consumer behaviuor cosmetics

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Departmentof ManagementSDMCET
SHRI DHARMASTHALA MANJUNATHESHWARA COLLEGE
OF
ENGINEERING AND TECHONOLOGY
(An Autonomous Institution Affiliated to VTU Belgaum)
Dharwad-580002, Karnataka
2015-16
Department of Management Studies
COSMETIC INDUSTRIES
COURSE INSTRUCTOR: Prof. SUPREETA LAGALI
Submitted by:
RAJPUROHIT RAMESH
RAHUL GULAGANJI

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CERTIFICATE
This is to certify that we are the students of department of management SDMCET, have prepared
this project report titled as “COSMETIC INDUSTRY” Under the guidance of Mrs. SUPREETA
LAGALI, Faculty, Department of Management Studies, SDM College of Engineering &
Technology Dharwad. (Affiliated to V.T.U Belgaum).
Place: Dharwad
Date: 15-12-2015
Prof: SUPREETA LAGALI
Department of Management Studies (MBA)
SDMCET, DHARWAD

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ACKNOWLEDGEMENT
With pleasure we are placing before you this report titled as “COSMETIC INDUSTRY”.
I express my sincere thanks and heartful gratitude to professor Mrs. Supreeta Lagali department
of management SDMCET Dharwad, for her excellent and inspiring guidance and suggestions
through the repot work without her inspiring encouragement it would have been not possible for
us to bring out this report and giving us this opportunity, because it had been a very good attempt
to educate the youth regarding the report on company in a practical way, as we earlier studied in
theory, which makes us perfect in the subject.
We are very much grateful to Professor Mr. Madhusudhan K Vyapari (HOD of the Management
department) and also Dr. S.B. Vanakudre (principle of the college) for providing necessary
infrastructure facilities for preparing this report work.
Last but not the least, my sincere thanks to everybody who has helped us directly or indirectly
for the completion of this report work.

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EXECUTIVE SUMMERY
Executive summary of COSMETIC INDUSTRY through our research, I have calculated the cost
of the capital. A firms cost of capital is imperative because it represents the funds used to
finance the firm assets and operations. First you have to estimate the cost of capital in order to
minimize it. In estimating the cost of the capital to find out the each capital component on then
combined the components costs. Brief history about the COSMETIC INDUSTRY and the
various details about the industry.

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Contents
SR. NO. PARTICULAR PAGE NO.
1 Introduction 1
2 Indian Cosmetic Industries Introduction 3
3 Major Players of Cosmetic Industries 5
4 Milestones & Achievements’ 8
5 Portfolio of Industries 9
6 Trends from Last Two Year 12
7 Bibliography 16

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INTRODUCTION
Cosmetics:
Cosmetics, also known as makeup or make-up, are care substances used to enhance the
appearance or order of the human body. They are generally mixtures of chemical compounds,
some being derived from natural sources (such as coconut oil) and many being synthetics.
In the U.S., the Food and Drug Administration (FDA), which regulates cosmetics, defines
cosmetics as "intended to be applied to the human body for cleansing, beautifying, promoting
attractiveness, or altering the appearance without affecting the body's structure or functions."
This broad definition includes any material intended for use as a component of a cosmetic
product. The FDA specifically excludes soap from this category
NAME:
The word cosmetics derives from the “Greek κοσμητικὴτέχνη (kosmetikētekhnē)”, meaning
"Technique of dress and Ornament", from κοσμητικός (kosmētikos), "Skilled in ordering or
Arranging" and that from κόσμος (kosmos), meaning amongst others "Order" &"Ornament”
INDUSTRY:
The manufacture of cosmetics is dominated by a small number of multinational corporations that
originated in the early 20th century, but the distribution and sale of cosmetics is spread among a
wide range of businesses. The world's largest cosmetic companies are L’Oreal, Procter
&Gamble, Unilever, Shiseido and Estée Lauder. In 2005, the market volume of the cosmetics
industry in the US, Europe, and Japan was about EUR 70 By. In the United States, the cosmetic
industry's size was US$42.8 billion in 2008.In Germany, the cosmetic industry generated €12.6
billion of retail sales in 2008,which makes the German cosmetic industry the third largest in the
world, after Japan and the United States. German exports of cosmetics reached €5.8 billion in
2008, whereas imports of cosmetics totaled €3 billion.

