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I'm completing a Competitive Environment Report and my focus is What are the Competitive Dynamics of...

I'm completing a Competitive Environment Report and my focus is

What are the Competitive Dynamics of the Beauty Industry - Describe any first movers. What are the tactical, strategic, offensive and defensive actions or maneuvers that are going on within the industry. Who is the Best of Breed? Who is very weak in the industry.

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BEAUTY INDUSTRY COMPETITIVE ENVIRONMENT REPORT INPUTS

Beauty care industry can be broadly called as personal and cosmetics care industry and is one of the most fastest growing industries in the world. This analysis is based on the Indian scenario where climatic shift has played a major role to enhance competition among existing brands and the upcoming of few newer brands. It has subsequently increased the shelf space in retail stores and parlor/boutiques with both products within the country and from other parts of the world.

The primary classification of the beauty products are as follows. Body care, Hair care, face care, hand care, and coloring cosmetics. Most of the foreign brands that came had an international presence and brand name whereas Indian brands existed because of their heavy advertisements.

During the recent economic sluggishness from 2015 onwards, lot of existing Indian brands, came out with similar brands as an alternative to international brands with priority given to skin care. The current media boom had resulted in a positive drive even in the rural markets of India to persons below the age of 30. In short, we can say that rural lifestyle is getting mapped to the urban lifestyle as well. The modern retail channels have facilitated this too.

A competitive dynamic usually exist in an immature market unlike matured market. For example, a country like Singapore, will have enough international brands in this segment because the purchasing power is almost same since the price are positioned to cater both higher and lower class. To tide over in such a market the important thing is the introduction of the product and some tactical actions associated with it to increase the reach before the competition catches up. A market dominance has to be attained with lesser time at the same time focusing on capital expenditure that may involve. At this point of time it is worth mentioning about Fiama Soaps, an ITC brand that took over most of the shelf space within a short span of their introduction into the Indian market.

Another important factor that we cannot let aside is the impact that it can cause to our health which is a sensitive issue. Anything that gets in touch our skin has to have a Drug License. Why should someone risk themselves and accept a new brand when they are happy with the current brand they are using? This issue is the first that needs the attention for a quick entry.

A normal bread winner in Indian segment, follows a strict budget when it comes to their monthly purchases. They will have a certain brand of toilet soap let us say Brand A. this brand is already in their purchase list for the month and though they see other brands sharing the same shelf space, they are not willing to change their mind, even if the price is lower than the brand they are using.

Here comes market penetration, where active advertisement strategies need to be implemented for brand endorsement. For understanding this better let us consider some brands and their importance in the Indian context

Brand A – Endorsed by a leading Bollywood celebrity, the advertisements of this brand run heavily in television and they shell out more money on conditioning people’s minds and to sponsor reality shows.

Brand – B Also endorsed by a Bollywood celebrity but not so famous or falls below the celebrity that has endorsed Brand – A. Their market is more matured, and their target is the Mid Indian Region because of the Brand’s name and their price positioning

Brand – C It’s an international brand name known to us for decades but fairly new in Indian market. Anyone who has gone outside the country should hear about this brand. In India, the brand sells by itself and their product range is very limited.

Brand – D This brand is dedicated to skin care and they have an aggressive sales and marketing strategy. Their stock turnover is high and offer lot of free samples and stock to resellers. They offer one of the best margins for their resellers. Aggressive marketing strategy involves advertisement in local channels and newspapers with local movie celebrities or known persons of that region.

Brand – E This brand is trying to make an entry into the market for one of their skin care products. The advantage of this brand is that the promoters are affluent, and they have a strong financial back up. Their ultimate aim is to have the major market share for the product that they are going to introduce.

All the above brands do a market study on sales volume in south India for one of their common skin care products that claim to have a sunscreen. Sunscreen products have seen a real kick off in sales soon after the climate change has happened. The mornings are getting hotter and any office/college/school goer, should have one of these creams for him/her to avoid the tan. The scenario is that all the above brands have this mentioned as one of their features in the writeup that is there on the packaging. However, Brand E is dedicated to skin fairness and tan protection.

The below table shows the sales volume in south India for these brands in 1000s for six months. The prices for all the brands except Brand – D are almost on the same plateau.

JAN

FEB

MAR

APR

MAY

JUN

Brand – A

950

1100

1150

1400

1450

1380

Brand – B

800

950

980

1100

1350

1280

Brand – C

700

750

800

870

875

900

Brand – D

1000

1010

980

1050

1080

1100

The analysis that has been arrived it are as follows.

  1. The summer in India starts from March onwards and almost all the brands except Brand – D shows the difference of sales volume during these months
  2. Brand – A of course has performed well because of its endorsements
  3. Brand – B also has the same sales effect as Brand – A
  4. Brand- C, however, has a matured demand even though the season changes. We can analyze that there are conditioned buyers for this brand who are not willing to change the purchase decision no matter what ever products are introduced in the market.
  5. Brand – D This brand is an everyday brand that is present in local newspaper, grocery bags as pictures, painted on compound walls, pamphlets along with newspapers and the community knows it all. Brand D promises to offer various skin care features and since its endorsed by a local celebrity, and because the end users are not so much educated, the brand performs well in all seasons.

So, what will Brand – E analyze from this picture before they make their marketing plan and strategy. The following points will be their constraints to formulate their strategy.

  1. Brand A will surely pose as a competitor and tough efforts should be there to overcome them. Or in other words, Brand – A falls as a direct competitor for the new brand that needs to be introduced.
  2. Brand – B is also a direct competitor but because of the exclusive features of the new brand they can definitely stand the competition. However, the only threat that they will face is that if not properly merchandised or in the event of a bad price positioning or in the event of a stock out for the new brand Brand – B will take that demand space.
  3. Brand – C however, being an international brand does not become their competitor at all. The new brand’s aim should be to take that market space too or to win over the customer using Brand – C. The new brand can lend their features written on their packing case with different approach let’s say, we offer international beauty care products at affordable cost and so on. Pricing should also be carefully managed to win over them. This does not happen within short time but will work slowly if an only if the new brand is better than Brand C
  4. Brand – D This brand is not at all a competitor to the new brand but can pose a major threat to them. Since they don’t have any coded advertisement strategies, they will always discourage the entry of a new brand to the market by the way of their advertisements and presentation. Brand – D is pretty sure that they cannot win over the new brand, but they will try to kill the demand for the new brand. In short, they will not be willing to lose over to competition. Here the new brand has to use a strategy to win over most of the resellers of Brand – D which is a major time spending process.

So, what should be the selling points of Brand E that is entering into the market

  1. They should have a proper pre-launch plan and branding. Customers should be made aware of the brand name much before the brand gets launched with a bigger geographical territory.
  2. The brand should be better than Brand – A or at least equivalent to Brand A in presentation, packing and advertising. They should also have smaller packs or packaging that will match the price of other brands mentioned above so that they can compete in price.
  3. Advertising campaign should be aggressive, and an active merchandising strategy should be implemented. Use of software or IT infrastructure in their logistics will give a better entry.

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