Potter's five forces model is a commonly used analytical tool for enterprise strategic management. It mainly includes five aspects: the threat of substitutes, the threat of new entrants, bargaining power of suppliers, bargaining power of buyers and rivalry among existing competitors. In the application of cosmetics microbial rapid detection boxes, the Potter's five forces model can be used to analyze the competition situation of the industry, understand the basic competitive situation of the industry, and also analyze the customer demand situation, customer bargaining power, and customer requirements for products or services. Based on this, it can provide reference for enterprises to develop more effective competitive strategies.
Figure 1：Porter’s Five Forces Model
1.1.1 Rivalry among existing competitors
Based on the current market research, the relevant projects in the field of cosmetics testing are relatively diversified. There are many companies that have been established for many years and have mature technology to do various tests for cosmetics, such as the detection of cosmetics ingredients and the toxicity test of cosmetics. It is undeniable that the cosmetic testing industry has a relatively mature system. But according to our survey, rapid testing for microbial contamination in cosmetics is a missing part of the industry. The rapid test product has a relative “blue sea” market for our company so maybe the real competitors will appear in the future.
1.1.2 The threat of substitutes
Although many other corporations are also doing microbial contamination detection, we have not found any companies in the market to develop quick test boxes. Most companies can only support sending samples to the laboratory for testing, and there are no more convenient measures, which are very costly for ordinary cosmetics users. Specific reference can be made to the following companies: Pony Testing Company and Centre Testing International Group. Pony was established as a testing company in 2002 and produced antigen testing kits during the epidemic. The other is CTI, which was established in 2003. From the establishment time, it can be seen the two companies have very mature detection technologies for various fields. Compared to the two companies mentioned above, our quick test kits offer a convenient option, allowing customers to do tests at home and get results quickly. So for the final products we made, the competition in the field of rapid detection is mild.
1.1.3 The Threat of new entrants
Firstly, we need to go through the laboratory development process to develop this detection box, and the required materials are relatively difficult to obtain, such as pre prepared Escherichia coli and sgDNA specifically for experiments. Therefore, the cost of early development is high, and the ROI (return of investment) time is also relatively long. In addition, there is a certain probability of failure during the experiments in the laboratory, so research and development carries risks.
Overall, the cosmetics rapid testing industry not only requires high costs and long time, but also carries certain risks, so it is very difficult for a newly established company to enter this industry.
1.1.4 Bargaining power of suppliers
Our company's raw material suppliers are mainly divided into two parts: one is the company that provides laboratory supplies, and the other is the company that provides samples required for experiments, such as special E. coli and sgDNA. Firstly, we conducted our experiments at the ATLATL Innovation Research and Development Center. ATLATL equipped with relatively advanced laboratory equipment. Some of the equipment we need, such as centrifuges, shakers, etc., are fully equipped here, and there are also many other laboratories we can substitute from China. In addition, AZENTA company, founded in 1999, is also a very old and mature company that provides us with laboratory samples, so our supply source is relatively stable. Meanwhile, we take strict management of supply process in order to prevent potential risks.
figure 2: Key Suppliers and Service Content
1.1.5 Bargaining power of buyers
With the improvement of national disposable income level and changes in people's consumption concepts, the scale of the cosmetics industry has shown a continuous growth trend in the past decade. As of 2021, the scale of China's cosmetics industry has reached 402.6 billion yuan, and the categories of cosmetics are also increasing. This also proves that more and more people are starting to purchase and pay attention to cosmetics related fields. Therefore, it is inevitable that the scale of the cosmetics microbiological testing field will also expand in the future. So for our quick detection box, there are currently two target customers. Firstly, based on the convenient and fast characteristics of our quick detection box, we analyze that the target consumers are ordinary people who use cosmetics. As the scale of the cosmetics industry grows, more and more people will purchase our products. According to market research, individuals in this group may not purchase too many test boxes, but due to the large number of people and strong purchasing power, we still decided to focus on this group of customers. Secondly, our rapid detection box can also assist some cosmetic companies in conducting preliminary inspections. In order to ensure the quality of their products, all cosmetics produced need to undergo professional microbiological testing. For some small companies, the cost is relatively high. They can choose to use our quick detection box first to screen out samples that may have potential problems, and then conduct subsequent testing, which saves them a lot of costs and time as well.
