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consumers from every other part of the world. This means that the
Indian cosmetic industry has
an even greater potential for growth than it is presently experiencing
and it is highly fragmented
and
concentrated in the Tier
I cities only. Hence it is very essential that the products should
reach to the other cities as well as in rural area. Here the marketing
plays an important role. The
companies need to understand the expectations of prospects.
This requires a thorough
understanding of consumer behavior and buying motives.
Consumer behavior is the behavior
that consumers display in searching for, purchasing, using and
evaluating products, services &
ideas which they expect will satisfy their nee
ds.
Consumer behavior encompasses a vast area including
consumption pattern, consumer
preferences, consumer motivation, and consumer buying process &
shopping behavior. The
purchase decision is influenced by various factors such as social,
cultural, demo
graphic,
personal, economic etc. So for effective marketing, the marketer
must know the basis of
decisions taken by customers.
INDUSTRY PROFILE
An ORG- study reveals that while most FMCG products were affected by the general slowdown,
this segment witnessed relatively good growth in volume and value 2001. Not only have more
people started using cosmetics, they are also willing to pay more to look and feel good. The
penetration rate is higher in the skin- care segment compared to lipsticks. While volume growth
has remained low, at 3 percent, in the case of lipsticks, much of the value growth has come from
price rises.
This not only means that consumers are willing to spend the extra bit to look and feel good, but
also indicates the constant up gradation from mass to premium products. Though mass products
still constitute a major portion of the market, a certain segment is obviously ready to upgrade to
the next category as disposable incomes rise. Increased media exposure, the willingness to
spend more on personal care, consciousness about looks, and advertisements and promotions
targeting various consumer segments are some reasons for these trends in consumption and
penetration. The growth trends definitely send positive signals about the industry prospects.
With numerous players fighting for market share, is the industry really big enough and the
growth high enough o accommodate all the players? What makes a player tick and create a
niche for itself in the market? These questions need to be pondered upon before jumping to
conclusions about the industry's prospects. Though most players see huge opportunity in this
industry, what would actually work wonders for the players is strong brand promotion, good
distribution network, constant innovation and quality improvement, the ability to provide a variety
of products and introduce affordable products without compromising on quality. Cosmetics are still
seen as elitist products and may be the last thing on an Average Indian consumer's mind. Though
the low penetration levels for most cosmetic products suggest much potential, the market for
cosmetic products May remain a niche market, accessed by a small proportion of the
consumers. Despite the tall claims, the actual growth prospects would be limited to this Extent.
From the investment perspective, though many big listed companies have a presence in the
various sub-segments of the industry; HUL is the only listed company that has a visible
presence across all segments. Being a diversified large company, the turnover from this
segment may be too small for HUL to affect investment decisions. As to the recent entrants
such as Dabur and Dr. Morepen, it may be a while before their financials reflect the dynamics
of this industry. The other listed players are Emami and J.L. Morison (India). Despite their
good financial track records, investing in these stocks may be highly risky for a retail investor as
low traded volumes and equity base characterize the stocks.
COSMETICS
The cosmetic segment primarily comprises of colour cosmetics (Face, eye, lip and Nail care
products), perfumes, talcum powder and deodorants. All these are very Small segments.
Talcum powder is the most popular cosmetic product in India.
This market is estimated at Rs.3.5 bn and is yet growing at 10-12% in pa. Awareness is very
high at 80% with a penetration of 45.4% in urban areas and 25.2% in rural areas. Pond's
dominates the talcum market with a 70% share Following by Johnson & Johnson, which has
a 15% market share.
Attar and alcoholic perfumes each account for 50% of the fragrance market estimated at Rs. 3
bn. In the alcoholic perfumes market, 1/3rd represented be an Unorganized, with the balance
largely imported. The June 98 budget halved duties to 50R Lakme has a minor presence in the
segment. Perception of damage to skin on.
Account of chemical ingredients restricts usage of face care products. The nail Polish market is
the largest at Rs.25-30%. Deodorants have a very negligible Presence in the Indian market an
estimated of Rs. 0.3 bn. Worldwide, deodorants is The largest market followed by skin care,
shampoos and toothpaste. HUL has Launched a couple of products in this segment. Unorganized,
with the balance largely Imported. The June 98budget halved duties to 50R Lakme ha a minor
presence in the segment. Perception of damage to skin on account of chemical ingredients
restricts. The nail polish market is the largest at Rs.25-30%. Deodorants have a very negligible
Presence in the Indian market an estimated of Rs. 0.3 bn. Worldwide, deodorants is the Largest
market followed by skin care, shampoos and toothpaste. HUL has launched a Couple of products
in this segment.
