Marketing Of Essential Oil Products example essay topic

MARKETING PLAN FOR PURE TROPICAL ESSENCE SDN BHD (631616-V) PROPOSED BY Kamaryati Kamaruddin Azhar Mohamad Nor Alan Dahraji Ice Chong Fei Ping Rohan i Jan gga TABLE OF CONTENTS EXECUTIVE SUMMARY COMPANY'S VISION & MISSION SECTION 1 - INTRODUCTION a. Name of the Company b. Date of incorporation c. Company registration no. d. Registered address e.

Operation address f. Contact person (telephone, fax and email) g. Homepage of company h. Details of Technical Team with Brief write-up on qualification / Experience i.

Brief History / Background of Company j. Brief Description of Current Activities k. Organization Structure l. Company Brochure SECTION 2 - a. Project objectives a. Project description b.

Priority of proposed project with respect to other company activities c. Project strengths d. Project risks e. Number of Licenses Involved In the Acquisition of the Technology f.

Technology Stage - Development / Prototype g. Key Items or Rights Given to Your Company in Licensing Agreement 1. Technology Ownership 2. Improvements of the Technology 3. Transfer of Technical Knowledge and Know-How 4.

Training 5. Marketing Right 6. Others SECTION 3 - Market and Business Aspects a. Market analysis b.

Marketing Strategy c. Market Success Factor d. Intended market e. Global and Local Players f. List of current and potential clients g. Confirmed orders h.

Buyback agreement EXECUTIVE SUMMARY Pure Tropical Essence Sdn Bhd (PTE) was formed with the objective of setting-up an extraction plant for essential oils in Malaysia exploiting the booming industry of the aromatherapy, SPA, slimming centres etc. Herbs and essential oil have created a stir of interest in the market but lack of knowledge and understanding of the product made it only syllable to those who used the products and aware of its existence in Malaysia. Presently, there is no reputable locally extract essential oil in Malaysia except in Perlis and universities and research centres. PTE is aware of the potential of local grown plants essential oil market. With the extraction plant, it is hope that it will elevate farmer's income level. The ignorance of Bumiputra firms to venture into this field prompted PTE to be the first company to do so.

Thus in realizing the company's dream, PTE, a RM 100,000 paid up capital company, has started bottling and marketing of essential oils. Processing and distilling of the oils are being contracted out. To be more competitive in the market, PTE has to have distillation plant, however this amount is far from sufficient to proceed with the manufacturing plan. Based on the assumption of RM 2 million grants, we at PTE believed we could be a major role player in the essential oil industry in Malaysia and become a prominent name in the international scene. Company's Vision To be an international leadership in production, value adding and marketing of essential oil, herbal and medicinal plant extracts. Company's mission statement 1.

To produce standard quality essential oil, herbal and medicinal products suitable for both local and international market. 2. To promote awareness and understanding of markets on essential oil, herbal and medicinal products to end-user as multi purpose home usage. 3. Improving continues effort on R&D in order to foster efficient industry development on essential oils, herbal and medicinal extracts. 4.

Encouraging the development of new crops and products to take advantage of market opportunities. 5. Improving yield and quality through technological advances. PTE will focus on products that have good market potential. Strategic alliance with R&D institutions will enable the organization control its manufacturing efficiency in production by improving extraction process, value adding, implementing quality assurance and control programs to guarantee consistency of quality.

We at PTE believe in giving the best products and services to our customers. SECTION A COMPANY PROFILE COMPANY PROFILE a. Name Of Company Pure Tropical Essence Sdn Bhd. b. Company Registration Number e. Operation Address g. e-mail h. Equity Structure: Authorized Capital: RM 100,000.00 Paid-Up Capital: RM 100,000.00 l.

No of Employees Category No of Personnel 1. Management 2 ( ) 2. General Manager 1 ( ) 3. Operation Manager 1 4.

Support Staff Technical Personnel: . Chemist. Botanist. Marketing 112 Total 8 ( ) Present manpower u.

