Cosmetic Industry 411l3s

Chapter IV 4.1. Introduction The Indian cosmetic industry is characterized by highly competitive marketing strategies. It depends on ability to introduce rapidly innovative products into the market without endless delays. A strategic marketing plan helps a company to decide proper segmentation, targeting and positioning of the products. Developing a concise strategic marketing plan includes a clear vision of business, its goal and unique selling proposition [1]. 4.1.1. Deg strategic marketing plan  This chapter discusses strategic marketing analysis for cosmetic companies which may be helpful for entry, survival and growth for companies interested to enter into Indian cosmeceutical market. The chapter covers information about selected cosmeceutical brands in India. The information includes various aspects of marketing mix. The marketing strategy analysis may help  The marketing department of cosmetic companies that are planning to enter the Indian cosmeceutical market. It may help to understand the Indian cosmeceutical market with respect to existing competitors for their products.  The researchers who are interested in the Indian cosmeceutical market.  The outcome of this chapter will give a foundation to build a constructive suggestion to the cosmetic companies in their marketing strategies. 4.1.2. International cosmeceutical brands in Indian market International cosmeceutical brands in India constitute about 20% of the market. Thus penetration levels of international brands are still low, which may be due to high pricing of these brands. Women living in urban areas and falling in age range of 23-50 years is the target market for quality brands. Industry estimates suggest that there are close to ten million such women population in India which are target consumers for International cosmeceutical brands [2]. 4.1.3. Domestic cosmeceutical brands in Indian market Cosmeceutical brands manufactured and marketed by Indian companies offer an economic alternative to multinational brands to a large section of population. Most Indian cosmetic companies launch their products in smaller pack sizes to make them more affordable to the consumers. Most of the domestic cosmetic companies are giving tough competition to multinational cosmetic companies. This chapter includes following aspects to understand Indian cosmeceutical market. 90

Chapter IV  Porter’s five force model  SWOT analysis of cosmetic industry  Market competition in of 4P’s (Product, Price, Place and Promotion) of selected cosmeceutical brands. 4.1.4. Significance of porter five force model The Porter's five force method is a simple but powerful tool for understanding where power lies in a business condition. Porter explains that there are five forces that determine industry attractiveness and long run industry profitability. Five force analyses help to decide the long run business activity. This is useful, because it helps company to comprehend both the strength of current competitive situation, and the strength of a position considering moving into. With a clear understanding of where power lies, company can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. Conventionally, the tool is used to find whether new products, services or businesses have the potential to be profitable [3]. 4.1.5. Significance of SWOT Analysis SWOT analysis (Fig. 4.1) stands for strengths, weakness, opportunities and threats which are method of analysis for auditing an organization and its environment. SWOT analysis applies to all corporate level, all business which simplify in marketing plans. The SWOT analysis allows analyzing a company, their goals, business plans and decisions. It also simplifies reviewing the positives and negatives of the industry and the company itself.

INTERNAL Strength

Weakness

SWOT

Opportunity

Threats EXTERNAL

Figure 4.1. SWOT analysis. (Source: hrmadvice.com)

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Chapter IV Strengths and weakness are internal factors that create value or destroy value. They can include assets and human skills compared to its competitors. They can be measured using internal assessments or external benchmarks. Opportunities and threats are external factors that create value or destroy value. A company cannot control them. It includes demographic, economic, political, technical, social, legal factors. Any organization must try to create a fit with its external environment [4]. 4.1.6. Significance of 4P’s (marketing mix) While marketing the products, firm need to create a successful marketing mix [5]. 

The right product



Sold at the right price



In the right place and



Using the most suitable promotion.

To create the right marketing mix, businesses have to meet the following conditions: 

Product: The product has to have the right features with broader choice and should satisfy consumer needs- such as; it must look well and work well.



Price: The price must be right. The price of an item is clearly an important cause of the value of sales made. Price decides success of product in market.



Place: The goods must be in the right place at the right time. Making sure that the goods arrive when and where, as they are wanted is an important operation.



Promotion: Promotion is the business of communicating with customers. It will provide information that will help company in making a decision to buy a product or service. However, successful promotion increases sales, so that advertising and other costs are spread over a larger output.

