Running head: INNOVATION AND SUSTAINABILITY IN COSMETIC INDUSTRY 1

Innovation and Sustainability in Cosmetic Industry

Contributing Factors and Development Strategies

Name

Institution
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Innovation and Sustainability in Cosmetic Industry

Cosmetic industry is responsible for the production of items such as deodorants,

toothpastes, hair colors, waves, shampoos, facial and eye makeup, nail polishes, lipsticks,

perfumes and skin moisturizes among other related products. It is undeniable that cosmetic

industry serves a large population globally. Thus, the industry has many small, medium and large

multinationals which tap into these market opportunities. Such huge global market demand

implies greater strain to the available natural resources. The operations management of these

corporations creates strain on raw materials and cause pollution from poor waste management of

their finished and used products. A shift to sustainable methods is the best way to salvage the

current operational environment in the cosmetic industry.

Sustainability Pillars

Sustainability in the cosmetic industry would mean vibrancy in economy as well as

improvements in the quality of life on consumers’ side. Considering Gardas et al. (2019)

definition, sustainability exists when all people manage to live without a compromise on the

quality of life for the coming generations. Martin, (2012) allege that sustainability entails the

vision for the world where current and future people are sensibly healthy. Therefore, the aspect

of sustainability focuses on the social, economic, environmental and future life of human beings.

Quality of life as well as people is critical in the definition of sustainability.

i. Social Pillar

Sustainability is broad in its definition. However, the social aspects of sustainability

touches on cultural considerations, community spirit, product responsibility, community

development, social justice, appropriate working conditions, labor rights, human rights, social
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equity and health. In a sustainable environment, there is no conflict among the above elements

thus ensuring cohesive and regenerative working environment as a way of ensuring good quality

of life in for current and future generations.

ii. Economic Pillar

The economic pillar of sustainability is where most corporate organizations maintain

keen attention. The economic pillar considers risk management, proper governance as well as

compliance to the existing rules and regulations. Good corporate governance guarantees

economic sustainability. The economic pillar is cognizant of the immediate community,

shareholders’ interest, value chains as well as consumers as a way of improving quality of life

for all.

iii. Environmental Pillar

The environmental pillar of sustainability focuses on water usage, packaging and

branding, carbon footprints as well as overall effects on environment. The environmental pillar

has been receiving urgent attention from the corporate players and the general public. Companies

are striving to attain environmental sustainability as a way of insuring quality of life in future.

Cosmetic Industry Outlook

Cosmetic industry is considered to be one of the fastest growing industries in the world.

According to Jamal (2019), the cosmetic industry is suggested to realize over $25 billion in sales

globally every single year. This figure is bound to increase in future considering the growing

economic empowerment as well as population. Some of major industry players are Chanel,

Nivea, Neutrogena, Gillette, L’Oreal Paris as well as Johnson & Johnson. The industry has
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realized tremendous growth since the 20th century having seen small, medium and large

multinationals establishing their brands all over the world. In addition, there has been an increase

in the use of cosmetic products worldwide that has massively contributed to the general growth

in the cosmetic industry overtime. The following data has been retrieved from www.statista.com.

Global Cosmetic Market Growth from 2004-2018

6

3
Annual growth (%)

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

From the figure above, it is inherent that the global cosmetic market has been on

consistent growth since the year 2004. Based on the data, no single year since the year 2004 has

the global market recorded negative growth rate. The growth has been positive all along and this

trend is set to continue into the future. Logically, it is arguable that even in proceeding five

years; the industry will still be lucrative in terms of market growth. The underlying driver for

such consistent growth is the growing demand for cosmetic products that has aroused emergence

of small, medium and large industry players. Below is the revenue outlook of various industry

players as of the close of 2018 financial year. The data has been retrieved from

www.statista.com.
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Revenue in billion U.S dollars (2018)

35
30
25
20
15
10
Beauty Manufacturers
5
0

LVMH
Henkel
Kose Corp

Procter&Gamble

Unilever
L Brands
Mary Kay

Avon

The Estee Lauder

Natura Cosmetico

L'Oreal
Amorapacific G.
Chanel

Shiseido
Coty
Revion

Colgate-Palmolive

Kao Corp

Johnson&Johnson
Louis Vuitton

From the graph, L’Oreal realized the most revenue in the year 2018 followed by

Unilever. The cumulative revenue from all the industry players means that the cosmetic industry

is one that has potential.

