Beauty Products Industry - Admission/Application Essay Example

BEAUTY PRODUCTS INDUSTRY The beauty product industry has experienced incredible growth in the recent years. Currently several markets have reached saturation point with fierce competition and tighter margins. Today’s generation consists of individuals willing to spend thousands of dollars to satisfy the growing consciousness of one’s image. The beauty industry is one of the most diverse industries; it includes cosmeceuticals, anti aging products, spa treatments, dermatologists and plastic surgeons etc. (Beauty Industry Trends) Further growth is expected in the ultra niche section of products, the usage of products containing plant acids, herbs, vitamins, botanical extracts and of late the inclusion of ingredients like chocolate and fruit extracts in beauty products. Anti ageing products with active ingredients have become very popular with individuals, who require the need to fight off signs of ageing due to sun damage, smoking, pollution and basically day to day stress. One of the fastest growing areas in beauty business remains to be cosmeceuticals; these products cannot be defined as cosmetics but they are not formulated or regulated as OTC/drug products, originally introduced as prestige skin care products they have increasingly crossed over into other areas like hair care , make up and the development of other multifunctional products. There has also been a considerable boom in teen products which roughly accounts for about 20% of the cosmetics and toiletries market. Other forms of products like natural/ organic, skin care and hair care have proved to be on the rise considering the environmental, ethical concerns and the general awareness. (Beauty Industry Trends) The internet is a fairly recent distribution channel that has entered the cosmetics industry. Considered once a medium that was dismissed since it was believed that consumers would never purchase cosmetics online, today it is one of the most powerful indicators of success among many of the major brands in the industry. There exists three different types of vertical markets in the industry namely mass market, prestige market and direct sales. These markets do exist online however none of them have created major dominance in e commerce as of yet... the mass market enjoys a wide distribution of its products in a chain of drug stores, grocery stores and mass merchandise stores like K-Mart of Wal-Mart, prestige products are available in high end retail stores like Macy’s or Bloomingdales and the final category is available through a direct sales force, all of these are being affected by the internet and e-commerce. Analysts claim that as more women are introduced to the eCommerce arena, their purchasing power and spending will be more than that of men. As per data in a study by CBD research and consulting, 23% of men then to spend more than $100 online per month while 47% of women tend to spend the same amount online. As per the study 29% of the female consumer range from ages 25 to 34, about 78 % of them have incomes of more than $75000 annually and 77 % of them are employed. (Marino Jennifer, 2000) Brands like Elizabeth Arden (elizabetharedn.com), Mary Kay (marykay.com), Avon (avon.com), Chanel (chanel.com), maybelline (maybelline.com), Olay (olay.com), nivea (niveausa.com), Neutrogena (Neutrogena.com), Mac, L’Oreal (loreal-paris.com), and Revlon (Revlon.com) etc are some of the popular brands that use the source of the internet for marketing of their products. Elizabeth Arden: The Company was founded in 1911 by Florence Nightingale Graham whom later came to be known as Elizabeth Arden. The company today is one of the biggest in the industry with their wide range of perfumes and its fine line of cosmetics that keeps earning awards even today. The company has changed hands twice after Elizabeth’s death, currently under the ownership of Unilever Plc which bought Elizabeth Arden in 1990. The company faced fierce competition , recession and tremendous lows in the period of ownership change, but today it is the second largest cosmetics industry the world over having a distribution network in almost every country, last years turnover being more that 2.25 billion dollars. Despite declining sales of their products, last years loss was $3.7 million as opposed to $3.81 as determine by the analysts. (Elizabeth Arden Co) Elizabeth Arden launched their website elizabetharden.com in June of 2000. The website is very easy to navigate and it takes an average of only three clicks to purchase items. Initially there were a few issues with the website for instance the issue of depicting of true color over the internet, but today it has advanced tremendously learning from their competitor’s mistakes, like almost every website in the retails industry Elizabeth Arden has made theirs very interactive and user friendly. This very appealing website boasts of free shipping and entices visitors to try their products. The virtual make over option available on the website attempts at breaking the interactive barrier between the customer and the company. The website offers a host of over 200 products and has exiting offers for every occasion like gift sets and free gifts over purchase. The website also offers a section devoted to products for men aiming skin care requirements and fragrances. The rich color and design of the website also plays a major in attracting and enticing the customer. (Marino Jennifer, 2000) Incorporating the 4p’s of marketing for elizabetarden.com has proved to be one of the most successful strategies in their marketing plan. The products offered cater to both men and women, make up, skin care and fragrances are the products offered online. All the products offered online are briefly explained so the customer gets an in-depth understanding of the product which might not be available at retail