Brief History / Background of Company PTE started operation in 2003 and is poised to position itself as a major role player in the essential oil industry in Malaysia. Lead by a group of young professionals from diverse background; PTE aimed to establish itself in the international market while realigning the concept of local farming industry into a commercial and viable business ventures. vs. Brief Description of Current Activities PTE principal activity is producing and marketing of essential oil products. In order to obtain the most feasible result, PTE plans to acquire high tech distillation machine to facilitate the extraction process. w. Company Brochure Under development x. Organization Structure PTE organization's structure SECTION B PROPOSED PROJECT B 1. Objectives The objective of this paper is to propose a very comprehensive marketing plan for execution.

PTE wishes to take the lead role of supporting the growth of a profitable and sustainable essential oils and plant extracts industry in Malaysia. B 2. Project Descriptions PTE was incorporated for the purpose of venturing into the high-end essential oil, herbal and medicinal extracts market using herbal extraction and steam distillation technology. Product Introduction Industry profile Essential oils and plant extracts are inputs to a range of products including food flavors, pharmaceutical goods and industrial solvents.

Malaysia's suitable soil and climate and unique flora provide opportunities for new crop development and agricultural diversification. Increasing consumer interest, and a wide and growing range of applications in commercial industries has led to strong, albeit fluctuating, growth in world demand for these commodities. Essential oils are the volatile oils, odorous, which occur in certain plants or specified parts of plants, recovered by accepted procedures such that the nature and composition of the product is, as nearly as practicable, unchanged by such procedures. Essential oils have been extracted from over 3000 plants, of which 200 to 300 are commonly traded on world markets (Iqbal 1995). Essential oils are widely known for their scents and flavors, making food flavoring and fragrance industries among the biggest users. Common uses for selected essential oils are shown in table 1.

Table 1 - Common uses for selected essential oils Essential oil Common uses Citrus Industrial solvents, fragrance for cleaning products, flavoring Spearmint Toothpaste, mouthwash, confectionery flavoring Peppermint Toothpaste, mouthwash, chewing gum, food flavoring, cosmetics, tobacco flavoring Lavender / lavandin Fragrances, toiletries Eucalyptus Cough / cold remedies, solvents, cleaning agents, flavoring Tea tree Toiletries, insect repellents, germicides, cosmetics Boronia Food flavoring, fragrance Blackcurrant bud Food and beverage flavoring SOME DEFINITIONS OF OIL Essential Oil A non -oily and highly fragrant essence, which is extracted from a plant by distillation and fast evaporates. Infused Oil It is from a vegetable oil, which has been infused with the fragrance of an aromatic plant (by mixing the two together and heating it). The resulting Oil is delicately fragrant, very greasy and does not evaporate. Aromatic Oil A term, which can indicate either or both of the above Aromatic Chemical Essential Oils consist of aromatic chemicals. Most essential oils have between 50 and 500 different chemical constituents. Base (Carrier) Oil (s) Base, or Carrier Oils are vegetable, nut or seed Oils, which has to be used to dilute the Essential Oil (s).

These oils themselves have therapeutic properties and presents a good source of Nutrients and Energy. Incense Combinations of resins, fragrant woods and gums in solid or powdered forms, which are burned to create an aromatic smoke. Massage Oil Massage Oil is a mix of Essential and Carrier Oil, which should be used for external purpose. Sometimes, only Carrier Oil might be used for a massage, because of skin nourishing and therapeutic qualities. Infused Oils also should be used for a Massage. Milk Bath A fragrant foam, liquid or powered, containing a derivative (including Essential Oil (s) ) which provides emollients and moisturizers for the Skin when added to the Bath.

Perfume Perfumes consist of a man-made mixture of aromatic chemicals and essential Oils. Up until the nineteenth century all perfumes were composed of natural aromatic Oils. Modern perfumes are almost synthetic and may contain up to 300 different elements in its blend At the present time Natural pure perfumes you can find very rare (see Dr. Emerald Pure Natural Beauty Products) and they contains no synthetic ingredients. Perfumes usually have an alcoholic base and up to 30% Concentration of Fragrances.

