business model
 By the degree of Digitalization: Click and mortar
After customers confirm their orders in the web store, our staffs will send the orders to
warehouse, and finally a deliver will bring the ordered products to the customers It is
obvious that our operating activities include both online and offline activities.
 By the degree of Participants: Business to consumer (B2C)
We sell directly to the consumers.
 By the degree of Source of revenue: Sales
The main source of our revenue comes from sales.
 By the degree of Role: Virtual merchant model

d) Functions of business
 Product supply:
 We would like to provide high-quality lipsticks with affordable prices for all classes of
women through online shopping.

 Search cost:
We sell the products online, so we can lower search costs for customers, because our store is
easy to find in the internet.

 Price determination:
All prices are included under each product on the website. In comparison with other actual
stores selling the same products, our products have lower prices, because we do not need to pay a
lot of operating expenses as the other (leases, utilities…)

 Facilitating transaction
We set up our web store to allow customer place orders any time. Additionally, we also offer
electronic payment methods (such as paying via Visa, mastercard and paypal) so that customers
are easy to get their favor lipsticks as soon as possible.

2. Why I select the product or service

a) Characteristics of our product

- Inforcentric product: Lipsticks might not be the product that customers will buy it right away
without any consideration. When customers want to buy a lipstick, they must have information
about their products’ ingredients. People usually search for information before making a
decision. Thus, buying a lipstick is either. Some will love this quality, this design, this function,
but there are people who will be allergic to some ingredients in lipsticks. Therefore, considering
information is very essential when customers decide which one they will buy. Thus, they can
choose their suitable products which are not only good quality but also good for their lips.

- High brand recognition: Products on e-commerce sites, customers can not touch before they
get the products, and then to buy online, customers need to make recognition about high brands
of lipsticks and high-reliable products. Therefore, Charmine lipsticks store chooses the typical
brands with high recognition to build trust and customers’ reliability.
- Time dependent products: Lipsticks are very important for women’ daily make up. However,
they are also expired in time. Some products such as matte lipstick will have longer time in
expiration, whereas some lip balm, glossy lipstick will have a shorter period in expiration due to
some natural ingredients.

b) Comparison between our online business and offline business

Offline business Online business
Distance travel and time- People must go out to visit Customer can go to our web
consuming issue
our office and see products, store on e-commerce sites to
which will take a lot of time find detailed information and
visual products at home or
anywhere. This saves time
Leases We need to pay a lot of We could reach all customers
money for leases, if we want all over the world, no matter
to expand our business to where they are living without
attract and serve more new any lease expenses.
customers (up to many
stores, with many different
locations).
Advertising methods We may advertise on We can reduce the
television, print hard advertising fee, because we
advertisements or through have already operated online,
online advertising channels so we can use our website
(fees charged). flat form to advertise (with a
small additional fee, and
certainly much less than
offline business)
Inventory carrying cost issue Because we do not know When customers place their
exactly how many quantities orders in our website store,
and what kinds of products we know exactly how many
that customers want to buy in quantities and what kinds of
advance, so we need to take products that customers want
 the control and carry an to buy; so at that time, we
estimated (budgeted) can contact with the whole
quantity in the warehouse. sellers and ask for the exact
quantities and types of
products which the
customers need. As a result,
we do not need to carry the
inventory in the long-time;
therefore, we can use just-in-
time inventory and it
definitely helps us lower
inventory costs.
Maintenance The offline store needs to The online store costs less
carry maintenance cost maintenance expenses
included the expenses the because the store does not
store incurs that are tied to need to show their products
the upkeep and repair of like in the offline store, so
device present throughout the costs for buying and
operation such as bulbs, glass maintain appliances like
doors, tables, chairs, shelves, cabinets or bulbs are
cabinets, and so on. unnecessary.

 Reasons for us to decide to sell our products online

We have realized that selling lipsticks online brings us much more benefits than the
offline business. One of many reasons is that we can reach all international customers
without the geographical distance barrier. Furthermore, we can minimize many kinds of
costs and expenses, such as, advertising expenses as well as inventory costs.
Additionally, we can eliminate the lease expenses (as we have mentioned above).

