Marketing management 214:
Jordan Proudfoot – 20889534
Catherine Mundell – 20690606
Roland Palme – 21082251
Joshua Strydom – 20718284
Jordan McMahon – 20706529
Table of contents
Internal analysis 1-5
External analysis 5-10
INTERNAL ENVIRONMENTAL ANALYSIS:
History of Union Swiss:
Union-Swiss (Pty) Ltd, a privately owned multi-national skincare company, is the developer of Bio-Oil. Union Swiss (Pty) Ltd researches, develops and locally manufactures skincare oils CITATION Em13 l 7177 (Follet-Botha, 2013). The company was founded in 1954 and is headquartered in Cape Town, South Africa CITATION Blo18 l 7177 (Bloomberg, 2018). Bio-Oil was the company’s first product and is now the international leader in the scar and stretch mark industry CITATION Cap14 l 7177 (Cape Venture Partners, 2014).
History of Bio-Oil:
Dieter Beier was a German chemist residing in South Africa and acquired Union Swiss (Pty) Ltd in 1972. Beier initiated product development and started researching oil-based skincare in the 1970’s. This lead to the development, manufacturing and launch of Bio?Oil in 1987.
Dieter Beier’s research of skincare oils was based on a Swiss skincare brand known as Vitamol. Union Swiss (Pty) Ltd distributed Vitamol under license during the period of Beier’s research.
The development of Bio-Oil was a return to the original and natural origins of skincare and its formulation has remained the same ever since.
When Bio-Oil was initially released, the skincare market was full of cosmetic creams and lotions and therefore Bio-Oil was not an instant success.
Dieter Beier retired in 2000 and subsequently sold the Bio?Oil empire to Justin and David Letschert. They subsequently changed Bio?Oil’s packaging to better reflect its purpose and altered its advertising campaigns and techniques to focus on what its users thought about the product.
Within the next five years Bio?Oil was the most selling skincare product in South Africa. Bio?Oil was released in the U.K. in 2003, in Australia in 2004 and then in New Zealand, Japan, Canada, the U.S.A and the Netherlands in the following years. At present, doctors and pharmacists globally recommend Bio?Oil as their first choice for scars and stretch marks CITATION Bio151 l 7177 (Bio-Oil Health, 2015).
Mission and objectives:
According to the source, Bio-Oil planned to extend their product range by at least one product and subsequently increase sales after the new product’s launch. Bio-Oil also planned to better the original formula of the oil to provide for increased customer satisfaction. Bio-Oil planned to build a stronger brand affiliation with medical doctors and with the health retail store market. These objectives have not been completed as of yet CITATION Em13 l 7177 (Follet-Botha, 2013).
Bio-Oil has had reasonable company growth since its global expansion but has had no new product developments or any extensive advertising campaigns.
The main objective of Bio-Oil as a leading skincare brand is to ensure that their spot as market leader in many countries is retained. They can ensure this by analysing their competition, pursuing a new or improved target market and provoking customers purchase Bio-Oil more often through different marketing techniques.
Bio-Oil saw the immense potential of social media and developed a plan to control an up to date social media platform to highlight the variety of uses and benefits of Bio-Oil to an ever-increasing audience of social media users.
Bio-Oil planned to market their product specifically to women and induce the idea of the product being a lifelong necessity for the treatment of various skin conditions experienced throughout life CITATION AME16 l 7177 (Amec, 2016).
Bio-Oil released a campaign known as “Every Body has a Skin Story” with the main objective being to show that every scar or imperfection had a real life story behind it that should be shared.
Through the use of these stories, Bio-Oil planned to make skin problems a less negative issue and build a strong support system with customers to promote brand loyalty.
