Industry profile – cosmetics industry

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The Cosmetics Industry is divided into five segments; namely Skincare, Hair care, Make-up (color), Fragrance and Toiletries. All these segments are different but complementary and are therefore able to meet all customer beauty needs. The above beauty segments can also be further sub-divided into premium and mass production segments, according to the brand prestige, price and distribution channels used. Globally, the mass segment represents 72% of total sales and the premium segment represents 28%.

The United States, Japan and France account for the majority of the sales of premium cosmetics (Barbarous, 2011) Geographically, the Cosmetics Industry is divided into dominating (high global avenue) and peripheral (small global revenue) areas. Dominating geographic regions are North America, Latin America, Asia-Pacific and Western Europe. Since 2000, the cosmetics markets of Brazil, Russia, India and China (BRICE countries) have shown significant growth.

The beauty and personal care markets there have expanded and have thus contributed significantly to the growth of the global market on the whole. In 2010, the BRICE countries accounted for 21% of the global beauty industry and their share is set to increase to 25% of the total market value in 201 5 (Leonard 2011). Presently, most major international cosmetics manufacturers are focusing on expanding their presence in the Bricks. The BRICE countries are the main force within the emerging markets.

Other emerging markets, Mexico, Argentina, Indonesia, Thailand and Turkey have shown incremental growth of about SUDS billion (walker, 2012). The recession did not have equal impact on all markets, the emerging markets did not suffer much and during their recovery, China, India and Indonesia achieved more than 25% growth in sales in 2010. The recession influenced consumer behavior mainly in two ways; by increasing home consumption and treating cosmetics’ researchers as investments rather than indulgences (In-cosmetics, 2010).

In 2010, when spending on cosmetics products returned to the level from before the recession and exceeded it by 5%, a strong demand was recorded and caused the growth in beauty and personal care. Consumers started purchasing premium products and most luxury brands have shown growth. The global Beauty Industry MARKETING TRENDS Due to the recent growth of the Latin America market, cosmetics companies have shifted their focus to the mass market, particularly in the fragrance category.

Also, customers have realized that some mass market products can provide the same laity as their luxury counterparts, especially in the color cosmetics and skin care products, e. G. , nail polish and facial cleansing products. What is interesting is that despite the fact that sales growth is generated mostly by mass-produced products, innovations are most often introduced by brands in the premium sector, e. G. , Alpha Hydroxyl Acids are now included in most mass market skin care products.

Product Innovations Product innovation trends in the past five years are time-saving products and long- lasting products. The time-saving products are a response to the needs of today’s busy consumer. As a result, such products as quick-drying nail polish and multi- purpose preparations such as 3-in-l shower gel, facial wash and shaving foam or hybrid products for the face that incorporate skincare, sun protection and make-up elements are now on the market.

Long-lasting cosmetics have an excellent price- value ratio as they can be used more sporadically than conventional products, e. G.. , long lasting lipstick, quick-drying nail polishes, 24 hour moisturizer and 24 hour deodorant sprays. It is now common for customers to extend the time between professional skincare treatments to which manufacturers have responded to by ailing do-it-yourself products for home use, providing an alternative which helps people maintain the effects of professional treatments for a longer time than before (Leonard, 2011).

E-commerce Cosmetics sales over the internet have grown. In 2010, more than SAUDI billion worth of sales were online transactions. E-commerce outlets have expanded their range of products, websites and price comparison engines. These new players are putting pressure on traditional shopping in department stores, pharmacies and perfumeries. The decisive factor on on-line purchasing of cosmetics is price. The customer already knows what they want and they are satisfied with previous products purchased in the conventional manner.

As this technology is growing, the cosmetics industry is using the internet to interact with customers on a practical level through interactive social media such as faceable, blobs, websites and APS for smart phones (In-cosmetics, 2010) Organic Beauty Products Organic beauty products are natural cosmetics manufactured in accordance to the fair-trade philosophy. They emerged from a niche that was previously occupied by small companies and got incorporated into the mainstream market. These products are now distributed through standard channels such as supermarkets and department stores ( Leonard, 2011).

When introducing these new products, cosmetics manufacturers now emphasize that they were produced in a way that was not harmful to the environment whilst their effectiveness remained comparable to their previous versions. In some countries, changes in legislation has been put in place to make consumers more informed and appreciate their value more (Fall, 2008). Technology Cosmetics products are manufactured on the basis of increasingly advanced research, formulas and technologies. High-tech innovations happen in all product categories and all price segments.

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