store outlets. The pricing is on par with those of other premium cosmetics and fragrance companies. The pricing is not very different in comparison with the products available in retail outlets to avoid misunderstanding and undercutting between retail distributors and the company; however there are offers online that might not be available at retail outlets. The company’s products are available in a host of retail outlets around the world, in their own exclusive stores and in more than 200 countries online (Elizabeth Arden Co). Consumers today are becoming fewer brands loyal owing to the wide variety of products available, a company like Elizabeth Arden needs to a lot of assistance in promoting their products online and in retails outlets, and they play horde to a number of celebrities in the entertainment industry even naming fragrances after them. A few of their brand ambassadors are Mariah Carey, Britney Spears, Catherine Zeta Jones, Elizabeth Taylor, Hillary Duff, Usher and Danielle Steel who play a major role in promoting their products. Celebrity fragrances have become the most sought after promotion trait in the industry today. (Elizabeth Arden Co). There are a few challenges that Elizabeth Arden faces with their online strategies one of them being the risk of purchasing on the internet, Arden offers free shipping along with select return policies for their products purchased online. The lack of being able to simulate actual color or smell also adds to the challenges, the site should also be easily accessible to every individual I.e. a user friendly site, so even a potential visitor becomes a buyer. (Marino Jennifer, 2000) Estee Lauder: This Company is currently the market leader and trend setter in the industry. It was founded in 1946 by Mrs. Estee Lauder and her husband. Today, it is one of leading makers, distributors and specialists in the field of upscale cosmetics, fragrances and hair care products. (Estee Lauder) Lancôme and Estee lauder own about 70% of the prestige cosmetics market. (Marino Jennifer, 2000) And Estee lauder group of companies together hold a market share of about 46 percent. The company showed slow progress initially due to market movements and recession but towards the fiscal year ending of June 1996 the company posted a profit of about $16.4 million on sales of $3.9 billion. The company acquired and added many smaller companies to its umbrella such as Aveda which the company into hair care and Donna Karan International Inc branching it into fragrances and other cosmetic products. Prior to these acquisitions, the company almost lost market share due to its exclusive focus on the department store channel but with its acquisition of brands like Mac and Bobbi brown essentials the company appeared to cater to the mass market and hair salon channels. (Estee Lauder) The company ranked 340th in the Fortune 500 with sales in excess of $6.476 billion, and net earnings totaling $ 324.6 million operating in more than 130 countries worldwide and an employee strength of over 22,000 employees. (Estee Lauder Companies) The company portrays its online presence through three other websites namely clinique.com, origins.com and Bobbi brown.com, apart from their main site esteelauder.com, of late they have also acquired many other brand websites under their name but these sub websites leave a lot to be desired, they are difficult to navigate not very interactive nor is it user friendly. As far as these websites go they definitely fall short of expectation. (Marino Jennifer, 2000) Esteelauder.com was launched officially in the year 2000, its internet marketing strategy helped the company cross the $ 5 billion mark in around five years. (Estee Lauder Companies) The product line varies from skin care products for women to fragrances for men and women. Their product line covers an entire range of beauty products and general skin wellness; this coupled with the high standard and quality of products makes them one of the most sought after brand in the industry. The pricing is on par with those of the premium segment products and are sold at the same price online as they are at premium stores and retail outlets. One of the best features available for any user on this website is the option to order and buy discontinued products. This option gives this web site a clear edge over all its competitors. The website also offers exclusive gift sets, free shipping and free gifts with purchases made online which may not be available in retail outlets. (The Estee Lauder Companies Inc). The site also offers many options which help in promotion thus leading to more traffic on their website, options like virtual makeovers, signature services, how-to videos, in store events etc are a boon to the promotional aspect of this website. The incorporation of names like Sharon Stone, Gwyneth Parlthrow, Aerin Launder and Elizabeth Hurley constitute to the brand building success of the company both online and offline. The company sponsors awareness’ campaigns like the breast cancer foundation, waste minimization, pollution prevention and also supports organizations like the American heart foundation and the make a wish foundation with regular updates on their website on these thus helping in promotion and fulfilling their moral responsibility towards society. (Estee Lauder) Mary Kay: Mary Kay like Elizabeth Arden also originated in the United States. The company was founded by Mary Kay Ash in 1963. Unlike Elizabeth Arden and Estee lauder, this company specializes in the distribution through direct sales of their products like skin creams, supplements, perfumes, dietary supplements, and other personal care items; it has a range of more than 180 products under its umbrella. The company markets its products through direct women distributors and not retail outlets, it saw a steep decline in the 1980’s when employment opportunities