Economics assignment report analysis on: Indian cosmetics market

1. Executive Summary:This report takes into consideration the estimation of the market size for a men’s fairness cream in India. The men’s fairness cream is one of the booming industries in the Indian cosmetics market.

The Indian cosmetic industry has been expected to grow at an average rate of 15% – 20% on yearly basis. The report would take into account the market size of the fairness cream in India, the key players in the Indian cosmetics market, percentage contribution of the male population in the cosmetics market. This report would also highlight the major competitors direct as well as indirect with which the upcoming product has to fight behind the scene. The estimated market share & the reasons to support the sales as well as the market share.

1. Market Size of the fairness cream in India:

The fairness cream in India refers to one of the most essential components in the cosmetics industry. The sale for the fairness cream in India has been increasing at a steady pace which refers to an increase in the market share of the FMCG products in the Indian market. Initially, fairness cream were manufactured & only catered to the female segment of the Indian Market. With an increase in the Western Culture, the males have also started preferring fairer skin tone (Manivannan, Kannan & Natrayan, 2000). With the rise in the taste & preferences of the females to get attracted towards fairer men, various male fairness creams have been manufactured & the sales of such creams are on a roll.

The success ratio of the fairness cream is maximum in the southern regions such as Tamil Nadu, Karnataka, Kerala, etc. as the males in such regions have a dark skin tone. There are various brands of fairness cream available in the Indian market; hence the competition is quite fierce in this particular segment (Mazzucato, 2000).

The estimated market size for the fairness cream in India is approximately 800 crores. It must be noted that the rate of growth with which the fairness cream market is likely to increase would be at an approximate rate of 15% – 20% on yearly basis. It is calculated that, the male fairness cream comprises of approximately 20% of the entire fairness industry in the Indian market (Mazzucato, 2000). There many key players in the fairness market in context of the Indian fairness industry. Some of the key players include Hindustan Lever Limited i.e. Godrej – Fair Glow, HLL – Fair & Lovely, Emami’s – fair & Handsome, Cavin Kare’s – Fairever, etc. The remaining market share is being covered by Vicco & Himalaya (Manivannan, Kannan & Natrayan, 2000).

There is a huge scope of improvement & growth in the cosmetics market especially in the Indian context. The existing players in the Indian cosmetics market majorly focus upon improving the quality of the product which they are offering to their target market & there would be some near entrants in the markets would be ready to explore the Indian cosmetic industry as it is one of the most booming segments (Manivannan, Kannan & Natrayan, 2000).

The major target market for the men’s fairness cream in India would be in the southern regions i.e. Tamil Nadu, Karnataka, Kerala, etc. The men in this particular region are quite dark & would be willing to use the cream in order to lighten their skin tone (Mazzucato, 2000).

It must also be noted that the various men’s fairness cream brands available in the Indian cosmetics market would have a different strategy in order to target different region of the country. It should also be seen that, the brand which would be successful in one part of the region might not be that successful in the other region. Hence, fair research & in depth study should be conducted in order to see the appropriate market to target.

The market for the men’s fairness cream is quite huge. It covers both rural as well as the urban market. In the Indian Cosmetic market, stiff competition has been noticed among the two key players i.e. HLL’s – Fair & Lovely & Emami’s – Fair & Handsome.  The customer prefers the two brands mentioned above as compared to the other brands readily available in the cosmetics market (Manivannan, Kannan & Natrayan, 2000).

In the 800 crore market of the Indian fairness industry, there has been a cut throat competition amongst the various brands available. All the brands are formulating strategies in order to enhance & establish their operations all across the globe. The domestic players are now targeting the international markets by producing a highly developed product which would suit the climate conditions, etc of the foreign market (Mazzucato, 2000).

As mentioned above, the Indian cosmetic industry is expected to grow at an approximate rate of 20%, hence India would be one of the most appropriate markets to come up with a men’s fairness cream which would suit all the conditions. The climate of India is hot & humid, hence with the launch of such product i.e. the men’s fairness cream they would also be able to protect them from the scorching heat & avoid tanning of the skin (Majumdar, 2006).

1. Competition:With many players present in the Indian cosmetics market, there is stiff & cut throat competition amongst the players as they would provide the same type of a product serving the same purpose of its customers (Mazzucato, 2000).

There would two types of competition amongst the competitors such as Direct & Indirect Competition. The direct competition refers to the competition which would be between the similar category of the product serving the similar purpose, such as Fair & handsome & Fair & Lovely competing with one another in order to capture a huge chunk of the market share (Majumdar, 2006).

The indirect competition would be amongst the various fairness brands available in the Indian cosmetics market.

The top 10 fairness creams available in India would be listed as under:

Þ    Garnier Light

Þ    Fair & Lovely

Þ    Olay Natural white

Þ    Pond’s White beauty

Þ    Loreal

Þ    Nivea

Þ    Lakme Radiance

Þ    Fairever

Þ    Neutrogena Fine Fairness

Þ    Fairone

The top 10 brands mentioned above would be the indirect competitors. Though, all the brands listed above might not be offering a similar category of the product i.e. men’s fairness cream but, there is a possibility that they might offer the similar category of the product in near future (Manivannan, Kannan & Natrayan, 2000). The list of the indirect competitors would become the new entrants in the Indian cosmetics market which would serve the needs of their customers (majorly men).The list of the competitors mentioned above majorly focuses upon the female market segments & look into their needs as well as requirements (Majumdar, 2006).

The standard of living of an average Indian has increased as compared to the past many years. The Indian economy consists of middle class people rather than the lower middle class or poor class. Men in India have been more cautious regarding the color of their skin.  An increase in the income of an average Indian consumer has led to an increase in the number of dermatologist’s centers, skin clinics, salons, etc (Manivannan, Kannan & Natrayan, 2000). This trend shows a positive impact on the Men today & makes them more cautious regarding their look. This has led to an increase in the number of fairness cream being sole in the market (Majumdar, 2006).