In the application of cosmetics microbial rapid detection boxes, the PESTEL analysis model can be used to evaluate and predict the macro environment of the industry. For example, by analyzing the political, economic, social, technological, environmental, and legal factors, companies can understand the development trends and market demand of the industry and develop more scientific and reasonable business strategies accordingly. Additionally, the PESTEL analysis model can also help companies understand the competitive landscape and potential threats of the industry, enabling them to adjust their strategic direction promptly to avoid adverse impacts from the external environment.
figure 3: PESTEL Analysis Model
Our products are mainly sold in Shanghai, China. From a political and legal perspective, the country attaches great importance to ensuring the safety of cosmetics. For details, please refer to some policies introduced in recent years: the "Management Method for Monitoring Adverse Reactions of Cosmetics" introduced in 2022, The "14th Five Year Plan for the Development of the Cosmetics Industry" issued in 2021 and the "Regulations on the Supervision and Administration of Cosmetics" issued in 2020 For cosmetics brands that meet national quality standards and safety requirements, the government will also assist in brand construction and further promotion by issuing patents, funding, financial and tax measures. Our products can effectively ensure the safety of cosmetics and prevent more people from being harmed by substandard cosmetics. Therefore, our products also comply with the political direction of the cosmetics industry in China.
It is understood that there is currently a wide range of popular science on cosmetic safety in society. For specific information, please refer to the National Cosmetic Safety Science Popularization Week held from May 21 to May 30, 2023. Therefore, popular science education targeting our audience is gradually increasing, which is very beneficial for our future promotion of products in society. As consumers' purchasing power increases and their consumption concepts change, they focus not only the branding but also the safety of products, which will help us seize the “blue sea” market quickly.
According to statistics, the annual GDP of 2023 was 121020.7 billion yuan, an increase of 3.0% compared to the previous year. Meanwhile, the economic recovery keeps promising growth momentum from 2020 to 2023.Therefore, currently, the domestic economic situation is showing a trend of gradually improving in the future.
figure 4: The Growth Trend of Chinese GDP from 2020 to 2023
Against this backdrop, the Chinese cosmetics industry has broad prospects, with multiple tracks such as skincare, mother and baby care, and toiletries thriving. In 2021, the scale of China's cosmetics industry will leap to the second largest in the world, with a global leading growth rate. However, the national consumption structure has a certain negative impact on our products. The current consumption structure of the population is as follows:
figure 5: The Consumption Structure of Population
And our products belong to the field of daily necessities and services, which only accounts for 5.8% of the consumption structure, which proves that only people with a certain level of consumption ability can have the ability to purchase our products.
1.2.4 Technical
At present, the technology for microbial detection in the market is relatively mature. Our project mainly focuses on the detection of Staphylococcus aureus and Pseudomonas aeruginosa, and the technology available for detecting these two bacteria is also very mature. At present, there are various technologies available in the market, such as optical testing, genetic testing, bacterial staining, etc., including the relatively emerging crisp technology we use. Therefore, from a technical perspective, we do not have a significant advantage. The technology we want to make breakthroughs and innovations is to enable every ordinary consumer to conduct rapid and convenient testing of microbial contamination in cosmetics at home or anywhere, rather than through laboratory testing, which is also a differentiation feature between us and other companies.
1.2.5 Environmental
During the experiment, it is possible that an engineered organism will accidentally release into the environment, for example, Escherichia coli bacterial solution, SDS page staining solution, and decolorization solution and so on. There are also some safety issues regarding the use of laboratory equipment, including the use of high-speed centrifuges, and the use of heating instruments such as alcohol lamps and metal baths. However, we will try our best to protect environment during the experiment periods by the following steps we will stick to.
figure 6: The Key Steps to Protect Environment
A. Waste Management: Proper waste disposal methods should be followed to dispose of sharps, contaminated materials, and unused reagents. Biological waste should be autoclaved or incinerated, while chemical waste should be neutralized or diluted before disposal to prevent groundwater contamination.
B. Efficient Sampling: Minimize the amount of sampling required to obtain meaningful results. Using smaller sample sizes can reduce the amount of reagents and solvents used, as well as the amount of waste generated.
C. Reuse and Recycle: Many reagents and solvents can be reused or recycled after distillation or evaporation. This can significantly reduce the amount of waste generated and the environmental impact of the laboratory.
D. Ventilation: Proper ventilation in the laboratory is essential to remove fumes and aerosols generated during experiments. Inhalation of these fumes and aerosols may pose health risks to laboratory personnel and can also affect the environment.
E. Personal Hygiene: Laboratory personnel should follow strict personal hygiene practices to minimize the spread of microorganisms. This includes changing clothes and shoes before entering the laboratory, thoroughly washing hands and arms after leaving the laboratory, and wearing appropriate protective equipment when handling samples.
F. Environmental Monitoring: The environment inside the laboratory should be regularly monitored to ensure that conditions do not become harmful to laboratory personnel or the environment outside the laboratory.
G. Biosafety Training: Laboratory personnel should receive regular training on biosafety measures to ensure that they are aware of potential hazards and how to handle them properly.
By implementing these measures, microbial testing laboratories can minimize their environmental impact while ensuring the safety of laboratory personnel and the quality of their work.
1.3 STP
STP model plays a significant role in cosmetics microbiological testing projects by providing our company with valuable insights into market segmentation, positioning, and pricing strategies.
