Introduction
Biotechnology has influenced cosmetic industry in many ways. Biotechnology is used by the cosmetic industries for research and manufacture of cosmetic components as well as in assessing the effects of natural and synthetic amalgamation on skin as well as changes associated with aging. Botox is one of such products and it is made from Clostridium botulinum that minimizes wrinkles as a result of paralyzing nerve cells (Milesi, Lucas, Marchant, Laperdrix, Lubrano & Robin, 2015) L’Oreal has also developed an artificial human skin that is used to test for irritation of newly manufactured products.
Through the SWOT, PESTEL and Porter’s five forces India provides a effective market in which Maybelline would invest. The Indian population and stable political system are among the encouraging factors for the company to invest in the market.
SWOT Analysis
SWOT analyses are carried out by organizations in order to determine their strengths, and weaknesses, as well as their external opportunities and threats. The aim of the tool is identifying the goals of an intended business while also identifying the possible benefits and problems that the business could have by examining the internal and external factors.
Strengths
Strengths are operations and activities that an organization does best and could provide organizations with competitive advantages. The following are some of the strengths of Maybelline LLC:
- Variety of products: The company provides different products in every category such as lipsticks which lie in four sets of colors in which there exists 28 color codes from which consumers are able to choose the best color that fits their attires
- Product quality: Quality for each product provided by Maybelline is tested for allergies and other side effects
- Innovation: The biotech and cosmetic industry is highly competitive in such a way that quality is not the only differentiator. As a result, the company’s acquisition by L’Oreal, the global giant in the cosmetic industry, has exposed the company to intense innovations especially with partnership with biotech companies (BURGER, 2014).
- Diversification of markets: Due to the high volatility of the industry, the company has diversified its risks by expanding into different markets
- Effective marketing: Maybelline promotes its products using movie celebrities, with a backup of other famous individuals. For instance, Alia Bhatt has been its ambassador.
- Association with L’Oreal: Association with the world’s leader in the industry creates a brand trust for its products
Weaknesses
Weaknesses indicate the areas in an organization that require improvements. In Maybelline some of the weaknesses involve:
- Weak Website: The company’s utility on e-commerce has not been optimized with a confusion on navigation buttons and poor view on its products
- Chemical in makeup: The company has been suspected of using too many chemicals in its products
- Little social media presence: Maybelline does not have a prominent social media presence as compared to its competitors. Some of its close competitors such as Revlon and Lakme post real-time information and provide favorable reviews as well as celebrity pin-ups on various social media platforms.
- Limited differentiation: Despite the fact that there are different products from which customers could choose from, there is no distinct feature or quality that exists in their products, hence confusing its customers.
Opportunities
Opportunities refer to the channels in the organizations environment in which the businesses could capitalize in order to increase their profitability. Maybelline opportunities include:
- Change in consumer behavior: Consumers around the globe have become more open to using makeup in every setting. Technology and globalization have improved women’s awareness on the makeup trends hence leading to a preference for cosmetic products
- Increase in number of working-class women: Increase in number of educated and professional women has increased the population of working women in the recent years. Education and working environment increase the demand for professional dressing as well as official appearance which also improves the demand for cosmetic products
- Growth in per capita income: There has been an increase in per capital income globally, that generates more disposable income that enhances more purchasing behavior of customers
- Focus on personalization: currently individuals demand more personalized cosmetic products that they are willing to purchase. As a result, companies charge a premium for such products especially when accompanied with makeup kits.
Threats
Threats refer to factors in the environment that could hinder the growth of a company. These include:
- Competition: Cosmetic industry faces intense competition both by local and international companies such as but not limited to Revlon, GreenTech, Mibelle and Amyris (Milesi, Lucas, Marchant, Laperdrix, Lubrano & Robin, 2015).
