Use of cosmetics is not latest trend, it has its roots deep within the annals of history.

The word
cosmetic has been given this modern name lately. Through regular and formal use of cosmetics
has gained momentum now, it has been in some form or other since a long time.
To cite an example of the long usage of cosmetic, the cosmetics depict had found its origin in
China in the 4th century BC.
Indian too has not remained far behind in the development and frequent usage of cosmetics.
Household utility like haldi, chandan, basan uptoon have been used centuries to preserve the
natural beauty of skin. The reason for their usage was adequate availability of pure material, apt
knowledge of natural formulation and virtually zeros effects.
The cosmetics industry, which started glowing in the early 1990s, is expanding
exponentially. With

more

women

and

men

becoming

conscious

of

their

and

willing to spend on their grooming, this industry has been growing at 20-25
percent the last few years. No wonder then that the shelves are stocked with a
plethora of products and brands, targeted at various segments, catering to the
various needs of customers. The enormous growth in this segment has not only

attracted many MNCs but also provided space for many Indian companies to foray or expand
their product range.

GROWTH TRENDS AND PROSPECTS :

An ORG-Marg study reveals that while most FMCG products were affected by the general
slowdown, this segment witnessed relatively good growth in volume and value 2001. Not only
have more people started using cosmetics, they are also willing to pay more to look and feel
good. The penetration rate is higher in the skin-care segment compared to lipsticks. While
volume growth has remained low, at 3 percent, in the case of lipsticks, much of the value
growth ha come from price rises.
This not only means that consumers are willing to spend the extra bit to look
and

feel

good,

but

also

indicates

the

constant

up

gradation

from mass

to

premium products. Though mass products still constitute a major portion of the
market, a certain segment is obviously ready to upgrade to the next category as
disposable

incomes

rise.

more

personal

care,

on

promotions

targeting

trends

consumption

positive

in

signals

about

Increased

media

consciousness

various

consumer

and
the

about
The

prospects.

the

looks,

segments

penetration.

industry

exposure,
are

and
some

growth
With

willingness

to

spend

advertisements
reasons

trends

numerous

for

these

definitely
players

for market share, is the industry really big enough and the growth high enough

and
send

fighting

to accommodate all the players? What makes a player tick and create a niche for itself in the
market? These questions need to be pondered upon before jumping to conclusions about the
industry's prospects.
Value growth Value growth Price growth
%

Skin Care

11

Lipsticks

13

Though most players see huge opportunity in this industry, what would actually
work

wonders

for

the

players

is

strong

brand

promotion,

good

distribution

network, constant innovation and quality improvement, the ability to provide a

variety of products and introduce affordable products without compromising on
quality.
Cosmetics are still seen as elitist products and may be the last thing on an
average Indian consumer's mind. Though the low penetration levels for most
cosmetic

products

suggest

much

potential,

the

market

for

cosmetic

products

may remain a niche market, accessed by a small proportion of the consumers.

Despite the tall claims, the actual growth prospects would be limited to this
extent.

From

the

investment

perspective,

though

many

big

listed

companies

have

presence in the various sub-segments of the industry, HLL is the only listed
company that has a visible presence across all segments. Being a diversified
large company, the turnover from this segment may be too small for HLL to
affect investment decisions. As to the recent entrants such as Dabur and Dr.
Morepen, it may be a while before their financials reflect the dynamics of this
industry. The other listed players are Emami and J.L. Morison (India). Despite
their good financial track records, investing in these stocks may be highly risky
for a retail investor as low traded volumes and equity base characterize the
stocks.

COSMETICS
The cosmetic segment primarily comprises of colour cosmetics (Face, eye, lip
and nail care products), perfumes, talcum powder and deodorants. All these are
very small segments. Talcum powder is the most popular cosmetic product in
India. This market is estimated at Rs.3.5 bn and is yet growing at 10-12% in

pa.

Awareness is very high at 80% with a penetration of 45.4% in urban areas and
25.2% in rural areas. Pond's dominates the talcum market with a 70% share following by
Johnson & Johnson, which has a 15% market share.
Attar and alcoholic perfumes each account for 50% of the fragrance market
estimated at Rs. 3 bn. In the alcoholic perfumes market, 1/3rd represnted b an

unorganized, with the balance largely imported. The June 98 budget halvd duties to 50R Lakme
ha a minor presence in the segment. Perception of damage to skin on account of chemical
ingredients restricts usage of face care products. The nail polish market is the largest at Rs.2530%.
Deodorants have a very negligible presence in the Indian market an estimated of
Rs. 0.3 bn. Wordwide, deodorants is the largest market followed by skin care,
shampoos

and

toothpaste.