Segmentation：After conducting market research, we used both demographic and psychographic methods to segment the market. According to our questionnaire survey, our clients are mainly young and middle-aged people aged 18-35, which also proves that young people are more concerned about cosmetics. Among these young and middle-aged people, our main focus is on the population who usually need to use cosmetics.
Targeting: Based on the above division, we ultimately decide that our audience is young and middle-aged people aged 18-35 with ordinary consumption standards, and have a foundation of higher education, because those with an education foundation are more aware of the importance of cosmetic safety and are more likely to buy our product.
Positioning: Our company is specialized in the rapid detection of microorganisms in cosmetics. Compared to other companies engaged in microbiological testing, we focus on the field of cosmetics. Compared to other companies engaged in cosmetic testing, we focus on microbiological testing in cosmetics. Our clear positioning will help us expand potential market with competitiveness.
1.4 Unique stakeholders
Our corporation has four key stakeholders, which are individual consumers and cosmetics companies, investors, suppliers and cosmetic testers.
The first category is consumers, mainly divided into individual consumers and cosmetics companies that purchase quick detection boxes. The main impact of these two stakeholders on our product design is, for example, for individual consumers, what equipment we need to place in the detection box to fully meet the characteristics of fast, convenient, and easy to use. For large cosmetics companies, we need to improve technology to ensure the effectiveness of testing. The second type is investors, and we need to ensure that our products are profitable and that revenue exceeds cost. The third category is suppliers, and the impact of suppliers on our products mainly lies in changes in costs. Our costs will increase or decrease with the prices of raw materials provided by suppliers. The fourth category is cosmetic testers, which are our employees. We need to analyze the salary range we need to provide.
As science education on microbiological safety is promoted, there is a growing concern about safety issues arising from microorganisms in cosmetic products. The number of such third-party testing organizations has grown rapidly over the past year. According to the official website of the State Food and Drug Administration, there are currently 304 cosmetic registration and filing inspection institutions, compared with 264 at the beginning of last year, an increase of 40 in nearly a year. Pony Testing and China Testing are two of the testing organizations. They provide very comprehensive testing services, including heavy metal testing, hormone testing, ingredient testing, microbial testing, utility testing and so on.
The registered capital of Pony Testing reaches 287,013,456,000 (paid-in 137,020,600,000), the market share reaches 3,762,000,000 in 2022, and has been listed. Its main competitive advantage is that as a continuous leader in China's testing industry, it provides comprehensive one-stop solutions for various industries and fields. Pony Testing Group has complete qualification capabilities and profound project experience, and has obtained many qualifications in many fields, covering biomedical, food, health care, ecology and environment, electronics and automobiles, environment and reliability, consumer goods, etc. Moreover, it has an excellent management team with many years of experience in the testing industry, and it has a good management team. It also has an excellent management team and many years of technical background in testing. Spectrum Testing Group was established by a national research institute, and its founders have many years of experience in technology development and laboratory management.
China Testing and Inspection（CTI）'s registered capital reached 165,753,0714,000, and in 2022 the total revenue of 51,307,10067.66 yuan, and normal listing, its competitive advantage lies in the CTI for is a third-party testing and certification services pioneer and leader, China's testing and certification industry, the first publicly traded company (stock code: 300012), the market foundation is strong; and occupies the CTI is the pioneer and leader in third-party testing and certification services, the first listed company in China's testing and certification industry (stock code: 300012), with a strong market foundation; and occupies a wide range of markets at all levels, with customers all over the world, serving more than 100,000 customers, including more than 100 of the world's top 500 customers.
After we did the research of the competing companies, we found that the professional testing organizations are already in a saturated state. No matter the scale, technology, service, management, we can't achieve to surpass in the short term, so we don't intend to use our technology in the testing organizations, but to make the rapid test paper for home use. There is a gap in the market of rapid test reagents in the same category as ours, and there is no similar test reagents as ours.
In order to have a deep understanding of our competitors, we make five comparing metrics to do analysis.
figure 7: Comparing Metrics Content
2.2.1 Product Features and Capabilities
Pony Testing, China Testing, and similar organizations focus on in-depth ingredient analysis, which often involves complex procedures and subsequently extends the testing timeline. Customers in the home situation more need to fast and easy to operate and low price, which can also better encourage users to carry out microbiological testing, our rapid microbial detection reagent is specifically designed to identify Staphylococcus aureus and Pseudomonas aeruginosa in cosmetics. It utilizes advanced synthetic biology, using CRISPER technology for rapid results (typically within minutes). The operation of the portable, inexpensive, can better meet the daily needs of individual users.
2.2.2 Sensitivity and Accuracy
Our company has a state-of-the-art laboratory environment and a dedicated team of researchers with advanced knowledge of synthetic biology. Our product focuses on two specific bacteria, Staphylococcus aureus and Pseudomonas aeruginosa, so it is more sensitive to these two bacteria in bacterial testing, and produces fewer errors and false positives. Compared to other professional testing companies, their technology covers a wider range of areas and cannot be precise for specific bacteria, so the possibility of error is greater.