MARKET SEGMENTATION
The Indian market can be segmented in terms of product category and price. Again oral care,
hair care shampoos & oils, skin care, soaps and distribution Network may divide the product
categories.
ORAL CARE
The oral care market can be segregated into toothpaste (60%), toothpowder (23%) and
toothbrushes (17%). While 60% of toothpaste is sold on the family Platform, around 35% is
sold on cosmetic propositions. On the other hand, while toothpowder accounts for 52% of the
market, red toothpowder accounts for 40% and black toothpowder accounts 8%. The
penetration levels of Toothpaste/powder in urban areas 3 X that in the rural areas. Traditionally
materials such as neem and Tobacoo are popular for cleaning in the rural areas; Frequency of
usage for toothpaste is only 1.5 times among other consumers, compared with 2 times in the
developed world.
Given the low per capita consumption and penetration rates, toothpaste demand is mainly being
driven by the overall market growth of 8-10.The rural segment is also tooth powder growth.
HAIRCARE OILS
The hair oil market is huge, valued at Rs.6 bn. Due to the varied consumption habits of
consumers across the country, where coconut oil and edible oil are interchange used, the size of
the market is likely to be higher than estimated. More importantly, the market is growing at an
impressive 6-7% in volume terms despite the high penetration level . Usage of hair oil is a typical
Indian habit with 50% of the population out of which some perceive that massaging the head
with hair oil has a cooling impact. The penetration of hair oil is fairly high at around 87% and
evenly distribute among the urban and rural areas.
HAIR CARE SHAMPOOS
The shampoo market in India is valued at Rs.4.5 bn with the penetration level at 13% only. The
market is expected to increase due to lower duties and aggressive Marketing by players
Shampoo is also available in a sachet, which is affordable and makes up to 40% of the total
shampoo sale.
The Indian shampoo market is characterized by a twin benefit platform; cosmetic and
antidandruff. It is basically an upper middle class product, as more than 50% of the consumers use
ordinary toilet soap for washing hair. While the awareness level is high, the penetration level is
very low even in the metros, which is only 30%. Urban markets account for 80% of the total
shampoomarket the penetration level is rapidly increasing due to decline in excise duty, which
was 120% in 1993 to 30% currently?
SKINCARE
The skin care market is at a very nascent stage with basic requirements of the Consumers
being protecting the skin from cold and dryness in winter, and improving Fairness of the skin .
Most of the product categories are niche segments. While the awareness rate is high in both
urban areas and rural areas accounting for 30% the penetration level is low for both. This is
because of apprehensions that usage of skin care products may benefit in the long run due to
the chemical contents. Many households prefer to use traditional and natural home made
products.
Since the market is at a very nascent stage with very low penetration levels, the growth rates
are expected to be higher at 24-255 over the next five years. New players such as Avon and
Oriflamme have entered the market with the natural ingredient benefit platform, which could
further spur growth.
SOAPS
The product categories can be classified into three segments; premium (Lux, Dove) Popular
(Nirma, Cinthol), and economy (Nirma Bath, Lifebuoy). The price differential between the
premium and economy segments is about 2X. The popular and economy segments account for
about 4/5ths of the entire market for soaps Penetration of toilet soaps is high at 88.6%.
However per capita consumption levels remain low India's per capita consumption of soap at
460 gms per annum is lower than that of Brazil at 1,100 gms per annum.
DISTRIBUTION NETWORK:
Soaps are available in 5 ml retail outlets in India, 3.75 m of which are in the rural areas.
Therefore availability of these products is not a problem 75% of India's population is in the rural
areas; hence about 50% of the soaps are sold in the rural markets.
PRICE SEMENTATION
Price is common basis for segmenting the cosmetics market. The market Segments formed
accordingly now describe:
POPULAR SEGMENT
The sector is divided into two distinct segments-the premium segment catering mostly to urban
higher/upper middle class and the popular segment with prices as low as 25%-30% of the
premium segment, catering to mass segments in urban and rural markets. The premium
segment is less price sensitive and more brands conscious.
ECONONY SEGMENT
India's rural markets have been a lot of activity in the last few years. Since penetration levels are
pretty high in most categories, future growth can come only deeper rural penetration. FMCG
majors are aggressively looking at rural India since it accounts for 70% of the total Indian
households.