4.2. Objective To analyze marketing strategy for cosmetic companies in India. To describe and analyze the Indian cosmeceutical brands and International cosmeceutical brands with focus on skin care products in of market competition (Product, Price, Promotion and Place) The high growth rate versus the tough competition in Indian cosmetic market leads to problem statement which is “How can cosmetic companies successfully plan a marketing strategy in India for its cosmeceutical skin care product line?” The skin care product

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Chapter IV category is chosen for marketing strategy analysis, since it has the highest volume in cosmetic and toiletries category. 4.3. Research methodology The strategic marketing was analyzed by applying three variables i.e. SWOT analysis, Porters’ five forces and 4p’s (marketing mix) (Figure 4.2).

Strategic marketing analysis

Porters’ five forces

SWOT analysis

4P’s (Marketing mix)

Product Price Promotion Place

Figure 4.2. Strategic marketing analysis. The information that was used for the strategic marketing analysis is from both primary and secondary sources. To study Porters five force model and SWOT analysis of cosmetic industry, secondary data were obtained from authentic websites, published literature in online, print journals, opinion articles, management articles and news items from the internet. To study 4P’s the information that was used in the competition analysis is from both primary and secondary sources. The primary data was collected from the field study. The field study provides information about the available products, price, promotion, and distribution channels of the existing competitors. The field study was carried out in the main supermarkets and trading malls of Manipal city-like Manipal stores, Supermarket, cosmetic shop, specialty store and various drug stores and from Udupi city- like More, Big Bazaar, Nilgiris, cosmetic shop, specialty store and various supermarkets. The information collected for the study was:

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Chapter IV  The type of skin care products like moisturizing, anti-acne, anti-aging, sun care and skin whitening.  The skin care products being sold in the supermarkets, shopping malls, cosmetic shop, specialty store and various drug stores  The price of the selected skin care products  The quantity of selected skin care product; and  The promotional method of the selected skin care products 4.3.1. Detail of the conducted field study The primary data was collected from field study. The secondary data was collected from the competitors’ websites and other reliable websites like Global Cosmetic Industry, Journal of Consumer Marketing, Wall Street Journal, Euromonitor, and Datamonitor. The collected information was analyzed in comparison. Table 4.1. Detail of the conducted field study Data

How to collect

How to analyze

List of existing competitors

Internet and market research paper

Comparison

Product

Field Study and official company website Comparison

Place

Field Study and official company website Comparison

Price

Field Study and official company website Comparison

Promotion

Field Study and official company website Comparison

4.4 Result and Discussion 4.4.1. Porter’s five forces There are five forces that influence the level of competition within a particular market. These forces were studied with the help of Michael E Porter theory. Michael E Porter a professor of Harvard Business School in 1979 developed a framework for the industry analysis and business. The theory determines the competitive intensity and attractiveness of a market called as Porter’s five forces (figure 4.3.). The Porter’s five forces include  The threat of substitute products  The threat of established rivals  The threat of new entrants  The bargaining power of suppliers  Bargaining powers of customers 94

Chapter IV

Buyer power: High

Substitutes and Complements Substitutes: Low Complements: High

Internal Rivalry High

Threat of entry: High

Supplier Power: Low to medium Figure 4.3 Porters five forces. [6]  The threat of established rivals The internal rivalry in cosmetic industry is very high. There is a presence of domestic players and International players in the market. The Indian cosmetic industry is marked by presence of few companies with global presence, which has the larger share of cosmetic market.  The threat of new entrants A new entry into this industry is not an easy trade. New entrants have to compete with large giant cosmetic companies. Most of the multinational companies invest good amount of capital for research and development and marketing expenditures. For new entrant a capital required for business is huge. The funds are required for investment in R&D, production, distribution and marketing which covers advertising cost which is crucial in this competitive industry. A major challenge for new entrants are advertising and positioning of product in the minds of consumers, as market is flooded with many national and international brands. Another issue is price sensitive market. The new entrants have had to work out innovative strategies to satisfy Indian preferences and budgets to establish a hold in the market. Many cosmetic companies launch their products in smaller pack sizes to make them more affordable. An opportunity for new entrant is to build a product under a synergy and collaboration with giant’s cosmetic companies.  The threat of substitute products In Porter’s theory threat of substitutes exists when a product’s demand is affected by the price change of substitute product. The consumers have a lot of brand choice as cosmetic market is flooded with many brands. Due to this demand, product becomes more elastic. So the treat of substitute is low. 95