2.2.3 Ease of Use and Accessibility
Professional testing organizations usually only have cooperation with commercial companies, usually do not accept individual commissions, so if an individual user wants to carry out cosmetic testing in the day-to-day for the user's professional ability and knowledge of synthetic biology requires a high degree of knowledge, at the same time, it reduces the audience of users. Our product comes with a simple and clear instruction manual, portable operation, can better meet the needs of the public testing, is our product target group is more extensive.
Nowadays, although the general public has the awareness to pay attention to the safety of cosmetic products, most of them have not found a suitable way to directly detect the bacteria in cosmetic products because professional testing organizations focus more on the cooperation with cosmetic companies and ignore the needs of individual users. While we focus on product and technology development, we also attach great importance to publicity, education and promotion. We have posted science videos on different social media platforms, created interactive games, held lectures, exhibitions, and voting walls, which have been very effective and significant in enhancing public understanding of the industry and increasing public trust in our technology.
These are the advantages we have over professional testing organizations as a home quick test product. In the household quick test industry, there is no competition that detects the same species of microorganisms in makeup as our products. Currently there exists a test tablet developed by Dayuan Oasis to test for Staphylococcus aureus in food, and the following is a comparison of our product with it.
2.2.5 Pricing and Cost-effectiveness
The official Taobao price for the Glucococcus aureus test strips developed by Dayuan Oasis is 178 RMB per 24 strips, our products are priced at 29.9 RMB per box of 6, which is a lot cheaper compared to Da Yuan Oasis. Meanwhile, their product operation is more complicated, as it requires a bacterial culture and a long waiting time of 15-20 hours. However, our product has been upgraded with more advanced synthetic biology CRISPER technology, which makes our product cheaper, easier to use and faster to get results, usually within 15-30 minutes.
We use SWOT model to do analysis because it plays a crucial role in our cosmetics microbiological testing project by helping us identify the strengths, weaknesses, opportunities, and threats related to our products.
figure 8: Summary of Our Company SWOT Model
Our products are focused on detecting Staphylococcus aureus and Pseudomonas aeruginosa, and we utilize advanced synthetic biology techniques to make our test agents more sensitive and less likely to be inaccurate for these two bacteria. Our technology has resulted in significantly shorter result cycle times, easier handling, and lower prices. In addition, our product instructions are very easy to follow and do not require any prior knowledge on the part of the user. Moreover, we are more focused on the daily needs of our customers, so our audience is wider than that of other organizations. In addition, due to our comprehensive publicity, the public's trust in our technology has been significantly enhanced.
Our reagents focus on only two bacteria and may not meet the more specialized and broader needs of some users. Also, in our start-up period, our product is only one type of kit, which is a single service compared to the diversity provided by other organizations.
With the attention of the state and the promotion of some science publicity, more and more people are more concerned about the safety of cosmetics. As a result, the demand of cosmetic testing is increasing. But now the market testing organizations rarely docking individual users and more commercial groups, so to meet the daily needs of customers home fast test reagents market gaps, our products due to technological enhancement, to meet the needs of customers home fast and portable low-priced demand, we can get more potential customers. Moreover, with our increasing popularization of science, more and more people will pay attention to the cosmetic testing industry, which is also conducive to obtaining more potential customers.
Although professional testing organizations are not as efficient as our products in terms of testing and breadth of users, they may pose a threat to our products because they are larger, offer a wider range of business, and have a good reputation in the public mind. In addition, with national policies, real-time changes in the general economic environment may also have an impact on our products. Furthermore, with the growing interest in education, high technology, and the increasing number of highly skilled professionals, there is always the possibility of introducing new technologies that could pose a threat to our existing technology, and we need to iterate on our technology to ensure that we are always at the forefront.
Our product is a kit that tests bacterial DNA in cosmetics. It can timely let users know whether the cosmetics they use are contaminated, ensuring their health and safety. Our product is named A.S.P. Bacteria Detector 01, where A, S, and P stand for Anti, Staphylococcus aureus and Pseudomonas aeruginosa respectively, meaning anti-infection. The main technology we use is DETECTOR, which contains CRISPR-Cas12a protein and ssDNA fluorescent probe.
Because Staphylococcus aureus and Pseudomonas aeruginosa are both dangerous pathogens, we will not use them directly as test samples. Instead, we will use the relatively safe E. coli and integrate femA and Gbc foreign target fragments to make E. coli mimic the expression of the DNA of these two pathogenic bacteria. The E. Coli type used by the wet team is BL21.