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The worldwide cosmetics and perfume industry currently generates an estimated annual turnover
of US$170 billion (according to Eurostaf – May 2007). Europe is the leading market,
representing approximately €63 billion, while sales in France reached €6.5 billion in 2006,
according to FIPAR (Federation des Industries de la Perfumeries – the French federation for the
perfume industry). France is another country in which the cosmetic industry plays an important
role, both nationally and internationally. According to data from 2008, the cosmetic industry has
grown constantly in France for 40 consecutive years. In 2006, this industrial sector reached a
record level of €6.5 billion. Famous cosmetic brands produced in France include Vichy, Yves
Saint Laurent, Yves Rocher and many others.
The Italian cosmetic industry is also an important player in the European cosmetic market.
Although not as large as in other European countries, the cosmetic industry in Italy was
estimated to reach €9 billion in 2007. The Italian cosmetic industry is dominated by hair and
body products and not makeup as in many other European countries. In Italy, hair and body
products make up approximately 30% of the cosmetic market. Makeup and facial care, however,
are the most common cosmetic products exported to the United States.
Due to the popularity of cosmetics, especially fragrances and perfumes, many designers who are
not necessarily involved in the cosmetic industry came up with perfumes carrying their names.
Moreover, some actors and singers(such as Celine Dion) have their own perfume line. Designer
perfumes are, like any other designer products, the most expensive in the industry as the
consumer pays for the product and the brand. Famous Italian fragrances are produced by Giorgio
Armani, Dolce and Gabbana, and others.
Procter & Gamble, which sells Cover Girl and Dolce & Gabbana makeup, funded a study
concluding that makeup makes women seem more competent.

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INDIAN COSMETIC INDUSTRY
INTRODUCTION:
Since 1991 with the liberalization along with the crowning of many Indian women at
international beauty pageants, the cosmetic industry has come into the limelight in a bigger way.
Subsequently their has been a change in the cosmetic consumption and this trend is fueling
growth in the cosmetic sector. Indian cosmetic Industry had rapid growth in the last couple of
years, growing at a CAGR of around 7.5% between 2006 and 2008. While this is due to the
improving purchasing power and increasing fashion consciousness, the industry is expected to
maintain the growth momentum during the period 2009-2012. In the Indian Cosmetic Industry
both electronic as well as print media are playing an important role in spreading awareness about
the cosmetic products and developing fashion consciousness among the Indian consumers.
The Indian Cosmetics Industry is defined as skin care, hair care, color cosmetics, fragrances and
oral care segments which stood at an estimated $2.5 billion in 2008 and is expected to grow at
7%, according to an analysis of the sector.Today herbal cosmetics industry is driving growth in
the beauty business in India and is expected to grow at a rate of 7% as more people shun
chemical products in favour of organic ones.
The emphasis of the herbal cosmetic has been on the spectacular growth of the herbal and
ayurvedic beauty products business as conveyed by beauty expert Shahnaz Husain who was the
first to introduce the concept of ayurvedic cosmetics to the world when she launched her
products way back in 1970. Today, the Indian cosmetics industry has a plethora of herbal
cosmetic brands like Forest Essentials, Biotique, Himalaya, Blossom Kochhar, VLCC, Dabur
and Lotus and many more. The Indian cosmetics industry has emerged as one of the unique
industries holding huge potential for further growth. In 2009, the cosmetics industry registered
sales of INR 356.6 Billion (US$ 7.1 Billion) despite the global economic recession. Indian
cosmetics Industry has mainly been driven by improved purchasing power and rising fashion
consciousness of the Indian population and industry players spending readily on the promotional
activities to increase consumer awareness and develop their products.

