top answer: following the previous assignments and example slides to write the presentation draft’s first part “

  

following the previous assignments and example slides to write the presentation draft’s first part “product and assortment” 1.5 page

Professor’s comment of “Line extension and assortment”:As I mentioned to you several weeks ago during one of our breaks, line extensions of colors and patterns make sense. I think extensions into apparel may be a bit of a step too far at the outset but if you feel strongly about that then go for it.”

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Product:
Eyebrow Tattoo Sticker
Description:
Many people find it troublesome and difficult to draw eyebrows, and many people are afraid of
eyebrow tattooing, so we plan to design an eyebrow tattoo sticker, which can last for about a
week. There are already some similar products on the market, but they have a lot of
shortcomings and the technology is not very mature. For example, many people do not know
what kind of eyebrows they are suitable for, then they may buy eyebrow stickers that are not
suitable for them (In this regard, we try to provide virtual eyebrow simulation services. The
clients can take a picture and try different eyebrow shapes and color on their face in order to find
their most satisfactory eyebrow shape and color). The products on the market also have some
other problems, such as being unnatural, easy to fall off. We will improve these shortcomings,
including designing more different eyebrow shapes and colors.

Market profile: Size,stage of growth: (Xiangyu)
Though eyebrow makeup was a small market, with little industrial specific data. In the age of
COVID-19, face masks have made it a focus. According to the senior vice president of
merchandising in makeup in Sephora, “Prior to mask-wearing shifting clients’ beauty habits, we
saw a new trend developing toward a more natural, fluffy brow look that helped drive heightened
interest in the category”. A similar market, false eyelashes, has boomed from $1.1 billion in 2018
to $1.96 billion last year, a 78.2% increase.

As eyebrow makeup becomes a daily demand in the pandemic era, the traditional makeup tools,
eyebrow pencils and creams, cannot meet the needs of consumers. According to Anastasia
Beverly Hills market research, only about 35% of respondents were doing their brows everyday.
Meanwhile, 60% of the target felt “intimated, overwhelmed, confused or scared” to do their
brows at all. Thus, a product which can free people from time-consuming everyday brow
makeup would be a potential large and fast growing market, with an estimated market size of $2
billion dollars.

Customer segments: Groups of prospects with similar wants & needs: (Fan)
Audience personas:
Serena, a 25-year-old, an analyst for a private equity company, who is totally occupied with work
and don’t have too much time spent doing make-up
Coco, a 20-year-old girl who is just a beginner at make-up, regards drawing eyebrows as a huge
struggle for her.

Fiona, a 18 year old girl who is fond of fashion and likes to try brand-new things, always pursues
different patterns and different colors of eyebrows.
Josh, a 40 year old man who is going through chemotherapy and has lost most of his bodyhair.

Marketing positioning :

We aim to deliver the best product suitable for our customers’ needs. By offering the virtual

eyebrow simulation services, the customer builds trust in the company, knowing more or less the

look they will have once using the product, instead of buying from a retailer without being able

to try it on and having the risk of not suiting well on their faces. This can happen either because

of color, format or size. Our clients can choose from an array of color and format options,

whereas today the market offerings are limited. In addition to that, our product will have

enhanced features such as being waterproof, having long-lasting pigments, being easy to remove

and apply.

We will develop our product lines through 5 phases with the development of our business, from
basic line to fashion line, male line, customized line, and celebrity line.

Phase 1
This line will offer the most basic eyebrow sets similar to those in the market which come in
brown and black colors but with superior quality to compete effectively. This line will also rely
on our virtual eyebrow simulation services which will help select the color and shape of the
eyebrow for the client without the struggle of trial and error. Key qualities which will make our
brand superior at this phase are that the eyebrows will be waterproof, sweatproof, and will be
easy to use with high flexibility and a 3D appearance.
Phase 2
Once the eyebrow tattoo line has become popular and accepted on the basis of superior quality, it
will be time to come up with a fashion line that will build on the same qualities but with a variety
of colors and patterns. This product line is designed for fashionable people who pursue
exaggerated and modern styles. Since the products offered will address the shortcomings of
products that are already in the market, it will be easy to win customers from other businesses.
Specific products will include clothes with subcategories of the festival, party, casual and official
lines.
Phase 3
At this point, the brand will be popular across different demographics and it will be time to move
to the next level. Many women who trust and buy our brand will be instrumental in propelling
the brand to the male gender. We will design the eyebrow
Phase 4
The previous phases have sold ready-made clothes and eyebrow sets. At this stage, it is time to
focus on addressing the most pressing concerns of our customers. It is extremely important that
we are able to give a customer what they need. This calls for customization. We will customize
our products to the needs of specific customers. This will propel our brand to reach customers
who are choosy and more specific.
Phase 5
The line is called celebrity copycatting, which follows the celebrity’s popular eyebrow and
produces a similar pattern of the product to the celebrity’s eyebrow. Besides, we can also work
with celebrities to develop the patterns.