Toilet water A light version of scent with a 4 to 8% concentration of Fragrances and synthetic Essential Oils in an alcohol and distilled water base. Cologne Cologne contains a lower percentage of fragrance than a perfume or toilet water (2 to 5%) in an alcohol and distilled water base and often used as an after-bath splash. Perfume Oil The fragrant ingredients of Perfume prepared on the non-greasy oil base. Pheromone Aromatic scent secreted by animals and insects, influencing behavior within their own or different species. WHAT ARE ESSENTIAL OILS? Essential oil or 'essences' as they are also called are highly concentrated substances extracted from various parts of aromatic plants and trees.

They are usually captured by steam distillation, a process whose origins can be traced back to ancient Mesopotamia. Unlike ordinary vegetable oils, such as corn and olive, plant essences are highly volatile and will evaporate if left in the open air. The chemistry of essential oils is complex. Most consist of hundreds of components, such as terpenes, alcohols, aldehydes, and esters. For this reason a single oil can help a wide variety of disorders.

Lavender, for instance, is endowed with antiseptic, antibacterial, antibiotic, antidepressant, analgesic, decongestant and sedative properties. Moreover, due to their tiny molecular structure, essential oils applied to the skin can be absorbed into the bloodstream. They also reach the blood as a result of the aromatic molecules being inhaled. In the lungs, they pass through the tiny air sacs to the surrounding blood capillaries by the process of diffusion. Once in the bloodstream the aromatic molecules interact with the body's chemistry. MAIN CHEMICAL COMPONENT While it is interesting to take a closer look at the individual components of essential oils, it is important not to lose sight of the whole.

Assigning actions to an essential oil based on its chemical composition can be misleading. As we have seen, the therapeutic properties of the whole oil are the result of synergism: an interaction of all its chemical constituents working harmoniously together so that the whole becomes more potent than the sum of its individual parts. Bearing this in mind, here is a brief survey of the main chemical compounds found in essential oils. Terpenes This is a vast group of chemicals with widely varying properties, so it is impossible to generalize about their therapeutic actions.

However, common terpenes include limonene (an antiviral agent found in 90 per cent of citrus oils), and pine ne (an antiseptic found in high concentrations in pine and turpentine oils). Others, such as chamazulene and farnesol (found in chamomile essence), possess remarkable anti-inflammatory and bactericidal properties. Esters The most widespread group found in plant essences, which includes linalyl acetate (found in clary sage and lavender), and gera nyl acetate (found in sweet marjoram). Esters are fungicidal and sedative, usually with a fruity odor. Aldehydes These substances are found notably in lemon-scented essences, such as lemongrass and citronella. Aldehydes generally have a sedative, though uplifting, quality.

Ketones Certain ketones are known to be toxic, so this chemical group is regarded with a degree of caution. However, it is misleading to generalize about the toxicity of individual chemical components without knowing the exact ratio of the substance in relation to other chemicals in the whole oil. Certain essences, however, do contain appreciable quantities of toxic ketones, so should be avoided by lay people. Mug wort, tansy, wormwood and common sage contain the potentially risky thu jone, while pennyroyal contains pule gone. Non-toxic ketones include jasmine, found in jasmine, and fenchone in sweet fennel.

Ketones ease congestion and aid the flow of mucus, which is why plants and essences containing relatively large quantities of these substances are usually helpful for upper respir a-tory complaints. Alcohols Some of the most common alcohols include linalool (found in abundance in lavender), citronellal (rose, lemon, eucalyptus and geranium) and geranial (geranium and palm arosa). These substances tend to have good antiseptic and antiviral properties and an uplifting quality. Phenols These are bactericidal with a strong, stimulating effect on the central nervous system. Essential oils containing relatively large quantities of certain phenols are potentially irritant to skin and mucous membranes. Common caustic phenols include eugenol (found in clove essence), thymol (thyme) and carvacrol (oregano).