HLL

has

launched a

couple

of

products

in this

segment.

MARKET SEGMENTATION
The Indian market can be segmented in terms of product category and price. Again oral care, hair
care shampoos & oils, skin care, soaps and distribution network may divide the product
categories. s

ORAL CARE
The oral care market can be segregated into toothpaste

(60%), toothpowder

(23%) and toothbrushes (17%). While 60% of toothpaste is sold on the family
platform, around

35% is sold on cosmetic propositions. On the other hand,

while toothpowder accounts for 52% of the market, red toothpowder accounts
for 40% and black toothpowder accounts 8%. The penetration level of
toothpaste/powder in urban areas

3 X that in the rural areas. Traditional

materials such as neem and tobacoo are popular for cleaning in the rural areas,
Frequency of usage for toothpaste is only 1.5 times among other consumers,
compared with 2 times in the developed world. Per gm in Tahiland.
Given the low per capita consumption and penetration rates, toothpaste demand is mainly being
driven by the overall market growth of 8-10.The rural segment is also tooth powder growth.

HAIRCAREOILS
The hair oil market is huge, valued at Rs.6 bn. Due to the varied consumption habits of
consumers across the country, where coconut oil and edible oil are interchange used, the size of
the market is likely to be higher than estimated. More importantly, the market is growing at an
impressive 6-7% in volume terms despite the high penetration level.
Usage of hair oil is a typical Indian habit with 50% of the population out of which some perceive
that massaging the head with hair oil has a cooling impact. The penetration of hair oil is fairly
high at around 87% and evenly distributed among the urban and rural areas.

HAIR CARE SHAMPOOS

The shampoo market in India is valued at Rs.4.5 bn with the penetration level at 13% only. The
market is expected to increase due to lower duties and aggressive marketing by players
Shampoo is also available in a sachet, which is affordable and makes up to 40% of the total
shampoo sale.
The Indian shampoo market is characterized by a twin benefit platform; cosmetic and
antidandruff. It is basically an upper middle class product, as more than 50% of the consumers
use ordinary toilet soap for washing hair.
While the awareness level is high, the penetration level is very low even in the metros, which is
only 30%. Urban markets account for 80% of the total shampoo market; the penetration
level is rapidly increasing due to decline in excise duty, which was 120% in 1993 to 30%
currently.

SKINCARE
The skin care market is at a very nascent stage with basic requirements of the consumers being
protecting the skin from cold and dryness in winter, and improving fairness of the skin. Most
of the product categories are niche segments.

While the awareness rate is high in both urban areas accounting for 60R and rural areas
accounting for 30% the penetration level is low for both. This is because of apprehensions that
usage of skin care products may benefit in the long run due to the chemical contents. Many
households prefer to use traditional and natural home made products.
Since the market is at a very nascent stage with very low penetration levels, the growth rates are
expected to be higher at 24-255 over the next five years. New players such as Avon and Oriflame
have entered the market with the natural ingredient benefit platform, which could further spur
growth.

SOAPS
The product categories can be classified into three segments; premium (Lux,
Dove),

popular

(Nirma,

Cinthol),

and

economy

(Nirma

Bath,

Lifebuoy).

The

price differential between the premium and economy segments is about 2X. The
popular and economy segments account for about 4/5ths of the entire market for
soaps.
Penetration of toilet soaps is high at 88.6%. However per capita consumption levels remain low
India's per capita consumption of soap at 460 gms per annum is lower than that of Brazil at 1,100
gms per annum.

DISTRIBUTION NETWORK :
Soaps are available in 5 ml retail outlets in India, 3.75 m of which are in the rural areas.
Therefore availability of these products is not a problems 75% of India's population is in the
rural areas; hence about 50% of the soaps are sold in the rural markets.

PRICE SEMENTATION
Price is common basis for segmenting the cosmetics market. The market segments formed
accordingly now describe:

POPULAR SEGMENT
The sector is divided into two distinct segments-the premium segment catering mostly to urban
higher/upper middle class and the popular segment with prices as low as 25%-30% of the
premium segment , catering to mass segments in urban and rural markets. The premium segment
is less price sensitive and more brand conscious.

