Overview of the Skincare Industry
Discuss about the Sodashi Global International Marketing.
Australia has a vast economy; however the markets are limited by a number of factors like the sizes of the industries, location of them and others. Australia has a major number of small businesses who are looking for opportunities to expand themselves internationally. One of the most lucrative markets for expansion of Australian business is the Asia-Pacific, where a huge growth economy wise has been taking place (Panayotou 2016). Different countries offer varied opportunities for the growth of business and although it might sound like a great strategy for expansion, it is slightly complicated. This is because the environment for marketing and business is different for different regions owing to the vast differences in political scenario, cultures, and technological advancements. This report is about the market analysis for an Australian Skincare brand Sodashi.
Sodashi is an Australia based skin-care company founded by skin care expert Megan Larsen in the year 1999. The company manufactures luxury natural and organic skin products which they supply to the biggest spas and salons in the world (Sodashi Skincare 2018). Sodashi has its branches at about 25 different countries and the strengths and weaknesses of the business are discussed below-
The products are made with unadulterated and pure natural ingredients which appeals to a wide base of consumers (Sodashi Skincare 2018).
- Continued innovation in products which help the consumers experience immediate results (Sodashi Skincare 2018).
- Their commitment towards providing high quality products (Sodashi Skincare 2018).
- Explorable list of ingredients for the consumers to be able to know what their product is made of.
- Production taking place in small batches to ensure originality and quality
- Usage of pure and high standard ingredients..
- Distribution of the products in the major high-end spas and salons across 25 different countries (Sodashi Skincare 2018).
The company has a large channel where they distribute their products. However, there are not many outlets in the capital cities for the Australian consumers
- Communities and businesses within Australia do not recognize the brand.
- Since the produce in batches, they have a limited capacity of production.
In Australia one of the largest skin care brands is L’Oreal and has been holding a share percentage of 12 in 2016 the company is renowned for both its mass and premium brands (Loreal.com.au 2018). The premium brands include Georgio Armani, Lancôme, Kiehl’s and other. The mass brands include Garnier and L’Oreal Paris (Loreal.com.au 2018). However, nowadays the trends have been reversing and people are interested in smaller and newer companies which offer trust worthy products and services. A 5 percent growth is expected in the CAGR of the skin are industry in Australia by 2024 (Statista 2018).
Skin care is a dynamic industry which welcomes numerous kinds of innovation. The trends for usage of skin care products are different with respect to the different regions. For instance the Asia Pacific countries have a high demand for skin lightening products, whereas Europe as high demands for anti-aging and sun block lotions. There have been expectations for a CAGR increase of 5.1 % in the skin care industry globally by the year or 2024 (Statista 2018). Variety of products ranging from body lotions, sun block, anti-ageing to lip balms, colour corrector balms, a steady increase in business has been noticed. The largest markets in the skin care industry include Asia Pacific, Middle East Asia, Europe, Latin America, North America and Africa (Statista 2018).
Cosmetics and skin care are the area where the consumers are proactive as they know their specifications needs and requirements about the kind of product that would suit their skin or body type. Skin care and make products are part of daily routine and therefore this can be categorized under the indulgent product category. There are a number of factors which come into play when profiling the consumers for a certain industry. In case of skin care the factors include, age, socio economic condition, geographical locations, cultural backgrounds, environmental needs and many more (GlobalDataPlc 2018).
The general target age group for beauty and skin care is 18- 35 where the population is young and eager to look good. Anti-aging products target a different age group ranging from 25- 55. However there are a lot of factors associated when a target consumer profile is created for a certain product launch (GlobalDataPlc 2018). Socio economic conditions are another major factor. Certain luxury products are launched for individuals with higher disposable incomes and some of them are targeted to middle class individuals specifically.
Sodashi as a skin care brand has its branches spread across twenty five different countries. They have increased their business with care and innovation and keeping in mind a certain profile of customers. They sell luxury skin care products made of natural ingredients to high end salons and spas all across the world (Sodashi Skincare 2018). There is a high demand for natural products but the consumer profile for this particular business is for people with higher disposable income (Ribeiro et al. 2015). Initially it was restricted to females, however the consumer profile has widened towards the other genders as well.