However, anethole (from fennel) and estragole (tarragon) are not at all caustic. Oxides These are found in a wide range of essences, especially those of a camphoraceous nature, such as rosemary, eucalyptus, tea tree and cajuput. Oxides tend to have an expectorant effect; for example, eucalyptol (eucalyptus). THE NATURE OF PLANT ESSENCE Essential oils, also known as 'essences' or 'volatile oils', are the highly odoriferous liquid components of aromatic plants, trees and grasses. The word 'essential' is derived from quintessence, which the Oxford English Dictionary defines as 'An extract of a substance containing its principle in its most concentrated form'. In ancient philosophical or alchemical terms, quintessence was related to ether or the fifth element and was thought to be the spiritual aspect of matter.

It is also interesting to mention that essential oils are sometimes called 'ethereal oils', a Germanic term which aptly describes their otherworldly nature; for if left in the open air they disappear without a trace, evaporating into the ether like a mist. WHERE ARE THEY FOUND? Essential oils may be found in different parts of the plant: in the petals (rose), leaves (eucalyptus), roots of grass (vetiver), bark (cinnamon), heartwood (sandalwood), citrus rind (lemon), seeds (caraway), rhizomes (valerian), bulbs (garlic), the aerial or top parts of the plant (marjoram) or resin (frankincense), and sometimes in more than one part of the plant. Lavender, for instance, yields oil from both the flowers and the leaves, while the orange tree produces three different smelling essences with varying medicinal properties; the heady bitter-sweet neroli (flowers), the similar though less refined scent of petigrain (leaves) and the cheery orange (the rind of the fruit). Although sometimes denigrated as 'waste products' of plant Metabolism, studies have shown that plants utilize essential oils for such purposes as attracting pollinating insects, repelling predators and protecting themselves from disease - quite a significant survival mechanism. Yet essential oils are not vital to the life of plants as a whole, as the word 'essential' may suggest.

Indeed, while it is true that most plants have an odor to a sensitive nose, not all plants produce volatile oils. Essential oils accumulate in specialized plant tissues, harboring oil glands. The more oil glands present in the plant, the cheaper the oil, and vice versa. For instance, 100 kilos of lavender yields almost 3 litters of essential oil, whereas 100 kilos of rose petals can yield only a half a liter. Essential oils are highly concentrated substances and therefore rarely used neat, though certain essences, such as lavender and tea tree, are sometimes used undiluted as an antiseptic. For aromatherapy massage, however, they are diluted in a 'carrier' oil such as sweet almond or olive.

As well as being soluble in ordinary vegetable oil, essential oils will dissolve in alcohol, egg yolk and waxes (melted beeswax or jojoba for example). However, they are only partially soluble in water - and a little more soluble in vinegar. COLOUR AND CONSISTENCY Even though they are technically classified as oils, plant essences are quite different from 'fixed' or fatty oils such as sunflower seed, corn or sweet almond. They are highly volatile, which means they evaporate when left in the open air, and they do not leave a permanent mark on paper. While many essences are virtually colorless (peppermint), yellowish (lavender), greenish (bergamot), amber (patchouli) or dark brown (vetiver), a few are endowed with an idiosyncratic hue.

Targets, for example, is dark orange or yellow, whereas German chamomile is a splendid inky-blue. Many essences have the consistency of water or alcohol - lavender, peppermint and rosemary, for example. Others, such as myrrh and vetiver, are viscous, or thick and sticky, whereas rose otto is semi-solid at room temperature, but becomes liquid with the slightest warmth. ENVIRONMENT The quantity and quality of essential oil produced by a plant is determined by many interrelated factors. As well as climate and altitude, the type of soil and its fertility is significant: German chamomile, for instance, produces a higher yield of oil when grown on soils rich in calcium. There are also special vintage plants whose essential oil quality supercedes that produced in different locations only a few kilometers apart, where soil and climatic conditions are apparently identical.

Moreover, the time of year and day has a major influence on the quality and abundance of essential oil, which moves around the plant according to both a daily and a seasonal cycle - individual plant species having their own characteristic rhythm. While the concentration of essential oil in flowering plants is generally highest at midday during warm dry weather, there are a few exceptions. The oil of jasmine, for instance, is most concentrated in the petals at night, which means the flowers must be picked before dawn. The oil of the damask rose, on the other hand, is most concentrated in the petals after the morning dew and before the greatest heat of the day. And, just like wine, the quality and 'bouquet' of an essential oil will vary from year to year.

