The cosmetic and beauty industry is a competitive market with four classifications. Prestige counts as the department stores and specialty stores in which beauty products are sold. The Bay, Macy’s, Sephora and MAC fall under the prestige classification. Mass merchandisers are classified as broad.
This could be Costco and Sam’s Club. Avon and Mary Kay are classified as alternate and involve direct sales. The final classification is specialty. The Body Shop and Bath and Body Works fall into this category as well as specific products/product lines sold at spas and salons.
The industry made nearly $35 billion in 2010. The industry experienced a yearly growth of about 4% from the four years before. The growth of the market is expected to stay around the same until the year 2015. It is estimated that the value will grow to $42 billion.
External Influences on the Market
The obvious ongoing recession has led to many consumers trading down on some products and as a result they become accustomed to buying lower-priced products (Lennard, 2011). While drug store brands might not offer consumers the same benefits that high-end brands like M.A.C. can, they cost much less. High-end products can really take a bite out of your budget which can deter consumers from spending their money on our brand.
With a poor economy such as this one, people are finding ways to save their money. The reality is that drugstore brands do offer some great products and so there is an industry concern that consumer might continue these habits as financial pressures ease up in the future (Carrillo, 2007).
However, the market for cosmetics has fared better than other industries because consumers view these products as affordable luxuries. People are competing in a tough employment market and as a result they need to look their best to convey confidence in an image-conscious society (Carrillo, 2007). Many high -end brands take advantage of this opportunity as their products are often promoted by professional men and women.
The use of cosmetics has become more commonplace among men in today’s society. Although women continue to outnumber men, the male population is expected to grow at a somewhat faster rate (Denise Smith, 26 J). This can be used to our advantage as it would provide us with an opportunity to increase penetration of cosmetics and fragrances among the growing male consumer base.
An increasing population will also benefit the cosmetics industry (Denise Smith, 26 J). While an ageing population could prove to be unfavourable, teenagers and young adults are the most avid users of cosmetics and fragrances. This generation is also very brand-conscious, often with the disposable income and a pride in appearance making them more likely to pay more for premium-priced products that promise additional benefits.
Social trends change with time but it is important to keep up with these trends. Knowing what’s going on in the industry and in the market helps
brands so that profit can be maximized.
Now more than ever, there is a lot of money to be made in the cosmetics industry. Consumers are constantly searching for new products and to keep up with demand, companies are regularly introducing new products in the market. These products offer older women a chance to look younger while promising glamour to younger women (Lennard, 2011).
Magazines have huge beauty sections because advertisers pay a lot of money for glossy ads about numerous products. So while it cost’s companies little money to produce items, women and girls will are ready to pay huge amounts of cash to buy it.
Today, beauty goes hand in hand with youth so many women look for products that will reduce their aged appearance. Looking old is undesirable in today’s society (Lennard, 2011) . As a result, many companies in this industry offer products that reduce wrinkles, facial lines and spots. These are represented as occurrences that need to be treated as soon as possible.
Celebrities are used by many cosmetic companies to promote products because it gives their brand a lot of exposure. While many celebrities might not actually use these products, consumers truly believe these products will make them look as attractive as women seen in movies and on TV. Media has a growing influence over what is portrayed as beautiful in today’s society (Pitman, 2011).