3. Market analysis

a) Discussion of industry characteristics and trends

From the past to the contemporary life, the emerge of lipsticks usage has been developed
remarkably over years to years over the world in general, and Vietnam in particular. In fact, the
lipstick industry manufactures, packages and delivers a variety of lipstick categories like lip
color and moisturizing products, including matte lipstick, long wearing and transfer resistant
lipsticks, glossy lipstick, lip tints, lip liner and lip balm, which in turn contributes a significant
development of this field of industry.

Over the five years to 2018, lipstick industry entrepreneurs have experienced elevated
demand of lipsticks, particularly from drug-store products to high-end products, in line with
increased consumer spending and overall economic expansion (Figure 1). Nevertheless, due to
the COVID-19 pandemic happened in 2020, the lipstick manufacturing industry is experiencing
a decline in the revenue growth as a result of decreasing demand of lipstick purchase (Lipstick
manufacturing industry, 2018). Despite this decline, there are so many predictions that lipstick
will be still greatly accepted. Product improvements combined with attractive deals seduce
customers to continually purchase new industry products.

Figure 1: The percentage of revenue growth in cosmetic products

(Source: Statista, 2019)

As the modernize trend has created a change in lifestyles, raising consciousness about the
awareness of beauty and elegance is expected to become one of the essential key drives of
lipsticks usage. Besides, rising purchasing power of women population due to rising female
workplace is anticipated for escalation of lipsticks’ production and expenditure on lipsticks.
Especially, consumer preferences and the introduction of new lipsticks with attractive packages
of luxury lipsticks are predicted to increase in the upcoming years (Figure 2). Thus, the
expenditure of non-luxury and luxury lipsticks have also contributed to revenue growth in the
upcoming years. Therefore, the more trends lipsticks launch, the more progressive this lipstick
industry will be.

Figure 2: The percentage of non-luxury and luxury lipsticks' expenditure

(Source: Statista, 2019)

b) Competitors and their businesses

As aforementioned trends, the lipstick marketplace has been so familiar with people
during the changes in trends throughout every year. Therefore, there are so many businesses
selling lipsticks either at store or online store. In the domestic retailer beauty stores, there are
more than 400 cosmetics businesses based on a report from the society of cosmetics of Ho Chi
Minh city (ANT consulting co, 2019). Among the domestic and foreign enterprises, the lipstick
marketplace in Vietnam is still based largely on the foreign brands. Meanwhile, the domestic
enterprises have to face fierce competition due to inferior advanced technology, knowledge and
corporations. Foreign brands are dominating the lipsticks market, especially the high-end market
segment which has attracted a lot of young customers via attractive packages, high quality than
drug-store market segment. In the competitive race between domestic and international brands,
there are so many foreign businesses enter to cosmetic marketplace in Vietnam, mostly from
Korean, Thailand and USA. They successfully attract a lot of young customers, which in turn
captures a large amount of profit about US$2 billion in Vietnam’s cosmetic marketplace. A
report found that 90 percent of the revenue of the cosmetics market in Vietnam goes into the
pockets of foreign manufacturers, especially South Koreans Vietnam’s US, 2018). Vietnamese
brands hold a smaller market share; and their products can be sold only in the low-end market
segment (mainly in normal stores) which bring low profits.

Meanwhile, the lipstick industry has recognized some new typical competitors of
domestic businesses such as Ofélia lipsticks – the lipstick brand of a Vietnamese famous
influencer about reviewing lipsticks, M.O.I lipsticks – the cosmetic brand of Ho Ngoc Ha who is
a famous singer and model. They mainly focus on offline store, rather than join into e-commerce
sites. Besides, there are two famous cosmetic chains from a domestic enterprise and a foreign
business in Vietnam which are Medicare of Vietnam, and Guardian of Hong Kong. In the
competition of two big cosmetic chains, Guardian has opened over 90 stores since 2011 in
Vietnam, whereas Medicare built in 2001 is still seeking for an expansion of its product range as
it is facing pressure from international competitors (Vien, 2019). Both these enterprises also
enter to e-commerce to sell online via Shopee, Lazada and Tiki which are 3 most popular e-
commerce sites in Vietnam with a large number of users. Thus, the competition between
domestic enterprises and foreign businesses have been one of the most noticeable factors in
market analysis. And e-commerce sites contribute a lot to the competition.
 c) Projected Growth