Chapter IV  Buyer power Consumer buying power is very high. To retain consumers is very challenging task. In cosmetic industry consumers do not always stick to one brand of skincare or hair care because the switching costs are very low. This means that buyer power is high and demand for favorable prices. Brand awareness is more in urban India, but brand loyalty is less towards the products, whereas brand awareness is less in rural India and brand loyality is more.  Bargaining supplier power Buyer supplier power is moderate. Suppliers in cosmetic industries are fragmented. Suppliers in cosmetic industry are interlinked together. Suppliers are often are insignificant in scale compared to major cosmetic manufacturers. Chemical producers have wide variety of sources to earn revenues; they are not completely dependent on cosmetic manufacturers. Overall the role supplier in cosmetic industry is adequate. 4.4.2. SWOT analysis of overall cosmetic and toiletries industry [7] The overall SWOT analysis of cosmetic and toiletries industry is shown in (Table 4.2). Strength Cosmetic industry has emerged as one industry holding huge potential for further growth. It is contributing to the economic growth of country. If we look around we find that what existed 20 or 30 years ago in cosmetic industry has totally changed. Cosmetic industry is more mature. During three to four decades, from 1970 to 2010, the industry has gained a momentum. Its extensive development trend is expected to continue well into the coming years. Average time for breakthrough technology is 3-5 years and cost of creating and developing a breakthrough cosmetic technology is around US $2-3 million. Fast innovation and new retail concepts are keys to this booming industry. Most of the market leaders have the presence in major markets. Consumer spending has climbed up to 75% and expected to rise. Rising salaries and increasing disposable incomes will fuel market growth in future as well. Weakness Cosmetic Industry is bound to depression and declination. Product prices are invariable; prices of products keep on changing according to market trends. Indian consumers are price conscious and demand value for costly products. Promotion budget are getting bigger due to stiff competition. Moreover, industry is dominated by market leaders. Due to lack of distribution network, some international brands have less presence in the rural market.

96

Chapter IV Opportunities Aging baby-boomers, who have the high spending power, tend to spend more on beauty products. Emerging markets that have high economic growths i.e., Europe, Latin America, and Asia are replacing the matured and developed western markets. Future growth will depend on strategy to grow through Merger& Acquisition to increase global presence. Many reputed local brands in the market have their pulse on the local consumers. Threats China can be both opportunity and threat because it has the high ability to develop products and compete in global markets. The regulatory system is complex and not stringent compared to drugs most of the time new launched products are vulnerable to uncertainty of regulatory review. Some products face recall from the market. European union has already banned animal tested product so, alternative to animal tests would raise manufacturing costs in future. Recently there is growth in counterfeit goods in market. Due to intense competition companies has to make up on price. Market leaders dominate the cosmetic industry, so lot of pressure exit on smaller companies in of quality and price of products.

97

Chapter IV Table 4.2. SWOT analysis of cosmetic and toiletries industry Company Overall industry

Strengths

Weaknesses

Opportunities

Threats

 During three to four decades, from  The sales in the past  Aging baby-boomers, who have  China

can

1970 to 2010, the industry has

year are slow moving

high spending power, tend to

opportunity

gained a momentum

because

spend more on beauty products

because

 Its extensive development trend is

of

downed

 Emerging markets, that have

consumer spending

capability

be

both

and it

threat

has to

high develop

expected to continue well into the  Industry is bound to

high economic growths i.e.

products and compete in

following years to come

depression

Europe, Latin America, and

global markets

 Industry is more mature

declination

 Positive

revenue

growth  Product

and

prices

Asia are replacing the matured  Consumer

invariable

projections

and developed western markets

are

 Contributing to the economic

getting bigger  Industry dominated by

growth of country  Major cosmetic companies have

market leaders

health, environment



increases global presentation

may

Specializing

costs

in

niches,

raise

manufacturing

differentiating the product lines,  More intense regulations by and focusing on mass market segment.

global presence

on

 Strategy to grow through M&A  Alternative to animal tests

 Promotion budget are

 Innovated industry

concerns

FDA  New launched products are

 Increased per capita consumption

vulnerable to uncertainty of

 Robust

regulatory review

network

sales

and

distribution

 Growth in counterfeit goods  Stiff competition and price war.

