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Essay: Factors impacting launch of Indian cosmetics brand

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  • Published: 30 September 2022*
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  • Words: 1,926 (approx)
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Social : Refers to the social factors that can affect the organization externally.

Large Population : India has one of the largest populations in the whole world, making it one of the biggest consumer markets in the world. When entering a market with such large populations, products demanded are large in quantity too.

Hike in middle class families : An increase in wages gives more and more families the purchasing power to have access to purchasing luxury goods like make up. This hike is consumer buying equals more sales.

Aging population : In India today, the baby boom has now turned into a papy boom, which means that the population mainly consists of maturing adults. In this economy where looks matter, more and more people are inclined to look younger and prettier, this is where makeup and skin coverage with foundation comes into picture.

Demographics : As of 21st April 2020, 51.6% of the Indian population is females, clearly making it a humongous market for the sales of a cosmetic brand.

Product safety : Women today are very conscious about what they apply to their skins, the same knowledge ie heard by women in India. So use of chemicals can defer from the sales of the brand.

Technological : Refers to the technological factors that can affect the organization externally.

Innovation : In today’s economy, innovation is key, it is essential for a brand to come up with something new in order to compete with other brands and increase sales. Fenty came up with one such innovation: Foundation for everyone, they have 50 different shades of foundation, one for every skin type.

Social media and Internet : Youth in India, just like every other developing, or developed country is all about the Internet. We are living in a techno savvy generation where social media is king, brands with the maximum social media coverage have the maximum sales and widespread awareness of the brand, Fenty is known for its social media coverage, giving the brand an edge.

Product duplication : In this generation of e commerce and internet, one can easily duplicate branded products and sell them for cheap. This could create a price competition among the sellers. The consumers here would be divided into two, people who buy for quality and people who buy based on the price. Limiting sales for Fenty.

Environmental : Refers to the environmental factors that can affect the organization externally.

Vegan friendly : Increasing knowledge about animal cruelty in India has given birth to a whole new set of consumers who only buy vegan or animal cruelty free products. With increasing knowledge about the materials used to make cosmetic products, more people are opting for vegan friendly or anti-animal cruelty products everyday, Fenty beauty is one of the brands in the short list of vegan friendly cosmetics, appealing to a whole different set of consumers.

Pollution, waste and recycling : In recent years, environmental pollution in India has drastically increased, resulting in an increasing population interested in the eco friendly environment, brands have to come up with eco friendly ways of producing products. Fenty Beauty is not a green beauty brand, they do claim to be paraben-free and phthalate-free.

Legal : Refers to the legal factors that can affect the organization externally.

Animal testing restrictions : Animal cruelty is taken vry seriously in this time and era in India, restrictions are in place which if not followed , can have brands fall in trouble legally. All cosmetic products that are imported for sale in India now need to be registered with the Central Drugs Standard Control Organization (CDSCO) which has been appointed as the licensing authority for the purpose of these rules(Cosmetic Regulations , Registration and Import Registration in India 2020).

Porter’s five forces :

This framework is used to analyze competition for a business. It is driven by five industrial organizational economic forces that can determine the competitive intensity and the profitability of the industry. I have used Porter’s 5 forces framework to identify the forces affecting your industry and thereby determining its strengths and weaknesses (Chappelow, 2020).

Threat to new entrants : High

The cosmetic industry in India is competitive, providing products at every price range. But it is also an industry that is thriving and hungry for new and better products, which makes it attractive to brands to enter into. An entry of a new company in the market can result in a drop in sales for the existing companies. Certain barriers that Fenty would face include: existing brands holding high economy scales, existing brand loyal consumers that refuse to switch and gaining access to distribute nationally can be a medium level barrier. And since Fenty does not intend on manufacturing the products in India, that barrier is completely eradicated from the list. Still the threat of other existing brands exists.

Threat of substitutes : Low

The threat of substitutes is minimal because cosmetics have only one other substitute which is home remedies such as oils and herbs, but they work on healing and skin care, not on covering the face with makeup. Fenty provides foundations and other cosmetic products that are used to cover the skin but not heal it, which results in the products having no substitutes. In this generation, women prefer using cosmetics that cover up their marks, because it is a quick fix. Hence, there is low to no threat of substitutes for Fenty when entering the Indian cosmetic market.

Competitive Rivalry : High

The competitive rivalry in the Indian cosmetic industry is high as there are hundreds of existing cosmetic brands that have gained customer loyalty over the years. Competitor brands include brands like Lakme, Lotus and L’oreal. The differences in products sold by competitive brands are minimal, even so, Fenty has one product which is unique in its number of shades offered. The foundation offered by Fenty is offered in 50 different shades, which covers all skin colours and types. This gives it an added advantage in sales as it is a consumer-centric market. The exit barriers for the cosmetics industry are high as well.

