The Structure of the Global Beauty Market

Case 6

The structure of the global beauty market is being changed by richer, ageing baby-boomers and increased discretionary income in the West, and by the growing middle classes in developing countries. For example, China, Russia, South Korea and Brazil are becoming huge market. In India sales of antiaging cream are increasing by 40 per cent a year. Avon is growing rapidly in different parts of the world, in Russia, Western Europe and in South America.

The traditional global beauty brands established by such companies as L'Oreal, Elizabeth Arden and Helena Rubenstein finding themselves in a vulnerable position because, global competition in the market is becoming too tough. And   now these companies should to fight hard in a global market where traditionally they have earned huge margins and enjoyed continuous growth for many years.

Unilever and Procter and Gamble, facing maturity in many of their traditional businesses, are devoting more resources to developing global beauty brands. Luxury product manufacturers such as Dior, Chanel and Yves St Laurent are moving into mainstream beauty products

Many of the global giants are growing by buying up smaller brands. There are some reasons, why big companies buy little ones. For example, to sell product of a small company to customers of bigger company. First Research creates cheat sheets for salespeople who want to sound smart when they call on a new customer in an industry they are unfamiliar with. Secondly, to leverage of a small company technology to make one of the products of bigger company better. Then to get a hold smartest employee of a small company and to acquire a new place to sell stuff of a bigger company. Japan’s Kao have gone into the hair dye market by buying John Frieda while Estee Lauder has acquired Stila, MAC and Bobbi Brown, all of which are innovative and growing make-up brands.