Pricing Strategy and Competitive Differentiation

The pricing strategy and competitive differentiation for the eyebrow stickers is:

1.We will use a value-based strategy in terms of pricing,which means we will check our competitors’
price and add value with our differentiation into it.
https://www.bdc.ca/en/articles-tools/marketing-sales-export/marketing/pricing-5-common-strategies
According to our brief survey on the price of our competitors, the average price of eyebrow stickers
(12/pairs) is 10 dollars. According to our competitive differentiation listed later, we will add nearly 5
dollars into it, leading to our final price as 15 dollars.

2. We will use high-low pricing strategy on several channels listed below:
● DTC website:high-low pricing
● Specialty Stores:Sephora,CVS, Walgreens
● Mid-tier stores such as Macy’s

3.Competitive differentiation:
1. Brand

Unlike our competitors, we are building a brand that will commercialize the eyebrow stickers. Today
there isn’t a brand known for this type of products and also a brand that tells a story behind it. With our
brand design and strategy, we aim to create a narrative that will engage our customers and build brand
loyalty, which is not something eyebrow sticker customers have currently.

2. Variety
To this day it is not easy to find a wide range of eyebrow stickers, mainly talking about their tonalities. It
is common to find dark ones (black and dark brown) but not in other colors to match customer’s hair and
skin colors, such as for blonde, gray or ginger hair. We plan to develop a range of different colors to suit a
bigger number of customers’ needs.In addition, we will also develop a wide range of different patterns of
eyebrow stickers.

3. Quality
We will enhance features to our stickers that will make them have much more quality than the ones
currently available. One example of enhanced quality feature will be the glue on each sticker, that will not
only be stronger, therefore making them last longer, but also hypoallergenic so it doesn’t harm the user’s
skin.we will also use the anti reflective material to make the sticker look more natural.

4. Packaging
While today’s products are offered in a plastic sticker sheet, wrapped with plastic foil, our brand’s
packaging will be differentiated, made with paper and having a recognizable visual ID that displays the
brand. Besides that, the products offered in the market today are sold entirely in one sheet, in a way that
the customer has to cut each piece off whenever wants to use it. Our product, however, will come with
each pair of stickers individually separated from each other.

5. Customer experience
Our brand aims to deliver a better and differentiated customer experience than the ones currently in offer.
A pain point to the customer is the inability to try on the sticker before buying it. While it’s not possible to

offer free samples for them to try on, we are developing display’s that will enable customers to choose the
most suitable option for them. There will be two types of ways in which this will happen:

A) In store:
Partnering with the retailers, in the shelf where the product will be displayed there will be a visual
merchandising tool placed along the products where, attached to a small rectangular shaped mirror that
has our ID, there will be all the different shapes of eyebrows and colors the brand offers. This way, the
customers will be able to see which color and shape works best for them prior to buying the product.

B) Online:
For the customer that shops directly from our DTC website, there will be a tool in which they can upload
a picture of their face and try on the stickers before buying.

Team: New Youth
Angela Qian
Anna Victoria Kacelnik
Fan Lu
Xiangyu Han

Describe the individual customer who you believe will buy your product and for what

reason

In this case, the primary customer groups will include young females who are into beauty

contests, models, fashion designers, and also female artists. These will be people ranging from

the age of 16 years to the late 30s. The reason, in this case, is that in such fields people would

want to modify their beauty as a way of looking better and attracting more clients in the different

fields of businesses they are (Li & Chen, 2018). Besides, the mass of young females from 16 to

40 years old is all the potential customers of our product, they are in high demand of beauty, and

can be influenced by the opinions from fashion and beauty industry, which is our primary

customer group. This consumer group is huge and has a promising consumption ability, so it is

the promise of future success.

Define the retail channel where you wish to sell your product

There are several retail channels where the products can be sold. The primary channel

will be a DTC online store, and other channels, such as department stores, malls, as well as

beauty stores will also be included. . These areas are ideal for such a product because they are

visited frequently by individuals who may be interested in such products.