98

Chapter IV 4.4.3. 4P’s: Product, Price, Place, Promotion (Marketing mix analysis) To understand the competition in the Indian cosmeceutical market for various brands, the product of main competitors were examined. 4.4.3.1. Product The international cosmeceutical brands of the main competitors of Procter & Gamble, Johnson and Johnson, L’Oreal, Estee Lauder and Unilever are listed in (Table 4.3). The Indian cosmeceutical brands of the main competitors of Himalaya herbal healthcare Ayur, Zydus Wellness, Lotus herbals and VLCC are listed in (Table 4.4). The high growth in cosmeceuticals market is mainly because of various companies trying to incorporate same attributes and features in their product. Further we noted that competitions in the skin care products are high. Product analysis of cosmeceutical brands are discussed below Among International cosmeceutical brands Less to moderate competition is observed in i.

Anti -acne products

Moderate to high competition is seen in i.

Moisturizing products

ii. Anti-aging products iii. Sun care products iv. Skin whitening products Among Indian cosmeceutical brands Less to moderate competition is for i.

Skin whitening products

ii. Anti-aging products Moderate to high competition is evident in i.

Moisturizing products

ii. Sun care products iii. Anti-acne products Analysis of International and Indian cosmeceutical brands indicated that low competition is observed in anti-acne product category and high competition is among sun care and moisturizing products. The remaining product comes under moderate competition. Cosmetic 99

Chapter IV companies can focus on untapped anti-acne category which is having less competition to cover larger market share. 4.4.3.2. Price The price analysis is tabulated in (Table 4.5). The more similarity in pricing strategy, cosmetic companies has the higher market competitiveness. Skin care products are categorized for analysis as Low price segment (45 to 200 INR) Numbers of available products are more in moisturizing, sun care and whitening categories, so intense competition observed in these categories. In anti-acne category only few products are available, so less competition is observed. No company is offering anti-aging products in low price range. Except Estee Lauder all major companies are following mass marketing. Moderate price segment (200 to 800 INR) More products are available in sun care and anti-aging categories but not as that of low price segment, so somewhat more competition in this category. In moisturizing, anti-acne and skin whitening categories very few products are available, so less competition in this category. High end price segment (800-5000 INR) Only two cosmetic companies are focused on this segment. They are L’Oreal and Estee Lauder, that too not in all categories. No product is available in anti-acne category, so less competition in this category. Where as in other categories products are available but not as that of low price segment, so moderate to low competition is seen in this category. Overall price analysis In India most of the cosmetic companies launch their products at low price. Some companies like L’Oreal are not only focusing on low price market but also focused on market and companies like Estee Lauder are mainly focusing on market. As India is price sensitive market, so companies should price their products accordingly.

100

Chapter IV Table 4.3. International cosmeceutical brands – Product analysis Skin care segments Moisturizers

Anti-acne

Anti –aging

P&G

J&J

1. Olay Moisturizing Lotion 2. Olay Moisturizing Cream -

1.Olay Total Effects

1. Neutrogena Oil free Moisturizer 2. Clean and Clear Skin Balancing Moisturizer Oil-free Lotion 1. Neutrogena Oil free Acne wash 2. Clean & Clear Blackhead Clearing daily Scrub 3. Clean & Clear Acne Clearing Moisturizer 1.Neutrogena Age Shield

2. Olay Age Protect Cream

Sun care

1. Olay Natural White UV Blocker

1.Neutrogena Ultra Sheer Dry Touch Sunblock

Company name L’Oreal Estee Lauder

Unilever

1. Garnier Light Moisturizer 2. Garnier Men Power Light Oil control fairness Moisturizer 1.Garnier Pimple control Pen

1.Estee Lauder Hydrationist Maximum Moisture Lotion -

1.L'Oreal Solar Expertise Anti-Ageing Suncare Collagen Protector SPF30 2.L’Oreal Paris Revitalift (day, eye, night cream)