Then, we will use the CRISPR-cas12a protein, the process of cas12a detecting pathogens DNA needs sgDNA as a guide, so we commissioned AZENDA to synthesize sgRNA. At the same time, we also tried t7 external transcription technology. The principle is to synthesize sgRNA using PCR technology through template DNA and RNA polymerase.
Since Cas12a is a protein naturally expressed by archaea, we will first use IPTG-induced expression techniques to facilitate the spontaneous expression of this protein in our cultured recombinant E. coli. However, as E. coli expresses multiple other proteins simultaneously, we will further purify Cas12a using Ni-NTA technology. As Cas12a protein is one of the basic proteins with a His-tag, it can bind to nickel chloride and nickel sulfate in the nickel column. Following successful protein binding, we elute imidazole, which can also bind to the nickel column. Imidazole is competitively bound to the nickel column, and the imidazole is removed again by dialysis, leading to the acquisition of highly pure Cas12a protein. Finally, we use SDS-PAGE technology to verify whether Cas12a was successfully obtained. After combining the sgRNA and Cas12a proteins together, we will use isothermal amplification technology at 37C for 1 to 2 hours to obtain a large number of samples for detection.
Finally, we will use PCR to amplify the target DNA fragment in Escherichia coli and use ssDNA fluorescent probes after adding detection agents. This is a technique commonly used to detect bacteria and viruses that can detect single-stranded DNA contained in a sample with high sensitivity.
The final product takes about 15-30 minutes to produce results in the hands of customers, and the materials required are kits and cosmetics samples heated to about 37 degrees Celsius and an ultraviolet lamp.
The graph presented below is the prototype of our product. One package contains a sterilized test tube, a dropper for sampling, a kit, and an ultraviolet lamp. To sum up, our products only need to heat the kit and cosmetic samples to a temperature of about 37C when they are used.
figure 9: Prototype of Our Product
3.1.4 Substitutes & Advantages
At present, most of the microbial rapid test strips and kits on the market are used in the food field. With the same purpose of detecting microorganisms, our products can get results faster. However, the cost of our products and those used to detect microbes in food is not significantly different. Of course, in the field of cosmetics pollution detection, large testing institutions are also popular. But these testing companies do not accept the individual testing needs of users, and our products can perfectly meet the needs of users at home self-testing.
figure 10: The Comparative Advantages of Product
Users can not only save time but also get a more accurate result by using our product. Meanwhile, our vision for the future of this product includes using the same technology to detect possible bacterial contamination in nutrient-rich foods such as meat, eggs, and milk.
The chart below shows the growth of China's online transaction volume from 2010 to 2020. As can be seen from the chart, China's online transaction volume showed a rapid growth trend in the given time period, indicating the continuous development and growth of China's e-commerce market. With the popularity of online shopping in society, our company has decided to use an online store as the main sales platform.
figure 11: Chinese Online Sales Growth Trend from 2010 to 2020
And also from the data below, it can be seen that the main platforms in China's e-commerce market are Tmall and JD.com, with their combined sales accounting for more than 60%. This also shows the leading position of these two platforms in China's e-commerce market.
figure 12: The Sales Share of Chinese Ecommerce Platform
Traditional Ecommerce Platform
After investigation, we learned that a deposit of at least 1000 RMB is required to open an online store on Taobao, but part of the deposit will be deducted every time users click "urge delivery"; If we are asked to return the product for a refund, we need to deduct 200 RMB from the deposit as a penalty. The Tmall platform has a percentage, generally about 2%-5% of the price of the product. Jingdong needs to charge a platform service fee of 1,000 RMB per month and deduct about 3-10 points depending on the amount of sales.
Social Media Platform
In addition to these more well-known platforms, we can also register businesses on social platforms, such as Douyin, Little Red Book , and other software. As a merchant, the proportion of buckle points in Tiktok is about 1%-5%, which changes according to sales. The Little Red Book platform is based on the monthly sales of different settlement fees, monthly sales of less than 10,000 RMB do not charge fees, and monthly sales of more than 10,000 RMB charge a 5% commission. The deposit for individual businesses is 1,000 RMB, and the deposit for domestic enterprise shops is 20,000 RMB.
Online KOL Collaboration
Based on the characteristics of our products and target customer groups, we choose to collaborate with KOLs who are in line with the product image, preferably bloggers who understand cosmetics microbiological testing knowledge. KOLs should have a certain influence and fan base in their field, as well as a good reputation and positive image. We will provide KOLs with quality products and services, including competitive prices, customized product solutions, and efficient logistics and distribution. At the same time, it is possible to develop indicators related to the promotion effectiveness of KOLs, such as conversion rate, ROI (return on investment), etc., to evaluate and provide feedback on the promotion effectiveness of KOLs. Ultimately, our cosmetics microbial testing products can achieve the goal of integrating product and marketing.
