Entry Strategy in Ukraine
Maria Francesca Vallario Juliana Ferreira Yuchen Lei Meike Chen
KIKO Make Up Milano Mission Statement: “Professional luxury is an exciting reality you can touch. For every budget.”
Founded in 1997 by Percassi Group professional cosmetics brand “Be What You Want” is KIKO’s ultimate vision of beauty perfect combination of quality and creativity KIKO does not carry out or order testing on animals
700 points of sale in 8 countries in Europe (Italy, Spain, France, Portugal, Germany, United Kingdom, Austria and Switzerland) with its presence in 34 nations (thanks to its online service delivery) and now with its new opening in U.S. and Hong Kong
SWOT Analysis Strenghts ➔ ➔ ➔ ➔ ➔ ➔ ➔
Italian brand-trendy and fashionable accessible to any budget good product quality attractive packaging research innovation and new developments in the cosmetics industry range and variety of products and lines (i.e.: On the-Go minis) high product quality and accessible prices
Opportunities ➔ ➔
develop an anti-ageing segment for a 60+ market, open a possibility of brand expansion travel retail segment is expanding- KIKO is producing smaller version of products and empty travel containers
Weaknesses ➔ ➔
stores are owned by Percassi, therefore both positive and negative outcomes reflect on the company part of a very competitive market with strong and well-known competitors
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L’Oreal, Maybelline, Revlon, and NYX--owned by the L’Oreal group (have more funds for marketing)
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more challenging for KIKO to appear as a strong competitor in the market
Threats ➔
KIKO is considered in between drugstore products and luxury products, thus is put in a very specific area
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illegal counterfeits lowers the brand image and the consumer confidence decreases, affecting sales
Why KIKO in Ukraine ➔
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Economic crisis in 2016- raised demand for beauty products mostly “lipstick effect” Doubling of minimum wage and raising pensions raised consumer demand Buying lipstick is viewed as moral compensation for their efforts
Segmentation and Targeting Suitable for every age group KIKO’s primary segment:
High cosmetic consumption Ukrainian market preferences: ➔ ➔ ➔
attracted and targeted to what is trendy and fashionable in-store experience test the products on skin
15-25
KIKO’s secondary segment: 26-36
(Possible) Brand Expansion in Ukraine: 45-55
High brand loyalty- Values tradition over innovation
Positioning
KIKO Entry Strategy retail format development growth opportunity âž”
from direct strategy to master
franchising agreement with a local sub-franchisor Governmental issues âž”
Ukrainian government does not allow the company to enter the market with its own subsidiary. These problems mainly concern political instability, a high level of corruption, and cultural diversity.
KIKO Entry Strategy Partnership with Praxet LLC
Praxet LLC ➔
founded in 1995
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Ukrainian cosmetic company and distributor
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over 20 years of experience in retail
Advantages ➔
ease of access to the market
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adapt the marketing mix to the Ukrainian culture, reducing the costs of intense market research over the country customs and habits
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“middle-men” between the Italian headquartered Kiko and sub-franchisors
KIKO Entry Strategy Agreements Why KIKO should adopt a franchising strategy?
Master Franchise Agreement ➔
International agreement between franchisor and sub-franchisor
Sub-Franchise Agreement ➔
Domestic agreement between sub-franchisor and each of the sub-franchisees Place:
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three stores in Kiev
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major shopping malls – Gulliver, Ocean Plaza, and Dream Town
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Only expense = training
KIKO In Ukraine Make Up: ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔
primer foundations concealers powders blush eyeshadows mascara eyeliner lipsticks lipgloss
Skin Care: ➔ ➔ ➔ ➔ ➔
body balms face masks face moisturizers hand creams anti-agers
Additional accessories: ➔ ➔ ➔ ➔
blenders sponges brushes fake eyelashes
Promotion in Ukraine
Online ➔
create a local website– kikocosmetics.ua to communicate with customers
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create short dynamic videos that promote “KIKO experience”
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post pictures of the make-up looks on Instagram followed by hashtag #KIKOTRENDSETTERS
Offline ➔
promote free make up applications available in the KIKO Ukraine store
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consider partnering with other salons, makeup schools and aesthetic schools to easily gain brand loyalty
Distribution In store:
Online:
KIKO Milano Headquarter
KIKO Milano Headquarter
Praxet LLC KIKO’s Warehouse
Consumer
KIKO store
References Kikosmetics.com, “Our Brand,” kikocosmetics.com Kumar, Sameer. "Exploratory Analysis Of Global Cosmetic Industry: Major Players, Technology And Market Trends." Technovation 25.11 (2005): 1263-1272. Business Source Premier. Web. About Us, Praxet LLC, http://praxet.com/en/about-us.html Worldbank.org, “Ukraine Economic Update – April 2017,”Worldbank.org “Ukraine Demographics Profile 2018.”Ukraine Demographics Profile 2018. Index Mundi, 20 January 2018. Web. “Beauty and Personal Care in Ukraine.” EuroMonitor.com, 2015. Web. www.tripadvisor.it, “10 Best Stores in Kiev,” www.tripadvisor.it