Processes in Cosmetic Industry

To realize the finished products that are sold in the market, the cosmetic industry players

undertake major three steps. These three steps include input sourcing, manufacturing and market

activities.
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Market Formulation Sourcing

analysis

Product Quality and Packaging

validation compliance and
branding

Finished Products & Market activities

The cosmetic industry undertake market analysis, formulation, sourcing, quality and

compliance, packaging and branding, product validation and market activities to ensure

transformation of raw materials into goods that are sold to the end consumer. The market

analysis stage involves definition of a particular product that appeals to market trend and

consumer needs in general. The formulation stage involves research and development to

establish underlying costs, requirements and chemical properties with deep consideration on the

existing regulation requirements. Sourcing involves acquisition of raw materials and other

supplies to meet the requirements and associated costs. Quality and compliance stage involves

safety and suitability tests. Packaging and branding involves artwork that is targeted to influence

consumer decision. Product validation involves counter check of the above steps to ensure that
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the product meets the set objectives. Market activities involve the community development

activities as well as other marketing activities that corporate organizations involve in.

Reasons for Sustainability

Given the growing demand for cosmetic products, the processes involved have created

greater strain on the available natural resources. There is too much flaw in the operations

management of these process that otherwise contributes to unsustainable environment in the

cosmetic industry.

I. Sourcing

The main ingredient in cosmetic products is water. Sourcing for water has proven to

create strain on this valuable natural resource. Cosmetic industry uses significant amount of

water in the production processes and thus cause strain in the natural environment. This habit is

not cognizant of the growing population and the shrinking of the available water resources all

over the world. In addition, the supply chain in cosmetic industry strains the natural environment

from the sourcing side. Over 70 percent of cosmetic products do compose palm oil and water.

Deforestation in favor of palm plantations as well as excessive use of water in production of

cosmetic products has presented renewed threat on the natural resources (Kushairi et al, 2018).

The net effect is the continued accumulation of greenhouse gases following burning of bushes

and reduction in number of trees which are some of the natural carbon sinks. This trend has been

observed in Malaysia and Indonesia among other countries. This research proposal therefore,

tends to satisfy the following objective;

• The innovative development strategies adopted by cosmetic industry.

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To satisfy this objective, the proposal poses the following research question;

• What are the main innovative development strategies adopted in the cosmetic industry

to foster sustainability?

II. Manufacturing

In the manufacturing section, activities such as packaging, branding and use of

chemicals are undertaken to ensure efficiency in the operations management. Considering the

aspect of packaging, cosmetic industry players have adopted poor methods of packaging that has

resulted in environmental pollution. Most products are packaged in plastic containers. The worst

part is that these containers are not effectively recycled thus they find their way into landfills and

oceans. Given that the cosmetic industry uses more plastics, it is inherent that they are massive

contributors to the global plastic pollution. Borrowing from Monteiro et al (2018), the global

cosmetic industry produced above 120 billion units of plastic cosmetics packaging products. In

addition, the aspect of branding has also been identified as one area where the industry players

compromise on the sustainability. There are no adequate responsibility and sustainability

messages in these brands. Finally, cosmetic industry uses excess chemicals to achieve their final

products. These chemicals are not environmentally friendly thus causes pollution to the

immediate environment. This research proposal has the objective to identify:

• Innovative development strategies adopted by cosmetic industry

• Main driving factors of sustainable innovation in cosmetic industry

• Impact of consumer education on consumer decision in preferring sustainable cosmetic

products.
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To satisfy these objectives, the research proposal proposes the following questions;

• What are the main innovative development strategies adopted in cosmetic industry to

foster sustainability?

• How has the rapid growing need for sustainable innovation affected the supply chain of

cosmetic industry?

• What are the main driving factors for sustainable innovation in the cosmetic industry?

