Nail Polish Industry Analysis Essay Sample

August 2, 2017 General Studies

Introduction and Background

The US nail Polish industry has a entire gross of $ 1. 1 billion and a net income of $ 118. 4 million in 2012. with an one-year growing of 2. 3 % in 2007-2012 and a jutting one-year growing of 3. 3 % from 2012-2017 ( Panteva ) . The nail Polish industry is able to last the recession because they are sold at low monetary values. get downing at a retail monetary value of lower than $ 5 to $ 10 for professional class nail glosss at apothecary’s shops ( Panteva ) . Unlike other consumer goods. consumers are non every bit inclined to restrict their purchase of nail gloss. due to low monetary values.

Current Performance

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Despite the recession that significantly the economic system. the nail Polish industry was about unaffected and has shown a positive tendency. Industry gross grew at an mean one-year rate of 2. 3 % since 2007. As the economic system continues to retrieve. industry gross is projected to increase by 4 % ( Panteva ) .

Although the general tendency is positive. in 2009 the industry suffered a minor reverse when disposable income per capita decreased 3. 2 % and the industry gross decreased 0. 6 % ( Walker ) . This is caused by a displacement from sing nail salons to buying inexpensive nail gloss from apothecary’s shops. which caused a low-cost purchase of nail gloss between $ 1- $ 5. As a consequence of diminishing purchase monetary value. nail Polish makers suffered decreasing net income borders. Net income borders for nail gloss used to be 10. 8 % . but decreased to 9. 2 % during 2009 ( Panteva ) .

As the effects of the recession are decreasing. consumers are buying higher priced nail Polish and profitableness increased. However. net income borders are still below pre-recession borders. With disposable income turning at 2. 3 % yearly for the following five old ages. consumers will be able to see nail salons ; industry gross will see an addition ( Wendlandt ) . Regardless of a minor reverse. the factors that are driving the industry are strong and with the economic system retrieving. the mentality of the industry is assuring.

Industry Life Cycle

The nail Polish industry is in its adulthood stage. The industry’s growing rate and part to the economic system is turning at a changeless and steady rate. In add-on. the growing rate of the industry is about consistent with GDP growing rate. There is besides minimum alteration and invention to the nail Polish itself. another feature of a mature industry. Most alterations were centered on colour. scope and consequence of the nail gloss.

In the US. nail Polish makers are about at market impregnation and demand is expected to worsen at an mean rate of 1. 3 % per twelvemonth ( Panteva ) . Acquisitions are going common among cardinal industry participants. such as Revlon and Coty. Revlon acquired Sinful Colorss in 2011 and Coty acquired Sally Hansen. NYC New York Color and OPI. By geting smaller companies. Revlon and Coty are able to cut down competition and increase their market portion within the industry ( Panteva ) .

Competition

The industry has two chief participants. including Revlon and Coty with a combined 63. 6 % portion of entire industry gross in 2012. The staying 36. 4 % of the industry gross is attributed to other little nail Polish companies that caters to a niche or bring forth a specialised nail gloss ( Barbalova ) . To increase market portion and gross. major participants get smaller companies. Coty was able to accomplish the highest market portion in the industry by geting Sally Hansen and OPI.

Companies in the nail Polish industry are extremely competitory with companies trying to pull consumers with lower monetary values. manner. assortment and quality ( Walker ) . Price is one of the most of import competitory factors. particularly in low-cost nail gloss because they offer the same monetary value and quality. While in the premium nail Polish market section monetary value is non as of import. houses compete on the footing of manner and colour. Intense competition remains among big houses in the industry through acquisitions of smaller houses.

The larger companies have the resources to fulfill different markets and demographics with the smaller houses they get. Nail Polish makers experience moderate indirect competition from acrylic nails. unreal nails and nail extensions. which imitates the effects of nail gloss without using any nail gloss ( Barbalova ) . However. there is a rush in demand of acrylic nails and could take to a lessening in demand for nail gloss.

The nail Polish industry has moderate barriers to entry. Coty and Revlon dominate 63. 6 % of the market and both corporations compete in the planetary market ( Panteva ) . As a planetary corporation Coty and Revlon extremely benefits from economic systems of graduated table. which allowed them to get several smaller houses. In add-on. both houses have bing selling and promotional activities and the public recognized the acquired houses. The fabricating procedure of nail glosss requires a high degree of capital and is highly proficient. The industry is besides confronting increased ordinances from the Food and Drug Administration ( FDA ) . Federal Trade Commission ( FTC ) and the Environmental Protection Agency ( EPA ) ( Sole-Smith ) .