Retailers Collaboration
For offline sales, our main platform is to cooperate with some beauty and medicine stores, so that they can become retailers of our products. These retailers can also list our products in their online stores. At present, we have decided to cooperate with some well-known businesses in mainland China: Guo Da Pharmacy, Dashen Lin, and Yi Xin Tang.
Dealer Collaboration
We need target distributors that are suitable for our products. We can conduct market research to understand the local distributor market, including competitors' distributors and distributors of similar products, to find distributors that match our business. Once a partnership is established, it needs to be carefully managed. A complete set of dealer policies can be established. This includes price policies, sales area policies, promotional activity policies, after-sales service policies, etc., to ensure that distributors have a clearer understanding of the products and better operating space. At the same time, in order to stimulate the enthusiasm of dealers, various incentives can be adopted. For example, setting up sales incentives, rebate policies, providing training support, and holding promotional activities to encourage distributors to better promote their products.
With the determination of the sales method, the cooperation of a warehouse and logistics company is necessary for our sales. Due to the specificity of the product, cas12a protein needs to be stored in an environment below 0C to ensure its dormancy state and preservation. So we think we should rent a 300 square meter freezer. According to the survey, the rental price ranges from 0.3RMB to 5RMB/ day. Because our products are small in size, sorting, packaging, and other operations are more convenient and fast, and the operation cost in the warehouse is about 1.5 yuan. At the same time, we can cooperate with warehousing logistics outsourcing companies, and express delivery prices are relatively lower. In the future, we will optimize the packaging and loading methods of products based on product characteristics and customer needs, reduce unnecessary packaging and loading costs, and improve logistics efficiency. Establish a sound emergency response mechanism, develop emergency plans for various possible emergencies, and handle problems in a timely manner to ensure the stability and reliability of logistics operations. Regularly evaluate and audit the warehousing and logistics operations, identify existing problems and bottlenecks, continuously improve and optimize the operation processes and management systems, and improve the efficiency of warehousing and logistics.
Our online promotion strategy takes SEO as the main way, which is specifically manifested in that when users use keywords such as "cosmetics", "makeup" and "microbial detection" to enter search engines, there will jump our advertisements or our official website to attract users' attention. At the same time, we will cooperate with some Internet celebrity beauty bloggers to make 1-2 videos to promote products on social platforms. We have also registered official accounts on Bilibili, WeChat, XiaoHongshu, and Douyin, and promoted online by sending videos and pictures. And also we will give out some special sale promotion in our online shop. For example, people can get a discount buying a special type of product containing 12 kits of tests, in order to meet the needs of people who wear makeup a lot or have a lot of makeup at home.
Meanwhile, advertising in areas with large traffic, such as subway stations and downtown squares, is also a way to promote above-the-line. We can use our slogan to make a call to action for the public and cover science content in the advertisement so that people can realize the necessity of using our products and the characteristics of our products to ensure health and safety.
According to the preliminary work we do, users are very interested in the principles and science behind our technologically innovative products, so we think that online promotion is a very good way to promote online.
Our offline promotion strategy is mainly based on cooperation, we will choose the more famous cosmetics companies in the market to cooperate, so that they can sell their own products with a copy of our testing products to ensure the safety of users, promote products in the health concept and increase the users of our products.
At the same time, we will also participate in some factory-sponsored expo activities, in the expo for professional customers to promote our ideas and products. Regularly inviting experts in the field of microbial testing to participate in our product offline events or lectures is also a good choice. On one hand, it can make more people aware of the importance of cosmetics microbial testing; on the other hand, it can also turn participating individuals into potential consumers of our products, laying a solid foundation for future sales of the product.
For raw material, it contains a test tube, a test box, dropper, uv light and a package in one kit. We include 6 kits in a box. So the cost and Price will be presented below:
figure 13: The Cost and Price of Kit Components
Our pricing strategy consists primarily of market penetration and a portion of psychological. Compared with the price of test strips of the same nature in the market, our test box is cheaper, and the results are faster and more accurate. Our products are bargain products, which offer better quality and cheaper prices to seize the market first. At the same time, our pricing of 29.9RMB takes advantage of customers' psychology, making them think that the price is closer to 20 RMB rather than 30 RMB, so as to increase sales. Then, we will further adjust our prices based on the company's long-term development and competition situation, including response strategies for price wars, brand image maintenance, and market share expansion, etc., to ensure that our products maintain competitiveness continuously.
AS.P. Co., Ltd. has 5,000,000 as registered capital. Our startup cost is 40,000,000 yuan. It is designed to cover the cost of the first 6-month operation. The capital will mainly be used for advance equipment purchase, technology development and optimization, and the conversion of technology into quick-test products for sale in the market in the early stage, as well as the batches of commodity production and sale in the later stage. We expect to have a research and development team of 10 people and about 20 office staff. The expenses for these six months can be broken down into the following sections: overhead expenses, fixed costs, and variable costs.
figure 14: Table of Startup Fund of A.S.P. Company
(a) Overhead expenses:
The inspection agency requires a license, and the annual inspection fee is about 10,000 yuan.
