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Right now Milk Makeup's main form of positioning is through the use of social media, primarily Instagram. Might consider focusing on their Facebook page or even Pinterest, social media platforms that older/ mature women prefer to use. Can consider using more mature women as models as well as different diversities to relay a more modern, inclusive approach to makeup for the mature demographic which adheres to the brand image of Milk, especially on pictures or videos posted on said social media platforms that are supposed to target the older demographic.
Can look into collaborating with high fashion brands to appeal to people of higher income bracket, more mature audience. These fashion brands must be ethical and "modern" in order to adhere to Milk Makeup's philosophy.
While social norms defying products such as their Kush mascara (cannabis-infused) draws in publicity for the business, it will benefit for them to be more careful with their product development, as it draws lots of criticism and might push away more mature customers who are unsure with new and controversial developments in skincare, as it makes the brand seem unreliable.

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Age prevention line will target a wider range of consumers, both the existing young female segment but also reach into more mature/ older women. Adhering to the need for businesses to develop multi-generational strategies as it will help appeal to a different demographic of women who are older. But also appeals to current consumers because they are young adults entering the stage where age-prevention products should be incorporated into their routine. Therefore, it meets the future demand of existing customers. The customers should also be concerned about ethical practices in beauty such as no animal testing as well as preferring "clean beauty" which concerns the quality of ingredients such as no synthetic fragrances and harmful parabens in their products. Having their own physical stores with help address their weaknesses such as lack of distribution network, strong reliance on distributors while expanding to a more luxurious age-prevention line helps expand its limited demographic market, which is another weakness of the brand.

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Geographic segment will increase as businesses expand to open stand-alone shops or displays in department shops around the country.

Demographics will extend as new stores in department shops target older/ more mature women who are more likely to frequent. May also attract women of higher income group with new luxury age-prevention brand in department store helping it establish a similar brand image with more upscale cosmetics brands.

Psychographics remains unchanged as Milk Makeup still has to adhere to original branding which is fuss-free, on-the-go makeup for women with a busy schedule. Ethical consciousness aspect of business also remains unchanged.

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Launch of more luxurious age-prevention line, expanding into physical stores/ department shops

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The threat of substitute for the cosmetics industry is very low.

- Nothing can directly substitute cosmetics/ no close substitution.

- Indirect substitutes to cosmetics could be homemade substitutes such as pomegranate seeds as a lipstick replacement or cocoa powder as a bronzer.
- Switching costs from cosmetics to homemade alternatives would decrease, but will also lead to a reduction of quality.
- Not threatening substitutes due to the insufficient ability to meet customers needs and demands such as longevity, performance and noncomedogenic (won't clog pores) properties etc.

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- Milk Makeup produces cosmetics, generally targeted at women, "Millennial" young adult females aged 18-25.
- Middle-class income group, uses social media, skin-care conscious, social ethics conscious.

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Plastic Pollution
- Caused by plastic envelopes, bubble wrap, cellophane, polystyrene, plastic bottles
- 66% of UK female beauty buyers aged 16-24 want more information about which products are environmentally friendly
- Many brands have started encouraging the reduction of waste in their packaging/ having eco-solutions to packaging and formulas.

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Trading Standards in the U.K.
Cosmetic Products Enforcement Regulations 2013

"in the EU there is a specific regulation for cosmetic products, while the US either does not specifically regulate them or classifies them as Over the Counter Drugs
(OTCs), which sometimes implies a stricter regulatory regime"

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A shift from retail-store shopping to online shopping:
- Online spending has increased at a fast rate whilst spending on stores has remained relatively stable.
- Consumers are now buying more online than ever before.

An increase in social media usage/ reliance
Instagram:
- last confirmed UK statistic stands at 14 million monthly active users, likely to have increased
- Gender demographics: 68% Instagrammers are female, 38% of females Internet users are on Instagram
- Age demographics: 59% of Internet users between 18-29 use Instagram
- 17% of teenagers say that Instagram is the most important social media platform for them
- 90% of users are under 35 years old

Youtube:
- estimated that there are 35.6 million UK visitors to
YouTube each month
- Gender demographics: there are 55% male users and 45% female
- Age demographics: From 2015 to 2016, time spent on YouTube grew 40% faster among adults aged 35+ than adults overall

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Significant growth of the U.K. ethnic population:
- estimated that 16% of the UK population is from a nonwhite ethnic group
- the forecast that ethnic minorities will make up 1/3 of the UK population by 2050
- Increased demand for medium-priced ethnic colour cosmetics, the largest group being Asian

Health and wellness trend
-increased the demand for more clean, natural and organic perfumes and scented personal care products
- creating a strong emphasis on quality ingredients and formulations

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Supply and Demand
- The U.K. beauty industry: worth £30 billion to the UK economy,
- the worth of the beauty industry at £18 billion, compared to the £27.2 billion in 2018 (shows rapid growth in the industry)

Economic growth rate - (GDP)

Interest rate
Tied to business organizational spending and expansion of businesses. If interest rate low, then it is more cost-efficient to expand.
The current U.K. interest rate is low, "The Bank kept interest rates on hold at 0.75%."  and is forecasted continue being low.
Milk Makeup is mainly online-oriented, may consider having physical stores in the U.K. as well.

