Cosmetic Industry

Topics: Cosmetics, Marketing, Manufacturing Pages: 3 (984 words) Published: April 22, 2013
Global Cosmetics Manufacturing Industry 
Over the past five years, the Global Cosmetics Manufacturing industry has experienced steady growth. According to IBISWorld industry analyst Nikoleta Panteva, "The past five years have been no exception, despite declining per capita disposable income in key markets."  Industry Analysis & Industry Trends:

The global cosmetics industry is broken down into six main categories; skincare being the largest one out of them all, accounting for 31 percent of the global market. * Revenue: $243bn;
* Annual Growth 08-13: 3, 0 %.

However, there are certain factors which affect the entry to the cosmetic industry by firms. These factors can be briefly analyzed using the Porter Five forces analysis. They include the threat of substitutes, threat of new entry, bargaining power of customers and suppliers as well as intensity of rivalry in the industry. Threat of new entry

This factor analyzes the ease with which firms may enter into an industry. The cosmetic industry has a low threat of new entrants. The first is the huge costs of entry. Developing unique cosmetic products requires a lot of resources both in terms of research and development and the actual manufacturing process. Another factor which discourages entry into this industry is the huge competition present in the industry. In addition to the huge competitors such as Avon, Revlon, Clinique, Estee Lauder, LR, Mac and Unilever, who have a large market share, there are many other small scale competitors who also have a small market share and who reduce the overall profitability of firms in the industry. Bargaining power of customers

This factor analyzes the power which suppliers have regarding making price changes for their products. When consumers have a high bargaining power, the manufacturers and sellers may not adequately predict future demand by the market. The cosmetic has a high bargaining power of customers. This is due to the increase competition and...
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