(b) Fixed cost:
Fixed cost for our company can be divided into two parts, which is one-time fixed cost, the capital used to purchase for experiment equipment, and monthly fixed cost, such as lab space rent fee and utilities, etc.
a) One-time cost: The whole research process includes 23 different kinds of equipment in total, and they cost 339,945 yuan.
b) Monthly cost:
i. Rent fee: Our lab and office area requires about 500 square meters, which will cost 75,000 yuan per
month.(https://sh.centanet.com/xiezilou/chuzu/m6t1u4/)
ii. Utilities: The lab has equipment that is turned on all the time to store samples, so the utility fees will be 5,000 yuan per month.
iii. Employee salary: For the research and development team, their monthly salary is 25,000 yuan. For office staff, their monthly salary is 8,000 yuan.
(c) Variable cost:
a) Raw material: We will find an foundry to help us mass produce our product after we finish the research. With 6 as the packaging, the production cost and raw materials cost a total of 7.63 yuan per box.
b) Postage: By negotiating with the Courier company, we shipped a piece of goods at 0.5 yuan.
Sales forecasting can help us predict the future demand for cosmetic microbiological rapid detection products in the market, so as to better arrange our production and procurement plans, reduce inventory and capital waste, and improve production efficiency and profitability. At the same time, based on the results of sales forecasting, develop more reasonable and effective sales strategies and product pricing strategies to improve future sales levels.
figure 15: Table of sales forecast from 2023 to 2027 of A.S.P. company
figure 16: Table of forecast model including details of revenue and cost from 2023 to 2025
The tables show the income forecast and forecast model of our company from the year 2023 to 2027, which is the first 5 years of our operation.
Firstly, we have decided to sell our products in Shanghai. According to census data, there are 22 million people between the ages of 15 and 65. Assuming that five in every hundred people pay attention to our product, there are 1.12 million potential customers. As the shelf life of our products is 6 months, we assume that each customer will buy two boxes per year. Based on our research, the factory's production cost per box is 1.6 yuan, and the cost of raw materials is approximately 6 yuan per box. As we will produce 2.24 million boxes in the first year, the total cost is approximately 17 million yuan. As the number of people aware of our brand will increase from 5% to 8% of the total population, we have decided to produce more in the following five years.
For research and development costs, they consist of the funds allocated to equipment purchases, materials required for research and development activities, as well as the salaries of the 10 members of the research and development team. The costs incurred are incrementally increasing year over year based on the necessities of research projects and the development of new products.
Sales and marketing expenses include funds allocated to advertising, including Key Opinion Consumers/Leaders, SEO, etc. These expenses remain the same for the first three years since a new enterprise launches, as massive promotional efforts are implemented using both ATL and BTL methods. Beginning in 2026, another large-scale promotional effort will be necessary to ensure customer attention to the company. This spending will ensure retention of our existing customers and attract new ones.
General and administrative consist of the salary of office staff, equipment maintenance and repair costs, utility fees, etc. In 2026, our company will initially expand to hire five more office staff.
Regarding the cost and revenue, according to the response to our questionnaire, 70% of people are interested in purchasing our product, and 66% of them are willing to pay more than 20 yuan for it. Therefore, we can expect 470,000 people to buy our products, resulting in a total revenue of 28 million yuan. As a medical company, we have to pay 13% income tax, resulting in a loss of 8 million yuan in the first year. Afterwards, due to our advertising efforts, the customer base will gradually increase. We believe that the number of people aware of our brand will grow from 5% to approximately 8% of the population, and our customer base will also expand accordingly. We expect to break even and start earning money in 2025, and generate 21 million yuan in revenue by 2027.
After five years, we decided to expand our market size to reach the whole of China. In this way, more customers will pay attention to our products, and our revenue will continue to increase.
In 2023, we will establish our company and launch our first product, the A.S.P. bacteria detector 01. Initially, we will focus our product efforts on the Shanghai market. As a new entrant into the market, we will incur significant expenses promoting our products to attract customers. By 2025, we expect to achieve break-even by the end of the year and begin development of a new product, version 2.0. We plan to expand our market presence throughout China. By 2027, we will hire additional office staff, and as our company enters its fourth year, we will increase our advertising efforts to promote our brand in the China market. In 2030, we plan to release and promote our second-generation product, which can detect additional bacteria in addition to Staphylococcus aureus and Pseudomonas aeruginosa. We will hire additional personnel to assist with operations and collaborate with more factories to create additional products for sale within the industry, developing more production lines as needed.
figure 17: Table of Project Timeline
We will summarize the article from the following aspects, including mission and vision, products or service, the market, competitive advantages, financial projection and ethics & safety.