Foreign exchange rates
Milk Makeup's creative studio in downtown New York City, with its products, manufactured in-house. Need to decide appropriate pricing of the products sold in British pounds, make leeway for depreciation/ appreciation in currency but not too expensive that it will put off British consumers.

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"Brexit" - The U.K. leaving the European Union
3 ways it can affect the industry:
(https://formulabotanica.com/impact-brexit-cosmetics-business/)

1) Cosmetics compliance
2) Imports and exports
3) Currency exchange rates

"No-deal Brexit"
Policymakers said it would lead to weaker growth, higher inflation and a further drop in the value of the pound.

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EXTERNAL FACTORS

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Milk Makeup is a New York City-based cosmetics and skin care company created by the founders of Milk Studios.

Milk Makeup had to be easy to apply; it had to be crafted from high-quality ingredients and it had to last. Most importantly, it had to stand up to a constantly-on-the-go urban lifestyle with all of its mess.

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Bargaining power of buyers is moderate.
- Many close substitutes are available --> brands with same value proposition as Milk Makeup.

- Switching cost is not high as there are many brands within the same mid-range cosmetics section which Milk Studios is so those brands would sell at a similar price range. e.g. Glossier.
- The consumer has high bargaining leverage.

Buyer price sensitivity
-The nature of the cosmetics market arguably price inelastic.
- Price sensitivity of Milk Makeup buyers is not high because Milk Makeup is a mid-range cosmetics brand.
- Price sensitivity is less than drugstore/pharmacy brands but higher than luxury/high-end cosmetics range such as Lancome or Louboutin.

Strong Branding  of Milk Makeup
- However, due to Milk Makeup's strong branding, it gives them a competitive advantage as it distinguishes them from other competitors.
- Decreases amount of direct substitutes from other brands: not many brands that represent the same value.
- Strong branding reduces consumer power.

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In terms of suppliers of manufacturing ingredients for Milk Makeup, bargaining power is low.
- Low reliability on suppliers because of the high availability of alternatives.
- Milk Makeup products are designed and manufactured in house by Milk, a creative studio, the parent company located in New York. Does not rely on the external manufacturer or distribution centres.

- If Milk Studios decide to switch suppliers, there would be a lot of options.

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Level of industry rivalry is very high.
Milk Makeup has a lot of existing competitors in the U.K. cosmetics industry as it is a highly competitive industry.

Direct competition to Milk Makeup is determined by brands who have elements of a similar value proposition to Milk Beauty.
Glossier:
"easy-to-apply", "constantly-on-the-go" , "Generation Z", "makeup minimalist"
RMS beauty:
"makeup minimalist", "clean beauty"
Charlotte Tilbury:
"multitasking products" "incorporating skincare with makeup"
Colourpop:
"freedom", "Generation Z"
Fenty Beauty:
"freedom, diversity, and inclusivity"

Indirect competition to Milk Makeup are brands that may not have elements of a similar proposition to Milk Beauty but meets the same need and demands of customers who are just looking for makeup in general.
These brands include:
Brands available in pharmacies (e.g. Boots and Superdrug) such as No.7, Rimmel London, Maybelline, Revlon
Brands available in department stores (e.g. John Lewis, House of Fraser, Liberty etc) such as Fenty Beauty, Benefit Cosmetics, Becca Cosmetics
Brands available through the internet such as Natasha Denona, Colourpop, Huda Beauty

Scope competition:
Milk Makeup has to compete with:
International:  Natasha Deneona, Colourpop, Huda Beauty, Glossier, Colourpop
Local beauty brands  : Rimmel London, Charlotte Tilbury, Illamasqua)
due to the existence of multi-brand beauty retailers both physical and online, including Boots, SpaceNK, Cult Beauty, Beauty Bay etc.

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The threat of new entrants is moderate.

- High capital requirement to produce cosmetics products.
- Government restricted policies: All cosmetics being sold in the U.K. must abide by the Cosmetic Products Enforcement Regulations 2013
- Access to suppliers and distributions
- Customer loyalty to established brands

BUT

- Entry barriers are lowering.
- Growing independent brands.
-  Growth of cruelty-free market (emerging markets) --> increasing market sector that has specific wants and needs that aren't fulfilled by existing brands.
Natural, clean, and sustainable beauty can get them (consumers) to switch.

- Establishing a network of branches as a barrier of entry is lowered by the Internet. Enabled firms to compete with lower set up costs. e.g. selling cosmetics on their website, using social media to promote their products, using social media influencers instead of paying for celebrities.

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Intense Competition
- The beauty industry is highly competitive,
- Major factors driving competition in the industry include product innovation and quality, pricing, and distribution channels.
- Some of the competitors of the company have greater financial, marketing and other resources, which enables them to pursue more vigorous marketing and expansion activities.