Target Consumer Profile
One of the countries that need to be analysed as a market option for the Sodashi business is Japan, therefore it is essential to have an overview about the political, economic, social, and technological. Legal and Environmental factors of the country. From the political perspective, Although Japan is a monarch state, he king has little to do when compared to the responsibilities of the five political parties Japan has. Japan has a rocky relationship with its neighbouring countries including Taiwan, South Korea, China and Russia because of the disputes due to factors like natural gas, oils and offshore resources (Neely 2018). Japan can be considered among the top five economies in the world. Children are taught from a very young age, the importance of money and earning, the children are made to learn all the professional norms forms their early childhood leading to such a growth in the economy of the country. Japan follows a collectivist culture and people tend to live in groups and families (BBC News 2018). The society is strictly patriarchal where the father is the head of the family and women are expected to quit work after marriage. However, due to the need of male children by most families, Japan has very low birth rate. Individuals however are free to practice any religion. (BBC News 2018). Technologically, Japan is one of the strongest in the world because of its enormously developed telecommunication and internet systems. This is a important factor giving rise to the improvement in economy of the country. The European corporate and labour laws have influenced the laws of Japan tremendously and there exists a lots of employee laws relating to shift timings, was, hours of work. In almost every contract of employment (BBC News 2018). In terms of environment, the seas and mountains surround Japan making it prone to tsunamis and earthquakes. The houses are designed in ways, so that the population can withstand minor such earthquakes.
Rivals: Its main competitors are Lancome, Shu Uemura, L’Oreal skin brands that gives competition to Sodashi.
Bargaining power of the Supplier: The switching cost is low to the company as the suppliers are an essential part. Hence, the power is low.
Bargaining power of the consumer: Due to concentrated number of competitors in the market the bargaining power is high.
Threat of Substitution: Its main substitutes are the medical treatments such as facial surgery are a major threat to the company.
Threat of new entry: The rate of investment while entering the market is high still there are chances of entering the market as it is a profitable industry. Hence it can be said that it is of medium power.
The last decade has been very fruitful for Singapore in terms of economic growth. Singapore is politically stable and a lot more peaceful as it does not suffer from many political risks. A number of business opportunities have improved because of the effective political system. There are very infrequent debates between their political parties and a restriction is free speech exists among the parties (Export.gov 2018). The economy of Singapore does not suffer from corruption; instead it provides support to all the business sectors of the country. Most of the workers are properly educated which enables in effective communication and business administration. Various industries like Tourism, pharma, skin care. have been on a steady rise due to the government made investment as well as the great geographic location (Export.gov 2018). There however exists certain constraint like labour shortage, increase in labour cost, and decline in the productivity which affects the overall economy of the country. The youth of Singapore are more liberal and moving towards individualistic cultures, the society is more adaptable and is slowly acquiring liberal western ideologies and perspectives unlike societies of most other Asian countries. The literacy rate of Singapore s high and the fluency of the population in English is an important factor why a lot of businesses find the Singapore market attractive (BBC News 2018). These are the reasons which contribute in the increase in productivity of the nation. Singapore too is advanced in the technological fields which is a reason why the economy and the standard of living of the population has improved so drastically. The IT structure of Singapore in amazing and the efficient internet connectivity throughout the country makes communications even easier. The legal settings of Singapore have been modified with time in order to be able to meet the growing demands of the industrial and economic improvements. There are a number of acts in relevance to the Singapore economy which includes Content Regulation Act, Electronic transaction act and Intellectual property rights (The Straits Times 2018). The ministry of environment of Singapore are very particular about maintaining the natural resources and environment of the country. However, Singapore faces a crisis in water supply and is moderately dependent on Malaysia for its water supply (The Straits Times 2018).
Rivals: All the skin care brands operating in this country and basically the global operators are one of the main rivals.
Bargaining power of the Supplier: There are several suppliers in the market which makes the power of them low.
Bargaining power of the consumer: The power of the consumer is high for the strong competitors.
Analysis of Political, Economic, Social, Technological, Legal, and Environmental Factors in Japan
Threat of Substitution: The threat is same as medical treatments and surgey.
Threat of new entry: Since, lucrative industry but with high investment power. There are chances of medium threat.
Japan has a lucrative market for the skin care industry because the population is very much inclined towards beauty and the want to look ageless. Skin care products, especially ones which bring out the natural beauty of the skin are very much in demand among the Japanese population (Huang et al. 2013). Although the women population have a high demand for beauty and wellness products, men too are inclined towards the usage of effective skin care. The men usually range from 40 to 60 years of age and are mostly working.
