Industry Analysis
1. Industry overview The cosmetic industry is a segment within the beauty and personal care industry, the distribution and sale of cosmetics is spread among a wide range of different businesses. Cosmetics companies deal in skin and sun care products, makeup/color cosmetics, fragrance, toiletries and various other grooming products.
In 2012, the total industry revenues are $245 billion (180 billion euros), with an industry revenue growth of 3.4% over the last five years. According the table, except the decreasing growth rates from 2008 to 2009, due to the worldwide economic crisis, the cosmetic industry keeps a considerable increase speed, around 4% per year, which offers a powerful supporting sign that the industry is…show more content… The mission is stated as ‘Beauty for all’, seeking the universalization of beauty by diversifying its teams and the richness of its brand portfolio. According to the annual report, to be more specific, beauty is a language, allowing all individuals to express their personalities and what they treasure. Also, the beauty offered by L’oreal will boost customers’ self-confidence so they are able to open to others. Also, beauty is universal. One of L’Oreal’s missions is to provide the best of cosmetics innovation in terms of quality, efficacy and safety to customers globally, satisfying their needs and desires, regardless of the ethnic needs, levels of purchasing power, cultural expectations. To achieve this mission, L’Oreal establishes its international brand portfolio to serve customers’ needs. Moreover, beauty is a science. In this beauty and personal care industry, the renovation and invention plays an essential role in the expansion. L’Oreal is going pretty well to great lengths to continually explore new territories and invent the products of the future. The combination of the market and the science can be seen from the continuous effort put into the R&D. Lastly, beauty is a commitment. L’Oreal takes up its social responsibility to provide access to products that enhance well-being, mobilizing…show more content… Challenges:
The flat growth in North America consumer product division;
The decentralized organizations (higher requirements on the management of new acquisitions);
Opportunities:
The digital revolution;
Consumers are more informed and connected to share the beauty information;
Consumers desire for more personalized products and services;
Consumers are more environmentally concerned about the ingredients, processing and even packaging. Threats:
The fast changing trends in this industry;
The volatile economic environment, especially in the developed regions;
The amount of natural disasters have potential risks on the global supply chain.
G. Business Model
The key value proposition lies with the comprehensive international brands portfolio, so L’Oreal is able to serve the worldwide customers on their dynamically changing needs. The business model is explained in more details below.
H. REVENUE AND COST DRIVERS
REVENUE BREAKDOWN BY BUSINESS