- Economic recession: Occurrence of global recession led to many people losing their Jobs hence reducing disposable incomes that could be used in purchasing surplus products
- Negative media hype: Cosmetic products have been often criticized to having chemical content with tests applied on animals that affect individuals’ health in the long-term. The negative imageries make customers to prefer mineral as well as the organic types
PESTEL Analysis
PESTEL is a strategic tool used to analyze the external or Macro-environment factors that affect the operations of the business either positively or negatively. India is a developing country in Asia that has experienced high growth rate in cosmetic industry in the recent years and thus the best choice for the study.
Political factors
The government also almost doubled taxation on imported products, raising tax to a final rate of 40.8 percent. This was due to the imposition of the Goods and Services Tax (GST). As a result, this would discourage new entrants into the market. However, India’s political stability is a political factor that would encourage investing in the country.
Economic Factors
The Indian cosmetic market was rated at 250 billion Rupees six years ago and has been growing due to decrease in the effects of global recession of 2009. The decrease in illiteracy levels especially for women and the increased consciousness about fashion and beauty products contribute to the continued growth of the industry.
Social factors
The fashion shores in India are common with functions such as the culture weeks which also raise the awareness of cosmetics and fashion. Nevertheless, the country has a long history of dancing and beauty contests that promote boost the market of cosmetic industry. Moreover, the country’s second largest population in the world is the main factor that attracts many global companies to tap that market. However, the Indian Muslim market has not been tapped and thus more research needs to be directed in this section
Technological factors
India provides effective technological and physical infrastructures such as communication and roads that improves the connectivity for cosmetic products. Accessibility for the internet and gadgets has improved marketing, research and sales of cosmetic products that have led to a shift of consumers purchasing behavior. Youths have increased their demand for cosmetic products due to increased access of Smartphone and the awareness of how appealing the products are for other youths in the world. Men have also been able to acquire their share in the demand for cosmetic products courtesy of the awareness created by technology.
Environmental factors
The rise in awareness on cosmetic products has also increased the skin problem issues. Despite how glossy cosmetic products are, excessive use of cosmetics has its own flaws, such as uneven skin tone and discoloration of the lips or eyelids. The Indian market prohibits use of mercury products in the manufacture of lipsticks but allows it to be used in the manufacture of eye care products only. However, when tested it was found that lipstick contained some harmful levels of products in it. However, mercury could naturally occur in the air and could thus not be an issue of the cosmetic industry.
Legal factors
All companies need to follow all rules and regulations. These involve disclosure of financial statements that indicate a company’s growth and the future investments that companies might undertake. Indian government provides and approves intellectual property and ensures ethical conducts are followed. Due more global cosmetic companies investing in Indian market, the Indian government recently stepped in to control the cosmetic imports. The government implemented the new rules on April 1st 2013 that amended the Drugs and Cosmetics rules, of 1945. The new rules require that the imported cosmetics be registered with the Central Drugs Standard Control Organizations (CDSCO). This ensures that companies sell products that have no hazardous products. Moreover, the registration procedure is also tedious with more documents required before the issuance of a certificate of operation in the country, addressed in Form 42. These include manufactures license, copies of information about different cosmetic brands, testing protocols and Schedule III that contains the chemical and safety information among other requirements.
Porter’s five forces
According to Michael Porter theory that was coined in 1979, there are five forces that influence the level of competition in a particular market. The theory determined the intensity of completion and as well as the attractiveness of the market, in what is called Porter’s five forces. The five forces are discussed below:
Threat of established competitors
Internal rivalry in the Indian Cosmetic industry is very high. The country has a host of local cosmetic industries such as the Clarion Cosmetics, Mahavir Health and Paramount cosmetic among others. Moreover, global companies are also many with giants such as L’Oreal and Johnson and Johnson companies among others also in the mix. The global markets have the lion’s share and thus entry would be difficult.
Threat of new entrants
Entry into a new industry is not a tourist endeavor as new entrants have to compete with local and giant corporations. Multinational companies have invested intensively in R &D and marketing that makes entrant fees to be huge (BURGER, 2014). As a result, new entrants must be prepared sufficiently in producing unique products or access untapped markets in order to thrive in the cosmetic industry.