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The companies have started going for rural expansion and are offering specialized products to
generate revenues from all the corners of the country. Improvement and strengthening of the
Indian economy in the coming years will also pave the way for the Indian cosmetics market over
the forecast period and develop the Cosmetic Industry.
The Indian Cosmetic market which traditionally a stronghold of a few major Indian players like
Lakme, and Ponds has seen a lot of foreign entrants to the market within the last decade. India is
a very price sensitive market and the cosmetics and personal care product companies, especially
the new entrants have had to work out new innovative strategies to suit Indian preferences and
budgets to establish a hold on the market and establish a niche market for them.
The size of Indian Cosmetics Industry globally is $ 274 billion, while that of the Indian cosmetic
industry is $ 4.6 billion. The current size of the Indian Cosmetic Industry is approx US$ 600
million. Among these fastest growing segment is color cosmetics, accounting for around US$ 60
million of the market. Industry sources estimate a rapid growth rate of 20% per annum across
different segments of the cosmetics industry reflecting with an increasing demand for all kinds of
beauty and personal care product. Growth in the Indian Cosmetic Industry has come mainly from
the low and medium-priced categories that account for 90 % of the cosmetics market in terms of
volume.
MARKET CAPITALIZATION:
Costs for importing other products are much higher than producing it in the country. India
usually allows the entry of imported cosmetics without any restrictions but the average import
tariff on cosmetics products is currently very high at 39.2%...

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MAJOR PLAYERS IN INDUSTRY
1) LAKME:
A Brand of Hindustan Unilever Limited, Lakme is the leading cosmetic brand in India and
accounts for the major share of products in the cosmetic segment. Introduced in the year 1952,
Lakme grew into a major cosmetic brand in a few decades and presently it is one of the most
preferred cosmetic brands in India.
Some of the Lakme products are Lipsticks, Nail Paints, Eye Liners, Face Wash, Sunscreens,
Creams, etc. Apart from making good quality cosmetic products, Lakme actively participates in
promoting the fashion events and is a co-organizer and a sponsor of “Lakme Fashion Week”.
2) PONDS:
Ponds Pond's Cream is a brand of beauty and health care products that is produced by the Ponds
Institute which is owned by the multinational company Unilever. Pond's Cream was invented in
the United States as a medicine by scientist Theron T. Pond (1800–1852) in 1846. Mr. Pond
extracted a healing tea from witch hazel, with which he discovered he could heal small cuts and
other ailments. The product was named "Golden Treasure", after Theron died, it would be known
as "Pond's Extract". By the twentieth century, the company's main strategy was geared towards
selling cosmetics products, and so the "Pond's Vanishing Cream" and the "Pond's Cold Cream"
were created, marking the entrance of Pond's products into the facial care industry. Today Ponds
is sold around the world. Its strengths are in Spain, India, Japan and Thailand. Pond's Company
was merged in 1955 with the Chesebrough Manufacturing Company, which had a good
percentage of brands in the facial care field. With this merger, "Pond's Creams" would become
sisters with the Cutex nail polish brand and the Matchabelli perfumes. In 1987, the Chesebrough
Manufacturing Company by most known as "Chesebrough-Ponds", was acquired by Anglo-
Dutch company Unilever, giving "Pond's Creams" a more international reach. Then 14% of the
company was subsequently traded privately to Bhosle Group of Industries for an undisclosed
amount of money. The Brand Trust Report, India Study, 2011, conducted by the Trust Research
Advisory included Pond's in the list of the most trusted brand in India.

