Cosmetic market us

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We can also do the segmentation of the cosmetic market by distribution channels, by gender and by age of the consumers

Swot analysis

Strengths

- Successful smooth transition to natural products

- Packaging and design

- Innovation

Weakness

- Ageing of many lines of products

- Still lack of products for men

Opportunities

- Growing demand for organic products

- Growth of E-commerce

- Increasin access to middle bottom segment of pyramid consumers

- Ageing population needs for products

Threats

- Volatile raw material prices

- New entrants taking advantage in innovative products lines and niche markets

- Intensified competition

5 Porter’s forces cosmetic industry in the US

The cosmetic industry has grown over the decades to become a billion dollar industry,both worldwilde and in the US, surpassing many other products which are sold in the market. Consumers are aware of the importance of cosmetic products and especially their positive impacts on improving self image, confidence and self esteem in a world where image is king. The realization of the importance of cosmetic products has increased demand for these products which are consumed by both males and females equally. The global cosmetic industry generates over $160 billion,the United States has the largest cosmetics market in the world, and its revenue exceeded $62 billion in 2016.However, the global market is still growing, with opportunities in emerging markets throughout Asia, Latin America, and Eastern Europe.The market volume of the cosmetics industry in the US, is about EUR €70b per year.The largest cosmetic companies are The L'Oréal Group, , Unilever, Shiseido Company, Limited and Estée Lauder Companies, Inc.

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As a matter of fact the major segments of the beauty and cosmetics industry is segmented as following :

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Threat of new entry

In the US, the main part of the cosmetic industry is occupied by about 20 to 30 firms whish evolve in a mature sector but always with this willingness of continuous innovation in terms of product. Therefore the cosmetic industry in a large market like the US, has a low threat of new entrants due to the fact that first of all, the costs of entry are huge. Developing unique cosmetic products requires a lot of resources, thorough research and complicated manufacturing process. In fact the only way for new brands to enter would be for them to play the differentiation card but even though it would be very difficult to impose a brand image when there is giants like Estee Lauder, L’oreal, Clinique, Unilever, etc, who all have a large market share, a huge brand awareness among US consumers and uses the Patents to cut throat the possible entries (for example Estee Lauder, the number one US cosmetic brand, aggressively field 300 patterns).

Still on this brand loyalty trend,some research shows that even if US cosmetic consumers are unloyal to brands,in the sense for instance that they purchase more than 8 brands on average,americans tend to stick to specific “well-known”/long existing brands.

As a last point to this part,Because of the maturity of the US market it is very risky,80 to 90 percent of new launches last 18 months, a good example to this is the Kylie cosmetic brand which did a remarkable entrance due to the notoriety of the brand’s owner,Kylie Jenner,the last one of the Kardashian family, and a new “matt line concept” but ended up losing shares after the immediate response of giants like L’oreal who has a stronger brand name.

It is important to notice though that there is some exceptions with brands like Urban Decay or Anastasia beverly hills that managed to take and maintain market shares.

Bargaining power of customers

The Us cosmetics industry has a high bargaining power of customers due to the increased competition and wide availability of cosmetic products from many different manufacturers. Since these products have high substitutes,consumers have a quite high pression on brands specially quality wise (more than price wise). This is a challenge which manufacturers of cosmetic products face across the world actually.There is an ongoing trend on the US cosmetics market which has shifted markedly to premium products, as consumers are now looking for higher quality products at a variety of price points. For instance because of the fact that this kind of demand has been high,the suppliers to keep up shifted,leading to a growth year to year that went from 7 to 15%

The majority of the clients are feminine obviously,they are volatil,more and more demanding especially regarding new innovative products.But the masculine side of the market is also developing (less than europe but still) which increase the bargaining power of customers.

"Beauty is a sector where consumers are willing to spend, and on which the majority - more than 80% of Americans invest - says Karen Grant, Global Beauty Industry Analyst at The NPD Group. "While there is some brand loyalty, consumers are also looking for more effective products, and are willing to add a product to their routine if it proves to be useful. The beauty industry in the United States benefits from the crossroads of this market where innovations and products from around the world meet consumers and try to meet their needs and desires in full light. "

Bargaining power of suppliers

The bargaining power of suppliers in the Us is very low due to the high number of market players and large supply of diverse products to the market. There are many cosmetic products which are developed by both large and small manufacturers. The supply is so huge that consumers have the power to influence the market quality and prices as opposed to the suppliers who tries to gain as much market share and block entry then trying to bargain.In

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