ECONONY SEGMENT
India's rural markets have been a lot of activity in the last few years. Since penetration levels are
pretty high in most categories, future growth can come only deeper rural penetration. FMCG
majors are aggressively looking at rural India since it accounts for 70% of the total Indian
households.

GROWTH
High consumer awareness and penetration levels will enable the market to grow at an average 810% per annum with slightly higher growth in the rural areas. Higher penetration stems from
popularity of low-cost detergents. Hence, besides increase in per capita consumption, there is
tremendous scope for movement up the value chain.
HLL, Nirma and P&G are the major players in the market with 40%, 30% and 12% share,
respectively. While HLL dominates the premium segment, Nirma is the leader in the popular
segment.

CONSUMER
The term consumer is often used to describe two different kinds of consuming entities; the
personal consumer and the organizational consumer.
The personal consumer buys goods and services for is or her own (e. g. soap,
shampoo etc.) for use of the household (e.g.TV VCR or car) or as a gift for a
friend

(e.g.

bike,

camera

etc.).

In

each

of

these

cases, individual

referred to as end uses or ultimate consumers buys the goods for final use.

who are

The organizational consumer buys goods and services in order to run their organization.
Manufacturing companies buy raw material etc. to manufacture and sell their own products.
Institutions buy the material they need to maintain themselves.

UNDERSTANDING CONSUMEROLOGY IMAGE SELLING

Whenever a consumer purchase a product, he is not just buying a brand. He is also buying an
image that is associated with the brand. Every marketer, and marketing company, operates with
the sole objective of crafting an array of image, and reinforcing this diverse image in a
contextual framework that is relevant to the target segment. In ensures that the company is able
to bring the brand so close to the consumer that the brand creates a special place for itself in the
consumer's mind
Imagery is everything. When a consumer parts with money to purchase a product, it is
actually a response to the image that a particular band of the product has cotnrived in his mind.
This image, when confronted by a need state translated itself into a purchase decision. During
this period, the consumer is creating a relationship with the brand which, depending on is
consumption experience, determines the future-buying pattern of the consumer. A series of good
repeat purchase experience gives you a local customer.

CONSUMEROLOGY
Once that real understanding of a brand's drives through an identification of the unique
associative image in obtained, in then becomes the task of the brand Consumerology to craft
relevant fit for the brand into the consumer-selected image. From this fit an image is interpreted
into a social and vocational set that is consonance with the consumer's image and the image of
the brand through the medium of an image solution.
Having identified the image solution, the next task is to deliver it through the
variables

of

promotion

and advertising. The most

image

marketing

solution,

is

that

like
they

packaging,
never

pricing,

important
dormant.

distribution, merchandising,

aspect of Consumerology, and

Imagery,

being

everything

is

constantly changing, so do the image solutions. Thus, these image solutions are
a function of listening to the consumer. They involves constant listening to
check if a brand's drivers are changing, if the consumer's image is changing and
id the image of the brand is being molded according to the changing situation.
So,

the

listening

correct

practice

of

Consumerology implies

the

creation

of

market

post, which is constantly receiving consumer feedback and passing it

to the brand consumerlogist who, in turn, interprets it for the creation of new
image solution. If the listening stops, the solutions are no longer the result of

consumer understanding, but merely the products of the experiential biases of the solution
creators.

CONSUMER BEHAVIOUR
Consumer behaviour is the study of individual, individual in a group as whole
while

the

individual

consumption
consumer
of

related

displays

products

and

decides
items.

in

to

Consumer

searching
services

spend

his/her

time,

effort

behaviour

refer

to

for, purchasing

that

they

expect

using,
will

and

the

money

behavior

on
that

evaluating

and

isposing

satisfy

their

needs.

They study of consumer behaviour is the study of how individual make decision
to spend their available resources viz. Time, money and effort on they buy from,
where they buy it, how often they buy it and how often they use it.
Take the case of consumer durable e.g. the T.V. set. What features they look for? What is the
reason for buying particular T.V. Set? How likely are they to replace their old models when
new models with added features become available? The answer to such question can only be
found through consumer research that provide. TV manufacture with important product
scheduling, design modification and opting final strategy.

Although this study focuses on how and why consumers make decision to buy
T.V Consumer behavior and considers the uses consumers make of the good

they buy and then subsequent equations. For example, a buyer may experience dissatisfaction to
friend, and in turn influence his friend future TV purchase decision or may vow never to buy
same brand or model again, prescribing his own future selection decisions. Each of these
possible consequences of consumer post purchase strategies into their promotional campaigns.