November 17, 2008
The demand for cosmetic products in India is still increasing and the current market size stands at $950 million U.S. dollars. The growth is between 15-20% annually and the overall beauty and wellness market that includes beauty services is about $2,680 million. (Bhattacharya, 2008). The change in the socio-economic status of the Indian consumers, especially women, is one of the main reasons for the increase in the market size. The economic situation has resulted in India’s GDP, growing 8.7% from 2007 to 2008, this makes India one of the fastest growing economies in the world and the second fastest in Asia, only overtaken by China. The change in the beauty industry that has resulted in women from all the social classes are being more conscious of their own appearance and are willing to spend more money on beauty and cosmetic products in the future. The Indian population spends $0.68 per capita on cosmetics, this might be lower than other countries, but still emphasizes the growing awareness among consumers. (Bhattacharya, 2008).
The color of the skin is a powerful theme in India, lighter color is associated with a higher status. Culturally, a fair skin is compared with positive values that are related to class and beauty. (Cateora and Graham, 2007). The Indian film industry (Bollywood) is the largest film industry in the world when comparing ticket sales and number of films produced annually. Many of the Indian film actors are opinion leaders and have an influence on the population regarding beauty and fashion. Many of the actors are light colored which means that girls and women want to look like them, therefore willing to spend money on cosmetics to realize their dreams. It’s not only people from the higher social class but also people from the bottom of the pyramid (BOP) that are spending money on cosmetics. It has been observed that girls and women in the slum of Hyderabad use Fair & Lovely. (Karnani, 2007). This shows the huge interest in beauty in all social hierarchy levels in India. Fair & Lovely had a market share of 90% in the Indian market before the direct competitor, CavinKare Ltd (CKL) launched their soap Fairever and impressively gained a market share of 15% in just two years. (Cateora and Graham, 2007). There are many foreign companies that see India as an interesting market with good opportunities to make money. The entry barriers have decreased which suggests that HLL can expect increases in the competition in the near future. The Indian government has reduced the duty to 12.5% and government agencies that have been set up to approve foreign investments, which have made it easier for foreign Multinational Corporations (MNC) to enter the Indian market. As a well established company this is a trend that needs to be taking seriously in order to protect the Fair & Lovely’s market share but also the share of HLL’s other product selection. Another important issue is that small retailers are importing directly from markets such as Dubai, where the price on cosmetics is lower than in the Indian market, which can vary from 30-70%. (Bhattacharya, 2008). These factors are a huge threat on HLL’s market share in the Indian market.
The popularity of a product in India depends on the company’s success of its promotion activities thus helping HLL to improve their image on the product brand, Fair & Lovely. (Cateora and Graham, 2007). In 2001, many women felt discriminated against due to Fair & Lovely commercials which resulted in a complaint from AIDWA (All India Women’s Democratic Association). (Cateora and Graham, 2007). This is still an issue for the company and that is why the marketing promotion program needs to be carefully prepared to ensure that the product brand and corporate brand are positively improved; to prevent future...