Select and/or finalize a label/brand name for your project’s product and how you plan to

market it

Being a new product in the market, it would also be essential to conduct good marketing

as a way of reaching more customers in the market. This can be done through referrals,

advertising, and word of mouth where customers will be informed of the product and the need to

buy it. It will also be essential to offer several options for customers by providing different

varieties of the product on sale. This will offer them an opportunity to select their most preferred

product and also ensure that they are satisfied at the end of the day. The best brand name for the

product, in this case, would be Meier which means in Chinese, “Mei” owns a similar

pronunciation to “eyebrow” and “beauty”, and Meier can be a meaning of more beautiful.

Besides, Meier is also a female name, which suits our target customer. Also bearing in mind the

product being sold relates to beauty, this would be a good brand name to use.

References

Li, W., & Chen, J. (2018). Pricing and quality competition in a brand-differentiated

supply chain. International Journal of Production Economics , 202 , 97-108.

Group:New Youth

Group member: Angela Qian; Anna Victoria Kacelnik;Fan Lu; Xiangyu Han

Total addressable market size and market share:

⚫ We adopt top-town methods to calculate market size.

⚫ The global eye makeup market reached a value of US$ 15.6 Billion in 2021,with a

CAGR of 5.5% from 2022 to 2027.

⚫ The Maybelline Tattoo Studio brand leads the U.S. market for eyebrow makeup with a

market share of 11.5 percent and its sales were 42.3million dollars,which shows the total

eyebrow market is 367.83 million dollars in 2019, and will be 431.92 million dollars in

2022.

Considering the leading competitor consist of 11.5% percent of market share,the characteristic of

our product, and our customer group, the market share of our brand will be expected to be 5%

and the total addressable market size will be 18.39millions

Sales Strategy – Quasi – consultative selling

Since our offline selling channel will be stores like Sephora, we will find it more efficient to

offer consultative selling to offer customer advice for choosing best pattern of eyebrow stickers

while they can purchase things in self-check out

ramp-up over time via acquisition vs. retention

Our target customer mainly includes two groups of people: Women who are busy with work or

not good at make-up(normal-pattern eyebrow stickers); women especially G-Zwho are pursuing

fashion(fashionable and different-color stickers). In the initial stage, we will focus more on the

former group, and the characteristics of that group will not be the main target of content

marketing and social media users. We can choose to adopt excellent customer service such as 24-

hour chat box to acquire customers or in-store promotion and in-store campaigns, and when we

earn enough money then we can produce more fashionable style eyebrow and adopt content

marketing for G-Z.

Reference

https://blog.hubspot.com/service/customer-acquisition

https://www.statista.com/statistics/380286/leading-us-eyebrow-makeup-brands-based-on-sales/

https://www.imarcgroup.com/eye-makeup-market

https://www.statista.com/statistics/380286/leading-us-eyebrow-makeup-brands-based-

on-sales/

appendix:

location of manufacturing/logistics providers

It will be manufactured in Guangdong Province, China. China is the largest eyebrow
tattoo sticker manufacturing country in the world. There are more than 90% of eyebrow
tattoo on Amazon comes from China, and around 50% of them comes from Guangdong
Provenice. Thus, Guangdong Province has the most experienced manufacturers and
the resources which provide the best raw materials.

We choose air transportation as the primary of logistics for three reasons. First, air
shipment is affordable, and the shipping cost for each piece is around $0.4. Second, air
transportation requires a much smaller minimum volume compared to sea shipment.
This avoids the problem of overstock and cashflow issues. Third, air transportation is
fast, the average delivery time is 5 days. Since eyebrow sticker is a fast changing
fashion business, time is important. Thus, DHL, Fedex and UPS are our primary
carriers. Among them, since DHL provides the fastest delivery, 3-5 days, .

name of relevant vendors

We choose around 5 manufacturers and allocate orders to them according to their
performance, including speed and quality. Assuming the monthly sale is over 2000
pieces a month, the average cost of each piece should be around $0.25. Here is the list
of our manufacturers:

Shenzhen Qianyu Gift Co., Ltd.
Dongguan Greae Paper Products Co., Ltd.
Shenzhen Lamigo Daily Products Co., Ltd.
Dongguan Bella Technology Co., Ltd.
Dongguan Zhengxiang Color Film Arts & Crafts Co., Ltd.

relevant processes
The manufacturing process of eyebrow tattoo stickers can be divided into 5 steps:
Printing – Drying – Printing Again – Airing – Packaging.

