INTRODUCTION
The attractiveness of an industry hinges on its potential for future growth, which is often influenced by the industry's size and customer perception. In the cosmetic sector, many companies manufacture and sell a diverse array of products, making it challenging for new cosmetic items to sustain themselves in the market. This assignment focuses on the cosmetic industry, specifically those dealing with Bulgarian gel products. It examines market size, profit margins, and utilizes Porter's five forces model to provide a comprehensive analysis.
TASK 1
Industry attractiveness
It is defined as an activity of organisation which generates profitability with determining the risks. It depends on the competitors who are existing in the marketplace along with their strength, margins and supply of products in compare of the organisation (Craig and Campbell, 2012).
The market size of Cosmetic Industry
Above chart is defined the value of cosmetics from the year 2009 to 2017. cosmetic industries are basically manufactures the products which are related with the skin care, health care and beauty products. This chart is basically defines the market size of the cosmetic products in United kingdom. According to the last financial report it was estimated that the business was taking a huge growth of 9.77 billion pounds at the end of 2017.
There are many beauty products are imported from various nations such as hair creams, body fitness vitamins in the world. France who is the largest importer or manufacturer of cosmetic products (Market value of cosmetics, 2017). UK also exports various products which includes rose creams body lotions and many more. Apart from that, Organic cosmetic products are also an essential part of this industry in which the country have a huge market presence in the world because 54% of total market size is captured by the organic products. Because there are various individuals who have a requirement of nature products so, there are various industries who are manufacturing the organic fairness products. Therefore, it can be said that the market size of cosmetic industries has been grown in recent years (UK Beauty Market Statistics, 2014).
Interpretation- From the above graph it can be said that the business of fragrances has getting lower increment than the other beauty products. Revenue from cosmetic colour product is decreased because of chemical ingredients in it. Sale of skin care goods are increased because of market trends and perception of customers. Hair care products have also increased its market size. Apart from that, it is seems that the natural products such as toiletries has an huge increment rather than other products.
Therefore, It can be said that market trends and perception of customers decide the growth of any industry. As per market trend it is seems that demand of natural products are increased because customer requires the non chemical products therefore, up coming time will be profitable for the cosmetic industry (Kamukama, 2013).
Porter Five Forces on Cosmetic industry
There are various organisations in UK which is engaged in manufacturing and selling cosmetic and skin care products. Therefore, to introduce new product into cosmetic market, the organisation should first analyse the competitiveness of market so that further decisions can be made accordingly. For this, Porter Five Forces is considered as a best method to analyse the market so as to achieve competitive advantage.
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Threats of new entrants: There are number of organisations engaged in selling various skin care cream products which has already attained strong position in cosmetic market such as Avon, Revlon, Clinique etc. which affect the new cream product to achieve sustainability due to having lack of trust and reliability. This will bring difficulties for new company to achieve sustainability within shorter period of time. The threat of new entrants are low due to having huge cost of entry. Developing unique cosmetic products such as Bulgarian rose cream requires funds to be invested in conducting research and development and manufacturing process (Luong, Vo and Le, 2017).
Threats of substitutes: In the cosmetic industry, the threat of substitute products are high due to having numerous rivals in the market. Therefore, if the cosmetic companies tried to increase the prices of their cream products then it may shift the buying behaviour of customers to substitute products which are hugely available in the market environment. To prevent such threat, the cosmetic organisation must introduce something new and innovative in their cosmetic product so that the chances of shifting buying behaviour of targeted people will be restricted.
Competitive rivalry: There are huge competitions amongst rivals in the cosmetic industry such as Elemis, Espa, Clarins and local companies. There are limited spas which have their own products therefore supply is more than the demand. Therefore the degree of differentiation is moderate. Therefore, huge number of rivals have their own brand products due to which it will be more difficult in cosmetic industry to achieve sustainability of new cosmetic products. Get the best teaching assistant level 2 coursework help from experts.
Supplier power: The suppliers in the cosmetic industry is low due to having high number of existing market players and largely supply of diverse products to the market. There are number of cosmetic products which are offered by both large and small scale manufactures. Due to high number of suppliers, the customer hold power to influence the market prices as opposed to the suppliers (Santoro, 2017).
Buyer power: Customers in cosmetic industry has high bargaining power due to having number of options to buy wide range of cosmetic products offered by number of companies. As the cosmetic products have high number of substitutes which forces manufactures of skin care products to lower their prices so as to attract their buying behaviour towards their new product. Therefore, to compete in market the cosmetic company should adopt penetration strategy in which the company first lower the price of their new product and after that increasing when achieve sustainability in market.
CONCLUSION
It has been concluded from the above report that industry attractiveness is based on the market trends and analysis of needs and demands of customers. Market size of this industry taking growth because of the requirement of customers. Porter's five model has analysed the strength and weaknesses of the competitors.
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