• What are the effects of consumer education on consumer education on consumer

decision in proffering sustainable cosmetic products?

III. Marketing Activities

The corporate social responsibilities in the cosmetic industry involve research and

development as well as community based programs meant to improve the quality of life

presently and in the future. The research and development is a strategic tool that corporate

players in cosmetic industry exploit to develop innovation strategies meant to ensure

sustainability in the industry. On the other hand, the community based programs are strategic in

enhancing collective responsible action towards enhancing efficiency among the consumers and

the community at large. This proposal has the following objectives in connection to market

activities.

• Impact of sustainable innovation in the supply chain of cosmetic industry.

• Main driving factors of sustainable innovation in cosmetic industry.

INNOVATION AND SUSTAINABILITY IN COSMETIC INDUSTRY 10

• Impact of consumer education on customers’ decision in preferring sustainable

cosmetic products.

• Innovative development strategies adopted by cosmetic industry.

The following research questions have been developed to enable the achievement of the above

objectives.

• How the rapid growing need for sustainable innovation has affected the supply chain of

cosmetic industry?

• What are the main driving factors for sustainable innovation in the cosmetic industry?

• What are the effects of consumer education on consumers’ decision in preferring

sustainable cosmetic products?

• What are the main innovative development strategies adopted in cosmetic industry to

foster sustainability?

Targeting sustainability in the sourcing, manufacturing and market activities would

establish the efforts and degeneration that the cosmetic industry has been contributing towards

social, economic and environmental pillars of sustainability. Nonetheless, there are some of great

measures and mechanisms that the corporate players have put in their processes to enhance

sustainability within their operations. This has been a positive response to the growing global

concerns on environmental protection as well as sustainable business environment.

Current Environment
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The industry players have adopted some positive measures and mechanisms that is

targeted to support the growing global concerns on environmental protection and sustainability.

Considering the push for zero waste, cosmetic industry players have been positive in adopting

sustainable changes in their packaging practices. The industry is quickly shifting to reusable

packaging as a way of reducing if not eliminating the burden on natural environment that is

caused by plastic waste. For instance, Olay has launched a refillable packaging container for

their new brand of perfume (Finney, & Hollar, 2019).

Other brands have also focused on research and development as a method to

establishing new eco-friendly ways of production. Brands such as Chanel and Naturally Serious

have invested in research and development towards development of alternative chemicals used in

manufacturing cosmetic products that are friendly to the environment. These brands have also

adopted responsible packaging with most of their messages to the consumer targeting

reforestation and afforestation. L’Oreal and Estee Lauder have pledged their commitment

towards green sourcing for palm oil and water come 2020. Unilever has also invested in research

and development geared towards establishing water efficient processes that they want to adopt in

their operations chain.

In the quest for carbon neutrality, major industry players such as Unilever, L’Oreal and

even Naturally Serious have shown their commitment to adopting wind power in their

production segments that require power input. Other product lines such as One Ocean Beauty

have launched their campaign to save the oceans. One of the mechanisms that this product line

uses is the advocating for reproduction of marine algae in laboratories to ease the stress on

natural environment.
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References

https://www.statista.com/statistics/

Finney, T. J., & Hollar, M. (2019). The Quest for Zero Waste.

Gardas, B. B., Raut, R. D., & Narkhede, B. (2019). Identifying critical success factors to
facilitate reusable plastic packaging towards sustainable supply chain management. Journal of
environmental management, 236, 81-92.

Jamal, N. A. M. (2019). Determinants of purchase intention to buy global brands cosmetic

among millennial.

Kushairi, A., Loh, S. K., Azman, I., Hishamuddin, E., Ong-Abdullah, M., Izuddin, Z. B. M. N.,
... & Parveez, G. K. A. (2018). Oil palm economic performance in Malaysia and R&D progress
in 2017. Journal of Oil Palm Research, 30(2), 163-195.

Martin, J. (2012). The sustainable university: Green goals and new challenges for higher
education leaders. JHU Press.

Monteiro, R. C., do Sul, J. A. I., & Costa, M. F. (2018). Plastic pollution in islands of the
Atlantic Ocean. Environmental Pollution, 238, 103-110.