Final Project: Hygge Hand Cream
Senior Buyers

Duncan Colterjohn, Licia Coimbra Sousa,
Andrew Niedt, Yunling Zhang

April 7, 2021

Presentation Framework
Product and assortment Positioning and Branding

Sales Channels and Visual
Merchandising

Sales projections Operations

• Select a product to
be sold at retail.

• Design and create a
sample of the
product.

• Specify all of its
component
parts, specifications,
sizes, colors etc.

• Build a conceptual
assortment around
your product.
Consider line
extensions,
related items, etc.

• Define the individual
customer who you
believe will buy the
product, and for
what reason

• Position the product
relative to actually
available competitive
merchandise. Describe
why your product is
differentiated from
competition and how
you believe the retailer
should position your
product in their store.

• Select a label/brand
name for your product.
Define your product’s
brand’s equity.

• Define the retail
channel where you
wish to sell the
product.

• Design a selling
package, and fixture for
your product, including
signage and
visual merchandising
requirements such as
presentation
minimums etc.

• Determine the cost of
the product as best you
can and define the
product’s retail
selling strategy and
expected retail price.
From this determine
your gross margin
expectation for the
product.

• Estimate the sales
potential of your
product in units and
retail dollars.

• Describe where
and how the
product will be
manufactured

• Describe how your
product will be
shipped and
supported
logistically.

The product

Hygge Hand Cream soothes, nourishes and protects hands from harsh or dry
conditions, and generates a feeling of contentment and well-being. This fast-
absorbing cream made of natural ingredients moisturizes, nurtures and supports
the skin’s natural processes of renewal without leaving a greasy residue.

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Assortment and Line Extensions

– Hygge Hand Cream has the potential to expand across both vertical and horizontal product extensions.

– Size: In addition to the original container size (50ML/1.7FL OZ), horizontal product extensions could quickly
incorporate different packages sizes such as (1) a travel size (30ML/1.0FL OZ) and (2) a value size (100ML/3.4FL OZ)

– Fragrance: Line extensions could include different fragrances such as Skov (Forest), Hav (Sea), Bjerg (Mountain),
Forelsket (Euphoria), and Steg (Rose). However, we look to avoid including too many different fragrances to reduce
Hygge’s inventory management complexity and the risk of stock-out. include different fragrances, but avoiding
including too many options to reduce inventory management complexity and therefore risk of out-of-stock in the
point of sales.

– Purpose: Upon the success of Hygge Hand Cream, we intend to expand our line of hand creams to
include variations with specific product purposes, such as hand cream’s for aging skin, night care, dry and cracked
skin, and damage repair.

– Areas: An opportunity to expand our product line into new verticals such as face and foot creams is also a viable
option. This will allow us to leverage economies of scale in our procurement process of raw materials and our
manufacturing production.

– As there are many viable line extensions, our strategy is to expand into products that closely resemble our core
product while offering other value add products (i.e. similar to Odacite or Henne)

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Assortment and Line Extensions

Hygge Hand Cream

Travel size (30 ML/ 1.0 FL OZ)

Hygge Hand Cream

Value size (100 ML/ 3.4 FL OZ)

Hygge Hand Cream

Night Repair

Hygge Hand Cream

Age Repair

Hygge Foot Cream

Hygge Body Cream

Hygge Face Cream

Hygge Hand Cream

Basic fragrances

Hygge Hand Cream

Seasonal fragrances (winter/summer)

Hygge Hand Cream

No fragrance

(50 ML/ 1.7 FL OZ)

Hygge Vegan Cream

Hygge Premium Cream

SizePurposes

Areas

Fragrances

Premium

formulations

Extensions

Core Product

Legend

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

The customer
Product and assortment Positioning and Branding

Sales Channels and Visual
Merchandising

Sales projections Operations

– Customer of the Hygge Hand Cream will be
mainly young adults who live in big cities
and look for an easy way of nourishing
hands and protecting them from harsh and
dry conditions.

– These customers are professionals with
very limited free time.

– They need a fast-absorbing hand cream, that allows them to nourish hands
quickly, preferably with natural ingredients, in a moment that brings them
coziness and tranquility.

– Finally, these customers also usually invest in activities to increase their well-
being, like exercise and healthy food.