On an average the monthly income of a male between the age group 20 – 50 years in India would be Rs 30000. Therefore, the target segment or the target group to which the men’s fairness cream would be sold would be earning approximately Rs 18000. The price of the product would be estimated to be Rs70 – 80 for each 50gms of tube. The packaging of the product would be quite attractive & would contain a logo of the corporate brand with all the details acknowledged on it. Men today are willing to pay for such kind of services; hence the product would be a success in the Indian cosmetics market (Manivannan, Kannan & Natrayan, 2000).

1. Market Share & Sales:

The market share enjoyed by the two key players of the Indian cosmetics market i.e. Emami’s – Fair & Handsome & HLL’s – Fair & Lovely is quite high & majority of the men prefers to use these two brands as compared to the other fairness cream available in the market (Majumdar, 2006).Fair & Handsome is worth Rs 45 crore & has an approximate market share of about 30% – 40% of the entire cosmetic market. Whereas, on the other hand, Fair & Lovely captures 28% of the market share. The sales figure of the two brands mentioned have been on a rise since their inception as men are quite cautious regarding their looks (InfoBharti.com).

The approximate sales figure of Fair & Lovely has been estimated to be Rs 500 crore out of which the share contributed by men accounts to Rs 100 crore. On the other hand, the sales of Fair & Handsome accounts to 20% of that of HLL are fair & Lovely (InfoBharti.com).

Apart from capturing a high market share, the key players i.e. Fair & Lovely, Fair & Handsome have been facing a cut throat competition from Cavin Kare’s – Fairever while targeting the male consumers (Mazzucato, 2000). Fairever contributes an approximate figure of 27% as their target market in the Indian cosmetics industry. Their sales accounts to Rs 80 crores which depicts a fair deal as compared to the two big brands in the Indian Cosmetics industry. Out of Rs 80 crores, Rs 22 crores has been contributed by selling the fairness cream to men (Mazzucato, 2000).

In order to establish its operations in the Indian market, the company should formulate & implement certain strategies which would help them in order to capture a huge target market or a target market which would be at par the other brands available in the market (Majumdar, 2006).

An increase in the market share would lead to an increase in the level of sales which would be made by the organization. The major reason in order to increase its market share, the organization should collaborate & create tie ups with the various skin clinics, salons, dermatologists, etc who would recommend to use a particular fairness cream to the male population which would help them to enhance, lighten their skin tone.

As mentioned above, the Indian cosmetic market has been on a boom & is increasing at an increased rate; therefore, the organization would be able to earn an approximately 40% of the profits amongst the entire cosmetics industry. In the years to come, the organizations would be able to double their profits in a short span of time (Majumdar, 2006).

With high levels of competition amongst the female’s fairness cream, the organizations decided to stretch their product line by introducing a fairness cream especially made to suit the male requirements. As the number of metrosexuals males has been on peak in India, thus, it would be an added advantage for the organization to come up with a new product in the same category such as a different variant of cream to suit dry, harsh, oily skin tone, etc (Manivannan, Kannan & Natrayan 2000).

In order to cater the Indian market & increase the number of sales, the organization should have a fair knowledge regarding the taste, preferences, culture, climatic conditions of that particular region. In order to attain an added advantage over the other key players, the product should be manufactured in such a manner that it would match up all the requirements. This would help them to capture the demand & target more number of customers (Mazzucato, 2000).

Such type of moves would help to enhance the sales & increase the amount of revenue which would be generated by selling up of the fairness creams.

1. Reasons to support the sales:

Proper research & in depth survey depicts the reasons in order to support the market share & the amount of sales. They are as under:

Þ    The very first reason to support the increasing sales of the male fairness cream in the Indian cosmetics context would be through the brand preference as well as the awareness of a particular brand (Manivannan, Kannan & Natrayan 2000).

The table below would show the brand preference as well as the mind awareness of a particular brand in the Indian cosmetics market:

Fairever

Vicco

Fair & Handsome       1

2

3

4

The ranks allotted states that the number of consumers or customers who prefer the following brands mentioned above in the table. The sequence in which the ranks have been allotted to the brands shows the awareness of the brands amongst the target population (Manivannan, Kannan & Natrayan 2000).

Þ    The second reason which leads to an increase in the number of sales would be the influencing factor which helps the target population in buying the product. The table is as under:

Sunscreen

Fragrance        64

26

10

This table shows the reasons as to why the people buy the particular fairness cream. There are three key factors due to which the people buy the cream.

Þ    The third reason which leads to an increase in the level of sales would be through the source which creates awareness amongst the people. The table is as under:

Retailers

Family

TV

Newspaper/ Magazines Ads36

20

20

10

14

The table shows the various sources of awareness which leads to the creation of high levels of demand in the Indian cosmetic market.

1. Conclusion

This report takes into consideration the estimation of the market size for a men’s fairness cream in India. The men’s fairness cream is one of the booming industries in the Indian cosmetics market. The report would take into account the market size of the fairness cream in India, the key players in the Indian cosmetics market, percentage contribution of the male population in the cosmetics market.Thus, it could be concluded that once the target market is selected where the product is to be launched, in this particular case India, the market size of the fairness cream in India is to be judged (Bhushan, 2004), the key or the main players of the Indian cosmetic market should be taken into account in order to see their market share in the entire Indian cosmetics market & estimate the approximate sales so as to encounter level of competition (InfoBharti.com).

In order to be successful in the Indian cosmetics market, the two key players i.e. Fair & Lovely & Fair & Handsome should be taken into account as they rule over the fairness segment in case of the males target population (Bhushan, 2004).

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