Industry Assessment - Part 1: Cosmetics Industry

Topics: Cosmetics, Brand, Inventory turnover Pages: 32 (7567 words) Published: October 5, 2014


Industry Assessment - Part 1
Cosmetics Industry
Riley Bell
Alexandru Colita
Nicholas Gonzalez
Derek Morin
Yuan (Amy) Zhang
MGMT 390: Industry Analysis Projects
Norine Webster
University of British Columbia Okanagan
February 14th, 2014

Table of Contents

1. Executive Summary……………………………………………………………………….2 2. Industry Description………………………………………....…………………………….3 3. Value Chain……………………………...………………………………………………..5 4. Relevant Features/Factors for the Industry ……………………………………………….7 5. Porter’s Five Forces ………………………………………………………………………9 5.1. Competitors and Level of Rivalry ……………………………………………………………………...9 5.2. Suppliers and Relative Power…………………………………………………………………………10 5.3. Buyers and Relative Power …………………………………………………………………………...10 5.4. Possible New Entrants, Barriers to Enter and Exit, Threat of Entry ………………………………….11 5.5 Substitute Products, Barriers to Switching, and Threat of Substitutes………………………………...12

6. Financial Ratios………………………………………………………………………….12 7. STEEP Analysis………………………………………………………………………….16
7.1. Social/Cultural Factors…………………………………………………………………………………16
7.2. Technological Factors…………………………………………………………………………………..18
7.3. Economic Factors………………………………………………………………………………………19
7.4. Environmental Factors………………………………………………………………………………….20
7.5. Political Factors………………………………………………………………………………………...20

8. Significant Drivers……………………………………………………………………….20 9. Key Success Factors……………………………………………………………………..22
9.1. Distribution……………………………………………………………………………………………..22
9.2. Brand Name and Brand Loyalty………………………………………………………………………..22
9.3. Manufacturing and Packaging………………………………………………………………………….23
9.4. Excellent Customer Service…………………………………………………………………………….24

10. Conclusion……………………………………………………………………………….24 11. Appendix………………………………………………………………………………....26 12. Bibliography…………………………………………………………………………......28

1. Executive Summary

Thesis
The cosmetic industry is a fiercely competitive business environment that relies heavily on effective strategies in the manufacturing and marketing of brands and products in the hopes of increasing consumer awareness and raising market share.

Major Topics
Included in this industry analysis there is a comprehensive breakdown of the cosmetic industry in North America. To be specific, this report focuses on the make-up industry within the cosmetic industry as a whole. An industry history and description will kick this report off, followed by a value chain analysis, relevant features of the industry, a breakdown of Porter’s Five Forces, financial ratios of the top three major players, a STEEP analysis, a description of significant drivers and key success factors, and finally a conclusion. Appendices and a bibliography can be found at the end of this report.

2. Industry Description
A cosmetic is any product applied to the body, especially the face, to improve its appearance. The purpose of the cosmetics industry is to provide adults, primarily women aged 14-64 years, with make-up products to enhance their appearance and increase self-confidence. Dating back to the primordial times of the Egyptians, Greeks, and Romans, the cosmetic industry is valuable to study because it is a significantly vital industry to the individuality and uniqueness of people today. This industry has had and continues to have major influences on the colorful social lives of humans globally (Kumar, 2005). Not to mention the major social trends affected by this industry through mass media outlets such as theatres, magazines, and movies. The process of this industry includes gathering chemicals and resources for manufacturing, inbound and outbound logistics accomplished by effective operations, heavy marketing and sales, and customer service. For this report cosmetics will be narrowly defined as all make-up products. This will include eye make-up, face make-up, lip make-up, and nail make-up. Cleansers, make-up removers, and...

Bibliography: Associated Press. (2014). N.Y. Legislation Would Ban Plastic Bits in Cosmetics. Retrieved February 11, 2014 from http://online.wsj.com/article/AP0c36e8466d994b919b1fef47
4b54c8a0.html?KEYWORD S=NY
Azoury, N., & Salloum, C. (2013). Brand Affect 's Impact on Consumer Loyalty: Empirical Analysis. Revue Des Sciences De Gestion, 48(261), 11-11.
Edgar, M. (2008). Canadian Chain Gets Eco-Savvy. WWD: Women 's Wear Daily, 195(89), 7-7.
Hitchcock, B. (2001). Thank Heaven for Little Girls. Marketing Magazine, 106(1), 14.
Latimer, J. (2011). Women lash Out-Way, Way Out. Maclean 's, 123(51), 92-92.
L 'Oréal Finance : Half-Year Financial Report. (2013). L 'Oréal Finance : Half-Year Financial Report. Retrieved February 12, 2014, from http://loreal-finance.com/eng/half-year-report
MarketLine
MarketLine. (2013). Make-up Industry Profile: United States. MarketLine Industry Profile. 1-38.
Nezakati, H., Yen, C. P., & Akhoundi, M. (2013). Antecendens Impact on Brand Loyalty in Cosmetics Industry. Journal of Applied Sciences, 13(1), 126-132. doi:10:3923/jas.2013.126.132
N.Y
Procter & Gamble. (2013). PG.com Investor / Shareholder Relations: Current Events, Latest News. Retrieved February 12, 2014, from http://www.pginvestor.com/
Product Line: Cosmetics, Make-Up, and Perfumes (Sub Category)
Revlon Inc. - AnnualReports.com. (2013). Revlon Inc. - AnnualReports.com. Retrieved January 17, 2014, from http://www.annualreports.com/Company/784
Revlon, Inc
Topoyan, M., & Bulut, Z. A. (2008). Packaging Value of Cosmetics Products: An Insight from the View Point of Consumers. ICOVACS, Izmir-Turkey.
Grading Rubric for Industry Assessment – Part 1
Section: Date: February 14, 2014
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