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3) PROCTER& GAMBLE:
Procter & Gamble Hygiene and Health Care Ltd was incorporated in the year 1964, as
Richardson Hindustan Ltd (RHL). The company initially manufactured menthol, dementholised
peppermint oil and Vicks range of products. RHL was acquired by Procter & Gamble, USA in
the year 1985 consequent to which its name was changed to Procter & Gamble India Ltd. In the
year 1999, the company got its present name
Executive the company manufactures and markets two types of products - healthcare products
and female hygiene products which are sold under the famous brands 'Vicks' and 'Whisper'
respectively. There are variants under each of these two brands. But the two brands dominate the
offerings. P&G has sold a number of non-core businesses and brands. The company divested its
laundry and detergent business to its sister concern P&GHP in 1992--93 even as it continued to
contract manufacture detergents for it. In October 2005, the company completely exited the
detergent business after transferring its manufacturing facility to P&GHP. The company divested
Medikar anti-lice shampoo business to Marico Industries in 1998--99. Another manufacturing
tie-up for shampoo, formed with P&GHP, was terminated in 1999--2000 after a formulation
change of the product had necessitated huge capital investment. In 2000--01, the company
divested one of its earlier brands, Clearasil. Old Spice brand of products, which the company
started marketing in the year 1993 was licensed (trademark & business) to Menezes Cosmetics
Pvt. Ltd in December 2002.
4) L’OREAL:
L’Oreal is ranked 3rd in the list of top 10 best cosmetic brands in India. L’Oreal is a French
Cosmetics Giant started in the year 1909 and is presently a leading brand in the cosmetic
segment in India. L’Oreal is a brand that stands for quality, reliability and innovation.
L’Oreal makes a high quality cosmetic products like Mascara, Lip Sticks, Eye Liner, Nail
Colour, Creams, etc. Apart from beauty products, L’Oreal also performs its Corporate Social
Responsibility well by providing skill development training to the underprivileged women and
constructing classrooms for the students

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5. HINDUSTAN UNILEVER LTD:
HUL is India’s largest Fast Moving Consumer Goods Company with categorized business like
soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged
foods, ice cream, and water purifiers. With a market capitalization of Rs. 61,000 crores, the
Company is a part of the everyday life of millions of consumers across India. The company
earned revenues of Rs. 5,000 crores with a net profit margin 12%. Its parent company is
Unilever, which holds about 52 % of the equity. Its portfolio can be categorized into Personal
care, Home care & Food. Some important names are Lifebuoy, Surf Excel, Rin, Wheel, Fair &
Lovely, Pepsodent, Closeup, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and Pureit. The
umbrella personal/ cosmetic brands include Aviance, Axe, Lakme, Fair & Lovely, Clinic Plus,
Dove, Hammam, Ayush, Lux, Sunsilk, Rexona, Pond’s.

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MILESTONE & DEVELOPMENTS OF COSMETIC INDUSTRY
The Rs.29, 000 crore ($4.5 billion) Indian cosmetic market is growing briskly and attracting
more and more international brands. Experts credit awareness among the middle-class, increase
in departmental stores and the tremendous growth opportunities that are luring global players
like Bobbi Brown Cosmetics and BellePierre Cosmetics to tap the Indian market.
If international brands like Revlon, L'Oreal Paris, Estee Lauder, M.A.C and Maybelline are
already doing brisk business, approximately 10 brands, including NATIO and Bottega Di
Lungavita, took the plunge this year.
"The market and customers are becoming very brand conscious with the readiness to try new
brands and products," he added.
"The current wellness market stands at approximately Rs.70,000 crore and out of that beauty
care products amount to Rs.29,000 crore. This number and the tremendous growth opportunity is
attracting a lot of international players to the Indian market," Gaba said.
According to Massooma, editor at New Age Salon & Spa and knowledge partner for
International Beauty Mart 2014, the Indian cosmetics market is growing twice as fast as its US
and European counterparts.
"India's cosmetics market is reportedly growing at 15-20 percent annually, twice as fast as that of
the US and European markets. The demand for skin whitening products by men as well as
women, is driving the trend, but other beauty products are not far behind," she said.
US-based Revlon was the first international cosmetics brand to hit Indian stores in 1995. Deepak
Bhandari, director of marketing at Revlon, says the rise of departmental stores in the country has
also encouraged various brands to enter India.
The new international brands see potential in the market and so lots of brands are coming to
India and launching in departmental stores,"

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PORTFOLIO OF COSMETIC INDUSTRIES
1. LAKME
2. PONDS

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3. PROCTER&GAMBLE:
4. LOREAL Paris

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5. HINDUSTAN UNILEVER LTD.