To the commercial perfumer, who demands a standardized product, such variability is regarded as a distinct disadvantage. But to the aroma therapist and natural perfumer, it simply adds to the charm of using aromatics from the earth rather than from the laboratory. The fragrances of organic essences are very different from the highly synthetic scents to which many of us have become accustomed. Newcomers to aromatherapy may need to acquire a 'nose' for natural aromatic oils. Similarly, it takes time for a junk-food-laden digestive system to adapt to a whole food diet. But once weaned on to natural essences, synthetic fragrances may even be perceived as a nostril-stinging assault!

SWOT ANALYSIS STRENGTH B 4. Project Strengths / Benefits Analysis on project strengths / benefits can be divided into the followings: i. Technical Strengths ii. Commercial Strengths, and. General and Strategic Benefits Technical Strength PTE will use the state of the art in steam distillation and herbal photochemical extraction technology in maximizing the recoveries and also reducing utility consumptions. The company will use continuous steam distillation technology because this will give the maximum recovery with minimum usage of energy required.

The resulted product recovered is also by far more superior in nature due to the fact that the vapor are distilled with fractionation effect the least amount of moisture is contaminated with the oil and the temperature used are uniformed. The continuous process can also be equipped with an external fractionation column to get the product with no traces of moisture at all and with all the volatiles in tact. Besides above, this extraction technology has high adaptable levels of sophistication. Proven R&D institutions also technically supports it.

Commercial Strengths. High employment potential... Maximum use of local raw materials and manpower resources... 2 years marketing experience... Large market... Export potential.

Strong management team PTE believes its senior management team possesses the mix of skills and experience to grow the business or company in a highly competitive environment, particularly in the area of marketing, branding, technology and finance. Many of the senior management team has been with the Company for minimum 2 years and has implemented many initiatives which allowed Company to adapt to changing market dynamics and attain its current market-leading position. Disciplined financial management PTE has maintained an acceptable level of gearing consistent with its cash flow. Company will always continue to improve its financial performance.

Strong and effective distribution network PTE will be having extensive distribution network in Malaysia as well overseas and will be the major contributors to its growth. The Company regards its operator as close business partners, and supports these partnerships with reliable technical support, effective operator and staff training program and competitive payment terms. Availability of resources PTE will be the primer supplier of essential oil in Malaysia contributing to the pharmaceutical and aromatherapy etc. PTE will continue to enjoy close business association with its vendors and supplier without fear of restraining available resources. WEAKNESSES Implementation Risk Wastage of raw material, water, electricity and other overhead could be high if factory technicians are not well trained to properly handle the distillation.

A high wastage level can easily result to increase of manufacturing cost and eventually lead to a high retail price of the products. Quality control A poor quality control mechanism at the manufacturing plant can also sacrifices the overall success of this project. The factory should be certified by at least one widely known international or national quality control standard in order to maintain and keep track of high quality of the products from start to finish. Depend on the availability of skilled workforce. Technologies are of high level and local employees need to be trained.

Technical personnel's from technology providers may stay for few weeks and transfer of technical information must be carried out without fail. OPPORTUNITY Investment in a new or relatively new venture New market such as export to USA, European countries and Japan are relatively new due to the different authority's requirement and expectation. Ordinary extractions procedure of essential oils is easily acquired but not new manufacturing procedures and requirement. Potential Market Small medium industries (SMI's) have been inherently subject to vagaries of general economic and business fluctuation. However, these industries have proven to be able to sustain its momentum during the recent regional economic crisis because consumers still demand the products despite the economic condition.

With the recent upturn in the country's economy, more take home salary and disposable income, it has provides more opportunities in the market place. THREAT Rapid technological change Customers' needs and preferences are constantly changing. Research and development on product innovation is an ongoing activity in order to keep pace with the stiff competition. PTE with technology providers will have to do their in-house R&D to avoid technology obsolescence. Competition PTE faces minimal competition from other players in the industry except from global players. Whilst PTE will continue to take effective measures such as ensuring good quality and effective products and services to secure market share, no assurance can be given that the company will be able to maintain its existing market share in the future.