Bio-Oil composed a set of specific objectives in order to evaluate the success of the campaign and organized these objectives under three headings, namely consumer engagement, consumer enlargement and consumer impact. Bio-Oil used a number of different techniques to execute their objectives in order to impact their entire target market CITATION AME16 l 7177 (Amec, 2016)These techniques included:
Story of the week:
The “Every Body has a Skin Story” or #myskinstory campaign was a success as a vast amount of women got involved by posting their story online. The campaign strengthened the trust of the community of the brand. Bio-Oil often included a controversial ‘Story of the week’ to encourage the inclusion of all people no matter their past CITATION AME16 l 7177 (Amec, 2016).
Bio-Oil encouraged women to share their stories through #myskinstory by promising economic incentives for specific charities and organisations in need CITATION AME16 l 7177 (Amec, 2016).
Digital dashboards were used throughout the campaign to provide for a constant relay of information through a visual update on key campaign advancements and the wider discussion of the brand online. The format of the dashboard allowed for updates to be communicated to stakeholders and the management team of Bio-Oil regularly CITATION AME16 l 7177 (Amec, 2016).
Industry of operation
Because of Bio-Oil’s large share in the skincare market, any changes and positive or negative happenings to the Bio-Oil product heavily affects the skincare market as a whole.
Bio-Oil, as stated earlier, is one of the products most recommended by doctors globally for various skin problems. The Bio-Oil brand, however, has no other complementary products to be bought alongside the oil and therefore has the potential to develop and put to market a new lotion, cream and/or lip balm to provide for even more brand awareness and loyalty and for an expanded product line.
There are plenty of competitors in the skincare market with similar and sometimes cheaper products when compared to Bio-Oil. These other brands generally have a range of products and market them in a way that promotes their other complementary products. This has the power to affect consumer behaviour and buying patterns by convincing consumers to buy one brand only and not diversify. Bio-Oil therefore have to either be the best product available for purchase or need to extend their product line CITATION Em13 l 7177 (Follet-Botha, 2013)Bio-Oil, since it’s international release in 2002, has won 369 skincare awards and slowly became the most selling scar and stretch mark product in 18 countries CITATION Bio151 l 7177 (Bio-Oil Health, 2015)Statistical studies and these numerous international awards have, however, shown that Bio-Oil is
one of the top skincare products globally and they thus need not worry about extending their product range as of yet. CITATION Em13 l 7177 (Follet-Botha, 2013)Bio-Oil
Bio-Oil is a specialist skincare product developed to help improve and alleviate the appearance of scars, stretch marks, aging skin and uneven skin tone CITATION Bio15 l 7177 (Bio-Oil Health, 2015)Formulation of Bio-Oil
The Bio-Oil formula combines plant extracts and vitamins and suspends them in an oil based solution. Vitamins and other natural extracts can be stored in oil for a long period of time without lowering their potency or having to add preservatives. It contains a unique ingredient known as PurCellin Oil™ which alters the oil’s consistency and texture. PurCellin Oil™ has made the oil light and non-greasy which provides for the ease of absorption of the ingredients.
Bio-Oil has undergone safety evaluations according to the Regulation of the European Parliament and the Council on Cosmetic Products. The evaluation of the toxins, the chemical structure and daily use of Bio-Oil has deemed the product safe for use CITATION Bio18 l 7177 (Bio-oil, 2018).
Manufacturing of Bio-Oil
Bio-Oil is manufactured according to the cGMP (current Good Manufacturing Practice) that was set out by the World Health Organisation (WHO).
All ingredients are tested before production takes place and a sample from each batch is tested in a laboratory and monitored over 5 years.
All Bio-Oil packaging is recyclable and all paper materials are used sustainably to protect and sustain the natural environment. No damaging emissions or hazardous waste is generated before, during or after the production of Bio-Oil. The brand can therefore be seen as eco-friendly which can be cleverly used in marketing campaigns CITATION Bio18 l 7177 (Bio-oil, 2018).
Why use Bio-Oil?:
Scars are the result of an overproduction of collagen and stretch marks are formed when the body grows faster than its skin causing the skin to tear. Uneven skin tone is due to an inconsistent and varying production of melanin by the body whereas wrinkled skin is mostly due to the weakening of the collagen and elastin support system of the skin.
