Cosmetics Case Study


Introduction


            The cosmetics industry plays a significant part in the economy.  In this sense, case studies prove to be useful since it provide findings as to the past and current situation of the industry.  Moreover, it will present recommendations based upon the perceived findings.  This case study can be classified according to the famous (SWOT) Strength, Weaknesses, Opportunities, and Threats format.


Strength


            During the three decades, from 1970 to 1990, the cosmetics industry gained momentum in its extensive development through per capita consumption.  Even some segments may vary; the cosmetic industry is near maturity.  The current annual retail sales of the industry totaled up to .5 billion. 


            The first quarter of this current year has seen a demand beginning to revive and trend is expected to continue well into the following year. 


Weaknesses


            Accounting to the past developments, the cosmetics industry has never been always in such a case.  The industry is no longer recession-proof and is now bound for depressions and declinations.  Actually, the sales in the past year are slow moving because of downed consumer spending.  Consumers that time then tend to settle for the less expensive lines. 


            Another setback of the industry is the demand-price ratio.  Within the past five years, the prices were invariable and steady but promotion budgets were growing and getting greater than ever. 


Opportunities


            In keeping away from a potential head-on competition, a strategy of focusing on special niches proved to be effective especially in the struggle with the industry leaders.  This has been a great line of attack adopted by smaller companies in their contest with the market leaders.  They survive and exist through specializing in niches, differentiating the product lines, and focusing on market segment. 


            A potential huge market has been spotted on men as they account for 50% of adult population that consume one-fifth of cosmetic sales.  The failure of the market leaders in such opportunity provides hint to smaller companies as to what would be the proper and better approach to the market. 


            Furthermore, the senior citizen population is a large growing market segment which should be given focus as the population’s needs were not being met. 


Threats


            Notwithstanding the apparent growth of the cosmetic industry during the past four decades, there are currently more than 700 growing cosmetic companies competing in the market.  Additionally, there are also market leaders that dominate the cosmetic industry.  Consequently, it creates stiff and intensifying competition especially to those smaller companies as market leaders are putting pressure on these smaller cosmetic companies. 


Conclusion and Recommendations


            As stated above, the configuration makes it clear enough for the company on where to focus its strategy.  That is, the focal point of such strategy should be on the opportunities keeping in mind the threats.  The strengths of the industry should also be maintained through the awareness of its weaknesses. 


            This SWOT structure provided clear and definite way in formulating strategies and approach to the cosmetic market.  It gave attentiveness by laying past and current findings that is of great significance to the market approach. 


           



Credit:ivythesis.typepad.com


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