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21st
CENTURY OF TRENDS
1) ANATOMY OF THE INDIAN COSMETIC MARKET :
In the last 20 years cosmetic Beauty Market has grown by 12-13% a year on average.with
annual growth rates ranging from around 10 to 11%. Also known as Cosmetics and
Toiletries or Personal Care Products, this market has proven both its ability to achieve
stable and continuous growth as well as its capacity for resilience in unfavorable
economic conditions. The Global Beauty Market is usually divided into five main
business segments: skincare, haircare, color (make-up), fragrances and toiletries. These
segments are complementary and through their diversity they are able to satisfy all
consumers’ needs and expectations with regard to cosmetics
2) MARKETING TRENDS:
Owing to the recent growth of importance of the Indian market, the cosmetic companies
shifted their focus to the mass market, particularly in the fragrance category which is
dominated by mass brands in this region. A trend worth mentioning is the continued
product diversification in the context of product line prices, as new product lines are
being released at lowering price levels.
3) DISTRIBUTION TRENDS:
In the recent years a systematic change in the pattern of distribution channels was
observed. These changes, which took place between 2000 and 2010, are presented in
following table

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The market share of the non-store retailing channel is gradually increasing in india. This
channel includes direct sale and sale over the internet. Companies relying on direct sale
managed to create a powerful sales network, especially in the fastest-growing emerging
markets such as Brazil, China. It was, to a large extent, enabled by the characteristics of
the new customers who are just entering the market, expecting professional advice,
analysis of their needs and support in choosing the right products. The online cosmetics
sales channel is also growing fast as per International’s estimates,
the online channel’s share in the global cosmetics sales reached 15-20% in 2014, while
in the top three online sales markets - South Korea, France and United States - it reached
a level of, respectively, 22% to 25%.
0
5
10
15
20
25
30
Non Store
Retailing
Drug stores Deparments
Store
Beauty
Specialist
Super Hyper
market
All Others
2012
2013
2014

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4) PRODUCT CATEGORIES TRENDS:
During the first decade of the 21st century the product structure of sales underwent
fairly significant changes, as presented in the following table.
In the period from 2000 to 2013 total cosmetics sales (beauty and personal care products) more
than doubled: from 25 billion USD to 82 to 90 billion USD. In 2000, the largest segment was
haircare – it accounted for more than 20% of global sales. Throughout 2013 skincare was the
most significant segment, with its 23% of the market share and its growth driven primarily by the
Indian market.The Indian skincare market is divided into facial care (2/3 of the total sales), hand
and body care and sun care. The success of this segment is a prerequisite for the prosperity of the
whole beauty industry. Although the economic downturn reduced the growth rate here, it was
possible to restore its pre-recession growth in subsequent years. A particularity of the indian
skincare markets is the leading role of face-whitening products, as pale skin continues to be
considered the beauty ideal in india.
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Skin Care Hair Care Color Fragrances Toileteries Others
2012
2014

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CONCLUSION
CONCLUSION Analysis of the trends present in the global cosmetics market in the
beginning of the 21st century leads to the following conclusions:
1. The demand for cosmetics will keep growing, fueled mostly by the emerging
markets of Asia and Latin America, what will contribute to creation of new
products, shape new spending patterns and perhaps even establish new beauty
canons.
2. Global cosmetics manufacturers will have to differentiate their products to adjust
them to the expectations of their new customers, originating from different, non-
Western cultures and behaving differently.
3. Skincare is the segment with the biggest growth potential. It will remain the flagship
segment on the cosmetic market over the next few years.
4. The deciding factor for market success will be mass cosmetics sales - they will be
setting the tone for the entire market. Growing awareness of mass cosmetics being
almost as good as prestige cosmetics will facilitate the growth of the masstige
segment.
5. The distribution structure is changing as well, as supermarkets and hypermarkets as
well as online sales channels increase their shares in the overall market.
6. New product launches are based in an increasing way upon advanced research and
technologies. On the other hand, there is a growing demand for organic products,
manufactured in a sustainable way, often according to the fair trade philosophy.

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BIBLIOGRAPHY
1. www.indianmirror.com
2. www.firstpost.com
3. www.business.mapsofindia.com
4. www.slideshare.net
5. www.wellnessindia.com