Market Drivers and Trends - Coursework Example

TIET 1 ANALYSIS By (Student’s Name) Course Professor Institution Date Table of Contents 1. Introduction 3 1.1Market Drivers and Trends 3 1.2 Market Segments 3 1.3 Global Market Outlook 4 2.0 Survey Research 4 2.1 Review 5 2.1.1 Age Band 5 2.1.2 Monthly Expenditure 5 2.1.3 Confidence Rating 6 2.2 Survey Limitations and recommendations 6 3.0 Data Analysis 7 3.1 Analytics (IBM Cognos Insight) 7 3.1.1Income and products 7 3.1.2Age band and products 8 3.2 Analytics Using Sap Lumira 8 4.0 Recommendations 9 4.1 Market Entry 9 4.2 Marker Demand and Target segments 10 5.0 Conclusion 11 Bibliography 12 1. Introduction 1.1Market Drivers and Trends In the past decade physicians, pharmacists and nutritionists have come up with new applications to meet the demand and needs of the end consumer. The beauty, health and wellness industry has experienced significant growth because of increased consumer awareness. Apart from the awareness for natural products to enable them to lead healthier lifestyles, the other major factors driving growth in this industry are demand for anti-aging products and affluence in the general population (Anunciato & Filho, 2012). People across the globe are experiencing changes in lifestyles; there is an increase in sedentary behavior and less physical activities. For instance, obesity has become more prevalent in most European countries, with an estimated increase of about 10%- 40 % in the past decade (Mahabir & Pathak, 2010). 1.2 Market Segments Areas such as Europe, Asia Pacific, and North America in recent years have experienced growing trends. According to research the nutraceutical, Nutri cosmetic, and cosmeceutical, the market is growing more than 7% annually. Industry analysts have estimated that the global market worth is approximately US $ 129 billion, with a projected average annual growth rate of 4.9%. Analysts also expect that North America and Asia Pacific segments will have a market share of 39.2% and 30.4% respectively (Mahabir & Pathak, 2010). The disparity in market share within specific market segments such as Japan, Europe, and North America is due to differences in culture, economic climate, and legislation; as a result, each market segment has developed independently, and the industry players have customized solutions for each region (Barel et al., 2014). The table below depicts how the stakeholders within the industry have tackled each geographic area to enable them to maximize sales. Characteristics of Nutricosmetic Markets Japan Europe North America Application Form Liquids Tablets Tablets Distribution Channels Main Stream Channels Pharmacies Specialty Brands Unique to Japan Unique to Europe Unique to N. America Pricing Low Prices High Prices Moderate prices Benefits Skin & Beauty support Skin & Hair Skin Source: Handbook of Cosmetic Science and Technology, Fourth Edition 1.3 Global Market Outlook The aging population is increasing and by the year 2020, people over 60 years are expected to be more than one billion. A large proportion of those aged 60 years and above will be from the developed countries; this upsurge is expected to increase the global market worth to about US $ 250 billion (Mahabir & Pathak, 2010). Currently, the top markets for the three segments include Japan, China, United States, Italy, France, Germany and Spain. The emerging markets that have shown significant potential include India, Brazil, Turkey, Australia, New Zealand and the Middle East. These markets most of which are untapped have immense opportunities for significant growth. Manufactures within the industry are continuously engaging in product innovation to come up with solutions that for the different market segments. 2.0 Survey Research 2.1 Review 2.1.1 Age Band The study shows that majority of respondents are under thirty, comprising of 25% closely followed by those of aged between 30 and 40 years at 23%. Respondents aged between 60 and 70 years are the least in the three consumer segments. 2.1.2 Monthly Expenditure Expenditure patterns indicate that most of the consumers spend between $ 50 and $ 100 on any of the three segments. According to the study, very few customers spend more than $ 100 on a monthly basis. The clients who spend less than $50 bracket comprises of 27%; while the customers spending over $100 are 9%. 2.1.3 Confidence Rating The study also reveals consumer confidence on the expected results. Only 14.5% of the respondents gave the lowest rating of one while a majority (33.9%) gave the segments a 4-point rating. 2.2 Survey Limitations and recommendations Data in this survey was collected from regular customers, and therefore some consumers were locked out of the sampling frame. Target population and sampling frames are important because they affect the survey design and hence the nature of inference that can be extracted directly from the data collected (Groves, 2009). Surveys are critical in measuring the opinions and attitudes of existing and potential consumers. Therefore, studies should be conducted to measure the existing customers as well as the expectations of the potential clients. It is important to give all potential respondents an opportunity to respond to a survey since such data might significantly affect the results. Taking a broad perspective and ensuring the study is properly designed enables the results to have minimal coverage error. To mitigate coverage errors, surveyors should develop studies that employ multi-method sampling techniques. Using a variety of survey methods to conduct a study allows potential respondents to choose the most convenient method (Spitz et al., 2006). This approach increases the increases the survey response and eventually minimizes the error margins 3.0 Data Analysis 3.1 Analytics (IBM Cognos Insight) The data as viewed on IBM Cognos Insight enables us to make comparisons on various aspects or variables of the data. The data also shows which customer had the highest income per store under various age brackets. The following comparisons can be derived from the analytics software. 