Today's Oils Today, there are literally thousands of essential oil vendors spread around the globe, supplied by hundreds of producers. Some oil vendors offer high-quality, pure essential oils, and some offer oils that are closer to being fragrance oils. The essential oil consumer must be aware that in order to receive the full benefit of essential oils, they must be sure of the purity of their purchases. Unfortunately, with some unethical vendors on the market, the best way to purchase oils is to get referrals from trusted sources, and purchase from an honest company. There are 4 major extraction processes used to recover / isolate valuable ingredients from the natural herbal / botanical material.

These are: SS Steam distillation, hydro alcoholic extraction, SS Expression / Cold Pressing SS Solvent extraction using alcohol / hexane /PET ether / ethyl acetate / acetone / chlorinated hydrocarbons / CS 2 & so on SS Supercritical fluid extraction using CO 2. B 14. Description of the Technology (Product and / or Process) Process flow chart for herbal / Phytochemical extraction (Generalized) Pictures below represent the herbal extraction and steam distillation extraction technology to be installed in Melaka. Finished product discharged after sterilization Herbal Extraction Plant B 17. Technology Application Essential Oil Usage Massage This is the most common and popular of usages for essential oils.

When massaging, it is sometimes best to massage in the affected areas. For instance, some essential oils will help with a sore throat, but they will have a better effect if they are gently massaged on the neck and throat area. However, nearly all essential oils are much too concentrated and strong to apply directly to the skin. So, when using essential oils in massage, be sure to first dilute the essential oils in base oil. A good ratio to use is 2 to 3 drops of essential oil per teaspoon of base oil. You can use either regular vegetable oil or carrier oils as your base oil, but it is recommended that you use carrier oils, since they are designed to mix well with essential oils.

(You can turn a screw with your fingers, but they won't work nearly as well as a screwdriver.) The only exceptions to required dilution are probably Lavender and Tea Tree oils, but an advantage to diluting is that you end up with more solution, rather than a few drops. Inhalation Essential oils can also be useful when the vapors are inhaled, especially in cases of colds or congestion. Remember that the oils are highly concentrated, so even a small amount of essential oil will provide a powerful aroma. When using this method, get a bowl of hot water and place a couple of drops of oil on top, and inhale the vapors. The resulting effect should be strong and pleasant.

Diffusion There are a variety of diffusion methods, and most of them involve different ways of heating the oils to release the aroma. However, if possible, you may consider getting an electric diffuser called a nebulizer. The advantage to using a nebulizer is that it does not use heat, but rather an air stream. Heat causes certain components of essential oils to evaporate faster, and the oil loses its potency faster.

A nebulizer is meant to increase the lifetime of an essential oil's potency, while refreshing the air with the fine oil molecules. The only downside of a nebulizer is that it can be a bit expensive (average room nebulizer start at around RM 60). SECTION C MARKET AND BUSINESS C 1. Market Analysis Porter's Five Forces The world market for essential oils Little information is available on the size of the markets for essential oils and plant extracts, which are predominantly inputs into other products. They are a subsection of the larger perfumes and flavors market.

Trends in these markets are at best indicative of trends in the essential oils markets. World trade in the markets for essential oils and their end use products is growing. In 1998, world exports of essential oils and related perfumes and flavors were valued at US$7435 million and imports at US$6811 million (UN 1999). Table 2.2 shows that the value of world trade has increased substantially between 1986 and 1998.

World trade in essential oils, perfumes and flavors 1996 1997 1998 1999 2000-2001 US$m US$m US$m US$m % pa Exports 2 149 4 122 5 051 7 435 10.9 Imports 2 008 4 206 4 802 6 811 10.7 The major exporters of essential oils are the United States (US), the European Union (EU) and a number of developing countries, the most important of which are China, Indonesia, India and Brazil. In 1998 the EU accounted for 52 per cent of the value of world exports, and the US 13 percent (UN 1999). Developed countries are the main importers of essential oils, with the EU and the US accounting for 44 per cent and 8 per cent respectively in 1998 (UN 1999). Essential oils industry in Malaysia Malaysia is relatively a small player in the world market for essential oils. To encourage entrepreneurs or potential investors to establish an essential oil industry in the country, FRIM (Forest Research Institute Malaysia) has developed two pilot-scale distillation units for the extraction of essential oils. FRIM also had been actively involved in providing technical advice, training and setting up extraction facilities of FRIM's portable distiller for the production of essential oils at selected herbal companies.

