TO: Len Chow, Vice-President of Corporate Planning
FROM: Abdullah Maryam, Business Development
DATE: May 18, 2013
SUBJECT: Market Opportunities
In response to your request of conducting a market research on opportunities within the cosmetics industry, my department investigated the threats and opportunities that we have in the aforementioned industry. After a considerable and thorough investigation, the following points are hereby presented:
- Sales of cosmetic products have grown over the past decades, and the trend shows a steady climb.
- Demand for less expensive lines has grown.
- Niche-based products have grown in number and financial value.
- The industry's competition has also grown over the past decade.
- The cosmetic industry is also affected by recession.
Market Opportunities:
- The cosmetic industry is growing.
Over the past few decades, the cosmetic industry has seen a steady growth, and the industry is toward full maturity. Annual retail sales of the industry showed varied growth of segments, as follow: a.) lotion and fragrances - $5.635 billion, b.) hair-care - $3.435 billion, c.) personal hygiene - $4.375 billion, d.) shaving - $1.055 billion. As these cosmetic industry segments mature, new opportunities for market growth is positive.
- Appreciation for less expensive lines.
The industry is not anymore recession-proof that consumers are more inclined to buy less expensive products. Market leaders such as Revlon, Avon, Procter & Gamble, and Gilette have seen declining market sales. As a result, new smaller industry players are on the rise. This offers an opportunity for the company to create a less expensive and more affordable product mixes that will appeal to general consumers.
- Segmented products are more marketable and sellable.
Smaller companies are more focused on specializing niche-based products. Products that target ethnic groups and other categorical demographics have grown in number and in sales. Instead of offering general products, product lines that target specific segments of the market are becoming the trend of most cosmetic companies. There are several segments that have not yet been met by mainstream cosmetic products. Segmentation includes based on race, gender, age, status in life, and so on.
Aside from these market opportunities, there are also possible weaknesses that should be considered in the decision-making of the company. First, the competition in the industry has grown over the past years as more businessmen invested on this promising industry. In fact, there are now more than 700 cosmetic companies that are working to gain a market share. Second, recession also has its effects on the growth of the industry. As a result, the industry becomes more erratic that there are several fluctuations that happened within a single business cycle.
Summary
- The company must determine its resources that can be used to take advantage of these new market opportunities presented. The strengths and core competencies of the company can be used to pursue objectives in new markets.
- The company must determine possible risks and weaknesses that may pose threat to the forward direction of the company in opening new market opportunities. A clear definition of the company’s weaknesses enables decision-making to see both sides of the market opportunity.