Supplier Power : Low

This industry is one with demand exceeding supply, the number of suppliers in the indian cosmetic market is very large, giving them very little bargaining power by the manufacturers. As for Fenty, this does not apply as the production would be done in the US, and only the final product would be imported to India for sales. Making this force a moot point.

Buyer Power : High

Consumers are king. The cosmetics market is consumer centric, meaning that brands are in no position to influence the price of their products anymore. Buyers can very easily opt for a cheaper product, this reduces long term profitability for the brand as they are forced to reduce their prices to compete with other brands. Fenty targets every female demographic as it offers what other brands don’t, a variety of shades to choose from. In a country like India, with women of varied colour habilitate, a USP like this would only increase sales.

Internal Analysis:

An internal analysis is made to examine a company/organization’s internal environment so that its resources and competitive advantages can be assessed. Two frameworks are used here:

S.W.O.T analysis:

SWOT analysis is the complete analysis of the external and internal along with the negative and positive factors that can potentially affect the brand/company.

Strengths :

Highly inclusive brand : Indian women, with their different coloured skins much awaited the presence of a foundation that matched their skin colour. Fenty offers 50 different shades of foundation, making it one of the most awaited brands in the indian cosmetic industry.

Strong influential media : Since the brand is owned by a world renowned singer who is known for her work as a women empowerer, women in India look up to her. Other than this, Fenty uses real life women in their campaigns to promote equality. Women love to feel empowered, and make up promoted by Fenty gives that to them.

Vegan products and anti-animal cruelty : Increasing knowledge about animal cruelty in India has given birth to a whole new set of consumers who only buy vegan or animal cruelty free products. Fenty does not conduct product trials on animals and does not make use of any of the harmful chemicals.

Charitable funds : Nothing speaks character better than the ability to do charity. Like any humans in the world, Indians connect charity with the good wellbeing of an individual. This would bring in an additional group of buyers for Fenty.

Weaknesses:

Fairly new brand : Since Fenty was established in 2017, it is a fairly new brand. This could downsize the buyers as most women are loyal customers to brands that they have been using for years, changing the products they are used to can be a challenge.

Limited gender demographics : Consumer percentage reduces as Fenty does not offer products for men. And since 49% of the population in India consists of men, it cuts the consumer ratio to half. Other brands like L’oreal that provide products for men are at an advantage.

Niche Product : The price range for Fenty products is fairly high compared to brands like Nykaa or Lakme that provide cheaper products that provide similar results. This limits the consumer ground for Fenty. Lowering prices in this competitive market is absolute.

Highly competitive market : The cosmetic market is India is highly competitive with the highest share holding brands that have existed for years and earned consumer trust overtime. There is also the concern of the product being easily duplicated in a market this competitive.

Opportunities :

Introduce products for men : There is an opportunity in the Indian market for products for men, which can appease 49% of the population. Fenty can target almost 100% of the market, regardless of age and gender.

Expand line for other existing products : Fenty boasts about its ability to provide a foundation shade for everyone, by expanding other products to do the same, Fenty can attract more consumers and earn loyalty points in return.

Enter the skin care market : Fenty has already established itself as a trustworthy brand in countries like the USA and UK, adding skin care products along with cosmetics can boost sales.

Threats :

Competitive brands : Kylie Jenner’s brand Kylie cosmetics along with other semi-high end brands are competition for Fenty Beauty. Kylie’s brand is well known and established in India with women loving the shades and products offered by Kylie. The price range is similar, and so are most of the products.

Absence of physical stores : Fenty beauty has no physical stores of its own, so it depends on brands like Sephora and Boots to sell its products. Any issues with these brands, would affect the sales of Fenty products. There is also the case of no sephora stores being available in India.

Increasing prices : A hike in prices due to import rates or taxes can discourage consumers from buying the brand and instead shifting to other cheaper brands to purchase their desired product.

Government Rules and Regulations : Any brand entering a new country market is faced with multiple rules and regulations that are different from other countries.

VRIO :

VRIO was developed to evaluate the importance of resources to a company in a relative manner, by Jay B Barney. Fenty‘s VRIO consists of:

Value of the resources it has – Valuable

Their Rarity – Rare

How easily can these resources be imitated by its competitors – costly to Imitate

How the firm is organised – Organisational competency & capabilities

All these factors lead into building a sustainable competitive edge for the company by making the best use of its available resources (2020).

2020-4-24-1587757827

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