Burt’s Bees Lip Balm: Targeting and Segmentation

Topics: Cosmetics, Lip balm, Marketing Pages: 7 (1985 words) Published: April 19, 2009
1. List the broad product market:

Lip care products

2. What homogenous products can be found in the broad product market?

Lip balm, lip gloss, lipstick, petroleum jelly, lipstain, lip plumper

3. Name the homogenous product market:

Lip Balm

4. Market description:

Industry Statistics:

Skin care industry sales in 2007 for the US were 8059.2 million, with a growth rate of 3.1 percent from 2006. •The skin care industry has had a compounded annual growth rate of 3.6% from 2002-2007. •88% of cosmetic products are sold through store-based retailing and 27.9% are sold in supermarkets. •75.8% of skin care products are sold though store-based retailing and 15.2% are sold in supermarkets. •The skin care industry has a projected Compound Annual Growth Rate of .1% per year for 2007-2012, while the men’s care sector of the cosmetic industry has a projected CAGR of 1.8% for 2007-2012.

Industry Trends:

Consumers are more concerned with the environment and their health, thus looking towards natural and organic cosmetic products for their personal use. Consumers are becoming more cautious about the chemicals, synthetic preservatives, and fragrances that are used in some cosmetic products. This consumer trend has led to strong profit growth for companies that produce natural cosmetics. In order to keep up with the desires of this emerging customer base, even large national companies are expanding into the natural product market. L’Oréal and Estée Lauder have launched lines of natural products. In 2007, Clorex purchased Burt’s Bees for $925 million.

Driven by growing consumer demand, retail sales of natural and organic beauty care are likely to continue growing. In fact, industry representatives anticipate double-digit growth in natural beauty care in the United States, a figure that is far ahead of growth projections for standard cosmetics and toiletries.

Drugstores have become the second leading distribution chain for the cosmetics industry. Consumers are more informed because of heavy advertising and Internet sites by large companies, so they want a wider selection of cosmetic products located in drugstores and convenience stores so they can find the product that fits their needs.

L’Oréal, Procter & Gamble, Estée Lauder Cosmetics, Unilever Home & Personal Care, and Johnson & Johnson Consumer Products are the top five companies in the cosmetics and toiletries market, controlling 50% of the total market share in 2007.

Socio-cultural Factors:

Products that satisfy consumer desire to look younger and have healthier skin will be the fastest growing subsection of the men’s cosmetics market.

The emergence of cosmetic gift baskets during holiday seasons (Christmas, Mother’s Day, Valentine’s Day) has become a viable profit maker for cosmetics companies.

Economic Factors:

The current economic conditions stemming from the credit crunch and mortgage crisis have tightened consumer spending in almost all aspects. Specifically, the health and beauty retailers channel saw value growth go down from 8% in 2006 to 6% in 2007.

Many experts, from mortgage lenders to economists, forecast that the recovery of the housing market will not occur until about 2009.

5. List the homogenous product market segments that comprise possible target marketing for your product.

Homogenous product market: Lip Balm

Segment #NameDescription Needs
1. Naturalists/Eco-Friendly ConsumersThis segment includes consumers that are concerned about not using products that are made with artificial ingredients. They could possibly be looking to invest in products from companies that give back to society, or publicly express concerns and actions for protecting the environment. The natural ingredients that Burt’s Bees uses, such as beeswax, root extract, and sunflower seed oil would appeal to this segment along with the recycled packaging that the lip balm dispenses from. On top of this,...
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