Bio-Oil is designed to assist in the improved appearance and reduced noticeability of scars and stretch marks, but it can never remove them due to their permanent nature. It also contains various ingredients that assist in making the skin softer and smoother and therefore reduces the noticeability of wrinkled skin. Bio-Oil moisturises and supplements the skin’s natural oil layer which helps prevent the loss of moisture CITATION Bio18 l 7177 (Bio-oil, 2018).
External environmental analysis
Today’s society depends heavily on social media platforms- this helps Bio-oil enter the market in over 95 countries CITATION Mar18 l 7177 (Marin software, 2018) Bio-oil uses a marketing company, Mangostorm, to assist them in their advertising. Bio-oil states that Mangostorm have increased their Facebook account activity resulting in a rapid increase in sales. CITATION Mar18 l 7177 (Marin software, 2018). Bio-oil have access to free advertising on facebook, allowing them to gain feedback easily to improve the company. This will allow Bio-oil to improve their product while keeping updated with the socio-economic factors worldwide and societies trends which could possibly influence the business and its production.
Customers have access to unlimited information about bio-oil through the internet. If a customer experiences maximum satisfaction the company will be guaranteed customer loyalty and further advertisement by word of mouth. Bio-Oil is known to use customers’ positive testimonials and reviews as a form of advertising. CITATION Bio18 l 7177 (Bio-oil, 2018)As technology advances, the quality and effectiveness of Bio-oil improves. Products created through emulsification of oil and water, just like bio-oil, were only formed in the early 20th century through the improvement technology. Because of the technological advancements at the time supply dramatically increased causing a decrease in price which eventually led to a higher quantity demanded due to the lower and more attractive prices of the bio-oil products. More people could now buy the skin care products, bio-oil specifically. CITATION Bio18 l 7177 (Bio-oil, 2018)With the improvement of technology, more job opportunities are arising and Bio-Oil are involved with the upliftment of the middle class which is helping stabilize South Africa’s economy as the employment rate will decrease. The unemployment rate has recently decreased from being 27.7 percent in the beginning of 2017, to 26,7 percent in the fourth quarter of the same year. CITATION Goo18 l 7177 (Business tech, 2018). By expanding its services and hiring more staff, Bio oil is faced with an opportunity to provide jobs and contribute to the decreasing unemployment rate. Complying with the BBBEE, Bio-oil can use this opportunity to create a positive public image and attract more potential customers if they are willing to support Bio-oil and the ways they are trying to help improve South Africa’s economy.
Advancements in technology also contribute to more efficient transportation of raw materials and the final bio-oil product. Bio-Oil was named the number one skincare product in South Africa which opened the opportunity to expand to many more countries such as the U.K, Australia, New Zealand, Japan, Canada, the U.S.A, and the Netherlands. Online shopping also helped globalise the company. Bio-Oil is highly recommended by doctors and pharmacists across the world for scars and stretchmark. CITATION Bio18 l 7177 (Bio-oil, 2018)In conclusion, Bio-Oil has used social media and technology advancements to their advantage and can continue to grow and succeed, but keeping up with the latest technology advancements and promoting their products online. Bio-Oil is a growing and expanding market, and using social media and creating a positive word of mouth, especially recommendations by doctors and pharmacists, Bio-Oil will continue to be a success.
Bio-Oil is a naturally produced product containing a mixture of mineral oils, vitamins, and plant extracts.CITATION Bio181 l 7177 (Bio-Oil health, 2018). The environment can be damaged a lot during the production of alternative products but no evidence is found that the production of Bio-Oil directly affects any form of nature.
There is no proof that Bio-Oil directly harms the environment, however, their non-biodegradable packaging builds up in landfills where the breakdown of them may take close to one hundred years. Bio-Oil must take their plastic bottles into account and maybe use an alternative like glass or recycled jars to create less waste.
