like many, I begin and end my day with my beauty routine. the cosmetics market is highly saturated; with brands, both old and new, and daily product launches. let’s take a look at how brands points of entry can make all the difference, both on your face and on the balance sheet.
In 2019, the Global Premium Cosmetic Market was estimated to grow to $126.1 billion. The beauty industry is made up of skin care, fragrance, color cosmetics and hair care. The United States is the global leader in this category, followed by China and Europe. Globally, the biggest players in this market include beauty conglomerates such as Shiseido, LVMH, Chanel, Estee Lauder, Coty, Kao, and L’Oreal.
As the middle class grows, there has been an increase to their disposable income. With more money to spend, millennials within this class are increasing their spending on cosmetics and opting for higher priced products. Although the beauty industry is relatively stable, economic fluctuations do not influence customer needs to purchase essentials, but can affect the purchase of discretionary products, like lipstick and eye cream.
Product innovations continue to grow the beauty industry. As new technology, ingredients and innovations are developed, brands become more competitive, entice new customers and create a larger niche within this vast market. This correlates to the price-quality relationship, as customers assume higher price means better quality. Brands within the luxury cosmetics segment must ensure their products meet quality and expectations in order to create a lasting, trusting, relationship with their customers.
When customers feel that the product surpasses their expectations, they begin to create value. This value is key to expanding and retaining your market, consequently improving the balance sheet and the brand’s reputation. Isn’t that the point though? Businesses begin with the sole mission of generating a profit. I constantly grapple with the fact that yes brands want to help their target market whether it’s clear their acne or fulfill whatever need, but at the core is making money.
The rise of social media and the internet is one of the biggest trends that has disrupted the beauty industry. The internet has created a generation of customers that prefer to do their shopping online. In order to stay relevant, these large beauty conglomerates must find a way to adapt to modern trends or else they will become extinct. Therefore, for brands to continue their financial and physical success, they must find a way to connect with their customers by having a deep understanding of their needs and creating products that fulfill their needs and exceed expectations. Successful brands of today have found a way to connect with their customers and have taken engagement to the next level.