Product Competitive Positioning

– Branding strategy: boutique hand cream within “clean beauty” category

– Key factors of product differentiation:
– Locally and sustainably sourced ingredients and packaging

– All-natural ingredients

– High quality product

– Competitive positioning:
– By age group: millennials

– By channel: online (Hygge Website and beauty specialized stores), brick and mortar beauty
specialized stores (i.e. Sephora), brick and mortar partnerships with SoulCycle and Lululemon

– By function: “repair” category

– Higher growth vs. anti-aging, whitening, and “overnight” hand creams

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Branding

– Hygge (pronounced “hoo-guh”) is descends from Danish culture and is used when
acknowledging a feeling or moment, whether alone or with friends, at home or out,
ordinary or extraordinary as cozy, charming or special.

– With this name, we not only aim to relate those characteristics to our product, but
also believe that a simple word with such an extraordinary meaning will help build a
strong brand.

– Our logo will not contain Hand Cream, as we feel this will undermine our ability to
expand our offerings.

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Brand Equity

– Drawing inspiration from Scandinavia’s long history of wellness and self-care,
Hygge’s goal is to build a reputation synonymous with these traditions.

– Our easily recognizable and memorable logo and our superior quality will help
create brand equity and differentiate us from generic and mass produced hand
creams, positioning us within the category that Henne and Odacite operate in.

– The quality, texture, and fragrance of Hygge products will offer customers
protection that nourishes and moisturizes hands while leaving them with an
incredibly pleasing sensory interaction.

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Brand Assets

1. Scandinavian Roots

2. A brand defined by coziness, warmth, and tranquility

3. Simple and elegant packaging

4. Natural and high-quality ingredients

5. Sold in stores synonymous with quality, health, and wellness.

6. Pleasant sensory interactions

7. Strong omni-channel strategy

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Value Creation Through Brand Equity

– The unique product that stimulates feelings of cozy and contentment while
exuding the Scandinavian carefree way of living will have customers yearning for
more.

– Hygge customers, through their interactions with this brand, will be seen as
authentic and elegant.

– Customers will see Hygge as a brand that has a great knowledge of the product
their creating and will feel rewarded for purchasing it.

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Sales Channels

1. Hygge Website

2. Other Online Retail Channels (i.e. Instagram Shop)

3. Beauty Specialized Stores

4. Well-Being Partnerships

Our long term vision, after having introduced our product to our targeted market
segment and building brand awareness, is to expand into other retail channels such
as high-end pharmacies, department stores, and Amazon.

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Sales Channels: Hygge Website

– Our goal in selling directly on the Hygge website is to leverage the benefits of the
direct-to-consumer (DTC) channels.

– Allows us to offer “deals” such as free delivery to incentivize customers to
purchase our goods as well as reward returning customers.

– DTC allow Hygge to increase our margin by reducing profit sharing via
partnerships or forgoing the increased costs of selling through third party stores.

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Sales Channels: Other Online Retail Channels

– 200 million unique accounts visit at least one or more business profiles on
Instagram, daily.

– Organic skin care is one of the fastest growing beauty product categories on
Amazon, growing at 141% YoY in 2020.

– By selling through other online retail channels such as Instagram Shop or
Amazon, we are able to build brand awareness and reach a broader customer
base through targeted advertising campaigns.

– Additionally, selling on Instagram Shop and Amazon offers opportunities to
showcase the Hygge product and highlight its unique benefits in some of the
largest online market places.

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Sales Channels: Specialized Beauty Stores

– By selling through specialized beauty stores, Hygge is able to further expand its
addressable market through an omni-channel sales strategy.

– Our target stores include Sephora and Bluemercury.

– The benefits include increased exposure to our target market, building brand
awareness and equity, and having trained personnel that are able to advise
customers on the benefits of Hygge Hand Cream.

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Sales Channels: Well-Being Partnerships

– By partnering with other Health and Wellness establishments that are frequented
by our target customer base, Hygge can establish brand credibility and create
brand awareness.

– Target partnerships include Yoga Studios, Cycling/Spin Studios, Barra Studios,
Spas, and luxury Health & Wellness clothing brands.

– Products will be sold in the physical locations with a percentage of sales going to
our partner brand.

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Packaging

– Hygge Hand Cream will initially be sold in a glass
container in the size of 50ML/1.7FL OZ.

– Why Glass?
– Glass exudes elegance and quality and aligns with our core

values of manufacturing with natural ingredients and in a
sustainable and eco-friendly way.