Figure 3: The percentage of revenue growth in lips segment

(Source: Statista, 2019)

Overall, the popularity of lipstick industry started to gain more revenue in 2013 at 5.3%
of revenue growth, which was considered about US$79,05 million. The revenue in the lips
segment continuously increased to 6.3% of growth in 2019, which was about US$112.86 million.
Nevertheless, due to the COVID-19 epidemic in the beginning of 2020, the revenue growth in
this segment is facing a decrease from 6.3% to only 6.1%. As the information mentioned before,
because the economy is impacted during the pandemic, so the demand of lipstick purchase also
experiences a decrease. This impact will continuously fall to 5.5% in 2023. As Nguyen Thi Nhu
Ngoc – a founder and CEO of EComEasy (ECE), which provides services to sellers in
marketplaces, expected that color lipsticks took a big hit as the government forced people to
follow the rule social-distancing, thus people would not have used much make-up (Lim, 2020).

Although the fall in predictions, but there are some claims from the authorities that
Vietnamese market is set to expand strongly over the next few years in cosmetic fields in
general, and in lipstick products in particular. Moreover, the COVID 19 pandemic also makes
people to buy products online via some e-commerce stores. Ms. Ngoc claimed that e-commerce
was on up-ward usage, and 80% of incremental beauty spending from online channels (Lim,
2020). Furthermore, with a young population, a perception of online convenience and heavy
promotions from E-commerce platforms; online shopping is gradually integrated into people’s
lives. Cosmetics - one of the best-selling product categories products online due to its
convenience, wide range of options and good prices. Official channels like E-commerce
platforms and brand websites are popular for online purchases, so does social media because of
its communication feature. The top 4 sites for buying cosmetics for Vietnamese people are
Shopee, Lazada, Facebook and Tiki. As the result, there is a fall in purchasing lipsticks at stores,
but it will be a projected growth in expenditure via e-commerce channels.

d) Customer Behavior
Vietnamese customers tend to buy more Korean brand cosmetics compared with other
countries’ cosmetics. From the Ho Chi Minh city report cosmetics association reported that 30%
of the market share in Vietnam belongs to Korean suppliers, EU accounts for 23% which stands
for the second large market share, followed by Japan is 17%, Thailand is 13%, US is 10% and
others account for 7% (Kim, 2019). Based on the environment which impacts on buyer’s
characteristics and decision process, the marketing stimuli of Korean brands has made a lot of
attention on customer behavior. The Korean lipstick products are often connected with colorful
models which suitable and attracts young customers. Besides, the price is also affordable with
both students and workers. Not only do attractive packages and affordable price attract a lot of
customers, but also being fashionable is very considerable in the customers’ decisions. After
Korean brands, the behavior of Vietnamese women also considers on EU and American
products. Vietnamese people often believe that expensive lipsticks will go with the best quality.
What also drives Vietnamese women to use high-end lipsticks is because of brands of luxury
such as Hermes, Chanel, Givenchy.

e) Complementary products / services.

In the cosmetic industry, especially lipsticks. There are a wide range of products from lip
colors to care products. In Charmine Lipsticks Store, we offer complementary products for lip
colors can be go with lip liner and lip balm, lip tint... and so on to make customers feel they
choose one more complementary products is a good deal or the best decision. One of the best
marketing for complementary products is using push notifications. As e-commerce has become
one of the best place to get promotions convenience for customers, push notification is
considered as a key component for e-commerce mobile applications. A push message can give a
recommendation for complementary products. For example, when customers go online shopping
via our store to buy a matte lipstick, they will get recommendations to buy with lip balm, lip
scrub and other care products for their lips. By the push notification, this will push more sales
through complementary products.