1. Estee Lauder Time Zone Line & Wrinkle Reducing Crème SPF 15

3.Garnier Wrinkle Lift Antiageing Cream 1.L’Oreal Sun Care - Body Solar Expertise Sensitive Lotion SPF30 2. L’Oreal Solar Expertise Advanced Sun Protection Lotion SPF10

1. Vaseline Light Moisturizing Lotion 2. Lakme Fruit Moisture Honey & Avocado Winter Perfect Day Crème -

-

1.Ponds Age Miracle cream

2. Estee Lauder Optimizer AntiWrinkle / Lifting Boosting Lotion

1. Estee Lauder - Sun Care - Body Bronze Goddess Golden Perfection Self-Tanning Spray For Body 3.Estee Lauder - Sun Care - Body Bronze Goddess Self Tan Golden Perfection Self-Tanning Milk For Body 4. Estee Lauder - Sun Care - Body Bronze Goddess Golden Perfection Tinted Self-Tanning Gel For Body

1. Lakme Sun Expert SPF 24pa++

…Continued to next page

101

Chapter IV …Continued from previous page Skin Whitening

1.Olay Natural White Day Cream

1.Neutrogena Fine Fairness Lotion, SPF 30

1.L'Oreal Pearl Perfect Relighting Whitening Facial Foam

2.Olay Natural White Healthy Fairness Day Cream

1. Estee Lauder - Cyber White Night Care Cyber White Extra Intensive Spot Corrector

1. Ponds White Beauty Daily Spot-Less Lightening Cream

2. Estee Lauder - Cyber White Cleanser Cyber White Extra Intensive Purifying Treatment

Table 4.4. Indian cosmeceutical brands – Product analysis Company name Skin care segments Moisturizers

Himalaya herbal health care

Ayur

Zydus Wellness

1. Himalaya Face

1.Ayur Moisturizer

1. EverYuth Skin

Moisturizing Lotion

Lotus herbals

Essential Moisturizing

VLCC -

-

Lotion

Anti-acne Anti –aging

Sun care

1. Himalaya Acne-N-

-

1. EverYuth Acne

Pimple Cream

1. Lotus Herbals Acne Gel

-

Control Gel

1. Himalaya Anti-

1.AyurAnti

Wrinkle

1.EverYuth Age Defense

-

wrinkle Cream

Gel

Anti-aging Cream

1. Himalaya Sun screen

1. Ayur Sun screen

1.EverYuth Daily Sun

1.Lotus

Lotion

SPF30

block crème SPF30

Lightening Anti-Tan Sun block SPF-30

Herbals

-

SAFE

SUN™

Skin

1. VLCC Hydrophobic Sun Block Lotion SPF 50

Skin

1.Himalaya Fairness Cream

Whitening

-

-

1.

Lotus Herbals

White

Glow Skin

-

Whitening & Brightening Micro-Emulsion SPF-25

102

Chapter IV Table 4.5. Price Analysis: The price of each product is calculated for 50gm and 50ml respectively. [8] [9] Price Range

Skin care segments Moisturizing Products 1.Olay Moisturizing Lotion (158 INR/50g)

2.Olay Moisturizing Cream (199 INR/50g) 3.Clean and Clear skin balancing moisturizer oil-free lotion. 4. Clean and Clear skin balancing moisturizer oil-free lotion (40 INR/50ml) 5.Vaseline Light Moisturizing Lotion (70 INR/50ml) Low Price (45-200 INR)

6.Lakme Fruit Moisture Honey & Avocado Winter Perfect Day Crème (60 INR/50ml) 7. Himalaya Face moisturizing lotion (20 INR/50ml). 8.Ayur Moisturizer (25 INR/50ml) 9.EverYuth Skin essential moisturizing lotion (42 INR/50g) 10. Garnier light moisturizer (175 INR/50 g) 11.Garnier men power light oil control fairness moisturizer (150 INR/ 50g)

Anti-acne Products 1.Himalaya Pimple Cream (112 INR/50g)

Acne-N-

2.EverYuth Acne control gel (75 INR/50g) 3. Lotus Herbals Acne Gel (90 INR /50g) 4. Neutrogena Oil free acne wash (98 INR/50ml). 5.Clean & Clear blackhead clearing daily scrub (60 INR/50g) 6.Clean & Clear acne clearing moisturizer (110 INR/50ml)

Anti-aging Product

Sun care Products

Skin whitening Products

-

1.L’Oreal Solar Expertise 1. Advanced Sun Protection Lotion SPF10 (107 INR/ 50ml) 2.

