Dissertation Survey Questionnaire on Hair Care Products of Body Shop
Competitive landscape
·
Contributing only 8% of its
total cosmetics and toiletries sales in 2005, hair care is a comparatively
minor interest for the company. Only present in Western Europe and Asia-Pacific,
the company has a tiny global share of the hair care market, a level it has
maintained throughout the review period.
·
After a few years of good
growth, the company’s sales contracted in 2005 by 2%. This was mainly due to a
disappointing result in Asia-Pacific where the company recorded negative growth
of over 23% after weak sales in its core market Hong Kong. As a result, the
company fell from 35th to 41st in the regional rankings as both international
and regional companies strengthened their positions in an increasingly
competitive market.
·
The Body Shop also experienced
declining sales of its conditioner product in Western Europe, offsetting a
modest sales increase in shampoos. Intense product development, including
value-added innovations such as anti-dandruff and speciality hair care products
for specific hair types, continued to drive the market with major companies
such as L’Oréal, Procter & Gamble and Unilever investing enormous sums
behind their leading brands. At much smaller size and limited distribution
channels, The Body Shop struggled to keep up with the market developments, but
managed to hold on to its 0.4% share of the regional market.
Prospects
·
Asia-Pacific is one of the most
interesting regions for hair care over the forecast period. With a CAGR of 5%,
the region will bring US$3.2 billion to the market of which a main part will be
generated in China (US$1.7 billion). However, the lucrative nature of
Asia-Pacific will attract increased competition and in order to be able to
benefit from its growth, The Body Shop will have to intensify its new product
launches and marketing campaigns.
·
If the company benefits from
L’Oréal’s advanced hair care technologies and financial resources, The Body
Shop could be in a position to expand its regional hair care activities, both
in terms of product offerings and new market entries. However, competition in
2006-2007 will be particularly intense, not only from the major multinationals
such as Unilever and Procter & Gamble but from local companies, particularly
Kao and Shiseido. Kao will be attempting to consolidate its position in the
region having acquired Kanebo Cosmetics in 2006, and launched the Asience brand
for Asian hair at the end of the year; meanwhile Shiseido strengthened its hair
care portfolio with the launch of the highly successful Tsubaki range, also
designed for Asian hair, in 2006.
·
As a result of its mature
status, Western Europe is only forecast to experience a modest CAGR of 1% over
the 2005-2010 period, with about the same rate for key markets such as Finland
and the UK. Again, this will lead to increased competitive pressures, as
companies within the sector will have to steal market share from each other to
achieve growth. Even with The Body Shop’s natural products and ethical values
acting in its favour, the company is likely to encounter difficulties in
expanding in this challenging market as the demand for innovation
increases. However, with potential
backing from L’Oréal, allied with stronger marketing, the company should be able
to strengthen its hair care range with more value-added offerings as well as
explore more lucrative parts of the region including Spain, which with a CAGR
of 6% will generate nearly 50% of the added value in hair care sales by 2010.
Also read Questionnaire on Bath and Shower Products of Body Shop. Contact Mahasagar Publications for further information.