PTE plans to take advantage of the pioneer project and have a first mover advantage over the other competitors in the industry. Key drivers of world demand for essential oils and plant extracts Between 1993 and 1998, world demand for essential oils grew at an average rate of 6.1 per cent, botanical extracts at 15.9 per cent, plant derived chemicals at 9.8 per cent, and gums, gels and polymers at 7.4 per cent (Won du 2000). Demand for essential oils and plant extracts is largely driven by the food flavoring industry, cosmetic and fragrance industries, and demand for industrial solvents. Pharmaceutical and medicinal uses drive the demand for botanical extracts, while plant derived chemicals, gums and polymers have industrial demands. Demand growth does not just reflect growth in the output of these industries. Changing consumer preferences in favor of natural over synthetic substances has had a strong impact on pharmaceutical and cosmetic industries, which has translated into growing demand for essential oils and plant extracts.

A feature of the essential oils and plant extracts market is that the markets for each product are discrete. Each product faces its own demand drivers, customer groups, cost conditions, uses and price. As a result, demand is typically very oil / plant -specific, although some oils such as orange and lemon readily substitute for each other. Value chains The production of an essential oil or plant extract is a complex process. The production process and people involved vary depending on the type and end use of the product. Common stages of production include growing and harvesting of the crop, extraction, further processing and distribution.

Some essential oils undergo further processing known as rectification, which adds value to the oil, increasing its suitability for its end use. Traditionally, producers have used agents to distribute their products due to their knowledge of the market and relevant buyers. However, there is a growing trend for producers to bypass agents and sell their products as close to consumers as possible. Increasingly producers in developed countries are importing oils from developing countries, further refining and blending the oils, and then exporting them (De Silva and Atal 1995). The value chains - both at farm gate and wholesale levels vary greatly across products so development of stylized value chains is not possible. However, based on a survey undertaken at the planning workshop, some guide to the share of costs is: . harvesting costs make up between 10 to 35 per cent of farm-gate costs, with an average of 22 per cent; . pest / weed /disease management costs make up a similar average 22 per cent of costs with a range of 11 to 37 per cent; and.

Nutrition (irrigation, fertilizer etc.) typically makes up 10 per cent of grower costs... at the wholesale level the variation is greater and depends on the extent of refinement and processing of the oil or extract. However extraction costs tend to be around 60 to 75 per cent of processor costs. PTE eliminated some of these costs by using local grown crops and outsourced logistics to give more value towards our customers's atis factions. C 2.

Marketing Mix Analysis The company marketing effort shall focus on the import substitution market and export of niche essential oils, herbal and medicinal extracts. Raw materials used are local grown crops, which add value to our product offering such as freshness in terms of quality and low pricing. Furthermore the essential oils are distilled locally (produced & packed) in contrast with competitors. Another advantage for the company is fast customer support or service for product enquiry or products defects. PTE personalize marketing (direct) approach will enable the company to create a personalize relationship which later will create loyal buyers. Proposed products of essential oils are floral water, soaps, scented candles etc.

Briefly, PTE's marketing strategy are as follows: - Segmenting Initially the promotional and marketing efforts will be directed towards major cosmetic and health industries. Once the acceptance is established, the marketing focus will shift to cover other segments. Targeting Within the identified target market, 'purchasing decision maker' will be single out and follow up decision be made. Positioning The product will be positioned as a 'good quality value for money' to end users.

