Cosmetic industry Porters Five forces analysis September 2, No Comments The decorative industry has grown over the past few decennaries and it is presently a billion dollar industry. Many consumers of decorative merchandises have realized the importance of self image and presentation and this has boosted the purchase of decorative merchandises across the universe.
The companies operating in the industry having range of products which are being commonly used by the customers. Threat of New Entrants — High Cosmetic and skin care are competitive industries and thus attract new entrants striving to capture market share. This leads to a drop in the profitability of the existing companies.
There are a number of entry barriers in this industry. There are high economies of scale by the existing players. The capital required to establish a manufacturing setup is high.
There is a strong brand identity. Gaining access to distribution and expected retaliation is also a moderate level barrier. The access to required inputs for manufacturing is not very hard.
Threat of Substitute — Low There are mainly two substitutes of skincare products which are home remedies and other skin products made at home with natural ingredients such as herbs and oils to protect and rejuvenate the skin.
Such products are more used at rural areas. Some women also think of these substitutes as old fashioned and ineffective. The switching cost and the buyer propensity to substitutes, both are low.
Competitive Rivalry — High The degree of competition amongst rivals in the industry is high. Competitors include brands such as Elemis, Espa, Clarins, and local companies.
The number of spas is limited and many spas have their own products.
So supply is greater than the demand. The degree of differentiation is medium. There are negligible differences amongst products of different brands. The exit barriers are also high. Supplier Power — Low The number of suppliers in this industry is large.
There are many manufacturers of the products required by the industry. There is low differentiation of inputs. There is a certain switching cost and a threat of forward integration also exists.
The presence of substitutes of the inputs and the impact of inputs on cost is low. Overall, the bargaining power of the suppliers in this industry is low. Buyer Power — High Increased competition and availability of the products have given the buyers of this industry high power. They are in no position to influence the prices of the products.
This makes it difficult for the companies to maintain long-term profitability. It may also force the company to reduce product prices as buyers can easily switch to other brands.China Cosmetics Industry Five Forces.
Global Cosmetics Manufacturing Industry Over the past five years, the Global Cosmetics Manufacturing industry has experienced steady growth. Aruvian's R'search analyzes The Cosmetics Industry in China in Michael Porter’s Five Forces Analysis.
It uses concepts developed in Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market.
Oct 10, · China continues to be one of the largest cosmetic producers in the world. A positive regulatory environment and an upbeat Chinese economy has fueled the growth of the cosmetics industry.
Statistics and facts on Cosmetics & Personal Care The global beauty market is usually divided into five main business segments: skincare, haircare, color (make-up), fragrances and toiletries.
‘Industry Stakeout’ could occur like the exit of L'Oreal's hair brand ‘Garnier’ in from China (Young, ) Market unstable and unpredictable beauty industry emerging market supposed to overtake developed market in pushed back to (Walker, ). Industry rivalry—or rivalry among existing firms—is one of Porter’s five forces used to determine the intensity of competition in an industry.
Other factors in this competitive analysis are: Other factors in this competitive analysis are.