1.L’Oreal Pearl Perfect Relighting Whitening Facial Foam (162 INR/ 50g)

2.Lakme Sun Expert SPF 24pa++ (95 INR/55ml) 3.Himalaya Sun screen lotion (95 INR/50ml)

2.Ponds White Beauty Daily Spot-Less Lightening Cream (144 INR/50g) 3. Himalaya Fairness cream (55 INR/50g)

4.Ayur Sun screen SPF 30 (55 INR/50ml)

5.EverYuth Daily sun block crème SPF30 (90 INR/50g) 6.Lotus Herbals SAFE SUN skin lightening anti-tan sun block SPF 30 (170 INR/50g) 7. VLCC Hydrophobic Sun Block lotion SPF 50 (138 INR/50g).

…Continued to next page 103

Chapter IV …Continued from previous page 1.Neutrogena moisturizer (250 INR/50ml)

Oil

free

1.Garnier pimple control pen (490 INR/50g)

1. Neutrogena Age shield (233 INR/50ml) 2.L'Oreal Solar Expertise AntiAgeing Sun care Collagen Protector SPF30 (255 INR/50ml) 3.Olay Total Effects (262 INR/50g) 4. Olay age protect cream (630INR/50ml)

5.Garnier Wrinkle Lift Antiageing Cream (305 INR /50g) Medium Price (200-800 INR)

6.Himalaya cream (380 INR/50g)

Anti-wrinkle

7.Ponds Age Miracle cream (595 INR/50g)

1.Olay Natural White UV Blocker ( 299 INR/50ml)

1.Olay natural white day Cream (225 INR/50g)

2.Neutrogena Ultra Sheer Dry Touch Sunblock (255 INR/50ml) 3.L'oreal Sun Care - Body Solar Expertise Sensitive Lotion SPF 30 (255 INR/ 50ml) 4.Estee Lauder - Sun Care Body Bronze Goddess Golden Perfection SelfTanning Spray For Body (568 INR/ 50ml) 5.Sun Care Body Bronze Goddess After-Sun Decadent Moisture Tan Enhancer For Body (538 INR /50ml) 6.Sun Care Body Bronze Goddess Golden Perfection Tinted SelfTanning Gel For Body (568 INR/ 50ml)

2.Olay natural white healthy fairness day cream (270 INR/50g) 3.Neutrogena fine fairness Lotion (250 INR/50ml)

4.Lotus Herbals WHITEGLOW™ Skin Whitening & Brightening Micro-Emulsion (225 INR/40ml)

8. Estee Lauder Optimizer Anti-Wrinkle / Lifting Boosting Lotion (633 INR/50ml) 9.Ayur Anti-wrinkle gel (668 INR/50ml) 10.EverYuth Age defense antiaging cream (672 INR/50 g)

…Continued to next page 104

Chapter IV …Continued from previous page High End Price (800-5000 INR)

1.Estee Lauder Hydrationist Maximum Moisture Lotion (4,680 INR/50ml)

1.L’Oreal Paris Revitalift (day, eye, night cream) (1667 INR/50ml)

2. Estee Lauder Time Zone Line & Wrinkle Reducing Crème SPF 15 (3433 INR/ 50ml)

1. Sun Care - Body Bronze Goddess Self Tan Golden Perfection SelfTanning Milk For Body (1,750 INR/50ml)

1.Estee Lauder -Cyber White - Night Care Cyber White Extra Intensive Spot Corrector (8,160 INR /50ml) 2.Estee Lauder -Cyber White - Cleanser Cyber White Extra Intensive Purifying Treatment (1650 INR/50ml).