Customer Sensitivity PTE emphasizes customer-satisfaction through longer-term relationship as strategy to win and maintain client base. Ensuring high quality of products, timely delivery, zero or minimal defect, quality advisory and after sales service will enhance customer satisfaction. Product Quality & Reliability Product quality and reliability ensured through systematic final product testing and quality production team. Customer Support Service Appropriate information and guidance will be given to customers, in addition to formation of dedicated customer support and after sales service team.

PTE plans to set up a dedicated information center for its customer free of charge. Strategic Alliances With Aum Consultancy in Research and Development and product improvement, PTE would be able to cope up with the market requirement. Practical Involvement PTE is also involved in the marketing of its product besides the dealer / agent so as to gain industrial practical knowledge vital in problem understanding, infield product testing and improvement. Product Improvement Strategic alliance with Aum Consultancy will allow and ensure constant improvement.

Active Marketing and Promotion PTE will market its products through trade exhibition and shows, e-business (website) and road shows in the industrial community. Financing Facilities PTE is discussing possibility of financing facilities to corporate buyers. C 3. Product Strategy PTE will be producing three main products categories namely: - 1. Straight Oils- 6 types of pure essential oils 2. Blending Oils-12 types of blend oils 3.

Aromatherapy Oils-12 types of aromatherapy oils The main six essential oils are Citronella (serai wangi), Lemongrass / Cymbopogon Citrates (daun serai), Cinnamon (kayu manis), Citrus Aurantium (limau nip is / peru), Melaleuca Leucadendron (daun gelam) and Citrus Kast uri. PTE is planning to add daun ke sum, Patchouli (Nilam), Ylang Ylang (campaka), and Nutmeg (buah pala) to its collection. The packing size for the straight oils and blending oils is fixed at 5 ml and 10 ml only while aromatherapy product is most suited packed in 15 ml bottle. C 4. Pricing strategy PTE will adopt a competitive pricing strategy in the market. Based on our production cost computation, average cost per ml is about RM 0.50-RM 0.70 or RM 7 for 10 ml.

Competitors are selling on average price ranging from RM 30 to RM 130 per 10 ml (Body Shop). Sales Price matrix-retail (In normal 10 ml packaging) Product Pure Tropical Competitor STRAIGHT OILS Citronella (Serai Wangi) RM 20 RM 30-RM 38 Cinnamon (Kayu Manis) RM 20 RM 54.72 Citrus Aurantium (Limau Purus) RM 45 RM 130.15 Lemongrass (Daun Serai) RM 20 RM 49.40 Melaleuca Leucadendron (Daun Gelam) RM 20 RM 45.00 Patchouli (Nilam) RM 30 RM 68.40 Nutmeg (Buah Pala) RM 20 RM 48.00 Ylang Ylang (Kenan ga) RM 55 RM 93.10 BLEND OILS RM 45 RM 80-RM 100 AROMATHERAPY OILS RM 45 RM 80-RM 100 Import substitution is a ready market for PTE. PTE should compete fairly in price compared to the imported product even from China. As such, in view of short term operation cash flow establishment, PTE is focusing on the import substitution and contract export market. However, for the mid term period, export oriented medicinal essential oils is expected to dominate PTE market share. C 6.

Intended Market Propose target sector Retail and Wholesale Market 1. Specialty (slimming / aromatherapy centers) 2. Cosmetics (beauty salons), 3. Perfumeries, household, healthcare etc.

C 7. Market Success Factor Success factors for the project are as follows: SS Experienced and skilled in-house staff SS Technically supported by proven R&D SS In-line with the government aspiration on "Dasa r Pertanian Negara Ke-3" and "Industrial Master Plan No. 2" objective. SS Price competitive to import products SS Niche market position for technologically advanced process that would tremendously uplift the product positioning C 8. List of Current and Potential Clients Current Client SS Melaka State Government SS Equatorial Hotel, Naz a Hotel, Golden Legacy Hotel Potential Client SS All industrial users / processors such as Lever Brothers, Colgate & Palmolive etc, P&G, Cosmetic SS Commercial / Private Customer SECTION F OTHER INFORMATION F. 1 Website on the potential client and its application A copy of document is as attached in the next page. F. 3 MARKETING PLAN Details Attached in the following page is a copy of the following:.