Identify TWO competitive characteristics that differentiate firms. Remember why you should NOT choose PRICE AND QUALITY.
Plot 10 companies based on those characteristics (circles represent each company based on relative size). In order to do this rank each company on each dimension.
Group companies to identify direct rivals.
Identify gaps where there might be unfilled potential.
Overview of the Cosmetic Industry in the US
The cosmetics industry is the fastest growing industry in the world and collected the highest revenue in the last year. The reason behind this is quite apparent that is an increase of the demand of the cosmetics material, and also the current trends play a vital role in uplifting the industry. Numbers of well-known cosmetics companies already producing the brand new products in the market every day to attract the customers and research has been done extensively to develop the products more. Competition in the market is also high, and this allows the customers to choose their favorite products to glow the beauty. In this paper, strategic group mapping will be done to understand the position of the cosmetic companies in US and description and evaluation will also be commenced to draw the better picture of the cosmetic industry in the US.
There are three groups in the map, in Group A, enlisted companies are MAC, COVER GIRL and MAYBELLINE. In Group B, there are four companies such as SEPRHORA, AVON, URBAN DECAY and TOM FORD. Three companies such as ANASTASIA, TOO FACED and BARE ESSENTUALS are in Group C
Strategic map of the cosmetics industry in the US reveals the competitive structure depending on the products and customer service. There are three different groups which reflect variety of the products and customer service (Castellano & Del Gobbo, 2018). In the strategic map, 10 different cosmetics companies are placed according to their variety of products and customer service help. There are three criteria that are low, medium and high and all the ten companies are differentiated along their services in the cosmetics market of US. Each dimension in the map helps to determine the ranking of these ten companies. In the map, MAC is in top position with the high variety of products and smooth customer services due to their wide range of products. MAC is one of the best cosmetics company with the range of products like lipstick, eyeliner, fountain and many more. Basically, their lipsticks are most popular in the US which every girl wish to have in their pocket (Wang et al,.2015). Not only products their customer service is also flexible and people get the information or help regarding any product related issue. That is the reason MAC is in top position on the map. Below this, there is a company named COVER GIRL, which is also a reputed brand, and products variety is also high. Their shades products have been accepted globally and also have different other products which are also accepted by most of the girls. Customer service of the COVER GIRL is also good, and they cover every quarry of the customers (Reed, 2015). MAYBELLINE is another big branded cosmetics company, which has the parental influence of LOREAL. MAYBELLINE produces high quality lipsticks, and these are world famous. Besides these many other products they produced are mascara, face makeup, eye makeup, nail polish and much more but their customer service is somehow not up to the mark but still is good enough to stay in the strategic map (Shumenko & Reva,2016). These three companies make a group, which is at the top of the map and their popularity, products are more or less same demanding in the market.
Strategic Group Mapping and Competitive Structure
In the map, there is another group, which belongs to the moderate level, and rankings are under 3 to 7. Companies in these groups are AVON, SEPHORA, URBAN DECAY, TOM FORD all these companies are also well known in the US market. Among this group, AVON is in top position with their range of products, but their most of the selling products are skin care. Typical cosmetics products like lipstick, eyeliner and much more are not so popular in the market because people still like to afford the cosmetics of the reputed company belongs to the higher group. Customer service is not promising, but still, they have different customer’s service stores to support and improve the service. Below this, there is the company named SEPHORA, which is also a reputed brand but their brand values, is not much high and products cost is low which precipitated a bad image in the market (Hennessy et al.,2017). Product collection in the stores is not so exciting for the girls because products quality is also another factor. Customer service is moderate among the belonging group on the map. Website and other facilities are available for the customers but sometimes it is time-consuming. URBAN DECAY is standing in the lower position because their various mascaras are not up to the level and collection of lipsticks and the foundations are also limited. Few lip-glosses are also not good for the skin. All these things pull down the URBAN DECAY in to the lower position, but their customer service is also not in good position due to lack of the proper response (Byrd & Ross, 2015). TOM FORD is in the lowest position of this group where their products are lower selling and variety is also low in response to other three companies in this group. Customer service is also not well structured to support the customer all the time. All the companies in this group are trying to capture the market in greater sense. They have the band and customer base, but still, due to lack of variety and quality products, they find the struggle in the market against the high brand companies.
