Pestel Framework Environmental factors

February 12, 2019 Commerce

Pestel Framework
Environmental factors: with the increase awareness in the issues against animal testing carried out in the cosmetic/beauty industry among the government and the consumers, it has been one of the aspect that any cosmetics business must focus on. Eradicating the animals suffering from the cruel test for the cosmetics, and looking for alternative choices which are much cheaper and most effective with the help of technology advancement is a factor that cosmetic business must consider which wants to attract todays ethical consumers following the regulation of the government. Kylie cosmetics is animal cruelty free company and the products are not tested on animals which helps it set its global presence.

Technological Factors: Through social media Kylie has leveraged herself and monetized it through the free marketing by using it as a platform to promote her company presence such as in Instagram and snapchat with a targeted audience of young women and girls. By taking forthcoming products and announcing the launches in Instagram and snapchat the company Kylie cosmetics later on shifted to e-commerce selling through Shopify outsourcing its sales. The online cosmetics industry is growing every day and it has helped create a brand awareness and ease of access for customers as well as helped in increasing sales for the companies. Kylie cosmetics was able to sell its first 15000 lip kits which was sold out in less than a minute on November 30 2015 solely through online.

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Legal factors: A copyright infringement is a violation of an individual or an organization’s copyright through the unauthorized use of text, photos, videos, music, software and other original content. Kylie cosmetics also faced a huge backlash in social media after the packaging of the Kylie’s infamous lip kit looked similar to the lip art of makeup artist Vlada Haggerty. Without the proper credit to the original artist it can lead to copyright infringement for the company.

Social factors: In 2016 the global cosmetics market grew an estimated of four percent in caparison to 2015 and its important for business to keep up with the shifting trends. The main focused customers of Kylie cosmetics, millennial crowds are the teenagers and even there are many substitutes, it relates to the desirability of the customers. To keep up with the trend and being relevant to the brands are what the company’s target audience focuses on and Kylie has used the social media platform and has seen success with over 250 million social media followers and $900 million dollar empire.

Life cycles
There are many stages an industry goes through and the industry lifecycle can be proposed into five stages: development, growth, shakeout, maturity, and decline. Kylie Jenner started up her now $900 million dollar empire with the use of around $250000 of her earning from her modeling campaigns producing around 15000 lip kits. Many suggest profit for the company may be limited due to high investments. In terms of Kylie Cosmetics Kylie used the social media as a free marketing platform a technology benefit and being relevant to her age groups. She used the scarcity tactics referred to as FOMO (fear of missing out) because of which her 15000 lip kits were sold out in a second, crashing the website. The bargaining power of customers was low as they are interested to buy the products in the trend. After the huge success of Kylie lip kits, on February 2016 Kylie cosmetics outsourced her manufacturing and packaging to Seed beauty and sales through e-commerce online Shopify. In 21 November 2016 Kylie cosmetics earned $19 million dollar in a single day and by the end of 2016 Kylie’s company was selling different products other than her infamous Lip Kits with the revenue of $307 million for a company which was less than a year. The value and demand of the new products becomes high and this phase requires the company to create relationship with its existing and future customers. It’s about identifying the barriers that could hinder the growth. And through the production and availability for its customers and the revenue Kylie cosmetics earned, it represents the business solidifying its stance in the market. Even though the changes in stages are inevitable, Kylie cosmetics seems to be in the shake out period with the revenue growing by 7% only in 2017. For the company to reach its maturity state it must work in towards product differentiation by producing more relevant products for its existing and future customers through consistency and steady revenue.

The threat of entry: The cosmetics industry has a low threat of entrants including several factors. It requires a large amount of capital to enter the market and availability of resources both in terms of research, development and manufacturing process. As cosmetic industry is an attractive market in creating a global presence and for profitability, business requires customer loyalty and innovate products according to their needs.

Kylie cosmetics has been able to develop customer loyalty by Kylie leveraging her fame in social media. Through this even with the entry of new firms their market share is unaffected in the industry. Kylie cosmetics has been coming up with products through collaborations and collections achieving customer loyalty meeting their needs.

The threat of substitutes: the industry can lose its bargaining power when competitors develop the products that are similar and can satisfy the market needs leading to the rise of substitutes. With many competitors in the cosmetic industry therefore a high threat of substitute products, consumers are given the option of purchasing from the competitors’ products if not satisfied with the price, quality and availability of the product.
Consumers are able to purchase competitor’s products if they are not satisfied with product price or quality. In order for suppliers to tackle the challenge of threat of substitutes, they have to innovate products which meet the needs of their target market segments (Keller, 2003: 595-600). In the cosmetic industry, there are many competitors as has been discussed. There is therefore a high threat of substitute products.

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