Threat of substitute products
In the theory threat for substitutes exist when a change in the products demand is influenced by the change in price. In the Indian market, there is a range of products in which consumers have choices to make hence the products become more elastic. As a result, the product threat is low.
Purchasing Power
The consumer purchasing power is very high in such a competitive market. Acquiring customer loyalty is very tricky as consumers do not stick to one brand for the range of products and consumers always have hair products from one company and hair products from another company and could as well purchase same products from other companies’ next time. The trend is different as urban consumers are more aware of cosmetic products and tend to be less loyal compared to rural individuals who are less aware but have higher loyalty.
Bargaining power of suppliers
The Indian cosmetic industry has a moderate bargaining power. The suppliers are always fragmented and interlinked. Due to existence of major players in the industry local suppliers have moderate bargaining power as companies may switch to others. However, chemical producers have various markets and do not depend on the cosmetic suppliers.
Five major goals the business unit strategy need to attain
The analysis of the tools above would provide the company with an opportunity to determine its entry into the Indian market that has been analyzed above. The following goals have been developed to assist the company enter in the new market.
- To determine the method of accessing the Muslim market. It has been found that the Muslim women customers do not purchase the industries products in fear that they contain alcohol that is prohibited by their religion. However, the company should find ways of alleviating this notion by: Creating awareness among Muslims that the products are not alcoholic, encouraging them on using the products and increasing Muslim participation in the production process (Szutowski & Szułczyńska, 2017). This would open up the Muslim market hence increasing Maybelline sales.
- To determine ways of improving marketing. The company has poor marketing of its products especially on online platforms. As a result, the company’s objective should be updating its information every week, developing a marketing group that would research the best ways of improving its research and benchmarking with the best players in the market.
- To invest into biotechnology. The company’s products are based on chemicals which have been criticized by many consumers and resulted strict regulations. As a result, the company should aim at three objectives which include, investing large capital in R&D, employing competitive individuals to enhance research and partnering with tech companies. These would increase its product range and also improve its brand.
- To promote environmental and health safety. Most competitive companies have invested greatly on environmentally friendly activities and health and safety for employees and customers in general. Therefore, Maybelline should focus on three objectives which include, researching on ways of developing environmentally friendly products like the biotechnology, eliminating mercury it its products, promoting a safety work environment for its customers and setting strategies that would promote its corporate social responsibility.
- To conduct ethical business. Ethics are important at improve any company’s brand and thus increasing sales. The company should ensure that if follows rules in the India market, it ensures quality is provided and also ensure that products are sold at fair prices.
Conclusion
The paper has used the SWOT analysis in identifying its weaknesses and opportunities, in which the goals highlighted, would assist in tapping the Indian market that provided an opportunity for cosmetic businesses. The PESTEL analysis for the Indian market has provided an insight into the market in which the company would determine whether to invest in the market or not. Five Porter’s forces have also enabled the company to determine the nature of the market and the attractiveness of the Indian market. I recommend that the company invests in the market as India has a favorable political environment as well as high economic potential, hence the ability to increase sales.
References
Berger, H. (2014). Environmentally compatible surfactants for the cosmetic industry. International Journal Of Cosmetic Science, 19(5), 227-237. doi: 10.1111/j.1467-2494.1997.tb00186.x
Milesi, S., Lucas, C., Marchant, M., Laperdrix, C., Lubrano, C., & Robin, J. (2015). Research for plant active ingredients of cosmetic interest: Innovation process for a cosmetic company. Planta Medica, 74(09). doi: 10.1055/s-0028-1083902
Szutowski, D., & Szułczyńska, J. (2017). Product Innovation In Cosmetic Industry – Case Study Of Major Cosmetic Companies. GISAP:Economics, Jurisprudence And Management, (12). doi: 10.18007/gisap:ejm.v0i12.1620
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