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Chapter IV

4.4.3.3. Place (Distribution) analysis Table 4.6. Place (Distribution) analysis

Cosmetic Himalaya

companies P&G

J&J

L’Oreal

Estee Lauder

Unilever

herbal

Ayur

Zydus

Lotus

Wellness herbals

VLCC

healthcare

Place

Cosmetic shop







×













Shopping mall







×













Specialty store

×

×





×





×

×

×

Drug store







×













 Available × None Distribution channels adapted by cosmetic companies are illustrated in (Table 4.6). More the cosmetic companies use the same distribution channel, the higher the competition in the market. The competition between Unilever, P&G, Johnson & Johnson, L’Oreal, Himalaya herbal healthcare, Ayur , Zydus Wellness, Lotus herbals and VLCC is high because they adapt the same distribution channels. Their products are available in cosmetic shops, shopping malls and drug stores. L’Oreal and Estee Lauder sell most of their products only through specialty stores. Low price skin care products from Unilever, P&G, Johnson & Johnson, Lotus herbals, Himalaya healthcare, Ayur, Zydus Wellness and VLCC use the same distribution channels. The higher range skin care products from L’Oreal and Estee Lauder are sold through specialty store. As a result, the competition in case of distribution is high in all skin care products with all price range. Indian cosmetic firms such as Himalaya herbal healthcare and Ayur are competent enough with all multinational cosmetic firms because they have adapted all sorts of distribution channels.

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Chapter IV 4.4.3.4. Promotion mix analysis Table 4.7. Promotion mix Analysis Cosmetic companies P&G J & J L’Oreal

Technique of promotion Television

Estee Unilever Lauder

Himalaya Zydus Lotus herbal Ayur VLCC wellness herbals healthcare

   

 

×



 

 

  





 



×





×

×

×

×

Publicity

 



×





×



×

×

Marketing Personal

 









 





 









 





 



×



×

×

×

×

Advertising Magazines Gift

Sales

promotions promotion Event sponsoring

team Websites

Funding



selling Indirect selling Social responsibility

Apply

×

×

×

×

× None

Various methods of product promotion adapted by cosmetic companies are illustrated in (Table 4.7). All cosmetic companies promote or their products through special magazines and through websites. For magazine ment, Unilever, P&G and Johnson & Johnson widely. For television ment, Unilever leads whereas P&G comes next. Companies like Ayur, Lotus herbals and VLCC prefer special magazines compared to television ment. However, Estee Lauder s to a lesser extent on the television and through magazines, so as to retain the exclusive image of the product since they are high-end brands. Other cosmetic companies like Johnson & Johnson, Zydus Wellness, VLCC, Lotus herbals, and Estee Lauder promote their products by giving special discounts or complementary product on special occasions, to encourage the customers to buy more products. To create a good reputation in the society companies like Unilever, P&G, J&J, L’Oreal and Himalaya herbal healthcare organizes social events and provide financial assistance for research work. The companies selling low price skin care product uses similar promotional channel such as television, magazines, gift, event sponsoring and website, while medium to high price skin care products are d through magazines, gifts and websites. The competition is considered high due to similarity in promotion strategy in low price and high price products.

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Chapter IV Both Indian cosmetic companies and multinational cosmetic companies use similar promotion strategy to promote their cosmeceutical brands. 4.5. Conclusion The usage of skin care cosmeceutical product has increased over time in India. The high growth of cosmetic industry is lucrative. Nevertheless, due to the high growth in cosmetic industry of India, many cosmetic companies have already invested a huge sum of money to promote their products. As a result, companies interested to enter cosmeceutical market may face a high competition. A strong brand promotional campaign, constant product innovation and quality improvement, and the ability to provide a variety of quality and economical products are some of the major reasons for the success in the Indian cosmeceutical market. 4.6. Recommendations As far as skin care cosmeceutical market is concerned it is very competitive and enjoys the existence of many large domestic as well as international brands. The market research and analysis conducted on cosmeceutical skin care brands have drawn attention to various aspects like As mentioned in the analysis part, the segments worth entering are i. Low price anti-acne products, skin whitening products and anti-aging products. ii. Medium price skin whitening and moisturizing products. iii. High price anti-acne products. The strategic marketing plan for a cosmetic company desiring to enter Indian cosmeceutical market is discussed below. This plan focuses on marketing mix (product, price, place, promotion) Product The key to success is to find the product that really matter to consumers. From the findings, the desired benefits are anti-acne, skin whitening and anti-aging products. Therefore, the cosmetic companies should emphasize on these categories. The Indian market is becoming increasingly sophisticated, with increasing consumer interest in skin whitening formulations. This segment s for 60% total skin care market. Another important potential segment is anti-aging products, according to market analysts; the anti-ageing market in India is estimated at Rs 3,000 crore. The cosmetic company can trap these potential segments in future. Furthermore, to differentiate product from the competitors, the company should find the special ingredients or technology that is unique.

