3 - Competitors, analysis, competitor maps

Strength of the forces of competition are mild in industries like cosmetics, where high returns are common. Cosmetic industry globally is worth $274 billion.

Facts about competition in cosmetic industry:

•          Cosmetic industry grows 20 % annually
•          Cosmetic industry's worth in India $1.5 billion
•          Expected to increase to $3 billion by 2014
•          19% CAGR (Compound Annual Growth Rate) expected by 2014
•          Our industry expected to grow twice as much as Europe

Top companies in India

•          Lakme - Unilever
•          Revlon – 1932 American company
•          Oriflame Cosmetics SA – 1967, Swedish origin
•          The Lo’real group – World’s largest cosmetic giant at Paris
•          Chambor – In India from 1994, Geneva company
•          Maybelline – Started in 1915, acquired by L’oreal in 1996
•          Avon products Inc – No 1 beauty direct seller in the world
•          MAC cosmetics
•          ColorBar cosmetics
•          Streer wear

Product differenciation in Lakme -

•          Skin - moisturising and sunscreen lotions and creams, facewash, foundation, compact, shimmers
•          eyes - kajal, eyeliner, eyeshadow, mascara
•          lips - gloss, lipstick
•          nails - nail polish
•          hair - shampoo, serum

Barriers to entry

The cosmetics industry exists in a market structure called monopolistic competition. The industry is characterized by a large number of firms that attempt to differentiate their products and maintain a certain degree of control over their pricing. In general monopolistic competition is characterized by relatively low barriers to entry and exit. Government regulation (mostly related to differences in the approach to safety issues) and distribution channels appear to be the most significant barriers to entry in the cosmetics industry.

Direct competitiors for Lakme (In terms of product category and not price) –  

•          Maybelline Clear Glow All in one Fairness compact Powder 9g – Rs 185 (Comes in 5 shades)
•          Loreal Paris True Match Powder Compact – Rs 850 (Comes in 4 shades)
•          Colorbar Time Plus Powder Compact - 9 g – Rs 200 (1 shade)
•          Coloressence Compact Powder Compact - 10 g – Rs 160 (Comes in 4 shades)
•        Revlon Ivory Matte Pressed Powder 8.4 g – Rs 415 (1 shade)
•          Lotus Herbals Natural Blend Botanical Compact SPF 15 – Rs 425 (1 shade)

Substitutes for compact powder

•          Loose powder
•          Cream based powder
•          Foundation which gives a matte finish
•          Creams which give matte finish