4. Value proposition

a) How Charmine’s products and service solve the problems and improve
market situations
Women today are busier than ever with lots of things to consider: working, family, social
interaction, beauty and health demands. Therefore, they often do not have much leisure time to
go shopping. However, the beauty demands of women are vital and necessary, so online beauty
industry becomes dynamic ever. Understanding the needs of women, our online store offers one
of the indispensable things in the women's handbags - lipsticks.

b) Benefits that customers can expect from our business

Coming to Charmine, customers will receive many benefits. Customers can purchase
lipsticks at their own homes or in workplace in the most comfortable way by just pressing the
"buy now" button. They do not need to go far away just to buy a lipstick or spend time standing
in queues in cash counters to pay for the products that have been purchased. Moreover,
Charmine offers the specific information about the products, so the customers can look for the
products by entering the key words or using search engines. Besides, Charmine will give a
discount for customers on holidays, so customers can look forward the attractive discount of our
store to save more money. Furthermore, Charmine created our own shipping service, so the
customers whose addresses near us can have a very low shipping fee or sometimes no shipping
fee due to the close distance. We are also cooperating with lots of domestic and international
delivery companies, so we can deliver your products very soon no matter where are you living.
On top of that, we affirm that our products are authentic and clear orgin. We have bills to prove that
our products are picked up from the reliable international stores. The products are always checked
carefully before delivering to customers. If any mistakes occur with the products such as the lipstick
is scratched or broken, we will give discount 50% for customers or replace a new one to customer.
We promise that we will serve the customers with our best responsibilities, so the customers can trust
in our store.

c) Why customers should buy from us over the competitors and how does
our products and service differ from others?
Charmine is offering lots of service to differ from other competitors and prove that why
customers should choose Charmine:

First of all, we take care of customers’ wallet, this means that we are always trying to
offer the most “competitive price” to our customers. Besides of that, Charmine will offer the
membership card for customers who usually buy our products with the total price is more than 4
million VND. The membership card will give the discount up to 10% for customers without
waiting for holidays to buy discount products.

In addition, Charmine provides advising service for men who need advice to buy
appropriate gifts for their girlfriends or wives. We will try our best to give the best advice to fix
their wallet and their beloved interests. We also offer free gift package service for those who buy
our products to present as a gift.

On top of that, saving time for customers is one of our big targets. Charmine divides our
products into many types to suit with the age level of customers. For example, for the young
customers, we will offer lipsticks with bright and youthful colors like coral orange, red orange,
peach orange, cherry red, ruby red, pretty pink and so on; while lipstick color for women 40 and
50 will be brown pink, peach pink, warm pink or brown nude ... to create the charm of the
overall face. Therefore, the customers just need to focus on types that suit to their ages without
looking at all types that we offer.

Moreover, we not only sell products for the domestic customers but also the international
ones. Therefore, depending on the bills, we can support customers about delivery fee by giving
some small discounts on products, so customers do not need minding whether the shipping costs
are high or not. We believe all the service that we offer will make customers go back to our
business again.
 5. References

Kim, C. (2019). How big is Vietnam’s cosmetics market?. Retrieved from

https://vietnamnet.vn/en/business/how-big-is-vietnam-s-cosmetics-market-529857.html

Lim, A. (2020). The COVID-19 impact: Vietnam personal care market jumps by double-digits.
Retrieved from https://www.cosmeticsdesign-asia.com/Article/2020/04/20/The-COVID-
19-impact-Vietnam-personal-care-market-jumps-by-double-digits

Vien, T. (2019). Affluence, e-commerce market Vietnam a lucrative cosmetic market. Retrieved
from https://e.vnexpress.net/news/business/industries/affluence-e-commerce-make-
vietnam-a-lucrative-cosmetics-market-3967651.html

Vietnam’s US$2 billion cosmetics market controlled by foreign brands. (2018). Retrieved from
https://vietnaminsider.vn/vietnams-us2-billion-cosmetics-market-controlled-by-foreign-
brands/

ANT consulting. (2019). Business cosmetic industry in Vietnam. Retrieved from

http://www.antconsult.vn/news/business-cosmetic-industry-in-vietnam.html

Lipstick manufacturing industry in the US – market research report. (Dec, 2018). Retrieved from
https://www.ibisworld.com/united-states/market-research-reports/lipstick-manufacturing-
industry/

https://www.statista.com/outlook/70010000/127/cosmetics/vietnam#market-revenue