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Chapter IV According to market trend natural ingredients are preferred more among Indian consumer since it is believed to have low side effect. Price Most cosmeceuticals are highly priced and hence the tag of exotic commodity remains despite of awareness. The target customers still remain the urban elite for cosmeceutical products in India. More products are available in sun care and anti-aging categories but not as that of low price segment, so somewhat more competition in this category, where as in moisturizing, anti- acne and skin whitening categories very few numbers of products are available, so less competition in this category, the company should target the young consumers since they prefer low price products. Low competition is seen in anti acne products and high competition is seen in sun care products and moisturizing products. And remaining categories comes under moderate competition. So the companies can focus on anti-acne category in all price segments and on anti-aging products in low price segment which is having less competition. Moreover, India is a very price sensitive market. Cosmetics and personal care product companies, especially the new entrants, have to create innovative strategies to satisfy Indian preferences and budgets to establish a hold in the market. For example, given the pricesensitivity of Indian consumers, many cosmetic and toiletries companies launched their products in smaller pack sizes to make them more affordable. Small pack sizes have proved to be very popular in the Indian market as the concept offers lower purchase costs and the opportunity to try new products. Place The place to sell cosmeceutical products should be easily reached by the consumers. The companies should have the good distribution network. The low price and medium price products should be easily available and distributed through mass retail channels, shopping malls and supermarket. Moreover, high-price skin care product should be distributed through luxurious professional stores. It is because the consumers would associate the image of the cosmetic store to quality and safety of the products available. Promotion To establish a long lasting potential of brand, companies have to spread awareness through aggressive marketing strategies with focus on continuous product promotion. Frequency of the ments should be increased in the television and print media so as to increase the 109

Chapter IV ment recall. The cosmetic companies should emphasize on gift promotion since it is one best way to introduce new cosmeceutical product in the market. Trial packs and free samples of all the products of the complete range should be introduced so as to facilitate the first-time s. Moreover, cosmetic companies with high priced cosmeceutical products should focus more on marketing and sales team to persuade the consumers about product benefits. Tie-ups with beauty parlors to organize exhibition and competitions for the target audience could be a pleasing promotional scheme. Hence, cosmetic companies can successfully enter Indian cosmeceutical market by applying the competitor-oriented marketing strategy that suits Indian consumers taste and fashion.

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Chapter IV 4.7. References 1. When to Develop a strategic marketing plan.[cited 2011 June 5]. Available from: http://www.ehow.com/way_5831241_develop-strategic-marketing-plan_.html 2. Status of International cosmeceutical brands in Indian cosmetic market. [cited 2011June 5].Available from: http://www.naukrihub.com/india/fmcg/overview/cosmetics-toiletries/ 3. Porter’s five forces assessing the Balance of Power in a Business Situation. [cited 2010 December 15]. Available from: http://www.mindtools.com/pages/article/newTMC_08.htm 4. What is SWOT analysis? Description.[cited 2011 June 5]. Available from: http://www.12manage.com/methods_swot_analysis.html 5. Marketing mix. Product, Price, Place, Promotion. The 4ps of Marketing. [cited 2011 June 6]. Available from: http://drypen.in/marketing/marketing-mix-productprice-placepromotion-the-4ps-of-marketing.html 6. Cosmetic industry. [cited 2010 October 25]. Available from: http://www.bignerds.com/ papers/15575/Cosmetics-Industry-5-Forces/Cosmetics Industry 7. Cosmetics SWOT Analysis.[cited 2011 September 15].Available http://www.wikiswot.com/SWOT/4__Generated/cosmetics.html

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8. India’s Cosmetic Market Ready for Big Leap. [cited 2011 June 15]. Available from: http://www.gcimagazine.com/marketstrends/regions/bric/30806969.html?page=2 price range 9. Nguyen HM, Serene S. Cosmetic market in Vietnam [dissertation] Malardalen University; 2008.

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