Strategic Planning When Starting Your Soap Business

Document Sample
Strategic Planning When Starting Your Soap Business Powered By Docstoc
					                            Strategic Planning
                     When Starting Your Soap Business
                                           by Sandy Simmons
                                Author of “The Super Soap Making Book”

Selling soap is one of the most popular business that a lot of people engage in. This is
because itʼs a relatively easy business to get into. You donʼt need a lot of capital. You can set
it up in your backyard. Your product keeps for a long time so spoilage is not an issue. You can
start as big or as small as you want, and the potential to grow the business is huge.

Even with a lot of commercial soaps being sold, there is still a niche for specialty soap
products. This is because soap is one of the most accessible luxury products that people
indulge in.

But like any other businesses, the key to success is proper planning. In this report, we will
look into the tools that you can use to strategically plan your soap business. This exercise is a
must for those who want to go into this business with their eyes open and for those who
would like to take advantage of the untapped opportunities that are present in the market.

In this report, you will find:

   * FDA regulations on selling soap and soap claims
   * How to evaluate competition
   * How to spot untapped opportunities in the market
   * How to identify your target market
   * How to define your marketing objectives and strategy


   The publisher used its best efforts in the preparation of this publication. The information in
   this electronic publication is provided “as is,” and is being provided as information only. It is
   not to be used as business decision making information in any circumstance.

   The authors, publisher and associated company make no claims expressly or implied and no
   warranties about the contents of this report as being completely accurate, and it specifically
   disclaims any implied warranties for any purpose, and shall in no event be liable for any loss
   or damage, including but not limited to special, incidental, consequential, physical, or other

                                     FDA Regulation
Before we start, it is important that you are aware of the government regulations that govern
the sale and promotion of soap and soap products. The US FDA may classify soap as a soap,
a cosmetic or a drug, depending on the claims that the product makes.

A soap is defined as a soap if it meets these 2 criteria:
• it makes no other claims except its ability to clean.
• it is made mostly from the alkali salt of fatty acids.

A soap is defined as a cosmetic if it makes any claims to enhance the skin. For example, if
your soap claims to moisturize skin, it would be considered as a cosmetic product.

A soap is defined as a drug if it makes any claims to alter the condition of our skin. For
example, an anti-bacterial soap or an anti-acne bar would be classified as a drug.

There are also cases when your product has properties that make it both a cosmetic and a
drug. In which case, it’ll have to follow the regulations for both categories.

Be sure to check with the FDA to find out regulations that affects the kind of soap that you will
be producing.

                               Evaluating Competition

When it comes to evaluating competition, you want to be as objective as possible. The more
you know about them, the better your chances are of beating them.

Before evaluating your competition, the first thing you need to do is identify who they are. Is it
the commercial soap being sold in the supermarket? Perhaps it’s the other corporate gift
products? Or is it that brand of soap that exclusively uses olive oil or goat’s milk as one of the
main ingredients?

Identifying who your competitors are may seem easy, even trivial. But it’s actually very
important because it also defines the kind of market or competitive space you will be
competing in.

If you define your competitors as all hypoallergenic soaps being sold on the internet, that
would be different from defining your competitors as all hypoallergenic soaps being sold in
your state. Aside from knowing who your competitors are, you’ve also defined the kind of
customers you’ll be after, and to a certain extent, the kind of marketing strategy and
distribution strategy that you need to beat in order to establish your presence and claim a
share of the pie.

After you’ve identified and listed down who your competitors are, the next step is doing an
analysis that is popularly known as a SWOT analysis. SWOT stands for:

     Strengths - attributes of the product or brand that will help it remain a strong player in
     the market
     Weaknesses - attributes of the product or brand that may harm it’s position in the
     Opportunities - conditions in the market that is beneficial to all the players in the market
     Threats - conditions in the market that is harmful or detrimental to all the players in the

This kind of analysis forces you to look at your competitors and other factors in the
competitive space that affect your market and helps you further define what kind of product or
what kind of marketing strategy you should pursue.

Here’s an example of analyzing a competitor by looking at its strengths and weaknesses:

                                  Competitor A

               Strengths                               Weaknesses

 Recognized brand - 10 years in the       Limited selection when it comes to
 market                                   scents of soap

 Wide distribution network                Weak online presence

 Best known for really good soap that     Old style product packaging
 doesnʼt dry skin

List down as many strength and weaknesses you recognize. Once you have completed the
strengths and weaknesses analysis for your competitors, the action point now is to state how
you can overcome the strengths and take advantage of the weaknesses of your competitors.

Here’s an example of analyzing the market place to spot opportunities and threats:

             Opportunities                               Threats

 More and more people are                 More stringent FDA rules on soap
 comfortable buying products online       products

 Growing population of 40 years old       Olive oil shortage - prices of this raw
 and up consumers mean more               material expected to rise
 people who are concerned with
 moisturizing and products that
 promote healthy and youthful skin.

 Rise of cases of skin diseases -         Recession - people are price-
 people more conscious of using           sensitive and willing to forego certain
 excellent skin care products             attributes for cheaper alternatives.

List down as many opportunities and threats that you can spot. List down factors that you
think affects business now and may affect the profitability of this business in the future.

Once you have your opportunities and threats table, you can now create you action
statements or plans on how you can take advantage of the opportunities in the market, and
how to counter the threats that you foresee.

                                      Target Market

Now that you have an idea of the kind of soap you want to sell, the next thing you do is to look
more closely at your target market. Doing this can help you refine your product even more
and will also dictate what kind of marketing strategies you need to use.