grew, this led to the number of sales consultants being cut into half and sales fell from $323 million to $263 million. Persistent Mary Kay surpassed $ 1 billion in retails sales in 1993, with over 250,000 consultants selling to over 20 million customers in 19 countries world wide. (Mary Kay Inc) In 2005 Mary Kay recorded nearly $2.2 billion and in 2008 $2.6 billion in wholesale alone. Currently the global headquarters are located in Dallas, Texas. (Mary Kay,) This company deals with direct sales representatives, a form of multilevel marketing, the two channels through which products can be bought are directly through independent distributors or the website marykay.com which connects you to a distributor within the locality. Their products range from skin care (men and women) and make up for women to fragrances for men and women. These entire products can be bought online through a consultant by entering an area specific pin code. This web site is a tool which can be utilized by independent distributors to help their individual business grow. The pricing of their products is almost the same in comparison with other premium companies in the retail segment; however they can be purchased at a discount if one becomes a distributor for the company. The negative aspects of this are the possibility of under cutting between the distributors and the unavailability of a distributor at that particular zip code making it impossible to buy the product. A distributor of the company also has the option of ‘hosting a party’ to market products, the website offers users the option to download the catalogue on a mobile device. As far as promotion is concerned the company employs over 1.8 billion the world over all of whom function as promoters of the product. The company also takes part in campaigns like being a responsible company, funding of refugees, domestic violence prevention programs and also have their own charitable trust. Marykay.com caters to almost 19 different countries and each of them has a local website which can be accessed from the main website. (Mary Kay) There are a set of challenges that every online marketing company faces. Some of the more important ones are the risk of buying over the internet. The lack of ability to touch, feel, smell or try a product before purchasing it... companies like Elizabeth Arden, Estee Lauder and Mary Kay try to minimize these challenges by offering free samples and generous return policies for products purchased online, free shipping and free gifts. The virtual make over option available in all of these sites helps in the absence of actually trying out the product before buying it. Products backed by high standards and company guarantees help in minimizing the risk of online purchasing. These companies also have to reassure the customer that their information will be kept safe and not misused. (Marino Jennifer, 2000) The future of the beauty and cosmetics industry on the internet sees websites becoming more interactive and personal, usage of cutting edge technology defining unique and clear navigation, application of delightful visual graphics to enhance more web traffic and increase and retain customers. There also exists great opportunities for boutique brands where in sales are restricted to a particular geographic location or limited distribution channels, the option of developing their products over the internet will erase any form of limited distribution thus helping to market themselves nationally or internationally. It is essential that every company updates their websites with the latest trends, designs and technology to keep up with high expectations of the customer. The beauty and cosmetics industry is one of the last industries to catch on the wave of e-commerce, however in the past few years it has grown by leaps and bounds (Marino Jennifer, 2000) Estee Lauder Net sales and Earning for the last 3 years and the net earning increased in 2008 because of internet marketing and home shopping networks EL Net Sales and Earnings ($mln) [1] Metric FY2009 Chg from FY2008 FY2008 Chg from FY2007 FY2007 Net Sales $7,323.8 (7%) $7,911 12.4% $7,037.5 ----Sales Breakdown by Products ------Skin Care $2,886.3 (3.7%) $2997 15% $2601 ------Make Up $2,830.9 (5.65%) $3000 11% $2713 ----Fragrance $1,150.9 (19.63%) $1432 9% $1309 ------Hair Care $402.4 (5.78%) $427 13% $377.1 ----Sales Breakdown by Regions ------The Americas $3,421.2 (7.82%) $3712 4% $3561 ------Europe, Middle East & Africa $2,661.2 (11.48%) $3007 21% $2493 ------Asia/Pacific $1,299.4 8.95% $1193 21% $983 Net Earnings $218.4 (54%) $473.8 5.5% $449.2 Estee Lauder Companies (EL) Estee Lauder Companies (EL) Literary References Beauty Industry Trends, retrieved 6th Feb 2010, from website http://www.girl.com.au/beauty-industry-trends.htm Elizabeth Arden Co, retrieved 5th Feb, 2010 from website http://www.fundinguniverse.com/company-histories/Elizabeth-Arden-Co-Company-History.html Estee Lauder, retrieved 4th Feb, 2010 from website http://www.esteelauder.com Estee Lauder Companies, retrieved 5th Feb, 2010 from website http://www.evancarmichael.com/Famous-Entrepreneurs/626/Estee-Lauder-Companies.html Estee Lauder Companies (EL), retrieved 5th Feb 2010 from website http://www.wikinvest.com/wiki/Estee_Lauder_Companies (EL) Mary Kay, retrieved 5th Feb 2010, from website http://www.marykay.com/ Mary Kay Inc, retrieved 4th Feb 2010, from website http://www.fundinguniverse.com/company-histories/Mary-Kay-Inc-Company-History.html Marino Jennifer (2000), Beauty on the web- Challenges and Opportunities of Marketing Cosmetics on the internet, retrieved 6th Feb 2010, from website http://www.allbusiness.com/marketing-advertising/segmentation-targeting/719395-1.html The Estee Lauder Companies Inc, retrieved 5th Feb 2010 from website http://www.fundinguniverse.com/company-histories/The-Esteacute;e-Lauder-Companies-Inc-Company-History.html Read More