Counterfeits Goods Markets
- The huge influx of counterfeit products could affect the company's business operations.
- Penetration of counterfeit merchandise could lower the company's sales and affect its profit margins.
- Will affect brand reputation due to low quality.

Foreign Exchange Risks
As Milk Makeup is based in the U.S. and is selling to customers based in Canada and the U.K., it is exposed to foreign exchange rates fluctuation.
- Need to adjust the price of products so customers won't be put off by it but also make sure the company can cover their cost despite currency fluctuation.

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Industry:
Positive Outlooks for the global beauty industry
- Today the global beauty industry is a $532 billion business.
- "Most agree it will continue to advance at a 5%-to-7% compound-annual-growth-rate to reach or exceed $800 billion by 2025."
-  Won't be that affected by world economy due to “Lipstick Effect,” when times get tight, consumers will continue to indulge in prestige cosmetics – little luxuries that give them an emotional lift, while forgoing expenditures on higher-priced luxury goods.

Positive Outlook for E-Retail Industry in UK

Emergent need for "clean beauty"
- increase in demand for more clean, natural and organic personal care products
- When it comes to product features that attract beauty buyers to new brands, natural, clean and sustainable are what they are drawn to.

Growth of the U.K. ethnic population
- estimated that 16% of the UK population is from a nonwhite ethnic group
- the forecast that ethnic minorities will make up 1/3 of the UK population by 2050

Demographic trends: Multi-generational strategies
- Survey by Ipsos suggests that "influencer marketing" may not be that effective compared to the people consumers know and trust. They are more influential than paid influencers or traditional marketing and advertising methods.
- Points to the need for beauty brands to develop multi-generational strategies.

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Operational:
Geographic Concentration
- Milk Makeup is developed and produced solely in the U.S., which is a high dependence on a single country.
- This increases the risk of the business as it creates a strong reliance on the economic and geopolitical situation of the country.

Lack of Distribution Network
- Milk Makeup is only available in 3 countries so far,
the U.S., Canada and the U.K.
- Limited access to customers, unable to cater to customers as much as competitors Glossier or Charlotte Tilbury.
- Runs the risk of letting competitors establish dominance

Strong reliance on retailers
- Even though Milk Makeup sells its products through its online website in the US, it doesn't have any physical stores and relies on Sephora & Urban Outfitters as its official retailer.
- Its website (milkmakeup.com) does not ship to the U.K., so U.K. customers have to purchase their products through Cult Beauty (cultbeauty.co.uk).

Limited demographic target
- Milk Makeup's main demographic target is Generation Z 18-24 consumers, which means that it could be alienating a huge segment of older consumers.
- Because of its social-media centric marketing, it's limiting its exposure to older women who might most likely shop in department stores.
- This leaves a segment of the market untapped, with these women familiarising itself with competitor brands such as Charlotte Tilbury which frequents upscale department stores.

Controversy: Using drug culture to sell products
- Estée Laundry reposted a screenshot of Milk's dime baggies (symbolic for drugs like cocaine) on their Instagram, telling their followers, “You know what needs to drop? Using drugs to glamorize beauty products.” They subsequently called out other brands for #WeedWashing in the hashtags.
- It’s further problematic for Milk to use this type of imagery and to hype up their KUSH product as numerous people, specifically indigenous, black, or other racialized people, have been incarcerated for those exact baggies.

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Operational:
Business Model
- Products designed and produced internally at head office Milk Studios in New York. Not affiliated with any other beauty companies. This allows Milk Makeup to be able to ensure quality control over product manufacturing.
- Increased supply chain efficiency because Milk Makeup has control over the delivery of stock.
- Decreased costs because Milk Makeup can avoid incurring any price markups resulting from outsourced production from a third party.

Product innovation
- Product and packaging of Milk Makeup are engineered to adhere to the "easy-to-apply", "constantly-on-the-go" concept of the brand.
- For example, Packaging infused with antimicrobial silver so “It could be dropped on the bathroom floor and still stay safe and won’t discolour.”
- Products such as "Blur Stick", "Holographic Stick", and "Lip + Cheek" that come in a stick form, so easy to apply and no need for brushes. Lip + Cheek are also multipurpose and versatile products which adhere to the "on-the-go" concept.

Strong differentiation
- The lifestyle-focused brand image revolves around freedom, diversity, and inclusivity, allowing its users to express their personal brand and project their desired lifestyle or life principles.
- Integration of branding with emerging social movements such as "The Center for Pride"

- The products can be applied without any tools, do not require touch-ups, and come in wear-and-tear resistant packaging, catering to busy Millennials.
- Appeals to a certain segment of cosmetics customers - makeup minimalists.

Financial:
Sustained Financial Growth
-  "100% online sales growth since launching in 2016"

Technological:
Strong social media presence
- Unique and innovative products and line made it a "trend" on social media platforms such as YouTube and Instagram.
- Holographic stick got a huge bump in exposure and sales when YouTuber Jeffree Star featured it.
-  The beauty industry is number one when it comes to influencer marketing, according to a study.