International Journal of Commerce and Management Research

International Journal of Commerce and Management Research

ISSN: 2455-1627; Impact Factor: RJIF 5.22
Received: 11-11-2019; Accepted: 12-12-2019
www.managejournal.com
Volume 6; Issue 1; January 2020; Page No. 47-53

A brief study on market segmentation of the cosmetic industry

Shefali Srivastava
Indira Gandhi National Open University, New Delhi, India

Abstract
The Indian cosmetic industry is exponentially developing. It is characterized by regular growth and high competitiveness. This
research paper is based on a “brief study on market segmentation of cosmetic industry”. The purpose of this paper is to study
on what basis the cosmetic’s market is segmented. The paper emphasizes market segmentation as a crucial factor, which helps
in competitive advantages of each of the presented cosmetic firms. The secondary sources are used for the purpose of
collecting information of various markets. The research is performed by using the case study method. Firstly, the paper
presents the overall picture of the market segmentation. Next part is focused on how the consumers of cosmetic markets are
segmented, followed by the description of major cosmetic companies based on the case study.

Keywords: case-study Method, cosmetic Industry, segmentation, target market

1. Introduction the varying buying behaviour of the consumers so that target

Marketing involves a number of functions in order to consumers can be reached easily by framing various
achieve its target. The word marketing is derived from marketing programmes based on such differences of the
‘market’ which may be looked upon as an arena for consumers. Market segmentation enables the entrepreneur to
potential exchange, i.e. a place where products can be match his marketing efforts to the requirements of the target
exchanged by money or anything else. The new concept of market. Instead of wasting his efforts in trying to sell to all
marketing focuses on consumer’s satisfaction by producing types of customers, a small-scale unit can focus its efforts
goods and services. Marketing is a wider term and the term on the segment most appropriate to its market.
market and market segmentation is a part of marketing. It is built around the consumers. In other words, the
Market segmentation has a wider meaning than the term company analyse the needs of the consumers, and the group
target marketing. Before defining market segmentation, we of these consumers who have similar needs. It tries to satisfy
should know the meaning of target marketing. those needs by having common marketing program, without
such segmentation, market program becomes haphazard and
Target Marketing they lead the company nowhere. A small company with
Target marketing involves breaking down the entire market limited resources can select a particular group of consumers
into various segments and planning marketing strategies and market its products efficiently by selecting the
accordingly for each segment to increase the market share. marketing mix suitable that group. There are various
Instead of trying to reach an entire market, a brand benefits of segmenting a market. Some of them are as
uses target marketing to put their energy into connecting follows;
with a specific, defined group within that market. The area 1. Helps to know the marketing opportunities: Market
where company wants to sell its end products to the end segmentation helps the marketer to know the marketing
consumer is known as Target Market. Target market and opportunities well in time which helps to understand the
target marketing are two different terms. Target market needs of each segment against the products and thus
basically relates with the place or area and target marketing position his/her products in a better way to satisfy the
refers to the process or activities. There are three consumers.
interrelated concepts which form the basis for successful 2. Helps to prepare effective Marketing Programme:
implementation of target marketing, these ideas are relate to Because of the segmentation sellers can create separate
customer needs, organization objectives and competitive marketing programmes which helps in fulfilling the
advantages. needs of the different buyers. The sellers can make
better adjustments of his products and marketing
Market Segmentation appeals.
A market is defined to be people or organizations with 3. Helpful in Competition: It helps to know the level of
needs or wants and the ability and willingness to buy. These competition in each segment. If the competitor has
markets are composed of different market segments, a strong hold on one segment, then there is no use in
market segment is a subgroup of people or organizations wasting one segment. However, where competitor’s
sharing one or more characteristics that cause them to have product fail to satisfy the target group, the management
similar product needs. Therefore, when the market is can penetrate in it.
divided into meaningful, relatively similar and identifiable 4. Best allocation of resources: Segmentation of market
segments or groups it is called market segmentation. The helps in best allocation of resources. The different
main objectives of segmenting the markets is to know about marketing response of the various market segments

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helps in allocating the limited resources of the concern. thus wasteful expenditure of the resources will be
A low marketing budget will be allocated to the prevented.
segment where marketing opportunities are less and