When you are evaluating your target market, these are some of the questions you need

   1. Which segment of the population of soap buyers is your target market?
   2. What is their purchasing capacity?
   3. Where do they do their soap shopping?
   4. How often do they buy?
   5. How did they first hear about the brand of soap they are buying now?
   6. What kind of soap and soap products do they buy?
   7. Why do they buy that and not the other brands or other similar soap products?
   8. What are the things they consider important when buying soap?
   9. How loyal are they to their current brands? What would it take to switch them to a new
   10. What are the thoughts, ideas, attributes they attach to soap or to the particular brand
       that they are currently using?

This exercise will allow you to gain a lot of insight into who your target customers are, why
they buy what they buy, and how you can convince them to try your product. It can also give
you an idea of what your target market considers important when it comes to the kind of soap
they purchase, as well as help you identify if there are any subsegments of your target market
that is unserved by the current range of available products.

Before you actually decide what kind of soap you are going to be selling, understanding your
target customers is important. When it comes to soap, you are not out to cater to the needs of
everyone. So identifying who it is that you’ll be selling to will allow you to streamline your
product decisions and marketing strategies.

              Setting Goals For Your Marketing Strategies

Depending on the research that you have done into your competitors, the condition of the
market and where its headed, and on your target market, you are now ready to start creating
your marketing strategy.

                                    Setting Your Goals

With the information you have on general market conditions, you can now set your goals for
your business. Goals are not just financial goals. You can also have goals on how you want
your product to be perceived by your customers. You will set short-term and long-term goals.
Having these targets will steer you in the right direction.

Sample goals that you can have for your business are as follows:

First 6 months of operation:
   1.Sell 1,000 bars of soap
   2.Breaking even
   3.Find 2 re-sellers located within my State to distribute my products
   4.Be known as the new brand of soap that uses a unique blend of Olive Oil and Essential
     Oils to create soaps that leave the skin soft, and fragrant that lasts the entire day.

Within 2 years of operation:
   1.Profitable, selling 12,000 bars of soap annually
   2.Establish partnership with 20 distributors in different states/countries
   3.Establish a strong online presence and online distribution network
   4.Become the leading specialty soap that caters to men and women who want
     moisturizing soaps with scents that last the entire day.

On one hand, goals should be realistic. It should be something that you believe you can
actually do. On the other hand, goals should also inspire you to dream BIG. They should
challenge your creativity and your perseverance to drive your business to where you want it to

                                 Unique Selling Proposition

The next thing to do now is to define your product. There are many ways to decide what kind
of soap to sell. One way is to look at what kinds of soaps your good at making. Or if you are
sourcing your soap from a supplier, to find out what kind of soaps are available to you. This is
a practical way to start a business because you are taking advantage of resources that you
already have access to.

Another way to do it is to look at the competitive space and find out what it is that consumers
want or need, but that current products are unable to meet. Or you can also look at competitor
products that you would like to emulate, and figure out a way to do it better.

Whichever way you do it, you will need to determine what your Unique Selling Proposition is
going to be.

What is a *Unique Selling Proposition*? Commonly called USP, this is the single thing that
makes your products stand out from the products of your competitors. This marketing concept
can help you become successful because it forces you to identify something about your
product that makes it different, and gives your consumers a reason to prefer you over your

                       Identifying Your Unique Selling Proposition

To identify your unique selling proposition, here is a system that you can follow. First identify
the factors that you think are important to your customers when they choose what soap to
buy. For example, you came up with these 3 factors:

  2.Convenience / Not hard to find
  3.Has moisturizing properties

Now that you’ve identified the properties that are important to consumers when buying soap,
the next thing you do is you identify the various brands or kinds of soaps that you want to
compete with. Rank them against the factors that you’ve identified.

             Properties                         Brand A                     Brand B


 Convenience/ Not hard to find

 Has moisturizing properties

This exercise will help you identify the strengths and weaknesses of the other soap brands. It
will also help you define properties important to consumers that you can capitalize on.

For example, you notice that the best selling soap ranks high in convenience and moisturizing
properties, but is just average in terms of fragrance. In this case, your unique selling
proposition could be a soap that moisturizes well and smells great. Using this method, you’ll
be able to determine what properties you need in order to compete.


Once you know what kind of product you want and how you will differentiate it from your
competitors, it’s now time to define your Brand Name and Brand Values. Brand values are the
attributes of your particular kind of soap that makes it uniquely your own. It’s the personality of
your particular kind of soap.

Branding encompasses the choice of distribution outlets you will have, the packaging for your
products, you communication to your customers, how you will price your products, and how
you deal with your suppliers and employees.

For example, you’ve defined your USP as soaps with fragrances that lasts the entire day. And
you’ve decided to name your brand of soap L’Amour. Let’s try to define what brand values
L’Amour will stand for:
   - Sensual, sexy and seductive

   - Romantic
   - Believes in love at first sight
   - Believes in love that is meant to be
   - Believes in love that lasts
   - Images and colors - roses, reds and pinks, woman in love, happy couples, passionate
     and intense moments

Once you know what your brand will be all about, you now have an idea of what your
marketing messages are going to sound like, what kind of packaging to prepare, what kind of
scents to use for your products, what kind of distribution outlets will work, etc. Defining your
brand this way opens up distribution outlets that are not normally associated with soap. For
example, lingerie boutiques or flower shops.

With this, you are now ready to go into the nitty gritty details of planning your soap business.
You would also have gained the confidence and the supporting data that you need to pursue
your chosen marketing strategy and to set up your soap business in accordance with it.

If you would like to read more on the subject of pricing, marketing and packaging for your
soap business as well as techniques on making custom soap and creating your own soap
recipes, check out my ebook called “The Super Soap Making Book”. It’s exclusively available
online at this URL:


Shared By:
Description: Want to turn your soap making hobby into a profitable business? Find out the first step to creating your business plan. Learn how to analyze markets and competitors, figure out what your unique selling proposition should be, and how you can spot and take advantage of untapped opportunities in your market.