The drought in the Western Cape will affect the Bio-Oil production within South Africa due to the shortage of raw materials. The following to name a few, Calendula Officinalis flower extract, lavandula angustifolia oil, Rosmarinus officinalis leaf oil etc are examples of what products can be found within Bio-Oil. Importing either already produced bottles of Bio-Oil or materials used to make the oil will add on costs, but is a necessity in order to keep production levels high.
As social media becomes a more important factor into today’s society, woman are seemingly more aware of their bodies and physical appearance. Bio-oil helps people with insecurities such as stretch marks, to get rid of them and therefore sales will increase because of the growing online lives. Social media platforms can play a big role in people’s lives and unfortunately sets unrealistic expectations of woman and men worldwide. Because of this, people want to make themselves near to perfect to fit in to the previously mentioned expectations which increases their negative image on their body by through the use of using bio-oil, bio-oil can help reduce some of these insecurities.
The internet can also be a positive factor for Bio-Oil because not only can their products be sold in various shops such as clicks, in many different countries such as the U.K, Australia, New Zealand, Japan, Canada and the U.S.A. but they can also be bought online CITATION Bio18 l 7177 (Bio-oil, 2018). Due to the indefinitely improving technology customers have easier access to purchasing the product which also can lower costs and reduce pollution emissions from having to transport the product to the shops, and that the customers travel to that same shop to purchase it, instead the product is delivered directly.
With interest rates and inflation rates being quite high in South Africa compared to other countries, customers may not be able to spend as much money on luxury products as they are not a necessity. This may affect the Bio-Oil sales rate as people may not be able to afford the product within their tight product. Bio-Oil has made their prices more affordable to fit into South Africa’s economy, to ensure that customers will still be able to purchase the product. CITATION Zoe14 l 7177 (Zoe, 2014).
In conclusion, Bio-Oil can affect the environment through their non-recyclable packaging because it takes close to one hundred years to biodegrade. The environment can equally harm the business as when droughts occur, plants used within the production of Bio-Oil may suffer due to the lack of water which can slow down production drastically. Bio-Oil can use technology to their advantage as online shopping will lead to a decrease in transport pollution. Bio-Oil can evidently control the effect they have on the environment, but will have to adapt their company if the environment greatly affects them, such as the draught, as they have very little control over this.
Bio-Oil is a skin treatment product that is world renowned and has won awards such as the number one selling skin care product in South Africa and multiple other countries worldwide, because of this Bio-Oil is a product that is high in demand.
Bio-Oil is used to treat multiple skin faults, such as stretch marks, scars, wrinkles, dehydrated skin and uneven skin tones, which apply to people of all ages. The product is therefore attractive to most people, but because many of these skin faults occur more commonly in women (e.g. stretch marks due to pregnancy, scaring from pimples during puberty and uneven skin tone from hormone imbalances during menopause) Due to this the general target for Bio-Oil will be women. CITATION Bio l 7177 (Bio-Oil, 2018) Bio-Oil’s target demography will be for people who want to keep their appearance looking healthy. This bracket of people usually falls from people aged 16 and up. Bio-Oil is also attractive to men and many of them obtain scars and stretch marks from sport, other exercises such as body building and excess weight loss CITATION Ing111 l 7177 (L, 2011). Should Bio-Oil provide ingredients that would benefit men more, a larger market shall open for Bio-Oil.
Bio-Oil has a wide range of location and price availability, ranging from recommended prices of R39.99 – R209.99. Bio-Oil is also available in multiple stores, such as Woolworths, Checkers and Clicks which ensures that a product is not limited to a group of a specific wealth bracket, increasing the size of their demographic range.CITATION Bio1 l 7177 (Bio-oil, 2018)The current population worldwide is generally very image conscious, therefore a product such as Bio-Oil is desired as it is designed to improve the condition of one’s skin. This also leads to products like Bio-Oil being boycotted but certain groups who believe using skin care products is preventing natural occurrences.CITATION Emm13 l 7177 (Follett-Botha, 2013)Because Bio-Oil is sold in countries worldwide advertising needs to be acceptable and appealing to the specific country it is attempting to sell its product or needs to fit a general standard for the countries that are selected.