GROWTH
High consumer awareness and penetration levels will enable the market to grow at an average
8-10% per annum with slightly higher growth in the rural areas. Higher penetration stems from
popularity of low-cost detergents. Hence, besides increase in Per capita consumption, there is
tremendous scope for movement up the value Chain.
HUL, Nirma and P&G are the major players in the market with 40%, 30% and 12% share,
respectively. While HUL dominates the premium segment, Nirma is the leader in the popular
segment
MARKETING STRATEGY
Lakme: To Strongly Position The Brand On The Youth Platform.
"In the first three years, Elle 18 registered sharp growth rates and the
purpose was to create a new segment of consumers," said Mr Chopra.
With a pricing that is almost one-third that of Lakme, Elle 18, of late,
has also unleashed a campaign based on its products.
"There was a change in our strategy in the past. While Lakme has
been high on innovation, Elle 18 has been on maintenance mode. The brand
has been growing at a lower rate than Lakme. But now we are now relooking
at Elle 18 as there is still no brand that is so sharply positioned on the
youth platform," said Mr Chopra.
"The overall beauty market has been growing between 15-20 per cent
but we have been growing higher than the market."
However, it is the salon business that has been registering the highest
growth rates for Lakme Lever.
"With a small base, our salon business has been growing the fastest,"
Mr. Chopra said.
There are plans to have 100 Lakme salons by the end of the year from
the existing 92 salons across the country.
"We do not want to add to existing hair care products in the market.
The brand has been launched in the hair styling category and we want to
create awareness and educate our consumers without confusing them with
more products," said Mr Chopra.
written by Frenchman Leo Delibes, from which Simone Tata borrowed the
name Lakme (French for Lakshmi, the name of the priestess).
By 1999, the world looked set for a revised version of the work.
Simone Tata was no longer on the scene. And a home-grown fashion brandoften personified as the high priestess of fashion in the country-had been
sold to a multinational company whose provenance was English, well, AngloDutch, actually-Hindustan Lever Ltd (HUL).
Worse, with HUL not appearing too keen about the brand-the
company, predictably, denies this-Lakm, the brand looked all set to follow
the spirit of Lakm the opera (a tragedy).
Lever was right. The aria, as is now evident, wasn't quite over.
Standing amidst the jamboree of what is, arguably, India's first fashion
summit, the Lakm India Fashion Week (LIFW for short), Anil Chopra, 51,
the affable Director who heads Lakm Lever Ltd is bullish about the brand's
new positioning: ''By taking on the fashion and glamour platform, we have,
in a way, not just taken a lead (over others), but also got a virtual ownership
of this plank. It will be very difficult for any other brand to adopt a similar
approach.'' And reactions to the born-again Lakm at the LIFW did suggest
that Chopra and the brand were on to a good thing. ''Lakm is at the
forefront of product-innovation. Almost everyone has a Lakm-something in
Chopra accepts that distribution has been the company's Achilles heel
for some time: ''The supply-chain hasn't been as robust as it should have
been, but that has been the result of our efforts to reposition and
reintroduce the brand.'' The positioning bit, although complex, is clear:
Ponds is Lever's primary skincare brand; Lakm, its apparitional colour
cosmetics brand, which also has a presence in skincare.
The premium segment, however, is just a slice of the Indian market for
colour cosmetics (estimated size: Rs 275 crore). Today, the company has
three brands: Lakm itself, which will be positioned as a fashion-brand; Elle
18, which has enjoyed success as a college-girl brand; and Orchid, a superpremium brand that hasn't really seen much excitement since its 1999relaunch.
The company plans to re-re-launch Orchid by end-2000, and is testmarketing Elka, a brand targeted at the lowest-end of the colour cosmetics
market. The brand, Chopra claims, could also catalyse Lakm's entry into
the hinterland, but only if tests show there is a rural market for colour
cosmetics. Says Nikhil Vora, 28, Portfolio Advisor, Sharekhan.com: ''Though
rural markets are big potential, a company has to think of segments
carefully. Any expansion into new areas should be justified by returns.''
Lakm will remain a loner in the Lever stable: Unilever does not have a
presence in the colour cosmetics segment. That means Lakm Lever will
have to depend on its own kitchen garden. But a focused-most of its
skincare business and all of its exports business have been taken on by
HUL-Lakm does seem to be on a come-back trail. It's still the second act,
but this opera could well have a happy ending.
