1. Market size: It is estimated that the Indian beauty market is worth more than US$ 1.5 billion and is rising at 20 percent a year -- twice as fast as the US and Europe markets. In fact, the Indian market is projected to grow four-fold to 60 million women by 2004. Premium brands are also gaining in sales as Indian women are increasingly gaining global exposure. Top-end western brands adorn the shelves of exclusive shopping malls.
2. Purchasing power of consumers: There is a tremendous increase in the female consumers. This is due to increasing number of women becoming the earning members of the family due to their increased level of literacy and growing influence of the media.
3. Major players: The segment that offers the highest competition is the cosmetic segment, which has Multinational players such as J. L. Morrison, Ponds, Unilever and Colgate
Palmolive. The increasing demand in the cosmetic industry has led to many international brands such as Maybelline and Revlon, Avon, Loreal entering the Indian market.
4. Marketing: The Indian cosmetics industr y is going through a very active phase in terms of product development and marketing. Indian consumers are moving away from the merely functional products to more advanced and specialized cosmetic items. Marketers have taken note of this change and developing new marketing strategies to offer the Indian consumer the best.
5.Rising incomes and demographic shifts spur sales
Economic and demographic trends continued to be a major influence for sales of cosmetic and toiletries in India, which grew by 5% in current value terms to cross the Rs150 billion mark in 2004. A cumulative positive impact has been rendered by the upbeat pace of the Indian economy post-liberalisation which enhanced disposable income levels and aspirations amongst rural consumers, changing lifestyles in the booming middle class, as well as a fast growing base of youth with a high inclination to self-indulge. Pervasive media and rising Westernisation influences have awakened the consciousness of the Indian consumer to proactively seek health and beauty offerings to look and feel good.
6.Hindustan Levers lead remains unassailable
Thanks to its unparalleled distribution strength and the sheer size of its brand portfolio spanning across most product areas, Hindustan Lever Ltd continued to guard its fort with 40% value share of total cosmetics and toiletries sales in 2004. Towering high above its competition, Hindustan Lever displayed resilience throughout the review period despite a fiercely competitive and fragmented operating environment. Retention of its consumer base through price-correction and brand makeover initiatives, enhanced rural volume sales for its lower end toiletry offerings, whilst innovation and premium offerings in facial moisturisers, colour cosmetics, sun care and fragrances, stood the leader in good stead amongst the middle and upper income consumers also. Colgate-Palmolive India Ltd and Godrej Consumer Products Ltd continued to play bridesmaid in second and third positions, with far inferior company shares.
7.Focus on innovation and price-segmentation
The divergent mindsets and distinct consumer purchasing patterns in the rural and urban areas of India have prompted manufacturers to pursue focused strategies to cater individually to these distinct consumer segments. 2004 saw rural penetration riding on the back of multiple price points in a variety of pack sizes as well as discounting and freebies to enhance product affordability and stimulate trials. This was especially apparent in bar soaps, shampoos, toothpastes and lower-end skin care and colour cosmetics. Urban areas, on the other hand saw renewed consumer excitement through brand extensions, upgrading to family packs, exciting product formulations such as herbal ingredients, internationally proven scientific formulas, and health positioning initiatives deployed within mass toiletries. Premium cosmetics, salon hair care, fragrances, skin care and mens grooming saw emphasis on product differentiation, specialised features and rising brand awareness and visibility through media and enhanced distribution reach.
8.Mounting aspirations and an upbeat economy herald a bright future
Despite a slow-down in growth over the review period, the Indian cosmetics and toiletries industry is buzzing with optimism for the future. As the economy rides on optimistic GDP growth rates, this would translate into higher purchasing power across rural and urban segments, pushing manufacturers to produce a wider variety of products to cater to this rising demand. Growing media and Westernisation influence will stimulate awareness of personal hygiene as well as beauty consciousness, enhancing the adoption and frequency of usage of cosmetics and toiletries especially amongst rural users. Furthermore, the urban consumer base would increasingly upgrade to sophisticated mid-priced and premium products. The most dynamically growing product areas over the forecast period are expected to be colour cosmetics, fragrances and sun care, due to their relative immaturity, although everyday use mass toiletries offerings will continue to rake in the highest sales numbers.
The first challenge that the colour cosmetics industry had to face was to undo the negative connotations attached with "Being fashionable". Further they also had to dispel the fears that colour cosmetics are harmful for the skin. They had to help the peoplelearn to adopt cosmetics as an essential part of daily grooming.
In this industry positioning is carried out mainly by advertisements. Lakme has always advertised in the various mass media available. It also has a very good distribution network. For instance, its premium brand Orchids has followed the path of Chambor, and is placed only in large and reputed retail stores
To position them strongly amongst the 6 million youth section Lakme came up with Elle18 in early 1996. It was advertised for the "Young girl who breaks the rules and loves to have fun". These ads showed young, college and high school going girls who projected the image of trying to be different and "cool".
In the premium segment Lakme has introduced another player, Aviance, which has been position as "customized beauty solutions". The distribution is handled by network marketing, which consists of a number of beauty consultants, mainly belonging to the upper-middle class, who have been well trained and are well groomed to spread the Aviance beauty gospel.