Union Swiss uses an undifferentiated marketing strategy for Bio-Oil. This is effective for their target market as it focuses on the common needs between the consumers and how Bio-Oil effectively solves their need. This strategy also makes the product attractive to those who are outside of the target market. CITATION Emm13 l 7177 (Follett-Botha, 2013)
Bio-Oil has gained a formidable reputation, and this has allowed the product to be advertised by testimonials and by word of mouth. This great reputation also encourages new customers to purchase Bio-Oil over other cosmetics.
Bio-Oil is a cosmetic and has a large amount of competition due the number of competitors in the cosmetic industry, and therefore must ensure the product has enough recognition amongst the consumers and maintains affordable prices for it to be sustainable and profitable inside of the market. Methods need to be developed for new customers to be encouraged to buy Bio-Oil over other cosmetics, while ensuring that current Bio-Oil consumers continue to purchase the product and do so more frequently. CITATION AME16 l 7177 (Amec, 2016)Because Bio-Oil is a cosmetic, it is classified as a luxury item. Due to this people will only be willing to pay for this product should they have enough income, or they have a high demand for this. This means that because Bio-Oil is sold in multiple countries, the average consumer income, as well as government taxation policies need to be considered to ensure that the target consumers will chose to by the Bio-Oil product regardless of the country it is sold in. The current and/or predicted inflations for the various countries should be considered as the difference rates of growth or decline will determine if the various populations will be able to afford Bio-Oil.
The harmlessness of a globally wide spread product such as Bio-oil should be constantly monitored as any slip-ups in safety of the product can lead to huge litigation issues. To date, a total of fourteen clinical trials have been carried out on the product, covering concerns such as safety and effectiveness. the chemical structure, toxicological profile and the daily total level of contact of each ingredient in the product has been investigated and announced safe for use CITATION Bio17 l 7177 (Bio oil , 2017).
Bio-oil has faced safety assessments through Regulation of the European parliament and the Council of cosmetic Products CITATION mwe13 l 7177 (mweb, 2013). The product is made in accordance with Good Manufacturing Practice- “Good Manufacturing Practice (GMP) is a system for ensuring that products are consistently produced and controlled according to quality standards. It is designed to minimize the risks involved in any pharmaceutical production that cannot be eliminated through testing the final product CITATION Int18 l 7177 ( International society of pharmaceutical engineering, 2018).”
The Letschert brothers, Justin and David, were confronted to find buyers for Union Swiss- a 50-year-old company for sale, which unfortunately was unattractive at the time due to a few brands within the company which were unprofitable. The brothers ended up buying Union Swiss, originally with the intent of cleaning the company up, they sold off the poor-performing brands and focused all their business on one core brand- Bio-oil and are now the current owners CITATION mwe13 l 7177 (mweb, 2013).
The Letschert brothers started off (in year) by outsourcing their manufacturing with the head office in central Cape Town. The brothers set Union Swiss up as an international company as they owned the distribution rights in South Africa and well as global distribution rights to the Bio-oil product. In 2002, after Bio-oil had established in South Africa, Union Swiss decided to expand the product to the United Kingdom. A week before the launch, the pharmacy chain, Boots, said they would not sell Bio-oil if the product read ‘scars’ on the packaging. This request was one made by Boots and had nothing to do with UK labelling laws. Bio-oils UK distributor still encouraged the company to pursue Boots and change their packaging. Bio-oil refused to change and started small. Just before the big launch the rand significantly weakened to the pound, which caused the required investment capital to almost double overnight. Only three years later, Bio-oil was the top-selling body care product in the UK. Since then the company has managed to expand to over 50 countries CITATION mwe13 l 7177 (mweb, 2013).
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