As discussed, Singapore has an ever improving economy with majority of its population having a lot of disposable income. This is the reason for increase in the business for the skin care industry. The youth strive for new and trendy products and the middle aged women and men want effective age defying products. Luxury skin care product is in high demand especially ones which are made from purely natural and organic products.
There are a number of competitors for Sodashi in the Japanese market, and while some brands are from US and UK, most are the Japanese brands itself. One of the leading brands in the Skin care industry in Japan is Shiseido. This company has shared a double digit market value along with a growth of 13 percent in the overall business in 2016 (Shiseido.com 2018). Apart from this, there are a number of global firms such as Lancôme, Nivea, Este Lauder and others. Therefore, the competition for Sodashi in This country is high.
The market size of Singapore maybe small but there exists a huge deal of competition among the various skin care brands, both mass and premium. The large brands that are very popular in the country include Bobby Brown, Dermalogica, MAC, Estee Lauder, Clinique and many more (Export.gov 2018).
- Business growing at an abnormally large rate just to meet demands would be consequential.
- The products may not be liked by the consumer as they would be sold to them without the consumers experiencing the effects prior.
- A number of competitive brands are present, most of which are large global brands.
- It might become a little complicated for the company to manage a number of offshore business partners.
The company, owing to its connections with the high end salons, can become a leading player in the skin care industry.
- Rapid growth in the business can take place owing to their business policies and philosophies.
- Online business opportunities.
New innovative product launches.
- Increasing number of spa communities can be useful in enlarging business.
- Possibility of more partnerships and contracts.
Conclusion
The report shows that skin care in a vast industry and is dynamic in nature. It has its scopes in different parts of the world as there is always a market for beauty, wellness and skincare. Japan and Singapore were the target markets in this report. The favourable country among the two for Sodashi to enlarge its business would be Singapore owing to the reasons mentioned above.
References:
BBC News. 2018. Japan country profile. [online] Available at: https://www.bbc.com/news/world-asia-pacific-14918801 [Accessed 2 Apr. 2018].
BBC News. 2018. Singapore profile. [online] Available at: https://www.bbc.com/news/world-asia-15961759 [Accessed 2 Apr. 2018].
Export.gov. 2018. Global Market Insight: Singapore Cosmetics Skincare and Toiletries Overview | export.gov. [online] Available at: https://www.export.gov/article?id=Global-Market-Insight-Singapore-Cosmetics-Skincare-and-Toiletries-Overview [Accessed 2 Apr. 2018].
GlobalData Plc. 2018. APAC to remain as the largest skincare market through 2022 | GlobalData Plc. [online] Available at: https://www.globaldata.com/apac-remain-largest-skincare-market-2022/ [Accessed 2 Apr. 2018].
Huang, J., Stone, V., Sunouchi, T., Tan, V. and Tashiro, T., 2013. Japanese Skin Care Cluster. Harvard Business School.
Loreal.com.au. 2018. L’Oréal Australia, world leader in beauty – L’Oréal Group. [online] Available at: https://www.loreal.com.au/ [Accessed 2 Apr. 2018].
Neely, C. 2018. The Japanese Political System. [online] Japan Industry News. Available at: https://www.japanindustrynews.com/2016/06/japanese-political-system/ [Accessed 2 Apr. 2018].
Oecd.org. 2018. Japan – Economic forecast summary (November 2017) – OECD. [online] Available at: https://www.oecd.org/economy/japan-economic-forecast-summary.htm [Accessed 2 Apr. 2018].
Panayotou, T., 2016. Economic growth and the environment. The environment in anthropology, pp.140-148.
Ribeiro, A.S., Estanqueiro, M., Oliveira, M.B. and Sousa Lobo, J.M., 2015. Main benefits and applicability of plant extracts in skin care products. Cosmetics, 2(2), pp.48-65.
Shiseido.com. 2018. SHISEIDO | Skincare, Makeup &Suncare. [online] Available at: https://www.shiseido.com/ [Accessed 2 Apr. 2018].
Sodashi Skincare. 2018. SkinCare Provider in Australia | Sodashi. [online] Available at: https://www.sodashi.com.au/ [Accessed 2 Apr. 2018].
Statista. 2018. Size of the global skin care market 2012-2024 | Statistic. [online] Available at: https://www.statista.com/statistics/254612/global-skin-care-market-size/ [Accessed 2 Apr. 2018].
The Straits Times. 2018. Preparing for Singapore 4.0. [online] Available at: https://www.straitstimes.com/opinion/preparing-for-singapore-40 [Accessed 2 Apr. 2018].
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