Lakme's Profile
Lakm is an Indian brand of cosmetics, owned by Unilever. Lakme
started as a 100% subsidiary of Tata Group (Tomco), it was named after the
French opera Lakm. At the time of its establishment, Indian cosmetic
industry was rather nacent, and there was a very small market base.
Simone Tata joined the company as director, and went on to become its
chairman. When Tata's saw a bigger growth potential in the retail market,
and greater competition from global companies in cosmetics, they enetered
into a 50-50 joint venture with Hindustan Lever Limited (the Indian
subsidiary of Unilever) in 1995 to form Lakme Lever. In 1998 Tata sold of
there stakes in Lakm Lever to to HUL, for Rs 200 Crore (45 million US$),
and went on to create Trent and Westside. Half a century ago, as India took
her steps into freedom, Lakme, India's first beauty brand was born. At a
time when the beauty industry in India was at a nascent stage, Lakme
tapped into what would grow to be amongst the leading, high consumer
interest segments in the Indian Industry - that of skincare and cosmetic
products. Armed with a potent combination of foresight, research and
constant innovation, Lakme has grown to be the market leader in the
cosmetics industry.
products to pamper herself from head to toe. These include products for the
lips, nails, eyes, face and skin, and services like the Lakme Beauty Salons
About LAKM
The Carreras family established LAKM Cosmetics in 1997 and is
independent, self-financed and family owned. The family has over 40 years
of manufacturing experience in salon products. Lakm East a regional
distributor of Lakm Cosmetics with its main office in Colchester is
conveniently placed to provide you with all the guidance back up and
support youll ever need.
The Products
LAKM leading hair care products are developed exclusively for
distribution to hair and beauty salons. Branding and packaging of
the product range is first class and they are tested and manufactured
solely for this brand name and no other. The very best raw materials
are used in manufacture using the latest technology and adopting the
highest levels of hygiene. All product formulation is in accordance
with the health standards of the European Union and the United
States Food & Drug Administration and is subject to ISO 9002
certification.
The Promotion
Lakme, the Indian cosmetics giant has expanded the range of skin
care products it markets in Sri Lanka, and unveiled the company's new
international logo and image, Lakme's local distributor Hemas Marketing
(Pte) Ltd., has announced.
Deep Pore Cleansing Milk, which the company will continue to market in
new packaging.
Revlon Profile
Revlon is a world leader in cosmetics, skin care, fragrance and
personal care and is a leading mass market cosmetics brand. Our vision is
to provide glamour, excitement and innovation through quality products at
affordable prices. To pursue this vision, Revlon's management team
combines the creativity of a cosmetics and fashion company with the
marketing, sales and operating system of a consumer packaged goods
company. Our global brand name recognition, product quality and
marketing experience have enabled us to create one of the strongest
consumer brand franchises in the world, with our products sold in
approximately 175 countries and territories. Revlon's brands include
Revlon, ColorStay, New Complexion, Revlon Age Defying, Almay,
Ultima II and Flex and Charlie.
Starting with a single product - a nail enamel unlike any before it - the
three founders pooled their meager resources and developed a unique
manufacturing process. Using pigments instead of dyes, Revlon was able to
permanent wave boom was making beauty salons more popular and
that demand for manicures was rising in tandem. He therefore
targeted beauty salons as a market niche--a fortunate choice whose
importance would grow.
Within its first nine months, the company boasted sales of
$4,055. There was a sharp rise in sales to $11,246 in 1933, the year
the company incorporated as Revlon Products Corporation. At the end
of 1934, the company had grossed $68,000. By 1937, sales multiplied
more than 40 times. In that year, Revson decided to enlarge his
market by retailing his nail polish through department stores and
selected drugstores. This gave him access to more affluent customers
as well as those with a moderate amount of money to spend on beauty
products. Formulating a maxim he followed for the rest of his life,
Revson steered clear of cut-rate stores, selling his product only at
premium prices.
Marketing strategy
Postwar sales strategy, too, was influenced by increases in
spending and department store credit sales. Returning interest in
dress sparked the company's twice-yearly nail enamel and lipstick
important
1970 acquisition
the
Thayer
Laboratories
subsidiary,
formerly
Knomark.
Revlon
Lakme
CRITICAL
WEIGH
RATIN
WEIGHTE
RATIN
WEIGHTE
SUCCSES
D SCORE
D SCORE
0.45
0.60
FACTOR
PRICE
0.15