Fig 1: Basis of Market Segmentation

Segmenting the market can be beneficial when these Classify in terms of states, district, cities, towns etc. The
segments are used to make separate marketing programmes variations in consumption patterns may due to cultural
for each segment and implementing them. There are various heritage, urbanization, population density, climate and many
factors which should kept in mind while segmenting the more.
market for their effectiveness. Some factors are identifiable,
measurable, accessible, substantiable etc. The broadest basis 3. Behavioural
for segmenting market is separating the final consumer from Here the buyers are divided into groups on the basis of their
industrial users. Final consumer differ significantly from behaviour which may be categorize as knowledge, use or
industrial users and as such separate marketing programmes response. Some of the characteristics which may use in this
are required for each of the two segments. The consumers category are rate of usage, benefits sought, loyalty status,
market can be segmented on the basis of consumer readiness to purchase, occasions, attitude, user status etc.
characteristics like geographic, demographic, Psychographic The behavioural variables are believed to be the best starting
or on the basis of consumer responses such as benefits point for segmenting the market.
sought, use, occasions and brand loyalty which together
form a segment called Behavioural segmentation. Different 4. Psychographic
bases for market segmentation are as follows: The three most common factors under this category are
personality characteristics, motives and lifestyles. Basically,
1. Demographic this category focuses on the human characteristics of
This is the most purposeful and commonly used base for the consumers. It is a method of segmenting market by diving
segmentation of market. Some of the characteristic which customers into group on the basis of their shared personality
may use in this category are gender, age, occupation, traits, beliefs, values, attitudes, interests and lifestyles and
income, education, family life cycle and religion. Every other factors. This segmentation is used for better
Individuals (i.e.consumers) are grouped in terms of these understanding of their customers and to improve their
similarities. These characteristics are commonly used to marketing.
divide markets, especially since they are readily measured
through observation. Cosmetic Industry: Segmentation
The segmentation of market is followed in each and every
2. Geographic sector either industry or a management. The Indian cosmetic
Geographic is simple, yet powerful segmentation basis. industry is continuously witnessing firm growth over the
Under this, the segmentation of market is based on different past years. Indian cosmetic industry is driven by the high
regions or areas. The market is divided into different personal disposable income of people, rising awareness
geographic areas such as nations, states, regions or cities, towards body aesthetics, coupled with increasing demand
the retailer may distinguish between nearby and distant for herbal cosmetic products. Our Indian cosmetics market
customer, a local dealer may distinguish as rural and urban, report comprises of the following companies as the key
a regional manufacturer may segment into zones like north, players: Himalaya, Biotique, Dabur, Lotus, Patanjali,
south, east and west whereas national manufacturer may Coach, the Estee Lauder companies, Loreal, Revlon, Avon
products, Hermes, Oriflame, Carolina Herrera, etc.

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Fig 2: Different segmentation of Cosmetic Industry

The Indian cosmetic industry is defined by skincare, hair care, fragrances, oral care and colour cosmetics segments. According
to the recent report, the Indian cosmetic industry is expected to witness impressive growth rate in the near future owing to
rising beauty concern of both men and women. Today the industry holds promising growth prospects for both existing and
new players. There has been a rise in variety of products offered by the industries in the country. The companies have started
going for rural expansion and are offering specialized products to generate revenues from all the corners of the country. 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. The new entrants (foreign entrants) had to work out new innovative
strategies and ideas to remain settled in the Indian markets. The cosmetic industry 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 different businesses. Research studies conducted on the cosmetic industry highlight that the cosmetic market
fared well even during the Great Recession of 2008. Indian skin care market is segmented into five categories such as facial
care, body care, sun care, hand care and other makeup removal and depilatory products. Indian hair care market is segmented
into four categories such as hair oil, hair shampoo, hair colors and hair styling products. Fragrance market is divided into two
segments viz. Perfumes and Deodorants. Color cosmetics market consists of four broad categories according to their products
viz. Eye makeup, Facial makeup, Lip products and Nail products. India oral care market segmented into five categories such
as toothpaste, toothbrush, tooth-powder, mouthwash and other oral care products that include dental floss, oral care , chewing
gum, etc. India has witnessed income growth of about 10% YOY, enabling large sections of its population to move up the
consumption, Fashion and lifestyle pyramid. This had naturally driven demand for organized retail space as opposed of
traditional stores. The online market place that has emerged in India a decade ago, Increases its penetration among consumers
via innovative promotion and advertising strategies. With the rise in disposable income and growing aspiration to look good,
consumer demand for more brands and categories is at an all time high, Both for online and offline retailers (especially malls),
growth in fashion is tapering and their focus would shift to thus high growth potential category.

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Fig 3: Distribution and Marketing Strategies of M.A.C

Fig 4: Distribution and Marketing strategies

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Fig 5: Distribution and Marketing strategies of Loreal Paris

Fig 6: Distribution and Marketing strategies

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Fig 7: Distribution and Marketing strategies of NYKAA

Fig 8: Distribution and Marketing strategies

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