Mission and Vision
A.S.P. Co. Ltd. strives to provide high-quality cosmetics-examining toolkits. With the vision of “Beauty unveiled, purity ensured”, our company aims to help mass cosmetic consumers to use makeup products with safety assurance and confidence while reducing the risk of being harmed by hazardous microbial ingredients.
Products or Service
Our product, the A.S.P. Bacteria Detector 01, is a user-friendly toolkit designed for testing bacterial DNA in cosmetics to detect contamination in makeup products. Utilizing advanced CRISPR technology and bioengineering, our kits offer swift and accurate quality assessments in just minutes, targeting two key bacteria: Staphylococcus aureus and Pseudomonas aeruginosa. With a focus on user-friendliness, our products are highly portable and include clear, concise instructions, making cosmetic safety testing accessible to the general consumer. We are not only dedicated to providing top-notch testing kits but also to raising awareness about the potential hazards associated with cosmetics.
To achieve this, our company has developed diverse awareness programs tailored to different age groups. These initiatives include shareable educational videos for the general public on various social media platforms and interactive games designed for younger audiences, ensuring that cosmetic knowledge is disseminated in an engaging and enjoyable manner. Furthermore, we have collaborated with esteemed industry experts and senior professors to deliver informative lectures, organize exhibitions, and establish a voting wall. Through these endeavors, we aim to enhance public understanding of cosmetics while instilling confidence in our testing kits.
The Market
After conducting extensive market research, our company has identified a notable gap in the microbiological testing sector. While there are several reputable microbiological testing organizations in existence, there is a distinct lack of specialized and comprehensive microbiological research specifically tailored to the cosmetics industry. This presents a significant opportunity for our corporation to excel in the field of testing the microbiological components of cosmetics.
Moreover, when examining the consumer landscape, it becomes evident that existing microbiology testing companies primarily serve cosmetic manufacturers and consumer goods companies requiring ingredient testing. Surprisingly, there is a conspicuous absence of microbiological test kits accessible to individual consumers for personal use. This deficiency in the market positions us with a compelling competitive advantage.
With careful consideration, we have chosen to target consumers aged between 18 and 35, representing a wide demographic with standard consumption patterns. The burgeoning number of cosmetic users and their increasing reliance on these products further underscores the vast untapped potential of the market for our cosmetic test kits. Our research has revealed a blue ocean opportunity within this industry, which we are determined to explore and capitalize on.
Competitive Advantages
We are strategically located in Shanghai, a prominent business hub, providing us with a distinct geographical edge. Furthermore, while there are a handful of testing companies serving specialized industries, the landscape for microbiological testing tailored specifically for cosmetics is vastly underdeveloped.
Our company is uniquely positioned to cater to a broad and diverse customer base, reaching a significant portion of the market. Leveraging advanced synthetic biology techniques, our product offers heightened sensitivity and accuracy in detecting Staphylococcus aureus and Pseudomonas aeruginosa. We have also prioritized user-friendliness by providing clear and straightforward instructions, accompanied by essential cosmetic knowledge.
Additionally, to address the needs of cost-conscious consumers, we have designed an affordable testing kit priced at just 29.9 RMB per box. This user-friendly kit delivers rapid results within 15-30 minutes, offering efficient and timely insights to users. In light of the evolving regulatory landscape emphasizing cosmetic safety, our company is poised for substantial growth. This presents a significant opportunity for us to expand our service offerings and engage in science education for a wide range of consumers in the future.
Financial Projections
To launch, we estimate that A.S.P. Co., Ltd. requires a registered capital of 5,000,000 RMB and a startup cost of 40,000,000 RMB for 6 months coverage. Based on the size of the market and our mature scheme, we estimate that A.S.P. Co., Ltd., the company is about to reach approximately 80 million RMB in revenues in a five-year scale, expanding our market size to reach the whole of China.
Ethics and Safety
Special attention must be devoted to recycling efforts and ensuring careful handling throughout experiments, given the potential generation of bacterial waste and hazardous labware. As outlined in SDS PAGE Stain Protocols, it's crucial to fix the gel using a non-modifying, precipitation procedure, such as the ethanol (or methanol)-acetic acid method employed here. Failure to do so may result in the loss of proteins and compromised results. Additionally, during experiments, it is imperative to minimize gel handling and consistently wear gloves to reduce surface contamination. Other safety precautions include avoiding over-filling tubes and utilizing only centrifuges with sealed centrifuge buckets. These measures collectively ensure the ethical and safe execution of our research and product design experiments.
Reference
1. About Puni. https://m.ponytest.com/pages/home/aboutpony.
2. Recommended SDS PAGE Stain Protocols. https://www.chem.ufl.edu/wp-content/uploads/sites/17/2014/05/SDS-PAGE-Stain-Protocol.pdf.
3. “In Your Life, CTI Is Everywhere.” CTI, https://www.cti-cert.com/about.