3.1.1Income and products $70,000-90,000 The graph shows that those people earning a net income of 70,000-90000$ are spending more on the said products across the states. They also have a high recommendation score of 688 and a confidence level of 3.52. This shows that as the income increases so is the urge to spend on the products. This analysis implies that the high-income earners highly recommend Nutri cosmetic compared to the other products. $50,000-70,000 The income earners within this income bracket, just as the highest income earners, recommend Nutri cosmetic over the other products. This income bracket least recommends nutraceutical. Less than $100,000 This income bracket highly recommends cosmeceutical. This implies that middle-class earners recommend this product compared to other products. This is also the case for those who earn less than $50,000. 3.1.2Age band and products Over 70 years This age bracket is confident that the Nutri cosmetic product is suitable for their consumption needs. It is also evident that this product is highly valued, and only those with the ability to pay are confident that it will fulfill their needs. 30-40 This age band prefers nutraceutical compared to the other products with a confidence rating of 3.62 although many in this bracket are confident that cosmeceutical can meet their consumption needs. The other age bands below the age of 30 recommended the cosmeceutical product and are more confident in it in fulfilling their monthly budgetary requirements. 3.2 Analytics Using Sap Lumira This software does not have much difference from the IBM Cognos although it has better analysis in the form of graphs and charts. It displays the high-income earners as preferring the Nutri cosmetic product compared to the other products. The low-income earners spend less as compared to high-income earners. According to this software, the high-income earners believe Nutri cosmetic can fulfill their needs. For instance, confidence rating by income, the age band of 50,000-70,000 has the highest percentage of confidence rating. This implies that this group has the highest belief in the given products in fulfilling their consumption needs. Generally, they have the highest level of trust in the products offered. This software gives a general comparison of the products as compared to IBM Cognos 4.0 Recommendations 4.1 Market Entry Marketing is a broad and dynamic field and is the engine driving the growth and successes of many organizations. The current volatile global market environment requires firms to embrace sound marketing strategies for them to grow. In today’s business environment companies need technological innovations for them to capture a broader client base. Companies intending to enter the beauty and health market in Australia should first focus on the fundamental concept of market orientation and understanding consumer behavior (Shankar & Carpenter, 2012). It is imperative for new market entrants to understand their competitors and competition. To gain competitive advantage, it is essential for a firm to undertake a competitor analysis. Therefore potential clients intending to enter the new industry should carry out a detailed competitor’s market analysis. It is only when an organization has a comprehensive analysis of the competition and customer; it can then focus its attention on underlying decisions relating to resource allocation, segmentation, and distribution. Market Types Type of Market No. of Manufactures/producers Kind of Competition Entry Barriers Special Characteristics Monopoly one none Entry not possible Only one firm Monopolistic Competition Many Non-price/price competition Easy entry Firms collude and behave as one firm Oligopoly Many Non-price competition. Difficult entry Many Perfect Competition A great many Price competition No barriers Many Source: managerial economics Dr. Khamlesh 4.2 Marker Demand and Target segments Data collected from the survey enables businesses to get more insight into understanding Nutri cosmetic, nutraceutical, and cosmeceutical market structure in Australia. The user generated content obtained by N-vision provides elaborate information on the market structure of all the three segments. According to the survey, cosmeceutical segment has a bigger market share attributable to consumers from the younger generations. This segment has a stronger brand loyalty since they make up the biggest portion of the consumer base. Furthermore, according to research, social media is greatly impacting consumer behavior; consumers continue to share their experiences on various products and their desires, (Euromonitor, 2016). It is, therefore, imperative for new market entrants to maximize the use of social media platforms to enable them build a strong following and eventually a firm client base. The top segments of the personal care industry are skin care, anti-aging, hair care and injectables. Research also shows that supermarkets and discounted pharmacies are playing a major role in increasing sales volume and enabling companies to grow their market shares. 5.0 Conclusion Global demand for personal care and beauty products has increased due as a result of urbanization and the availability of disposable income within the emerging markets. Competition within the industry and demand for high-quality products has boosted innovation in all the three product segments (nutraceutical, cosmeceutical and Nutri cosmetic). The emerging markets provide the best opportunities for companies to increase their market share and also strengthen their positions in the developed markets. Bibliography Anunciato, T. P., & Filho, P. A. (2012). Carotenoids and polyphenols in Nutri cosmetics, nutraceuticals, and cosmeceuticals. Journal of Cosmetic Dermatology, 11(1), 51-54. doi:10.1111/j.1473-2165.2011.00600.x Barel, A. O., Paye, M., & Maibach, H. I. (2014). Handbook of Cosmetic Science and Technology, Fourth Edition. London: CRC Press. Beauty and Personal Care in Australia. (2016.). Retrieved August 31, 2016, from http://www.euromonitor.com/ Jani, K., Dr., & Kakkad, R., Dr. (2012). Managerial Economics. Mahabir, S., & Pathak, Y. (2010). Nutraceuticals and health: Review of the human evidence. Taylor & Francis Group, Llc. Groves, R. M. (2009). Survey methodology. Oxford: Wiley-Blackwell. Shankar, V., & Carpenter, G. S. (2012). Handbook of marketing strategy. Cheltenham, UK: Edward Elgar Pub. Spitz, G., Niles, F. L., & Adler, T. J. (2006). Web-based survey techniques. Washington, D.C.: Transportation Research Board. Read More