– Cylindrical glass containers are sturdy and easily packable
which reduces our logistical challenges. The glass containers
can either be recycled or traded in for a discount on a
customers next order.

– One of the assortment expansions is to provide
different container sizes (travel and value size).

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Visual Merchandising

– Displays will be necessary in two of our three retail
channels: beauty specialized stores and well-being
partners.

– Displays will be compact and made of acrylic, so
they are durable and can be easily placed in a
visible and easily accessible locations within retail
stores or partner locations.

– Once we expand the assortment, we need to
expand the fixtures too, for a cream tower or
mobile islands, especially for the beauty specialized
stores like Sephora.

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Retail Price and Product Cost

– Hygge Hand Cream will operate in the “clean beauty” space, which allows us to
charge a premium over generic and mass-marketed brands.

– Average price premium assigned clean skin-care products is 29.55%

– Comparables include:
1. Henne Organics’ Citrus Luxury Hand Cream = $25 per 50ML/1.7FL OZ bottle

2. Odacite Hand Balm = $23.50 per 50ML/1.7FL OZ bottle

– Our retail price: $24 per 50ML/1.7FL OZ bottle

– Our unit costs: $5 per 50ML/1.7FL OZ bottle ($4-$6 per 50ML/1.7FL OZ bottle
based on comparable firms)

– Gross margin: ($24-$5)/$24 = 79%

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Sales Potential

– Large addressable market
and medium-term industry
growth in excess of GDP

– US Cosmetic and Beauty
Products Industry is $39bn1

– Exposure to long-term
secular tailwinds

– Accelerating consumer
demand for all-natural and
sustainably sourced skincare
products

– Organic skincare market is
$9.5bn (~35%
of total US skincare market)2

– Market 2020-2025 CAGR: high-
single digits

– Underlying trend of
increasing fragmentation
among larger industry
incumbents; unique
opportunity for smaller
brands, like Hygge.

– Fragmentation driven by
perceived decline in product
quality of large brands

Source: 1IBIS World; 2Pitchbook

The Market Sales Projections

– Our projected serviceable
available market (SAM): 2.0%
of total US = $200MM

– Projected serviceable
obtainable market (SOM):
0.5%-1.0% of SAM

– Average initial annual run-rate
revenue: $1,500,000

– Average number of annual
units sold: 62,500

– Significant opportunity to grow
as brand recognition increases

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Manufacturing

First phase: Self-owned manufacturing base, located in the U.S.

– Advantage: (1) minimize logistics cost given that Hygge will be made from locally sourced, natural
ingredients; (2) quickly react to customer demand, feedback, and requests

– Disadvantage: (1) initial one-time investment may be huge; (2) cannot reach economy of scale in the short
term

Second phase: Outsource a part of the manufacturing of established, popular products while holding the self-
owned manufacturing base

– How it works: Contract manufacturers that have the capacity to meet our demand forecasts and have
extensive experience producing similar products. Manufacturers can produce under the proprietary formula
of Hygge.

– Advantage: (1) able to maintain an asset-light business model even if we want to quickly scale our
operations as demands grow; (2) minimize the manufacturing barrier if we want to enter different markets,
e.g., international markets

– Disadvantage: potential risks while dealing with manufacturers, e.g., quality issue, patent infringement

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

Logistics

– We will leverage a warehouse fulfillment service, such as USA Fulfillment Inc., to
arrange the packaging and shipment process for Hygge.

– To simplify stock management and demand forecasting, Hygge will have a
centralized stock of packs of 20 jars, and a subset area for ecommerce sales,
where the packs will be opened to the unit level to facilitate picking

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

General stock: packs of 20 jars Ecommerce stock: unitary level

Logistics

The warehouse fulfillment service will serve all channels, in different formats:

– For third-party channels (beauty specialized stores and well-being partners):
picking, handling and shipping will be made in packs of 20 jars, and B2B carrier
services will be used for the distribution.

– For own channels (e.g., Hygge website): When an order is placed online, the
warehouse fulfillment service will be notified to pick and pack item, prepare
shipping label, and negotiate shipping rates with last-mile carrier services to
distribute the product to the customer.

– Because Hygge Hand Cream will be contained in a glass jar, the product will need to be
shipped to its end location with biodegradable packing peanuts in order to prevent in-transit
damage. We also intend to use recycled cardboard as our shipping material.

Product and assortment Positioning and Branding
Sales Channels and Visual

Merchandising
Sales projections Operations

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