The main concern from the regulative bureaus is protecting consumers from harmful substances in nail glosss. A recent probe by the California Department of Toxic Substances Control discovered that 80 % of nail Polish tested contains harmful substances that is linked to deliver defects and asthma ( Sole-Smith ) . As a consequence. the industry is confronting increased examination from the authorities. For new houses to last in the industry. they must provide to markets that is non presently being served by Revlon and Coty and must hold sufficient resources to follow with federal ordinances.

OPI

OPI Products is a nail Polish maker located in North Hollywood. California and was one of the first companies in the industry to restrict gross revenues to professional salons ( Hoovers ) . OPI is associated with luxury and professional manicures and has a catalogue OPI manufactures premium quality nail gloss that is strong and lasting and is used in most nail salons. In add-on. OPI has a assortment of colourss and merchandise lines and the colourss have notional names. such as Comet Loves Cupid or I’m Indi-a Mood for Love ( Hoovers ) .

Selling is a cardinal success factor for the nail Polish industry. which is extremely competitory and saturated. Therefore. advertisement and trade name consciousness is indispensable to keep and derive market portion. To derive consciousness and gross revenues. OPI came up with a program to advance the trade name through word of oral cavity. OPI partnered with SheSpeaks. which is the taking word of oral cavity selling web to aim female consumers. The selling run involved 9. 000 SheSpeaks members trying OPI nail gloss ( Maffin ) .

The word of oral cavity run generated about 800. 000 conversations and 120. 000 units were sold ( Maffin ) . OPI besides employs famous person indorsement to hike trade name consciousness. OPI collaborates with famous persons and let go of a famous person nail Polish aggregation. such as coactions with Mariah Carrey. Katy Perry and Justin Bieber. OPI famous person aggregations are a success since consumers hold famous persons in high respect and when a famous person collaborates with OPI. consumers’ trust in the trade name will increase.

Industry Summary 2012|
Revenue| $ 1. 1 bn|
Profit| $ 118. 4 m|
Avg. one-year growing 12-17| 3. 3 % |
No. of companies| 45|
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Predicted Revenue Outlook|
Year| Revenue $ million| Growth % |
2013| 1. 138. 00| 3. 8|
2014| 1. 177. 90| 3. 5|
2015| 1. 217. 10| 3. 3|
2016| 1. 252. 60| 2. 9|
2017| 1. 286. 90| 2. 7|
2018| 1. 317. 00| 2. 3|
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Mentions
Barbalova. I. ( n. d. ) . Nail Polish Brings New Affordable Luxury. Euromonitor International. Retrieved December 3. 2012. from hypertext transfer protocol: //euromonitor. com/2012/04/nail-polish-brings-new-affordable-luxury. hypertext markup language Maffin. T. ( n. d. ) . OPI Grows Word-Of-Mouth. Case Studies Online. Retrieved December 3. 2012. from hypertext transfer protocol: //www. casestudiesonline. com/opi-grows-word-of-mouth/ O P I Products. Inc. . ( n. d. ) . Hoovers. Retrieved December 3. 2012. from hypertext transfer protocol: //www. Hoovers. com/company-information/cs/sales-preparation. O_P_I_Products_Inc. a61e6d6a80a041f8. hypertext markup language Panteva. N. ( n. d. ) . Market Research Reports & A ; Analysis. Ibisworld. Retrieved December 3. 2012. from hypertext transfer protocol: //clients1. ibisworld. com/reports/us/industry/default. aspx? entid=4962 Sole-Smith. V. ( n. d. ) . Toxic Nail Polish: Lies Found on Beauty Industry Labels. Slate Magazine. Retrieved December 3. 2012. from hypertext transfer protocol: //www. slate. com/blogs/xx_factor/2012/04/13/toxic_nail_polish_lies_found_on_beauty_industry_labels. hypertext markup language Walker. R. ( n. d. ) . State of the Industry. GCI Magazine. Retrieved December 3. 2012. from hypertext transfer protocol: //www. gcimagazine. com/marketstrends/regions/world/156321685. hypertext markup language? pag

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