Three companies are in the last group which have the lowest product variety and customer service. All the companies are in the rank between 1 to 3, and this means their brand is not so high in the market. ANASTASIA is one of them which is one of the cosmetics company in the US. They have the products like lipstick, eyeliner but there are some issues with all of these products. Sometimes there is quality issue, sometimes lack of variety, and all these factors restrict the company to become popular (Fred, 2015). TOO FACED is another company, which also offers the same products in the market and belongs to these groups. Products variety is not so promising for the customers and customer service facility is very poor in response to others. Last company, which is placed lower corner of the map, is BARE ESSENTUALS. This company is still searching for determining the products because their products are not much popular in the market and their profit share is also low.
Top Companies in the Cosmetics Market
All these ten companies are placed according to product and customer service in the strategic map. The first group which consists of three companies are highly reputed, and their market shares are also high. Next group is the moderate group consists of 4companies, and all the companies are reputed but not much as first groups (Barbas, 2015). Last groups are in the lower position, their market share, products variety and customer service are not so promising in the market.
In order to determine Porter's five forces to detect the barriers to entry, it is necessary to choose two groups from the map. For the first group which consist of three companies, has the high brand value in the market.
Group A: According to Porter's five forces, GROUP A is highly strong in the market. All the three companies like MAC, COVER GIRL, MAYBELLINE are the highest selling brand in the US market as well as globally. They have the financial support, variety of products, quality products, strong customer base and much more to stay strong in the market (Thorpe, 2015). It is very tough for the new companies to invade the position of these three companies because to grab the customers of this group is highly suspicious. These three companies have strong customers base, which is nearly unbreakable. The risk from the new entry is less for this group.
Group B: In this group, there are four companies like AVON, SEPHORA, URBAN DECAY, TOM FORD are highly competitive because all the companies are trying to increase the business and develop their business in more expanding manner. These four companies also have the threat from the lower group like ANASTASIA, BARE ESSENTUALS AND TOO FACED and rivalry in the group is also high (Mori, Gold & Jose, 2017). A new entry can be possible in this group because all the companies still do not have strong impression in the market and new companies can take this advantages to build their business.
All the companies want to invade the new market to facilitate the business properly. The new market is the place where a new companies can take the advantages of all new customers and produce new products to grab the customers. This will also help to increase the band image in the market. The Asian market is the place where all the company can take the business because Asian and African market is the emerging economy where making profit is easy (Ramli, 2015). This place is still not filled up completely because demand for cosmetics in this two market was not so high but recently as the economy is moving in growing manner demands of the customers is also increased rapidly. In order to take the advantages, in the country like India, Hong Kong, Nigeria and many more the company needs to produce the products, which costs low but quality is good. Quality products at affordable price are the best strategy to invade the emerging market. Another strategy maybe is to produce the regional products, which gives the value to the society and also the culture where company might deal. For example if the company want to grab the Indian market then they can produce the lipstick which defines their culture or in the African market they can produce black lipstick which is quite famous in their culture (Sulu, Saerang & Massie, 2016). In order to gain in the business, it is essential to buildi a strong customer base, and quality products at affordable range are the best way to get the customers.
- a) The group which involves MAC, COVER GIRL, MAYBELLINE is the top position and also have the high brand value. They have the various products and strong customer base. In strategic group map, they are in top position, and this position helps them to get more business (Wu, Yeh & Woodside, 2014). Their products are high quality and also good for skin and this the reason people want to buy their products.
- b) The last group in the map is in struggle because their brand value is low and product variety and quality are also not promising in the market (Safford et al.,2015). Due to this, they will be in struggle if they are not able to improve their services.
- c) In this map, the upper position is determined by the amount of product variety and level of customer service. Companies which are in this position are better because their service is high and sales are also high; this makes the position better on the map. Middle zone of the map is the moderate area where all the companies are trying to grab the market by improving their services and products (Castellano & Del Gobbo, 2018). Lower zone of the map is for the companies, which are not so much promising in the market, and this zone is not safe for the companies.
From the above discussion, it can be concluded that cosmetics market has leaded by the few companies like MAC, MAYBELLINE COVERGIRL, AVON. Details description of the cosmetic industry through strategic group map is in this paper which reflects the position of all the companies of US market. Description of the companies is also there for better understanding of the market condition and barriers of the new entry are also described in this paper.
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